UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

              |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2004

             |_| TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

            For the transaction period from __________ to __________

                         Commission File Number: 0-22140

                          FIRST MIDWEST FINANCIAL, INC.
             (Exact name of registrant as specified in its charter)

                  Delaware                              42-1406262
     (State or other jurisdiction of         (IRS Employer Identification No.)
      incorporation or organization)

                      Fifth at Erie, Storm Lake, Iowa 50588
                    (Address of principal executive offices)

                                 (712) 732-4117
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|

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

         Class:                               Outstanding at May 10, 2004:
Common Stock, $.01 par value                     2,497,197 Common Shares

Transitional Small Business Disclosure Format: Yes |_|; No |X|



                          FIRST MIDWEST FINANCIAL, INC.
                                    FORM 10-Q

                                      INDEX



                                                                              Page No.
                                                                              --------
                                                                              
Part I.   Financial Information

      Item 1.     Financial Statements (unaudited):

                  Consolidated Balance Sheets
                    at March 31, 2004 and September 30, 2003                      3

                  Consolidated Statements of Income for the Three Months
                    And Six Months Ended March 31, 2004 and 2003                  4

                  Consolidated Statements of Comprehensive Income for the
                    Three Months and Six Months Ended March 31, 2004 and 2003     5

                  Consolidated Statement of Changes in Shareholders'
                    Equity for the Six Months Ended March 31, 2004                6

                  Consolidated Statements of Cash Flows for the
                    Six Months Ended March 31, 2004 and 2003                      7

                  Notes to Consolidated Financial Statements                      8

      Item 2.     Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                          12

      Item 3.     Quantitative and Qualitative Disclosure About Market Risk      20

      Item 4.     Controls and Procedures                                        22

Part II.  Other Information

      Item 1.     Legal Proceedings                                              23

      Item 2.     Changes in Securities, Use of Proceeds and Issuer
                      Purchases of Equity Securities                             23

      Item 3.     Defaults on Senior Securities                                  23

      Item 4.     Submission of Matters to a Vote of Security Holders            23

      Item 5.     Other Information                                              24

      Item 6.     Exhibits and Reports on Form 8-K                               24

      Signatures                                                                 25



                                       2


Part I. Financial Information
Item 1. Financial Statements

                          FIRST MIDWEST FINANCIAL, INC.
                                AND SUBSIDIARIES
                     Consolidated Balance Sheets (Unaudited)



                                                                           March 31, 2004     September 30, 2003
                                                                           --------------     ------------------
                                                                                          
Assets
Cash and due from banks                                                     $   1,374,436       $   2,090,221
Interest-bearing deposits in other financial institutions -
   short-term (cost approximates market value)                                  6,920,112           7,666,594
                                                                            -------------       -------------
      Total cash and cash equivalents                                           8,294,548           9,756,815
Securities available for sale, amortized cost
   of $337,520,562 at March 31, 2004 and
   $370,900,230 at September 30, 2003                                         337,795,925         366,075,033
Loans receivable - net of allowance for loan losses
  of $5,126,146 at March 31, 2004 and $4,961,777
  at September 30, 2003                                                       372,186,920         349,691,995
Loans held for sale                                                               249,850           1,126,310
Federal Home Loan Bank stock, at cost                                           9,058,400          10,930,300
Accrued interest receivable                                                     3,192,269           3,932,076
Premises and equipment, net                                                    11,292,182          11,353,365
Foreclosed real estate, net                                                       900,233           1,109,338
Bank owned life insurance                                                      11,595,057          11,301,390
Other assets                                                                    5,180,119           7,008,505
                                                                            -------------       -------------

         Total assets                                                       $ 759,745,503       $ 772,285,127
                                                                            =============       =============

Liabilities and Shareholders' Equity
                    Liabilities
Non-interest bearing demand deposits                                        $  18,899,328       $  17,457,662
Savings, NOW and money market demand deposits                                 154,869,495         119,497,887
Time certificates of deposit                                                  309,398,970         298,597,193
                                                                            -------------       -------------
         Total deposits                                                       483,167,793         435,552,742
Advances from Federal Home Loan Bank                                          181,557,367         223,784,394
Securities sold under agreements to repurchase                                 33,828,468          57,702,034
Subordinated debentures held by deconsolidated
  subsidiary trust                                                             10,000,000          10,000,000
Advances from borrowers for taxes and insurance                                   265,274             268,682
Accrued interest payable                                                          522,526             506,861
Accrued expenses and other liabilities                                          2,151,052           1,439,615
                                                                            -------------       -------------

         Total liabilities                                                    711,492,480         729,254,328
                                                                            -------------       -------------

                Shareholders' Equity
Preferred stock, 800,000 shares authorized, no shares
   issued or outstanding                                                               --                  --
Common stock, $.01 par value, 5,200,000 shares authorized,
   2,957,999 shares issued, 2,497,197 and 2,493,949 shares outstanding
   at March 31, 2004 and September 30, 2003, respectively                          29,580              29,580
Additional paid-in capital                                                     20,655,919          20,538,879
Retained earnings - substantially restricted                                   36,058,820          34,057,741
Accumulated other comprehensive income (loss)                                     173,879          (3,028,762)
Unearned Employee Stock Ownership Plan shares                                    (249,846)           (401,676)
Treasury stock, 460,802 and 464,050 common shares, at cost,
   at March 31, 2004 and September 30, 2003, respectively                      (8,415,329)         (8,164,963)
                                                                            -------------       -------------

         Total Shareholders' Equity                                            48,253,023          43,030,799
                                                                            -------------       -------------

         Total Liabilities and Shareholders' Equity                         $ 759,745,503       $ 772,285,127
                                                                            =============       =============


The accompanying notes are an integral part of these consolidated financial
statements.


                                       3


                          FIRST MIDWEST FINANCIAL, INC.
                                AND SUBSIDIARIES
                  Consolidated Statements of Income (Unaudited)



                                                                     Three Months Ended                 Six Months Ended
                                                                         March 31,                          March 31,
                                                                  2004              2003             2004               2003
                                                               -----------       ----------      ------------       ------------
                                                                                                        
Interest and Dividend Income:
      Loans receivable, including fees                         $ 5,708,553       $5,982,126      $ 11,527,310       $ 12,275,762
      Securities available for sale                              3,146,976        2,973,549         6,298,717          5,578,546
      Dividends on Federal Home Loan Bank stock                     35,112           46,008           118,321            100,124
                                                               -----------       ----------      ------------       ------------

            Total interest and dividend income                   8,890,641        9,001,683        17,944,348         17,954,432

Interest Expense:
      Deposits                                                   2,339,588        2,621,701         4,753,885          5,422,568
      FHLB advances and other borrowings                         2,136,238        2,233,038         4,307,850          4,459,355
                                                               -----------       ----------      ------------       ------------

            Total interest expense                               4,475,826        4,854,739         9,061,735          9,881,923
                                                               -----------       ----------      ------------       ------------

Net interest income                                              4,414,815        4,146,944         8,882,613          8,072,509

Provision for loan losses                                           56,000          108,000           157,000            283,000
                                                               -----------       ----------      ------------       ------------

Net interest income after provision for loan losses              4,358,815        4,038,944         8,725,613          7,789,509

Noninterest income:
      Deposit service charges and other fees                       294,895          299,399           629,469            611,863
      Gain on sales of loans, net                                   31,380          224,335           120,100            510,184
      Bank owned life insurance                                    157,443          162,349           317,841            336,544
      Gain on sales of securities available for sale, net               --            6,530                --            196,390
      Gain on sale of branch office                              1,113,230               --         1,113,230                 --
      Gain (loss) on sales of foreclosed real estate, net           (2,505)           1,970              (492)              (580)
      Brokerage commissions                                         36,631           26,208            76,207             44,273
      Other income                                                  59,507          171,695           109,024            207,150
                                                               -----------       ----------      ------------       ------------

