<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

     [X] Annual Report under Section 13 or 15(d) of the Securities Exchange
          Act of 1934 (Fee required) For the year ended DECEMBER 31, 2002;

     [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 (No fee required) For the Transition Period
                            from _______ to _______

                        Commission File Number: 000-29400

                             INVESTORSBANCORP, INC.
                 (Name of Small Business Issuer in Its Charter)

              WISCONSIN                                39-1854234
              ---------                                ----------
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
           incorporation)

         W239 N1700 BUSSE ROAD
          WAUKESHA, WISCONSIN                          53188-1160
          -------------------                          ----------
(Address of principal executive offices)               (Zip Code)


         Issuer's telephone number, including area code: (262) 523-1000

         Securities registered under Section 12(b) of the Exchange Act:
                                      NONE

         Securities registered under Section 12(g) of the Exchange Act:
                     COMMON STOCK, PAR VALUE $.01 PER SHARE

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

The issuer's revenues for its most recent year were $8.2 million.

The aggregate market value of the voting stock held by non-affiliates of the
issuer as of March 26, 2003 was approximately $5.4 million. As of that date, the
issuer had 994,187 shares of common stock outstanding.

    Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

<PAGE>

                             INVESTORSBANCORP, INC.

                      INDEX TO ANNUAL REPORT ON FORM 10-KSB
                      FOR THE YEAR ENDED DECEMBER 31, 2002

<TABLE>
<S>                                                                                              <C>
PART I ........................................................................................   3

    Item 1.   Description of Business .........................................................   3

    Item 2.   Properties  .....................................................................   9

    Item 3.   Legal Proceedings  ..............................................................   9

    Item 4.   Submission of Matters to a Vote of Security Holders .............................   9

PART II .......................................................................................   9

    Item 5.   Market for Registrant's Stock and Related Shareholder Matters....................   9

    Item 6.   Management's Discussion and Analysis of Financial Condition and Results
              of Operations (for the years ended December 31, 2002, 2001 and 2000) ............  10

    Item 7.   Financial Statements and Supplementary Data .....................................  30

    Item 8.   Changes in and Disagreements on Accounting and Financial Disclosure .............  58

PART III ......................................................................................  58

    Item 9.   Directors and Officers of the Registrant ........................................  58

    Item 10.  Executive Compensation ..........................................................  60

    Item 11.  Security Ownership of Certain Beneficial Owners and Management ..................  61

    Item 12.  Certain Relationships and Transactions ..........................................  63

PART IV .......................................................................................  64

    Item 13.  Exhibits, Financial Statements, Schedules and Reports on Form 8-K ...............  64

    Item 14.  Controls and Procedures .........................................................  64
</TABLE>

                                        2

<PAGE>

                                     PART I

ITEM 1.           DESCRIPTION OF BUSINESS

GENERAL

                  InvestorsBancorp, Inc. (the "Company"), a Wisconsin
corporation, was organized on June 12, 1996, to be the holding company of
InvestorsBank, a Wisconsin state bank located in Pewaukee, Wisconsin (the
"Bank"). The Bank commenced business on September 8, 1997. On September 6, 1997,
The Middleton Doll Company (f/k/a Bando McGlocklin Capital Corporation), the
former principal shareholder of the Company, distributed all of the 880,000
shares of the Company it held to its shareholders. In connection with the
distribution, the Company filed a Form 10SB with the Securities and Exchange
Commission to register its shares of Common Stock, $.01 par value per share,
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

                  Investors Business Credit, Inc. was incorporated under Nevada
law on September 19, 2000, as a wholly-owned subsidiary of the Bank to hold and
manage certain loans and securities of the Bank. InvestorsBancorp Capital Trust
I (the "Trust") was incorporated under Delaware law on June 20, 2002, as a
wholly-owned subsidiary of the Company to issue and sell Capital Trust I
Floating Rate Cumulative Trust Preferred Securities.

                  The Company's current mailing address is W239 N1700 Busse
Road, Waukesha, Wisconsin, 53188-1160. The Company's telephone number is (262)
523-1000.

RECENT DEVELOPMENTS

                  On March 26, 2003, the Company announced that its Board of
Directors had unanimously authorized a "going private" transaction by which
George Schonath, the Company's president and chief executive officer, and his
family will become the sole shareholders of the Company. As a result of this
transaction, shares held by all other shareholders will be converted into the
right to receive $14.20 per share in cash.

                  The transaction will be structured as a cash-out merger with a
wholly-owned subsidiary of the Company formed for this purpose. Upon completion
of the merger, the Company's common stock will no longer be listed on the OTC
Bulletin Board and the registration of its securities with the Securities and
Exchange Commission will be terminated.

BUSINESS STRATEGY

                  The Bank offers a complete line of financial services to small
businesses and individuals in the community of Waukesha and in southeastern
Wisconsin. Pursuant to a management services agreement, the Bank also manages
the commercial loan and leased properties portfolio of Bando McGlocklin Small
Business Lending Corporation, a subsidiary of The Middleton Doll Company.

                  The Bank offers a broad range of deposit services, including
checking accounts, money market accounts and certificates of deposit, as well as
a full range of short to intermediate term personal and commercial loans. The
Bank makes personal loans directly to individuals for various purposes,
including first mortgage loans and home equity lines of credit. The Bank also
offers other services, including credit cards, debit cards, cashier's checks,
money orders and traveler's checks.

                  The Bank's present lending limit is approximately $2.9
million. Management may from time to time impose a lower "in-house" limit as it
deems appropriate to comply with safe and sound banking practices and respond to
overall economic conditions. In addition, the Company's relationship with Bando
McGlocklin Small Business Lending Corporation ("BMSBLC") may result in the Bank
being able to originate loans in larger principal amounts and sell
participations in such loans to them. Due to a higher loan limit at the Bank,
fewer loans have been participated with BMSBLC over the past year. The Bank may
also sell participations to other financial institutions.

                                        3

<PAGE>

                  The Bank's market area is competitive. The Bank faces
competition from numerous other banks, savings and loan associations, finance
companies, insurance companies, mortgage companies, securities brokerage firms,
money market funds, loan production offices and other providers of financial
services. Most of the Bank's competitors have been in business for many years,
have established customer bases, are substantially larger, have substantially
larger lending limits than the Bank and can offer certain services, including
multiple branches and international banking services, that the Bank will be able
to offer only through correspondent banks, if at all. In addition, most of these
entities have greater capital resources than the Bank, which among other things,
may allow them to price their services at levels more favorable to customers and
to provide larger credit facilities than could the Bank.

                  Under the Gramm-Leach-Bliley Act, which became effective in
2000, securities firms and insurance companies that elect to become financial
holding companies may acquire banks and other financial institutions. The
Gramm-Leach-Bliley Act may at some time significantly change the competitive
environment in which the Company and the Bank conduct business. The financial
services industry is also likely to become more competitive as further
technological advances enable more companies to provide financial services.
These technological advances may diminish the importance of depository
institutions and other financial intermediaries in the transfer of funds between
parties.

EMPLOYEES

                  As of March 1, 2003, the Company had 22 full-time employees.
None of its employees are covered by a collective bargaining agreement with the
Company or the Bank. The Company considers its employee relations to be
excellent.

                           SUPERVISION AND REGULATION

GENERAL

                  Financial institutions, their holding companies and their
affiliates are extensively regulated under federal and state law. As a result,
the growth and earnings performance of the Company may be affected not only by
management decisions and general economic conditions, but also by the
requirements of federal and state statutes and by the regulations and policies
of various bank regulatory authorities, including the Division of Banking of the
Wisconsin Department of Financial Institutions (the "Banking Division"), the
Board of Governors of the Federal Reserve System (the "Federal Reserve") and the
Federal Deposit Insurance Corporation (the "FDIC"). Furthermore, taxation laws
administered by the Internal Revenue Service and state taxing authorities and
securities laws administered by the Securities and Exchange Commission (the
"SEC") and state securities authorities have an impact on the business of the
Company. The effect of these statutes, regulations and regulatory policies may
be significant, and cannot be predicted with a high degree of certainty.

                  Federal and state laws and regulations generally applicable to
financial institutions regulate, among other things, the scope of business, the
kinds and amounts of investments, reserve requirements, capital levels relative
to operations, the nature and amount of collateral for loans, the establishment
of branches, mergers and consolidations and the payment of dividends. This
system of supervision and regulation established a comprehensive framework for
the respective operations of the Company and its subsidiaries and is intended
primarily for the protection of the FDIC insured deposits and depositors of the
Bank, rather than shareholders.

                  The following is a summary of the material elements of the
regulatory framework that applies to the Company and its subsidiaries. It does
not describe all of the statutes, regulations and regulatory policies that
apply, nor does it restate all of the requirements of those that are described.
As such, the following is qualified in its entirety by reference to applicable
law. Any change in statutes, regulations or regulatory policies may have a
material effect on the business of the Company and its subsidiaries.

THE COMPANY

                  GENERAL. The Company, as the sole shareholder of the Bank, is
a bank holding company. As a bank holding company, the Company is registered
with, and is subject to regulation by, the Federal Reserve under the Bank

                                        4

<PAGE>

Holding Company Act of 1956, as amended (the "BHCA"). In accordance with Federal
Reserve policy, the Company is expected to act as a source of financial strength
to the Bank and to commit resources to support the Bank in circumstances where
the Company might not otherwise do so. Under the BHCA, the Company is subject to
periodic examination by the Federal Reserve. The Company is required to file
with the Federal Reserve periodic reports of the Company's operations and such
additional information regarding the Company and its subsidiaries as the Federal
Reserve may require. The Company is also subject to supervision and regulation
by the Banking Division under Wisconsin law.

                  ACQUISITIONS, ACTIVITIES AND CHANGE IN CONTROL. The primary
purpose of a bank holding company is to control and manage banks. The BHCA
generally requires the prior approval of the Federal Reserve for any merger
involving a bank holding company or any acquisition by a bank holding company of
another bank or bank holding company. Subject to certain conditions (including
deposit concentration limits established by the BHCA), the Federal Reserve may
allow a bank holding company to acquire banks located in any state of the United
States. In approving interstate acquisitions, the Federal Reserve is required to
give effect to applicable state law limitations on the aggregate amount of
deposits that may be held by the acquiring bank holding company and its insured
depository institution affiliates in the state in which the target bank is
located (provided that those limits do not discriminate against out-of-state
depository institutions or their holding companies) and state laws that require
that the target bank have been in existence for a minimum period of time (not to
exceed five years) before being acquired by an out-of-state bank holding
company.

                  The BHCA generally prohibits the Company from acquiring direct
or indirect ownership or control of more than 5% of the voting shares of any
company that is not a bank and from engaging in any business other than that of
banking, managing and controlling banks or furnishing services to banks and
their subsidiaries. This general prohibition is subject to a number of
exceptions. The principal exception allows bank holding companies to engage in,
and to own shares of companies engaged in, certain businesses found by the
Federal Reserve to be "so closely related to banking ... as to be a proper
incident thereto". This authority would permit the Company to engage in a
variety of banking-related businesses, including the operation of a thrift,
consumer finance, equipment leasing, the operation of a computer service bureau
(including software development), and mortgage banking and brokerage. The BHCA
generally does not place territorial restrictions on the domestic activities of
non-bank subsidiaries of bank holding companies.