            Total noninterest income                             1,690,581          892,486         2,365,379          1,905,824

Noninterest expense:
      Employee compensation and benefits                         2,162,385        2,023,322         4,425,122          4,119,773
      Occupancy and equipment expense                              588,828          590,127         1,123,679          1,086,936
      Deposit insurance premium                                     15,220           14,929            31,446             30,303
      Data processing expense                                      182,007          165,983           361,930            307,036
      Prepayment penalty on FHLB advances                               --          274,398                --            500,674
      Other expense                                                515,843          496,382         1,082,034          1,035,615
                                                               -----------       ----------      ------------       ------------

            Total noninterest expense                            3,464,283        3,565,141         7,024,211          7,080,337
                                                               -----------       ----------      ------------       ------------

Income before income taxes                                       2,585,113        1,366,289         4,066,781          2,614,996

Income tax expense                                                 909,716          451,103         1,414,442            855,555
                                                               -----------       ----------      ------------       ------------

Net income                                                     $ 1,675,397       $  915,186      $  2,652,339       $  1,759,441
                                                               ===========       ==========      ============       ============

Earnings per common share:
      Basic                                                    $      0.67       $     0.37      $       1.07       $       0.71
                                                               ===========       ==========      ============       ============
      Diluted                                                  $      0.66       $     0.37      $       1.05       $       0.71
                                                               ===========       ==========      ============       ============


The accompanying notes are an integral part of these consolidated financial
statements.


                                       4


                          FIRST MIDWEST FINANCIAL, INC.
                                AND SUBSIDIARIES
           Consolidated Statements of Comprehensive Income (Unaudited)



                                                                 Three Months Ended               Six Months Ended
                                                                      March 31,                       March 31,
                                                                 2004           2003             2004             2003
                                                              ----------      ---------       ----------      -----------
                                                                                                  
Net income                                                    $1,675,397      $ 915,186       $2,652,339      $ 1,759,441

Other comprehensive income (loss):
        Net change in net unrealized gains and losses on
          securities available for sale                        2,838,499        (99,571)       5,100,560         (709,763)
        Deferred income tax expense (benefit)                  1,056,207        (37,052)       1,897,919         (264,102)
                                                              ----------      ---------       ----------      -----------

        Total other comprehensive income (loss)                1,782,292        (62,519)       3,202,641         (445,661)
                                                              ----------      ---------       ----------      -----------

Total comprehensive income                                    $3,457,689      $ 852,667       $5,854,980      $ 1,313,780
                                                              ==========      =========       ==========      ===========


The accompanying notes are an integral part of these consolidated financial
statements.


                                        5


                          FIRST MIDWEST FINANCIAL, INC.
                                AND SUBSIDIARIES
      Consolidated Statement of Changes in Shareholders' Equity (Unaudited)
                     For the Six Months Ended March 31, 2004



                                                                           Accumulated
                                                                              Other
                                                                             Compre-       Unearned
                                                                             hensive       Employee
                                                                             Income          Stock
                                              Additional                      (Loss),      Ownership                      Total
                                    Common     Paid-In       Retained         Net of          Plan        Treasury     Shareholders'
                                    Stock      Capital       Earnings          Tax           Shares        Stock          Equity
                                   -------   -----------   ------------    -----------     ---------    -----------    ------------
                                                                                                  
Balance at September 30, 2003      $29,580   $20,538,879   $ 34,057,741    $(3,028,762)    $(401,676)   $(8,164,963)   $ 43,030,799

Cash dividends declared on
  common stock ($0.26 per
  share)                                --            --       (651,260)            --            --             --        (651,260)

Purchase of 33,298 shares of
  treasury stock                        --            --             --             --            --       (764,865)       (764,865)

Issuance of 36,546 common shares
  from treasury stock due to
  exercise of stock options             --        68,056             --             --            --        514,499         582,555

9,000 common shares committed to
  be released under the ESOP            --        48,984             --             --       151,830             --         200,814

Net change in net unrealized
  losses on securities available
  for sale, net of effect of
  income taxes of $1,897,919            --            --             --      3,202,641            --             --       3,202,641

Net income for the six months
  ended March 31, 2004                  --            --      2,652,339             --            --             --       2,652,339
                                   -------   -----------   ------------    -----------     ---------    -----------    ------------

Balance at March 31, 2004          $29,580   $20,655,919   $ 36,058,820    $   173,879     $(249,846)   $(8,415,329)   $ 48,253,023
                                   =======   ===========   ============    ===========     =========    ===========    ============


The accompanying notes are an integral part of these consolidated financial
statements.


                                        6


                          FIRST MIDWEST FINANCIAL, INC.
                                AND SUBSIDIARIES
                Consolidated Statements of Cash Flows (Unaudited)



                                                                                         Six Months Ended March 31,
                                                                                          2004                2003
                                                                                    ---------------       -------------
                                                                                                    
Cash flows from operating activities:
    Net income                                                                      $     2,652,339       $   1,759,441
    Adjustments to reconcile net income to net cash from operating activities:
       Depreciation, amoritization and accretion, net                                     2,373,575           2,315,133
       Provision for loan losses                                                            157,000             283,000
       Loss on sales of foreclosed real estate, net                                             492                 580
       Gain on sales of securities available for sale                                            --            (196,390)
       Loss on early extinguishment of FHLB advances                                             --             500,674
       Gain on the sale of branch office                                                 (1,113,230)                 --
       Gain on the sale of office properties, net                                                --            (134,700)
       Proceeds from sales of loans held for sale                                         7,808,048          43,062,897
       Originations of loans held for sale                                               (6,931,588)        (43,268,171)
       Net change in accrued interest receivable                                            734,289             337,278
       Net change in other assets                                                          (363,199)           (867,461)
       Net change in accrued interest payable                                                15,665            (130,050)
       Net change in accrued expenses and other liabilities                                 717,563             485,748
                                                                                    ---------------       -------------
             Net cash from operating activities                                           6,050,954           4,147,979

Cash flows from investing activities:
    Purchase of securities available for sale                                           (15,262,500)       (215,306,727)
    Proceeds from sales of securities available for sale                                         --          20,648,999
    Proceeds from maturities and principal repayments of
      securities available for sale                                                      46,929,598          77,223,576
    Net change in loans receivable                                                        1,668,517          14,783,213
    Loans purchased                                                                     (25,088,646)        (12,280,134)
    Proceeds from sales of foreclosed real estate                                           228,441              84,032
    Proceeds from sale of office building                                                        --             197,169
    Cash transferred to buyer on sale of branch                                         (14,154,359)                 --
    Purchase of shares by ESOP                                                                   --            (311,934)
    Change in FHLB stock                                                                  1,871,900          (3,162,200)
    Purchase of premises and equipment, net                                                (492,155)           (755,113)
                                                                                    ---------------       -------------
             Net cash used in investing activities                                       (4,299,204)       (118,879,119)