                  Additionally, bank holding companies that meet certain
eligibility requirements prescribed by the BHCA and elect to operate as
financial holding companies may engage in, or own shares in companies engaged
in, a wider range of nonbanking activities, including securities and insurance
underwriting and sales, merchant banking and any other activity that the Federal
Reserve, in consultation with the Secretary of the Treasury, determines by
regulation or order is financial in nature, incidental to any such financial
activity or complementary to any such financial activity and does not pose a
substantial risk to the safety or soundness of depository institutions or the
financial system generally. As of the date of this filing, the Company has
neither applied for nor received approval to operate as a financial holding
company.

                  Federal law also prohibits any person or company from
acquiring "control" of an FDIC-insured depository institution or its holding
company without prior notice to the appropriate federal bank regulator.
"Control" is conclusively presumed to exist upon the acquisition of 25% or more
of the outstanding voting securities of a bank or bank holding company, but may
arise under certain circumstances at 10% ownership.

                  CAPITAL REQUIREMENTS. Bank holding companies are required to
maintain minimum levels of capital in accordance with Federal Reserve capital
adequacy guidelines. If capital levels fall below the minimum required levels, a
bank holding company, among other things, may be denied approval to acquire or
establish additional banks or non-bank businesses.

                  The Federal Reserve's capital guidelines establish the
following minimum regulatory capital requirements for bank holding companies:
(i) a risk-based requirement expressed as a percentage of total assets weighted
according to risk; and (ii) a leverage requirement expressed as a percentage of
total assets. The risk-based requirement consists of a minimum ratio of total
capital to total risk-weighted assets of 8%, and a minimum ratio of Tier I
capital to total risk-weighted assets of 4%. The leverage requirement consists
of a minimum ratio of Tier I capital to total assets of 3% for the most highly
rate companies, with a minimum requirement of 4% for all others. For purposes of
these capital standards, Tier I capital consists primarily of permanent
stockholders' equity less intangible

                                        5

<PAGE>

assets (other than certain loan servicing rights and purchased credit card
relationships). Total capital consists primarily of Tier I capital plus certain
other debt and equity instruments that do not qualify as Tier I capital and a
portion of the company's allowance for loan and lease losses.

                  The risk-based and leverage standards described above are
minimum requirements. Higher capital levels will be required if warranted by the
particular circumstances or risk profiles of individual banking organizations.
For example, the Federal Reserve's capital guidelines contemplate that
additional capital may be required to take adequate account of, among other
things, interest rate risk, or the risks posed by concentration of credit,
nontraditional activities or securities trading activities. Further, any banking
organization experiencing or anticipating significant growth would be expected
to maintain capital ratios, including tangible capital positions (i.e., Tier 1
capital less all intangible assets), well above the minimum levels. As of
December 31, 2002, the Company had regulatory capital in excess of the Federal
Reserve's minimum requirements.

                  DIVIDEND PAYMENTS. The Company's ability to pay dividends to
its shareholders may be affected by both general corporate law considerations
and policies of the Federal Reserve applicable to bank holding companies. As a
Wisconsin corporation, the Company is subject to the limitations of the
Wisconsin Business Corporation Law, which prohibits the Company from paying
dividends if the Company is, or by the payment of the dividend would become,
insolvent, or if the payment of dividends would render the Company unable to pay
its debts as they come due in the ordinary course of business. Additionally,
policies of the Federal Reserve caution that a bank holding company should not
pay cash dividends that exceed its net income or that can only be funded in ways
that weaken the bank holding company's financial health, such as by borrowing.
The Federal Reserve also possesses enforcement powers over bank holding
companies and their non-bank subsidiaries to prevent or remedy actions that
represent unsafe or unsound practices or violations of applicable statutes and
regulations. Among these powers is the ability to proscribe the payment of
dividends by banks and bank holding companies.

                  FEDERAL SECURITIES REGULATION. The Company's common stock is
registered with the SEC under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Consequently,
the Company is subject to the information, proxy solicitation, insider trading
and other restrictions and requirements of the SEC under the Exchange Act.

THE BANK

                  GENERAL. The Bank is a Wisconsin-chartered bank, the deposit
accounts of which are insured by the FDIC's Bank Insurance Fund ("BIF"). As a
Wisconsin-chartered bank, the Bank is subject to the examination, supervision,
reporting and enforcement requirements of the Banking Division, the chartering
authority for Wisconsin banks, and the FDIC, designated by federal law as the
primary federal regulator of state-chartered FDIC-insured banks that, like the
Bank, are not members of the Federal Reserve System.

                  DEPOSIT INSURANCE. As an FDIC-insured institution, the Bank is
required to pay deposit insurance premium assessments to the FDIC. The FDIC has
adopted a risk-based assessment system under which all insured depository
institutions are placed into one of nine categories and assessed insurance
premiums based upon their respective levels of capital and results of
supervisory evaluations. Institutions classified as well-capitalized (as defined
by the FDIC) and considered healthy pay the lowest premium while institutions
that are less than adequately capitalized (as defined by the FDIC) and
considered of substantial supervisory concern pay the highest premium. Risk
classification of all insured institutions is made by the FDIC for each
semi-annual assessment period.

                  During the year ended December 31, 2002, BIF assessments
ranged from 0% of deposits to 0.27% of deposits. For the semi-annual assessment
period beginning January 1, 2003, BIF assessment rates will continued to range
from 0% of deposits to 0.27% of deposits.

                  FICO ASSESSMENTS. Since 1987, a portion of the deposit
insurance assessments paid by members of the FDIC's Savings Association
Insurance Fund ("SAIF") has been used to cover interest payments due on the
outstanding obligations of the Financing Corporation ("FICO"). FICO was created
in 1987 to finance the recapitalization of the Federal Savings and Loan
Insurance Corporation, the SAIF's predecessor insurance fund. As a result of
federal legislation enacted in 1996, beginning as of January 1, 1997, both SAIF
members and BIF members became subject to assessments to cover the interest
payments on outstanding FICO obligations until the final maturity

                                       6

<PAGE>

of such obligations in 2019. These FICO assessments are in addition to amounts
assessed by the FDIC for deposit insurance. During the year ended December 31,
2002, the FICO assessment rate for BIF and SAIF members was approximately 0.02%
of deposits.

                  SUPERVISORY ASSESSMENTS. All Wisconsin banks are required to
pay supervisory assessments to the Banking Division to fund the operations of
the Banking Division. The amount of the assessment is calculated based on the
institution's total assets. During the year ended December 31, 2002, the Bank
paid supervisory assessments to the Banking Division totaling $3,923.

                  CAPITAL REQUIREMENTS. Banks are generally required to maintain
capital levels in excess of other businesses. The FDIC has established the
following minimum capital standards for state-chartered insured non-member
banks, such as the Bank: (i) a leverage requirement consisting of a minimum
ratio of Tier I capital to total assets of 3% for the most highly-rated banks
with a minimum requirement of at least 4% for all others; and (ii) a risk-based
capital requirement consisting of a minimum ratio of total capital to total
risk-weighted assets of 8%, and a minimum ratio of Tier I capital to total
risk-weighted assets of 4%. For purposes of these capital standards, the
components of Tier I capital and total capital are the same as those for bank
holding companies discussed above.

                  The capital requirements described above are minimum
requirements. Higher capital levels will be required if warranted by the
particular circumstances or risk profiles of individual institutions. For
example, regulations of the FDIC provide that additional capital may be required
to take adequate account of, among other things, interest rate risk or the risks
posed by concentration of credit, nontraditional activities or securities
trading activities.

                  Further, federal law and regulations provide various
incentives for financial institutions to maintain regulatory capital at levels
in excess of minimum regulatory requirements. For example, a financial
institution that is "well-capitalized" may qualify for exemptions from prior
notice or application requirements otherwise applicable to certain types of
activities and may qualify for expedited processing of other required notices or
applications. Additionally, one of the criteria that determines a bank holding
company's eligibility to operate as a financial holding company is a requirement
that all of its financial institution subsidiaries be "well-capitalized". Under
the regulations of the FDIC, in order to be "well-capitalized" a financial
institution must maintain a ratio of total capital to total risk-weighted assets
of 10% of greater, a ratio of Tier I capital to total risk-weighted assets of 6%
or greater and a ratio of Tier I capital to total assets of 5% or greater.

                  Federal law also provided the federal banking regulators with
broad power to take prompt corrective action to resolve the problems of
undercapitalized institutions. The extent of the regulators' powers depends on
whether the institution in questions is "adequately capitalized",
"undercapitalized", "significantly undercapitalized", or "critically
undercapitalized", in each case as defined by regulation. Depending upon the
capital category to which an institution is assigned, the regulators' powers
include: (i) requiring the institution to submit a capital restoration plan;
(ii) limiting the institution's asset growth and restricting its activities;
(iii) requiring the institution to issue additional capital stock (including
additional voting stock) or to be acquired; (iv) restricting transactions
between the institution and its affiliates; (v) restricting the interest rate
the institution may pay on deposits; (vi) ordering a new election of directors
of the institution; (vii) requiring that senior executive officers or directors
be dismissed; (viii) prohibiting the institution from accepting deposits from
correspondent banks; (ix) requiring the institution to divest certain
subsidiaries; (x) prohibiting the payment of principal or interest on
subordinated debt; and (xi) ultimately, appointing a receiver for the
institution.

                  As of December 31, 2002: (i) the Bank was not subject to a
directive from the FDIC to increase its capital to an amount in excess of the
minimum regulatory capital requirements; (ii) the Bank exceeded its minimum
regulatory capital requirements under FDIC capital adequacy guidelines; and
(iii) the Bank was "well-capitalized", as defined by FDIC regulations.

                  DIVIDEND PAYMENTS. The primary source of funds for the Company
is dividends from the Bank. Wisconsin law generally allows a Wisconsin bank to
pay dividends out of its undivided profits, in such amounts and at such times as
the bank's board of directors deems expedient. Without the prior approval of the
Banking Division, however, a Wisconsin bank may not pay dividends in any year
which, in the aggregate, exceed the bank's calendar year-to-date net income if,
during either of the two immediately preceding years the bank paid aggregate
dividends exceeding its net income for such year.

                                       7

<PAGE>

                  The payment of dividends by any financial institution or its
holding company is affected by the requirement to maintain adequate capital
pursuant to applicable capital adequacy guidelines and regulations, and a
financial institutions generally is prohibited from paying any dividends if,
following payment thereof, the institution would be undercapitalized. As
described above, the Bank exceeded its minimum capital requirements under
applicable guidelines as of December 31, 2002. As of December 31, 2002,
approximately $3.58 million was available to be paid as dividends by the Bank.
Notwithstanding the availability of funds for dividends, however, the FDIC may
prohibit the payment of any dividends by the Bank if the FDIC determines such
payment would constitute an unsafe or unsound practice.

                  INSIDER TRANSACTIONS. The Bank is subject to certain
restrictions imposed by federal law on extensions of credit to the Company, on
investments in the stock or other securities of the Company and the acceptance
of the stock or other securities of the Company as collateral for loans made by
the Bank. Certain limitations and reporting requirements are also placed on
extensions of credit by the Bank to its directors and officers, to directors and
officers of the Company, to principal shareholders of the Company and to
"related interest" of such directors, officers and principal shareholders. In
addition, federal law and regulations may affect the terms upon which any person
who is a director of officer of the Company or the Bank or a principal
shareholder of the Company may obtain credit from banks with which the Bank
maintains correspondent relationships.

                  SAFETY AND SOUNDNESS STANDARDS. The federal banking agencies
have adopted guidelines that establish operational and managerial standards to
promote the safety and soundness of federally insured depository institutions.
The guidelines set forth standards for internal controls, information systems,
internal audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth, compensation, fees and benefits, asset quality and
earnings.