Cash flows from financing activities:
    Net change in noninterest-bearing demand, savings, NOW, and
      money market demand deposits                                                       43,127,340          26,551,166
    Net change in other time deposits                                                    20,590,465          27,045,233
    Proceeds from advances from Federal Home Loan Bank                                1,031,540,000         369,550,000
    Repayments of advances from Federal Home Loan Bank                               (1,073,767,027)       (314,445,543)
    Net change in securities sold under agreements to repurchase                        (23,873,566)         21,442,475
    Net change in advances from borrowers for taxes and insurance                             2,341                (930)
    Cash dividends paid                                                                    (651,260)           (645,157)
    Proceeds from the exercise of stock options                                             582,555             322,829
    Purchase of treasury stock                                                             (764,865)           (165,092)
                                                                                    ---------------       -------------
             Net cash from (used in) financing activities                                (3,214,017)        129,654,981
                                                                                    ---------------       -------------

Net change in cash and cash equivalents                                                  (1,462,267)         14,923,841

Cash and cash equivalents at beginning of period                                          9,756,815           7,376,434
                                                                                    ---------------       -------------

Cash and cash equivalents at end of period                                          $     8,294,548       $  22,300,275
                                                                                    ===============       =============

Supplemental disclosure of cash flow information
    Cash paid during the period for:
       Interest                                                                     $     9,756,815       $  10,011,973
                                                                                    ===============       =============
       Income taxes                                                                         641,000             731,688
                                                                                    ===============       =============

Supplemental schedule of non-cash investing and financing activities:
    Loans transferred to foreclosed real estate                                     $        19,829       $     385,846
                                                                                    ===============       =============

Sale of branch
    Assets disposed:
       Loans                                                                        $      (730,704)
       Accrued interest receivable                                                           (5,518)
       Premises and equipment                                                              (110,818)
    Liabilitied assumed by buyer:
       Non-interest bearing demand, savings, NOW                                          6,314,066
         and money market demand accounts
       Time deposits                                                                      9,788,688
       Advances from borrowers for taxes and insurance                                        5,749
       Other liabilities                                                                      6,126
    Gain on sale of office property, net                                                 (1,113,230)
                                                                                    ---------------
    Cash paid                                                                       $    14,154,359
                                                                                    ===============


The accompanying notes are an integral part of these consolidated financial
statements.


                                       7


                          FIRST MIDWEST FINANCIAL, INC.
                                AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (Unaudited)

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The accounting policies followed by First Midwest Financial, Inc. ("First
      Midwest" or the "Company") and its consolidated subsidiaries, First
      Federal Savings Bank of the Midwest ("First Federal"), Security State Bank
      ("Security"), First Services Trust Company, First Services Financial
      Limited and Brookings Service Corporation, for interim reporting are
      consistent with the accounting policies followed for annual financial
      reporting. All adjustments that, in the opinion of management, are
      necessary for a fair presentation of the results for the periods reported
      have been included in the accompanying unaudited consolidated financial
      statements, and all such adjustments are of a normal recurring nature. The
      accompanying financial statements do not purport to contain all the
      necessary financial disclosures required by generally accepted accounting
      principles that might otherwise be necessary in the circumstances and
      should be read in conjunction with the Company's consolidated financial
      statements, and notes thereto, for the year ended September 30, 2003.

2.    EARNINGS PER SHARE

      Basic earnings per share is based on net income divided by the weighted
      average number of shares outstanding during the period. Diluted earnings
      per share shows the dilutive effect of additional common shares issuable
      under stock options.

      A reconciliation of the numerators and denominators used in the basic
      earnings per common share and the diluted earnings per common share
      computations for the three months and six months ended March 31, 2004 and
      2003 is presented below.



                                                         Three Months Ended                  Six Months Ended
                                                              March 31,                          March 31,
                                                              ---------                          ---------
                                                        2004              2003              2004              2003
                                                        ----              ----              ----              ----
                                                                                              
      Basic Earnings Per Common Share:
      Numerator:
          Net Income                                $ 1,675,397       $   915,186       $ 2,652,339       $ 1,759,441
                                                    ===========       ===========       ===========       ===========
      Denominator:
          Weighted average common shares
            outstanding                               2,502,255         2,483,715         2,502,049         2,476,178
          Less: Weighted average unallocated
            ESOP shares                                 (17,763)          (11,193)          (20,025)           (7,601)
                                                    -----------       -----------       -----------       -----------
          Weighted average common shares
            outstanding for basic earnings
            per share                                 2,484,492         2,472,522         2,482,024         2,468,577
                                                    ===========       ===========       ===========       ===========

      Basic earnings per common share               $      0.67       $      0.37       $      1.07       $      0.71
                                                    ===========       ===========       ===========       ===========



                                       8




                                                         Three Months Ended                   Six Months Ended
                                                              March 31,                           March 31,
                                                              ---------                           ---------
                                                        2004              2003              2004              2003
                                                        ----              ----              ----              ----
                                                                                              
      Diluted Earnings Per Common Share:
      Numerator:
          Net Income                                $ 1,675,397       $   915,186       $ 2,652,339       $ 1,759,441
                                                    ===========       ===========       ===========       ===========
      Denominator:
          Weighted average common shares
            outstanding for basic earnings per
            common share                              2,484,492         2,472,522         2,482,024         2,468,577
          Add: Dilutive effects of assumed
            exercise of stock options, net
            of tax benefits                              51,668            27,692            53,684            27,056
                                                    -----------       -----------       -----------       -----------
          Weighted average common and
            dilutive potential common shares
            outstanding                               2,536,160         2,500,214         2,535,708         2,495,633
                                                    ===========       ===========       ===========       ===========

      Diluted earnings per common share             $      0.66       $      0.37       $      1.05       $      0.71
                                                    ===========       ===========       ===========       ===========


3.    COMMITMENTS

      At March 31, 2004 and September 30, 2003, the Company had outstanding
      commitments to originate and purchase loans totaling $62.2 million and
      $63.4 million, respectively, excluding undisbursed portions of loans in
      process. It is expected that outstanding loan commitments will be funded
      with existing liquid assets.

4.    INTANGIBLE ASSETS

      As of March 31, 2004 and September 30, 2003 the Company had intangible
      assets of $3,403,019, all of which has been determined to be goodwill.
      There was no goodwill impairment loss or amortization related to goodwill
      during the three-month or six-month periods ended March 31, 2004 and 2003.

5.    CURRENT ACCOUNTING DEVELOPMENTS

      FIN No. 46, Consolidation of Variable Interest Entities, an interpretation
      of Accounting Research Bulletin No, 51, establishes accounting guidance
      for consolidation of variable interest entities (VIE) that function to
      support the activities of the primary beneficiary. Prior to the
      implementation of FIN 46, VIEs were generally consolidated by an
      enterprise when the enterprise had a controlling financial interest
      through ownership of a majority of voting interest in the entity. The
      provisions of FIN 46 were effective immediately for all arrangements
      entered into after January 31, 2003. For existing VIEs, the implementation
      date of FIN 46 is the first period ending after December 15, 2003.

      The Company adopted FIN 46 in connection with its consolidated financial
      statements beginning October 1, 2003. As revised, FIN 46 requires the
      Company to deconsolidate its investment in First Midwest Capital Trust I
      in future financial statements. The Company deconsolidated First Midwest
      Capital Trust I effective for the quarter ending March 31, 2004. This
      deconsolidation affects only balance sheet presentation, and does not
      affect the results of operations or shareholders' equity.