                  In general, the safety and soundness guidelines prescribe
goals to be achieved in each area, and each institution is responsible for
establishing its own procedures to achieve those goals. If an institution fails
to comply with any of the standards set forth in the guidelines, the
institution's primary federal regulator may require the institution to submit a
plan for achieving and maintaining compliance. If an institution fails to submit
an acceptable compliance plan, or fails in any material respect to implement a
compliance plan that has been accepted by its primary federal regulator, the
regulator is required to issue an order directing the institution to cure the
deficiency. Until the deficiency cited in the regulator's order is cured, the
regulator may restrict the institution's rate of growth, require the institution
to increase its capital, restrict the rates the institution pays on deposits or
require the institution to take any action the regulator deems appropriate under
the circumstances. Noncompliance with the standards established by the safety
and soundness guidelines may also constitute grounds for other enforcement
action by the federal banking regulators, including cease and desist orders and
civil money penalty assessments.

                  BRANCHING AUTHORITY. Wisconsin banks, such as the Bank, have
the authority under Wisconsin law to establish branches anywhere in the State of
Wisconsin, subject to receipt of all required regulatory approvals.

                  State and national banks are allowed to establish interstate
branch networks through acquisitions of other banks, subject to certain
conditions, including certain limitations on the aggregate amount of deposits
that may be held by the surviving bank and all of its insured depository
institution affiliates. The establishment of new interstate branches or the
acquisition of individual branches of a bank in another state (rather than the
acquisition of an out-of-state bank in its entirety) is allowed only if
specifically authorized by state law. Wisconsin law permits interstate mergers
subject to certain conditions, including a condition requiring a Wisconsin bank
involved in an interstate merger to have been in existence and continuous
operation for more than five years.

                  STATE BANK INVESTMENTS AND ACTIVITIES. The Bank generally is
permitted to make investments and engage in activities directly or through
subsidiaries as authorized by Wisconsin law. However, under federal law and FDIC
regulations, FDIC insured state banks are prohibited, subject to certain
exceptions, from making or retaining equity investments of a type, or in an
amount, that are not permissible for a national bank. Federal law and FDIC
regulations also prohibit FDIC insured state banks and their subsidiaries,
subject to certain exceptions, from engaging as principal in any activity that
is not permitted for a national bank unless the bank meets, and continues to
meet, its minimum regulatory capital requirements and the FDIC determines the
activity would not pose a significant threat to the deposit insurance fund of
which the bank is a member. These restrictions have not had, and are not
currently expected to have, a material impact on the operations of the Bank.

                                       8

<PAGE>

                  FEDERAL RESERVE SYSTEM. Federal Reserve regulations, as
presently in effect, require depository institutions to maintain non-interest
earning reserves against their transaction accounts (primarily NOW and regular
checking accounts), as follows: for transactions accounts aggregating $42.1
million or less, the reserve requirement is 3% of total transaction accounts;
and for transaction accounts aggregating in excess of $42.1 million, the reserve
requirement is $1.083 million plus 10% of the aggregate amount of total
transaction accounts in excess of $43.1 million. The first $6.0 million of
otherwise reservable balances are exempted from the reserve requirements. These
reserve requirements are subject to annual adjustment by the Federal Reserve.
The Bank is in compliance with the foregoing requirements.

ITEM 2.           PROPERTIES

                  The Company's corporate headquarters and the Bank's main
office is located at W239 N1700 Busse Road, Pewaukee, Wisconsin. The building is
a single story, brick building constructed in 1996 with approximately 16,000
square feet of office space. The Bank has three interior teller stations and a
night depository facility. The Company believes the facility will be adequate to
meet the needs of the Company and the Bank for the foreseeable future. In
October of 2002, the Bank purchased the premises from Bando McGlocklin Small
Business Lending Corporation and at present leases approximately 10,500 square
feet to Bando McGlocklin and two other unrelated parties.

ITEM 3.           LEGAL PROCEEDINGS

                  The Company is from time to time a party to legal proceedings
in the ordinary course of business that are incident to the business of banking.
The Company is not engaged in any legal proceedings of a material nature at the
present time.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  No matters were submitted to a vote of the Company's security
holders during the fourth quarter of 2002.

                                     PART II

ITEM 5.           MARKET FOR REGISTRANT'S STOCK AND RELATED SHAREHOLDER MATTERS

                  The Company's common stock was held by approximately 590
holders of record as of March 14, 2003, and is quoted on the OTC Bulletin Board
under the symbol "INVB". The following table shows for the periods indicated,
the high and low closing prices per share of transactions in the Company's
common stock as quoted on the OTC Bulletin Board. Certain other private
transactions may have occurred during the period indicated of which the Company
has no knowledge. The following prices represent inter-dealer prices without
retail markups, markdowns or commissions.

<TABLE>
<CAPTION>
                            CLOSING PRICE PER SHARE
  QUARTER ENDING:           HIGH               LOW
  --------------            ----               ---
<S>                      <C>               <C>
March 31, 2002           $    13.00        $    10.10
June 30, 2002            $    13.00        $    11.00
September 30, 2002       $    12.95        $    12.50
December 31, 2002        $    12.75        $    12.55

March 31, 2001           $     8.00        $     7.00
June 30, 2001            $     8.25        $     5.00
September 30, 2001       $     8.85        $     6.75
December 31, 2001        $    11.00        $     8.30
</TABLE>

                                       9

<PAGE>

                  No cash dividends were declared or paid during the years ended
December 31, 2002 and 2001. The Company expects that all Company and Bank
earnings, if any, will be retained to finance the growth of the Company and the
Bank and to repurchase common stock of the Company, and that no cash dividends
will be paid for the foreseeable future. If and when dividends are declared, the
Company will probably be largely dependent upon dividends paid by the Bank for
funds to pay dividends on the Common Stock. It is also possible, however, that
the Company will pay dividends in the future generated from investment income
and other activities of the Company.