      In July 2003, the Board of Governors of the Federal Reserve System
      ("Federal Reserve") issued a supervisory letter instructing bank holding
      companies, such as the Company, to


                                       9


      continue to include the trust preferred securities in their Tier I capital
      for regulatory purposes until notice is given to the contrary. The Federal
      Reserve has been reviewing the regulatory implications of the change in
      accounting treatment and, on May 6, 2004, issued a proposal on the
      regulatory capital treatment of trust preferred securities. Under the
      proposal, trust preferred securities would continue to be included in Tier
      I capital up to 25% of Tier l capital. After a three year transition
      period, beginning March 31, 2007, trust preferred securities would count
      up to 25% of Tier l capital, net of goodwill. Until these proposals are
      finalized, it can not be assumed that the Federal Reserve will continue to
      permit institutions to include trust preferred securities in Tier I
      capital for regulatory capital purposes. As of March 31, 2004, had the
      Company not been permitted to include the $10 million in trust preferred
      securities issued by First Midwest Financial Capital Trust I in its Tier I
      capital, the Company would still have exceeded the regulatory required
      minimums for capital adequacy purposes. In the event that trust preferred
      securities would no longer be includable in Tier I capital, the Company
      would also be permitted to redeem the capital securities, which bear
      interest at 4.96%, without penalty.

      The interpretations of FIN 46 and its application to various transaction
      types and structures are evolving. Management continuously monitors
      emerging issues related to FIN 46, some of which could potentially impact
      the Company's financial statements.

      The Accounting Standards Executive Committee has issued Statement of
      Position (SOP) 03-3 "Accounting for Certain Loans or Debt Securities
      Acquired in a Transfer". This Statement applies to all loans acquired in a
      transfer, including those acquired in the acquisition of a bank or a
      branch, and provides that such loans be accounted for at fair value with
      no allowance for loan losses, or other valuation allowance, permitted at
      the time of acquisition. The difference between cash flows expected at the
      acquisition date and the investment in the loan should be recognized as
      interest income over the life of the loan. If contractually required
      payments for principal and interest are less than expected cash flows,
      this amount should not be recognized as a yield adjustment, a loss
      accrual, or a valuation allowance. For the Company this Statement is
      effective for fiscal year 2006 and, early adoption, although permitted, is
      not planned. No significant impact is expected on the consolidated
      financial statements at the time of adoption.

6.    STOCK OPTION PLAN

      FASB Statement No. 123, Accounting for Stock-Based Compensation,
      establishes a fair value based method for financial accounting and
      reporting for stock-based employee compensation plans and for transactions
      in which an entity issues its equity instruments to acquire goods and
      services from non-employees. However, the standard allows compensation to
      continue to be measured by using the intrinsic value based method of
      accounting prescribed by APB No. 25, Accounting for Stock Issued to
      Employees, but requires expanded disclosures. The Company has elected to
      apply the intrinsic value based method of accounting for stock options
      issued to employees. Accordingly, compensation cost for stock options is
      measured as the excess, if any, of the quoted market price of the Company
      stock at the date of grant over the amount an employee must pay to acquire
      the stock.

      Had compensation cost for the Plan been determined based on the grant date
      fair values of awards (the method described in FASB Statement No. 123),
      the approximate reported income and earnings per common share would have
      been decreased to the pro forma amounts shown below:


                                       10




                                                          Three Months Ended                     Six Months Ended
                                                               March 31,                             March 31,
                                                               ---------                             ---------
                                                        2004                2003              2004                2003
                                                        ----                ----              ----                ----
                                                                                                 
Net income, as reported                            $   1,675,397       $     915,186     $   2,652,339       $   1,759,442
Deduct: Total stock-based employee
   compensation expense determined under fair
   value based method for all awards, net of
   related tax effects                                    (5,814)             (3,281)          (11,528)             (6,561)
                                                   -------------       -------------     -------------       -------------
         Pro forma net income                      $   1,669,583       $     911,905     $   2,640,711       $   1,752,881
                                                   =============       =============     =============       =============

Earnings per common share - basic:
   As reported                                     $         .67       $         .37     $        1.07       $         .71
   Pro forma                                       $         .67       $         .37     $        1.06       $         .71

Earnings per common share - diluted:
   As reported                                     $         .66       $         .37     $        1.05       $         .71
   Pro forma                                       $         .66       $         .36     $        1.04       $         .70



                                       11


Part I. Financial Information

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

                          FIRST MIDWEST FINANCIAL, INC.
                                AND SUBSIDIARIES

GENERAL

First Midwest Financial, Inc. ("First Midwest" or the "Company") is a bank
holding company whose primary assets are First Federal Savings Bank of the
Midwest ("First Federal") and Security State Bank ("Security"). The Company was
incorporated in 1993 as a unitary non-diversified savings and loan holding
company and, on September 20, 1993, acquired all of the capital stock of First
Federal in connection with First Federal's conversion from mutual to stock form
of ownership. On September 30, 1996, the Company became a bank holding company
in conjunction with the acquisition of Security.

The following discussion focuses on the consolidated financial condition of the
Company and its subsidiaries, at March 31, 2004, compared to September 30, 2003,
and the consolidated results of operations for the three months and six months
ended March 31, 2004, compared to the same periods in 2003. This discussion
should be read in conjunction with the Company's consolidated financial
statements, and notes thereto, for the year ended September 30, 2003.

RECENT CORPORATE DEVELOPMENTS

On May 6, 2004, the Company announced that First Federal had started the process
of forming of a new operating division to position the Company to take advantage
of opportunities in the growing area of prepaid debit cards and related systems
and services. On May 4, 2004, the first five members of the management group
leading this new division joined First Federal. These individuals have extensive
experience and a proven track record for creating value and profitability in
this emerging market. As the development process for the division proceeds,
additional management and operational staff will be hired. The division is based
in First Federal's offices in Sioux Falls, South Dakota. While results are
subject to change and cannot be predicted with certainty, it is expected the
first year of operations will result in an operating loss of approximately $1.1
million, net of income taxes, and the second year of operations will be
break-even, or result in a small profit, net of income taxes. It is anticipated
the third year will result in income, net of income taxes, sufficient for the
three-year cumulative operations of the division to become positive.

FINANCIAL CONDITION

Total assets decreased by $12.5 million, or 1.6%, to $759.7 million at March 31,
2004, from $772.3 million at September 30, 2003. The decrease in total assets
was primarily attributable to the sale during the period of a branch office in
Manson, Iowa, which resulted in a decrease of $15.0 million in total assets.

The portfolio of securities available for sale decreased $28.3 million, or 7.7%,
to $337.8 million at March 31, 2004, from $366.1 million at September 30, 2003.
The decrease reflects $46.9 million of maturities and principal repayments,
which were partially offset by $15.3 million of purchases and by the change in
market value of securities available for sale.

The portfolio of net loans receivable increased by $22.5 million, or 6.4%, to
$372.2 million at March 31, 2004, from $349.7 million at September 30, 2003. The
increase reflects increased origination or


                                       12


purchase of commercial and multi-family real estate loans on existing and newly
constructed properties and by increased origination and purchase of commercial
business loans. The increase was partially offset by a reduction in conventional
one-to-four family residential mortgage loans, and by a reduction in
agricultural business loans, as existing originated and purchased loans were
repaid in amounts greater than new originations retained in portfolio during the
period. The reduction included the sale of $730,000 of one-to-four family
residential mortgage loans and consumer loans as part of the branch sale.

Deposit balances increased by $47.6 million, or 10.9%, to $483.2 million at
March 31, 2004, from $435.6 million at September 30, 2003. The increase in
deposit balances resulted from increases in checking accounts, money market
demand accounts, savings accounts and certificates of deposit in the amounts of
$3.5 million, $1.3 million, $32.0 million and $10.8 million, respectively. The
deposit increases are net of decreases resulting from the branch office sale
during the period. Deposits totaling $16.1 million were included in the branch
sale, consisting of checking accounts, money market demand accounts, savings
accounts and certificates of deposit in the amounts of $2.2 million, $3.3
million, $758,000 and $9.8 million, respectively.