                  The Wisconsin Business Corporation Law prohibits the Company
from paying dividends if the Company is insolvent or if the payment of dividends
would render the Company unable to pay its debts as they come due in the
ordinary course of business. Wisconsin law generally allows the Bank to pay
dividends out of its undivided profits in such amounts and at such times as the
Bank's board of directors deem prudent. However, without the prior approval of
the Banking Division, the Bank in any one year may not pay dividends in an
amount which exceeds the Bank's calendar year-to-date net income if, during
either of the two immediately preceding years the Bank paid aggregate dividends
exceeding its net income for such year.

ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

                  The following discussion provides additional analysis of the
financial statements and should be read in conjunction with this information.
This discussion focuses on significant factors which affected the Company's
financial performance in 2002 with comparisons to 2001 and to 2000 where
applicable. As of December 31, 2002, the operations of the Bank contributed
substantially all of the revenue and expense for the year. Included in the
operations of the Bank are the activities of its wholly-owned subsidiary,
Investors Business Credit, Inc. Schedules containing certain statistical data
are included immediately following the text of the management's discussion and
analysis.

RESULTS OF OPERATIONS

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND
DECEMBER 31, 2001.

                  During the year ended December 31, 2002, the Company reported
net income of $1.67 million or $1.70 per share (diluted) as compared to the year
ended December 31, 2001 when reported net income was $1.47 million or $1.51 per
share (diluted), a 14% increase. The increased profitability was attributable to
an increase in earning assets (Schedule 2) as the average balance increased from
$132.4 million for 2001 to $142.0 million in 2002, a 7% increase and a slight
increase in interest rate margin. Schedule 1 presents average balance sheets for
the Company for 2002 and 2001.

                  The Company's return on average assets and average equity, as
well as other key financial ratios for 2002 and 2001, are detailed below.

<TABLE>
<CAPTION>
              RATIOS                      2002     2001
              ------                      ----     ----
<S>                                      <C>      <C>
Return on Average Assets                  1.15%    1.09%

Return on Average Equity                 17.17%   17.60%

Dividend Payout Ratio on Common Stock     0.00%    0.00%

Average Equity to Average Assets          6.70%    6.19%
</TABLE>

NET INTEREST INCOME

                  Net interest income is the difference between interest income,
including fees on loans, and interest expense. It is the largest contributing
factor to net income for the Company. Total interest income in 2002 decreased
19% to $8.18 million from $10.06 million in 2001. Interest income on loans
decreased to $8.10 million during 2002 from $9.67 million in 2001, a 16%
decrease. Although average loan volume increased 12% in 2002 as compared to
2001, declining interest rates resulted in the reduction in interest income. The
average prime rate in 2002 was 4.68% compared to 6.92% in 2001. The majority of
interest income on loans is derived from the

                                       10

<PAGE>

commercial and commercial real estate loan portfolios, which comprised 68% of
total loans at December 31, 2002 and 69% of total loans at December 31, 2001.
The other components of interest income are interest earned on investment
securities, which totaled $85,000 in 2002 and $355,000 in 2001; and interest
earned on federal funds sold, which totaled $3,000 in 2002 and $35,000 in 2001.
While the direction of future interest rates, competition, and other factors may
have a significant impact, management anticipates interest income will continue
to increase proportionately with the projected growth of the loan portfolio.

                  Interest expense decreased to $3.53 million in 2002 as
compared to $5.84 million for 2001 due to decreasing interest rates. Interest
expense consists predominantly of interest paid on certificates of deposit,
which totaled $2.40 million in 2002 and $3.08 million in 2001 and money market
accounts, which totaled $0.74 million in 2002 and $2.38 million in 2001. As
indicated in Schedule 1, average deposits in 2002 were $124.75 million compared
to $122.08 million in 2001. Interest rate swap income, which offsets interest
expense, was $541,000 for the year ended December 31, 2002, compared to $341,000
for the prior year. Interest expense on federal funds purchased and other
borrowings totaled $355,000 for 2002 as compared to $295,000 for 2001. It is
anticipated that management will continue to employ time deposit instruments as
the primary funding source utilized by the Company to fund additional growth.

                  As presented in Schedule 2, the Company's interest spread
increased to 2.99% in 2002 from 2.68% in 2001. The rate paid on total interest
bearing liabilities decreased more than the yield on earning assets. The yield
on average earning assets decreased 184 basis points due to decreases in
interest rates. The average rate paid on interest bearing liabilities decreased
215 basis points due to lower short-term interest rates and due to lower
long-term interest rates for time and money market deposits. In addition,
because of the increase in average loans the net interest spread increased
$437,000 from 2001 to 2002. Schedule 2 sets forth an analysis of the interest
rates and interest differential of earning assets, which earn interest income,
and interest bearing liabilities, which accrue interest expense.

PROVISION FOR LOAN LOSSES

                  The allowance for loan losses increased from $1.88 million as
of December 31, 2001 to $1.99 million as of December 31, 2002. The allowance for
loan losses is established through a provision for loan losses charged to
expense. Loan loss provisions of $472,000 and $847,000 were expensed in 2002 and
2001, respectively. One measure of the adequacy of the allowance for estimated
losses on loans is the ratio of the allowance to the total portfolio. The
allowance for loan losses at the end of 2002 was 1.3% of total loans and for
2001 was 1.5% of total loans, net of residential mortgage loans held for sale on
the secondary market. In 2002, the activity in the allowance for loan losses
included $371,000 in actual charge-offs while in 2001 actual charge-offs were
$772,000. The remaining increase in the loan loss provision for both years was
due to the increase in the amount of loans outstanding.