The balance in advances from the Federal Home Loan Bank of Des Moines (FHLB)
decreased by $42.2 million, or 18.9%, to $181.6 million at March 31, 2004 from
$223.8 million at September 30, 2003. The balance in securities sold under
agreements to repurchase decreased by $23.9 million, or 41.4%, to $33.8 million
at March 31, 2004 from $57.7 million at September 30, 2003. The decrease in
advances from the FHLB and in securities sold under agreements to repurchase
reflects the replacement of borrowed funds through deposit growth during the
quarter.

Total shareholders' equity increased $5.2 million, or 12.1%, to $48.2 million at
March 31, 2004 from $43.0 million at September 30, 2003. The increase in
shareholders' equity reflects earnings of $2.7 million during the period and a
$3.2 million change, in accordance with SFAS 115, from a $3.0 million unrealized
loss to a $174,000 unrealized gain, net of income tax, on securities available
for sale. These increases were partially offset by the payment of a cash
dividend to shareholders and the purchase of treasury stock.

NON-PERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES

Generally, when a loan becomes delinquent 90 days or more, or when the
collection of principal or interest becomes doubtful, the Company will place the
loan on non-accrual status and, as a result of this action, previously accrued
interest income on the loan is taken out of current income. The loan will remain
on non-accrual status until the loan has been brought current, or until other
circumstances occur that provide adequate assurance of full repayment of
interest and principal.

At March 31, 2004, the Company had loans delinquent 30 days and over totaling
$6.4 million, or 1.7% of total loans compared to $2.0 million, or 0.6%, of total
loans at September 30, 2003. The Company's increase in delinquent (and
nonperforming) loans relates entirely to one $5.0 million purchased loan
participation secured by a 102 unit assisted living facility in Sun City,
Arizona. Lease up was slower than expected, but is trending positively. The loan
was current through its September 30, 2003 maturity and the lead lender and the
borrower had been negotiating an extension of the note. Subsequent to March 31,
2004 an agreement on the terms for the extension was successfully completed, and
the loan was brought current.

At March 31, 2004, commercial and multi-family real estate loans delinquent 30
days and over totaled $5.4 million, or 1.4% of the total loan portfolio as
compared to $417,000, or 0.1% of total loans at September 30, 2003. This
increase is due to the $5.0 million loan described in the preceding paragraph.
Multi-family and commercial real estate loans generally present a higher level
of risk than loans secured by one-to-four family residences. This greater risk
is due to several factors, including the


                                       13


concentration of principal in a limited number of loans and borrowers, the
effect of general economic conditions on income producing properties and the
increased difficulty of evaluating and monitoring these types of loans. These
loans are being closely monitored by management, however, there can be no
assurance that all loans will be fully collectible.

At March 31, 2004, agricultural operating loans delinquent 30 days and over
totaled $625,000, or 0.2% of the total loan portfolio as compared to $291,000,
or 0.1% of total loans at September 30, 2003. Agricultural lending involves a
greater degree of risk than one-to-four family residential mortgage loans
because of the typically larger loan amounts. In addition, payments on loans are
dependent on the successful operation or management of the farm property
securing the loan or for which an operating loan is utilized. The success of the
loan may also be affected by factors outside the control of the agricultural
borrower, such as the weather and grain and livestock prices. Although
management believes the Company's portfolio of agricultural real estate and
operating loans is well structured and adequately secured, there can be no
assurance that all loans will be fully collectible.

The table below sets forth the amounts and categories of non-performing assets
in the Company's loan portfolio. The Company's restructured loans (which
involved forgiving a portion of the interest or principal on the loan or making
loans at a rate materially less than market rates) are included in the table and
were performing as agreed at the date shown. Foreclosed assets include assets
acquired in settlement of loans.



                                              March 31, 2004    September 30, 2003
                                              --------------    ------------------
                                                    (Dollars in Thousands)
                                                                
Non-accruing loans:
     One-to four family                            $   70             $  156
     Commercial and multi-family                    5,417                417
     Agricultural real estate                          --                 --
     Consumer                                          14                 17
     Agricultural operating                           287                291
     Commercial business                              121                126
                                                   ------             ------
       Total non-accruing loans                     5,909              1,007

Accruing loans delinquent 90 days or more              --                 --
                                                   ------             ------
       Total non-performing loans                   5,909              1,007
                                                   ------             ------

Restructured loans:
     Consumer                                          --                 --
     Agricultural operating                            17                 28
     Commercial business                                8                 31
                                                   ------             ------
       Total  restructured loans                       25                 59
                                                   ------             ------

Foreclosed assets:
     One-to four family                                --                 --
     Commercial real estate                           889                912
     Consumer                                          --                  4
     Agricultural operating                            --                 --
     Commercial business                               11                193
                                                   ------             ------
     Total foreclosed assets                          900              1,109
     Less: Allowance for losses                        --                 --
                                                   ------             ------
       Total foreclosed assets, net                   900              1,109
                                                   ------             ------

Total non-performing assets                        $6,834             $2,175
                                                   ======             ======

Total as a percentage of total assets                0.90%              0.28%
                                                   ======             ======



                                       14


Classified Assets. Federal regulations provide for the classification of loans
and other assets as "substandard", "doubtful" or "loss", based on the level of
weakness determined to be inherent in the collection of the principal and
interest. When loans are classified as either substandard or doubtful, the
Company may establish general allowances for loan losses in an amount deemed
prudent by management. General allowances represent loss allowances which have
been established to recognize the inherent risk associated with lending
activities, but which, unlike specific allowances, have not been allocated to
particular problem loans. When assets are classified as loss, the Company is
required either to establish a specific allowance for loan losses equal to 100%
of that portion of the loan so classified, or to charge-off such amount. The
Company's determination as to the classification of its loans and the amount of
its allowances for loan losses are subject to review by its regulatory
authorities, which may require the establishment of additional general or
specific allowances for loan losses.

On the basis of management's review of its loans and other assets, at March 31,
2004, the Company had classified a total of $13.2 million of its assets as
substandard, $25,000 as doubtful and none as loss as compared to classifications
at September 30, 2003 of $9.5 million substandard, $33,000 doubtful and none as
loss. The increase in assets classified as substandard was the result of the
$5.0 million participation loan discussed above having been classified as such.

Allowance for Loan Losses. The Company establishes its provision for loan
losses, and evaluates the adequacy of its allowance for loan losses based upon a
systematic methodology consisting of a number of factors including, among
others, historic loss experience, the overall level of classified assets and
non-performing loans, the composition of its loan portfolio and the general
economic environment within which the Bank and its borrowers operate.

Current economic conditions in the agricultural sector of the Company's market
area are stable due to generally higher commodity prices and a history of
government subsidies. Price levels for grain crops and livestock generally
improved during 2003 and are currently at levels that present minimal concern.
The agricultural economy is accustomed to commodity price fluctuations and is
generally able to handle such fluctuations without significant problem. Many
areas served by the Company experienced abnormally dry growing conditions during
2003, which resulted in reduced yields. The impact of reduced yield was
substantially offset by higher commodity prices. Although the Company
underwrites its agricultural loans based on normal expectations for commodity
prices and yields, an extended period of low commodity prices or adverse growing
conditions could result in weakness in the agricultural loan portfolio and could
create a need for the Company to increase its allowance for loan losses through
increased charges to the provision for loan losses.

At March 31, 2004, the Company has established an allowance for loan losses
totaling $5.1 million. The allowance represented approximately 86.7% of the
total non-performing loans at March 31, 2004, while the allowance at September
30, 2003 represented approximately 492.8% of the total non-performing loans at
that date.

The following table sets forth an analysis of the activity in the Company's
allowance for loan losses for the six-month periods ended March 31, 2004 and
March 31, 2003:

                                               2004          2003
                                               ----          ----
                                                 (In Thousands)
      Balance, September 30,                 $ 4,962       $ 4,693
        Charge-offs                               (1)          (97)
        Recoveries                                 8            20
        Additions charged to operations          157           283
                                             -------       -------
      Balance, March 31,                     $ 5,126       $ 4,899
                                             =======       =======


                                       15


The allowance for loan losses reflects management's best estimate of probable
losses inherent in the portfolio based on currently available information.
Future additions to the allowance for loan losses may become necessary based
upon changing economic conditions, increased loan balances or changes in the
underlying collateral of the loan portfolio.

CRITICAL ACCOUNTING POLICY

The Company's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America. The financial
information contained within these statements is, to a significant extent,
financial information that is based on approximate measures of the financial
effects of transactions and events that have already occurred. Based on its
consideration of accounting policies that involve the most complex and
subjective decisions and assessments, management has identified its most
critical accounting policy to be that related to the allowance for loan losses.
The Company's allowance for loan loss methodology incorporates a variety of risk
considerations, both quantitative and qualitative in establishing an allowance
for loan loss that management believes is appropriate at each reporting date.
Quantitative factors include the Company's historical loss experience,
delinquency and charge-off trends, collateral values, changes in nonperforming
loans, and other factors. Quantitative factors also incorporate known
information about individual loans, including borrowers' sensitivity to interest
rate movements. Qualitative factors include the general economic environment in
the Company's markets, including economic conditions throughout the Midwest and
in particular, the state of certain industries. Size and complexity of
individual credits in relation to loan structure, existing loan policies and
pace of portfolio growth are other qualitative factors that are considered in
the methodology. As the Company adds new products and increases the complexity
of its loan portfolio, it will enhance its methodology accordingly. Management
may report a materially different amount for the provision for loan losses in
the statement of operations to change the allowance for loan losses if its
assessment of the above factors were different. This discussion and analysis
should be read in conjunction with the Company's financial statements and the
accompanying notes presented elsewhere herein, as well as the portion of this
Management's Discussion and Analysis section entitled "Nonperforming Assets and
Allowance for Loan Losses." Although management believes the levels of the
allowance as of both March 31, 2004 and September 30, 2003 were adequate to
absorb losses inherent in the loan portfolio, a decline in local economic
conditions, or other factors, could result in increasing losses that cannot be
reasonably predicted at this time.

RESULTS OF OPERATIONS

General. For the three months ended March 31, 2004, the Company recorded net
income of $1.6 million compared to net income of $915,000 for the same period in
2003. For the six months ended March 31, 2004, net income was $2,652,000
compared to $1,759,000 for the same period in 2003. Both periods reflect
increases in net interest income and non-interest income, decreases in the
provision for loan losses, and decreases in non-interest expense, offset in part
by increases in tax expense. The increase in non-interest income for both
periods reflects primarily a gain of $1,113,000 on the sale of the Manson, Iowa
branch office.

Net Interest Income. Net interest income increased by $268,000, or 6.5%, to
$4,415,000 for the three months ended March 31, 2004 from $4,147,000 for the
same period in 2003. For the six months ended March 31, 2004, net interest
income increased $810,000, or 10.0%, to $8,883,000 from $8,073,000 for the same
period in 2003. The increase in net interest income for the three month period
ended March 31, 2004 included a decrease in total interest expense of $379,000,
or 7.8%, which was partially offset by a decrease in total interest income of
$111,000 or 1.2%, compared to the same period in 2003. The decrease in total
interest expense reflects a decrease in the cost of interest-bearing liabilities
to 2.50% from 2.93%, which was partially offset by an increase of $55.5 million
in the average balance of interest bearing-liabilities during the period. The
decrease in total interest income reflects a decrease in the


                                       16


yield on interest-earning assets to 4.82% from 5.29%, which was partially offset
by an increase of $57.2 million in the average balance of interest
earning-assets during the period. The increase in net interest income for the
six month period ended March 31, 2004 included a decrease in total interest
expense of $820,000, or 8.3%, which was partially offset by a decrease in total
interest income of $10,000 or 0.1%, compared to the same period in 2003. The
decrease in total interest expense reflects a decrease in the cost of
interest-bearing liabilities to 2.39% from 2.50%, which was partially offset by
an increase of $99.0 million in the average balance of interest
bearing-liabilities during the period. The decrease in total interest income
reflects a decrease in the yield on interest-earning assets to 4.82% from 5.56%,
which was partially offset by an increase of $97.7 million in the average
balance of interest earning-assets during the period.

Provision for Loan Losses. For the three months ended March 31, 2004, the
provision for loan losses was $56,000 compared to $108,000 for the same period
in 2003. For the six months ended March 31, 2004, the provision for loan losses
was $157,000 compared to $283,000 for the same period in 2003. Management
believes that, based on a detail review of the loan portfolio, historic loan
losses, current economic conditions, and other factors, the current level of
provision for loan losses, and the resulting level of the allowance for loan
losses, reflects an adequate allowance against probable losses from the loan
portfolio. See "Non-Performing Assets and Allowance for Loan Losses."

Non-interest Income. Non-interest income increased $798,000, or 89.4%, to
$1,691,000 for the three months ended March 31, 2004 from $892,000 for the same
period in 2003. For the six months ended March 31, 2004, non-interest income
increased $460,000, or 24.1%, to $2,365,000 from $1,906,000 for the same period
in 2003. The increase in non-interest income for both periods reflects primarily
a gain of $1,113,000 on the sale of the Manson, Iowa branch office. There was
also an increase in both periods in commissions received through the Company's
brokerage subsidiary. These increases were partially offset primarily by
decreases in both periods in net gain on the sale of loans, and to a lesser
extent by decreases in net gain on the sale of securities and other income. The
decrease in other income was partially the result of a $134,000 gain on the sale
of a drive-up facility during the 2003 periods which did not recur in 2004.
There was also a small decrease in both periods in income derived from Bank
Owned Life Insurance.

Non-interest Expense. Non-interest expense decreased $101,000, or 2.8%, to
$3,464,000 for the three months ended March 31, 2004, from $3,565,000 for the
same period in 2003. For the six months ended March 31, 2004, non-interest
expense decreased $56,000, or 0.8%, to $7,024,000 from $7,080,000 for the same
period in 2003. The decrease in non-interest expense is the result of prepayment
penalties associated with the early extinguishment of FHLB advances during the
three and six months ended March 31, 2003, which did not recur during the same
periods in 2004. These cost reductions were substantially offset by increases in
compensation and benefit expense, data processing expense and other expense
during both the three and six month periods ended March 31, 2004. The increases
were attributable to costs associated with the construction of a second branch
office in Sioux Falls, South Dakota, the opening of the Des Moines, Iowa area
main office in late 2002, and the development and centralization of mortgage
loan operations.

Income Tax Expense. Income tax expense was $910,000 for the three months ended
March 31, 2004 compared to $451,000 for the same period in 2003. For the six
months ended March 31, 2004, income tax expense was $1,414,000 compared to
$856,000 for the same period in 2003. The increase for both periods reflects the
increase in the level of taxable income between the comparable periods.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of funds are deposits, borrowings, principal and
interest payments on loans, investments and mortgage-backed securities, and
funds provided by operations. While scheduled payments on loans, mortgage-backed
securities and short-term investments are relatively


                                       17


predictable sources of funds, deposit flows and early loan repayments are
greatly influenced by general interest rates, economic conditions and
competition.