                  The Bank has a relatively high percentage of commercial and
commercial real estate loans, most of which are extended to small or
medium-sized businesses. At the present time, management believes the allowance
for loan losses is at a level commensurate with the overall risk exposure of the
loan portfolio. However, should the economic climate continue to be depressed,
certain borrowers may experience difficulty and the level of non-performing
loans, charge-offs, and delinquencies could rise and require further increases
in the provision.

                  The majority of risk in the loan portfolio lies in commercial
loans which include commercial real estate loans. Accordingly, the Bank
allocated $1.50 million (or 76% of the loan loss reserve total) to these loans,
which comprised about 68% of the loan portfolio. The Bank also allocated
$158,000 (or approximately 8% of the loan loss reserve total) to residential
mortgages, which comprised about 25% of the loan portfolio. Approximately
$328,000 of the reserve for loan losses is unallocated. The unallocated amount
is determined based on management's judgment which considers, among other
things, the risk of error in the specific allocations, economic conditions and
trends, loan portfolio concentrations, the size of individual credit
relationships, regulatory directives and other factors. Continued softness in
the industrial manufacturing sector of the economy, in particular, has adversely
impacted a number of the Bank's commercial loan customers. Management believes
it is prudent to maintain a significant level of unallocated reserves given the
weakness in the manufacturing sector and uncertainty in the future direction of
the economy. While management uses the best information available to make its
evaluation, future adjustments to the allowance may be necessary if there are
significant changes in economic conditions.

                                       11

<PAGE>

                  Impaired loans are measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate or,
as a practical expedient, at the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent. A loan is impaired
when it is probable the creditor will be unable to collect all contractual
principal and interest payments due in accordance with the terms of the loan
agreement. Impaired loans totaled $2.09 million as of December 31, 2002 and
$1.94 million as of December 31, 2001. Impaired loans represented 1.3% and 1.5%
of the loan portfolio at December 31, 2002 and 2001, respectively. At December
31, 2002, one commercial loan, secured by real estate, totaling $1.25 million
accounted for 60% of the impaired loan total. The gross interest income which
would have been recorded had the nonaccruing loans been current in accordance
with their original terms was $136,000 and $27,000 for 2002 and 2001,
respectively, none of which was recognized. The amount of interest income on
nonaccruing loans that was collected and included in net income was $49,000 and
$165,000 for 2002 and 2001, respectively.

                  As presented in Schedule 8, $371,000 of loans were charged-off
during 2002 and $772,000 of loans were charged-off in 2001. The charged-off
losses related to loans extended to companies involved in industrial
manufacturing. Management, to the best of its knowledge, is not aware of any
other significant loans, group of loans or segments of the portfolio where there
are serious doubts as to the ability to repay their debt. While a comprehensive
analysis of the allowance for loan losses is somewhat problematic due to the
Company's relatively short history, management believes that the allowance at
year end was at an adequate level based on the composition of the portfolio as
well as regulatory guidelines. Management recognizes there are significant
estimates in the process and the ultimate losses could be significantly
different from those currently estimated.

                  The following table summarizes the Company's nonperforming
loans as of December 31, 2002 and December 31, 2001. The increase in past due
loans was attributable to $0.66 million of matured loans at December 31, 2002,
which were paid or refinanced during January of 2003.

<TABLE>
<CAPTION>
           NONPERFORMING LOANS                     2002              2001
           -------------------                     ----              ----
<S>                                           <C>                <C>
Nonaccrual Loans                              $  2,093,434       $  1,937,882

Accruing Loans Past Due 90 Days or More (1)   $  1,310,560       $    707,172

Restructured Loans (2)                        $          -       $          -
</TABLE>

    (1)  Loans are generally placed on nonaccrual status when contractually past
         due 90 days or more, unless management based upon facts and
         circumstances does not feel it is necessary to put the specific loan on
         nonaccrual status.

    (2)  Loans are considered restructured when the terms are modified due to a
         deterioration in the financial condition of the borrower.

NON-INTEREST INCOME AND EXPENSE

                  Non-interest income in 2002 totaled $1.88 million compared to
$1.83 million in 2001, a 3% increase. Management service fees were the largest
component of non-interest income totaling $986,000 in 2002 and $992,000 in 2001.
The Company charges The Middleton Doll Company, an affiliate of the Company, a
management fee for salaries and employee benefits of common management, as well
as a loan servicing fee based on total loans and leases under management. The
gain on sale of loans, which are received from the sale of residential mortgages
originated for the secondary market totaled $626,000 and $657,000 in 2002 and
2001, respectively. During the first quarter of 2003 the refinancing of
residential mortgages continued to be strong, however, if mortgage rates
increase it is uncertain how mortgage volume will be affected. Service charges
related to deposit accounts totaled $178,000 in 2002 and $148,000 in 2001. Other
income increased $60,000 from 2001 to 2002 due to a $35,000 increase in the cash
surrender value of the keyman life insurance policy and $25,000 of rental income
from leased space in the Bank's building.

                  Non-interest expense totaled $3.51 million in 2002 compared to
$3.07 million in 2001. Salaries and employee benefits increased $170,000
totaling $2.39 million and $2.22 million in 2002 and 2001, respectively. These
amounts included salaries that were reimbursed through the management service
fee noted above. Retirement plan expenses and bonuses each increased $88,000
over last year. Other operating expenses, which include occupancy and fixed
assets expense, data processing fees, advertising, investor communications and
professional

                                       12

<PAGE>

fees were $1.13 million compared to $843,000, a 34% increase. Depreciation
increased $25,000 over last year due to the building purchase and additional
software and equipment. Professional fees, including network management
services, bank examination fees and trust organizational fees, increased $82,000
over last year. Legal expenses relating to ongoing collection efforts regarding
a commercial loan increased $127,000 over last year.