The Company uses its capital resources principally to meet ongoing commitments
to fund maturing certificates of deposits and loan commitments, to maintain
liquidity, and to meet operating expenses. At March 31, 2004, the Company had
commitments to originate and purchase loans totaling $62.2 million. The Company
believes that loan repayments and other sources of funds will be adequate to
meet its foreseeable short- and long-term liquidity needs.

Regulations require First Federal and Security to maintain minimum amounts and
ratios of total risk-based capital and Tier 1 capital to risk-weighted assets,
and a leverage ratio consisting of Tier 1 capital to average assets. The
following table sets forth First Federal's and Security's actual capital and
required capital amounts and ratios at March 31, 2004 which, at that date,
exceeded the capital adequacy requirements:



                                                                                                           Minimum Requirement
                                                                                                                To Be Well
                                                                                   Minimum Requirement      Capitalized Under
                                                                                   For Capital Adequacy     Prompt Corrective
                                                                  Actual                 Purposes           Action Provisions
                                                                  ------                 --------           -----------------
At March 31, 2004                                         Amount        Ratio     Amount       Ratio      Amount     Ratio
- -----------------                                         ------        -----     ------       -----      ------     -----
                                                                                                    
(Dollars in Thousands)
Total Capital (to risk weighted assets):
        First Federal                                     $52,917        11.7%   $36,157         8.0%    $45,196      10.0%
        Security                                            4,568        14.0      2,614         8.0       3,268      10.0
Tier 1 (Core) Capital (to risk weighted assets):
        First Federal                                      48,000        10.6     18,078         4.0      27,118      6.0
        Security                                            4,284        13.1      1,307         4.0       1,961      6.0
Tier 1 (Core) Capital (to adjusted total assets):
        First Federal                                      48,000        7.0      27,529         4.0      34,411      5.0
        Security                                            4,284        6.4       2,677         4.0       3,346      5.0
Tier 1 (Core) Capital (to average assets):
        First Federal                                      48,000        6.9      27,884         4.0      34,855      5.0


The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
established five regulatory capital categories and authorized the banking
regulators to take prompt corrective action with respect to institutions in an
undercapitalized category. At March 31, 2004, First Federal and Security
exceeded minimum requirements for the well-capitalized category.

Forward-Looking Statements

The Company, and its wholly-owned subsidiaries, First Federal and Security, may
from time to time make written or oral "forward-looking statements," including
statements contained in its filings with the Securities and Exchange Commission,
in its reports to shareholders, and in other communications by the Company,
which are made in good faith by the Company pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements with respect to the
Company's beliefs, expectations, estimates, and intentions that are subject to
significant risks and uncertainties, and are subject to change based on various
factors, some of which are beyond the Company's control. Such statements address
the following subjects: future operating results; customer growth and retention;
loan and other product demand; earnings growth and expectations; new products
and services; credit quality and adequacy of reserves; technology; and our
employees. The following factors, among others, could


                                       18


cause the Company's financial performance to differ materially from the
expectations, estimates, and intentions expressed in such forward-looking
statements: the strength of the United States economy in general and the
strength of the local economies in which the Company conducts operations; the
effects of, and changes in, trade, monetary, and fiscal policies and laws,
including interest rate policies of the Federal Reserve Board; inflation,
interest rate, market, and monetary fluctuations; the timely development of and
acceptance of new products and services of the Company and the perceived overall
value of these products and services by users; the impact of changes in
financial services' laws and regulations; technological changes; acquisitions;
changes in consumer spending and saving habits; and the success of the Company
at managing the risks involved in the foregoing.

The foregoing list of factors is not exclusive. Additional discussion of factors
affecting the Company's business and prospects is contained in the Company's
periodic filings with the SEC. The Company does not undertake, and expressly
disclaims any intent or obligation, to update any forward-looking statement,
whether written or oral, that may be made from time to time by or on behalf of
the Company.


                                       19


Part I. Financial Information

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Market Risk

The Company is exposed to the impact of interest rate changes and changes in the
market value of its investments.

The Company currently focuses lending efforts toward originating and purchasing
competitively priced adjustable-rate loan products and fixed-rate loan products
with relatively short terms to maturity. This allows the Company to maintain a
portfolio of loans that will be sensitive to changes in the level of interest
rates while providing a reasonable spread to the cost of liabilities used to
fund the loans.

The Company's primary objective for its investment portfolio is to provide the
liquidity necessary to meet loan funding needs. This portfolio is used in the
ongoing management of changes to the Company's asset/liability mix, while
contributing to profitability through earnings flow. The investment policy
generally calls for funds to be invested among various categories of security
types and maturities based upon the Company's need for liquidity, desire to
achieve a proper balance between minimizing risk while maximizing yield, the
need to provide collateral for borrowings, and to fulfill the Company's
asset/liability management goals.

The Company's cost of funds responds to changes in interest rates due to the
relatively short-term nature of its deposit portfolio. Consequently, the results
of operations are generally influenced by the level of short-term interest
rates. The Company offers a range of maturities on its deposit products at
competitive rates and monitors the maturities on an ongoing basis.

The Company emphasizes and promotes its savings, money market, demand and NOW
accounts and, subject to market conditions, certificates of deposit with
maturities of six months through five years, principally from its primary market
area. The savings and NOW accounts tend to be less susceptible to rapid changes
in interest rates.

In managing its asset/liability mix, the Company, at times, depending on the
relationship between long- and short-term interest rates, market conditions and
consumer preference, may place somewhat greater emphasis on maximizing its net
interest margin than on strictly matching the interest rate sensitivity of its
assets and liabilities. Management believes that the increased net income which
may result from an acceptable mismatch in the actual maturity or repricing of
its asset and liability portfolios can, during periods of declining or stable
interest rates, provide sufficient returns to justify the increased exposure to
sudden and unexpected increases in interest rates which may result from such a
mismatch. The Company has established limits, which may change from time to
time, on the level of acceptable interest rate risk. There can be no assurance,
however, that in the event of an adverse change in interest rates the Company's
efforts to limit interest rate risk will be successful.

Net Portfolio Value The Company uses a Net Portfolio Value ("NPV") approach to
the quantification of interest rate risk. This approach calculates the
difference between the present value of expected cash flows from assets and the
present value of expected cash flows from liabilities, as well as cash flows
from off-balance-sheet contracts. Management of the Company's assets and
liabilities is performed within the context of the marketplace, but also within
limits established by the Board of Directors on the amount of change in NPV that
is acceptable given certain interest rate changes.

Presented below, as of March 31, 2004 and September 30, 2003, is an analysis of
the Company's interest rate risk as measured by changes in NPV for an
instantaneous and sustained parallel shift in the yield curve, in 100 basis
point increments, up and down 200


                                       20


basis points, except for the down 200 basis point scenario for March 31, 2004,
which, do to the level of market interest rates at that date, does not yield
meaningful results. As illustrated in the table, the Company's NPV at March 31,
2004 and September 30, 2003 was more sensitive to increasing interest rates than
to decreasing interest rates. When market interest rates increase, the market
value of fixed rate mortgage loans and fixed rate mortgage-backed securities
decline due to both the rate increase and the related slowing of loan prepayment
levels. During the three months between reporting dates, market interest rates
first increased and prepayment speeds slowed, resulting in an increase in NPV
sensitivity to rising rates. During the second three months between reporting
periods market interest rates decreased and prepayment speeds increased,
somewhat moderating the impact from the first three months. During the six
months, management increased the Company's use of longer term borrowed funds,
and decreased the use of shorter term borrowed funds. In addition, management
limited purchases of mortgage-backed securities and continued to originate
shorter term commercial and consumer loans. Management closely monitors the
Company's interest rate sensitivity.



                                                             At March 31, 2004             At September 30, 2003
     Change in Interest Rates         Board Limit            -----------------             ---------------------
          (Basis Points)                % Change          $ Change        % Change        $ Change        % Change
     ------------------------         -----------         --------        --------        --------        --------
                                                                         (Dollars in Thousands)
                                                                                             
                 +200 bp                  (40)%            $(6,755)         (17)%          $(6,062)         (19)%
                 +100 bp                  (25)              (2,957)          (8)            (2,451)          (8)
                  0 bp                     --                   --           --                 --           --
                 -100 bp                  (10)               1,709            4              1,085            3
                 -200 bp                  (15)                 n/a          n/a                925            3


Certain shortcomings are inherent in the method of analysis presented in the
foregoing table. For example, although certain assets and liabilities may have
similar maturities or periods to repricing, they may react in different degrees
to changes in market interest rates. Also, the interest rates on certain types
of assets and liabilities may fluctuate in advance of changes in market interest
rates, while interest rates on other types may lag behind changes in market
rates. Additionally, certain assets such as adjustable-rate mortgage loans, have
features which restrict changes in interest rates on a short-term basis and over
the life of the asset. Further, in the event of a change in interest rates,
prepayments and early withdrawal levels would likely deviate from those assumed
in calculating the tables. Finally, the ability of some borrowers to service
their debt may decrease in the event of an interest rate increase. The Company
considers all of these factors in monitoring its exposure to interest rate risk.


                                       21


Part I. Financial Information

Item 4. Disclosure Controls and Procedures

Disclosure Controls and Procedures

Any control system, no matter how well designed and operated, can provide only
reasonable (not absolute) assurance that its objectives will be met.
Furthermore, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, have been detected.

Disclosure Controls and Procedures

The Company's management, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of the Company's disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934
(Exchange Act)) as of the end of the period covered by this report. Based on
such evaluation, the Company's Chief Executive Officer and Chief Financial
Officer have concluded that, as of the end of such period, the Company's
disclosure controls and procedures are effective in recording, processing,
summarizing and reporting, on a timely basis, information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act.

Internal Control Over Financial Reporting

There have not been any changes in the Company's internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting


                                       22


                          FIRST MIDWEST FINANCIAL, INC.

                           PART II - OTHER INFORMATION

                                    FORM 10-Q

Item 1.     Legal Proceedings - There are no material pending legal proceedings
            to which the Company or its subsidiaries is a party other than
            ordinary routine litigation incidental to their respective
            businesses.

Item 2.     Changes in Securities, Use of Proceeds and Issuer Purchases of
            Equity Securities -

            (e) The following table provides information about purchases by the
            Company during the quarter ended March 31, 2004 of equity securities
            that are registered by the Company pursuant to Section 12 of the
            Exchange Act.



            ---------------------------------------------------------------------------------------------------------------
                                                                             Total Number of Shares    Maximum Number of
                                        Total Number        Average Price     Purchased as Part of    Shares that May Yet
                    Period               of Common         Paid Per Share      Publicly Announced      Be Purchased Under
                                      Shares Purchased        Purchased            Program(s)            the Program(s)
            ---------------------------------------------------------------------------------------------------------------
                                                                                                 
               1/1/04 - 1/31/04               5,000              $21.75                5,000                 145,000
            ---------------------------------------------------------------------------------------------------------------
               2/1/04 - 2/29/04                  --                  --                   --                 145,000
            ---------------------------------------------------------------------------------------------------------------
               3/1/04 - 3/31/04               5,870              $22.75                5,870                 139,130
            ---------------------------------------------------------------------------------------------------------------
                    Total                    10,870              $22.29               10,870                 139,130
            ---------------------------------------------------------------------------------------------------------------


            The above purchases were made in accordance with the July 7, 2003
            authorization by the Company's board of directors for the repurchase
            of up to 150,000 shares of the Company's common stock. The
            repurchase period under this authorization runs through July 31,
            2004. This share repurchase plan is the only plan in effect since
            its authorization.

Item 3.     Defaults Upon Senior Securities - None

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

            The Company held its Annual Meeting of Shareholders on January 26,
            2004. At the meeting, shareholders of the Company considered and
            voted upon the following matters:

            1.    The election of the following individuals as directors for a
                  three-year term:

                           E. Wayne Cooley
                           J. Tyler Haahr
                           John Thune

                  The results of the election of directors are as follows:

                                                               Votes
                                                               -----
                                                       In Favor         Withheld
                                                       --------         --------
                           E. Wayne Cooley            1,851,494          33,548
                           J. Tyler Haahr             1,850,682          34,360
                           John Thune                 1,870,932          14,110

                  There were no broker non-votes or abstentions on this
                  proposal.


                                       23


                  The following directors' terms of office continued after the
                  meeting:

                           E. Thurman Gaskill
                           James S. Haahr
                           G. Mark Mickelson
                           Rodney G. Muilenburg
                           Jeanne Partlow

Item 5.     Other Information - None

Item 6.     Exhibits and Reports on Form 8-K

            (a)   Exhibits:

                  31.1     Section 302 certification of Chief Executive Officer.
                  31.2     Section 302 certification of Chief Financial Officer.
                  32.1     Section 906 certification of Chief Executive Officer.
                  32.2     Section 906 certification of Chief Financial Officer.

            (b)   Reports on Form 8-K:

                  On January 12, 2004, the Company filed a report on Form 8-K
                  stating under Item 5 that the Company had, on January 9, 2004,
                  issued two press releases. The first announced the appointment
                  of a new Chief Financial Officer, and the second announced the
                  completion of the sale of the Company's branch office in
                  Manson, Iowa.

                  On January 21, 2004, the Company furnished a report on Form
                  8-K stating under Item 12 that the Company had, on January 20,
                  2004, issued a press release announcing its earnings for the
                  quarter ended December 31, 2003.

                  On February 20, 2004, the Company filed a report on Form 8-K
                  stating under Item 11 that the Company had, on February 20,
                  2004, provided a notice to its directors and executive
                  officers required by Rule 104 of Regulation BTR of a blackout
                  period for transactions in the Company's employee benefits
                  plans during which period the plans would convert to a new
                  trustee and record administrator.

                  On February 23, 2004, the Company filed a report on Form 8-K
                  stating under Item 5 that the Company had, on February 23,
                  2004, issued a press release announcing the declaration of a
                  cash dividend for the second quarter of its fiscal year 2004.

                  On April 21, 2004, the Company furnished a report on Form 8-K
                  stating under Item 12 that the Company had, on April 21, 2004,
                  issued a press release announcing its earnings for the quarter
                  and six month period ended March 31, 2004.

                  On May 6, 2004, the Company filed a report on Form 8-K stating
                  under Item 5 that the Company had, on May 6, 2004, issued a
                  press release announcing the Company's entrance, through its
                  wholly-owned subsidiary, First Federal Savings Bank of the
                  Midwest, its entrance into the prepaid debit card business.


                                       24


                          FIRST MIDWEST FINANCIAL, INC.

                                   SIGNATURES

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

                                     FIRST MIDWEST FINANCIAL, INC.


Date: May  14, 2004              By: /s/ James S. Haahr
                                     ------------------
                                     James S. Haahr, Chairman of the Board,
                                       and Chief Executive Officer


Date: May 14,  2004              By: /s/ Ronald J. Walters
                                     ---------------------
                                     Ronald J. Walters, Senior Vice President,
                                       Secretary, Treasurer and Chief Financial
                                       Officer


                                       25