                  Amounts provided for income tax expense or benefit are based
on income reported for financial statement purposes and do not necessarily
represent amounts currently payable under tax laws. Deferred income tax assets
and liabilities are computed quarterly for differences between the financial
statement and tax basis of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
As changes in tax laws or rates are enacted, deferred tax assets and liabilities
are adjusted through the provision for income taxes. The differences relate
primarily to tax exempt interest income, tax differences in the allowance for
loan losses and charge-offs, non-accrual interest and depreciation.

                  In 2002, the Company recorded federal and state income tax
expense of $882,000 compared to $668,000 in 2001. The Company's deferred tax
asset was $979,000 in 2002 and $850,000 in 2001. Management believes it is more
likely than not that the deferred tax asset will be fully realized. The
effective rate for income tax expense for 2002 was 34.5% and for 2001 was 31.2%.
The increase in the effective rate was due to an increase in state income taxes
and a reduction in tax exempt interest.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2001 AND
DECEMBER 31, 2000.

                  During the year ended December 31, 2001, the Company reported
net income of $1.47 million or $1.51 per share (diluted) as compared to the year
ended December 31, 2000 when reported net income was $0.56 million or $0.54 per
share (diluted), a 163% increase. The increased profitability was attributable
to an increase in earning assets (Schedule 2) as the average balance increased
from $98.7 million as of December 31, 2000 to $132.4 million at year end 2001, a
34% increase. Schedule 1 presents average balance sheets for the Company for
2001 and 2000.

                  The Company's return on average assets and average equity, as
well as other key financial ratios for 2001 and 2000, are detailed below.

<TABLE>
<CAPTION>
              RATIOS                          2001       2000
              ------                          ----       ----
<S>                                          <C>        <C>
Return on Average Assets                      1.09%     0.52%

Return on Average Equity                     17.60%     7.03%

Dividend Payout Ratio on Common Stock (1)     0.00%     0.00%

Average Equity to Average Assets              6.19%     7.36%
</TABLE>

NET INTEREST INCOME

                  Net interest income is the difference between interest income,
including fees on loans, and interest expense. It is the largest contributing
factor to net income for the Company. Total interest income in 2001 increased 9%
to $10.06 million from $9.32 million in 2000. Significantly higher loan volumes
resulted in an increase in interest and fee income on loans which totaled $9.67
million in 2001 compared to $8.67 million in 2000. Interest income on loans was
reduced in 2001 due to lower interest rates. The average prime rate in 2001 was
6.92%, as interest rates declined steadily throughout the year, compared to
9.24% in 2000. The majority of interest income on loans is derived from the
commercial and commercial real estate loan portfolios which comprised 69% of
total loans at December 31, 2001 and 66% of total loans at December 31, 2000.
The other components of interest income are interest earned on investment
securities, which totaled $355,000 in 2001 and $548,000 in 2000; and interest
earned on federal funds sold, which totaled $35,000 in 2001 and $103,000 in
2000. While the direction of future interest rates, competition, and other
factors may have a significant impact, management anticipates interest income
will continue to increase proportionately with the projected growth of the loan
portfolio.

                                       13

<PAGE>

                  Interest expense decreased to $5.84 million in 2001 as
compared to $5.94 million for 2000 due to decreasing interest rates. Interest
expense consists predominantly of interest paid on money market accounts, which
totaled $2.38 million in 2001 and $2.84 million in 2000 and certificates of
deposit, which totaled $3.08 million in 2001 and $2.79 million in 2000. As
indicated on Schedule 1, average deposits in 2001 were $122.08 million compared
to $97.17 million in 2000. Interest rate swap income of $341,000 for the year
ended December 31, 2001, compared to $49,000 for the prior year, also
contributed to the decrease in interest expense, due to the netting of the
amounts. Interest expense on subordinated debt and federal funds purchased
totaled $295,000 for 2001 as compared to $232,000 for 2000. It is anticipated
that management will continue to employ time deposit instruments as the primary
funding source utilized by the Company to fund additional growth.

                  As presented in Schedule 2, the Company's interest spread
increased to 2.68% in 2001 from 2.41% in 2000. The rate paid on total interest
bearing liabilities decreased more than the yield on earning assets. The yield
on average earning assets decreased 121 basis points due to decreases in
interest rates. The average rate paid on interest bearing liabilities decreased
148 basis points due to lower short-term interest rates and due to lower
long-term interest rates for time deposits which matured. In addition, because
of the 29% increase in average loans the net interest spread increased $848,000
from 2000 to 2001. Schedule 2 sets forth an analysis of the interest rates and
interest differential of earning assets, which earn interest income, and
interest bearing liabilities, which accrue interest expense.

PROVISION FOR LOAN LOSSES

                  The allowance for loan losses increased from $1.81 million as
of December 31, 2000 to $1.88 million as of December 31, 2001. The allowance for
loan losses is established through a provision for loan losses charged to
expense. Loan loss provisions of $847,000 and $1.04 million were expensed in
2001 and 2000, respectively. The allowance for loan losses at the end of 2001
and 2000 was 1.5% of total loans, net of residential mortgage loans held for
sale on the secondary market. Loan loss provisions in 2000 were due primarily to
loan growth and increasing signs of economic weakness necessitating an increase
in the reserve from 1.0% to 1.5% to account for perceived potential losses,
whereas provisions in 2001 were necessary to offset actual loan losses totaling
$772,000.

                  The Bank has a relatively high percentage of commercial and
commercial real estate loans, most of which are extended to small or
medium-sized businesses. During 2001 the allowance for loan losses was at a
level commensurate with the overall risk exposure of the loan portfolio.
However, should the economic climate continue to deteriorate during 2002,
certain borrowers may experience difficulty and the level of non-performing
loans, charge-offs, and delinquencies could rise and require further increases
in the provision.

                  The majority of risk in the loan portfolio lies in commercial
loans which include commercial real estate loans. Accordingly, the Bank
allocated $1.14 million (or 61% of the loan loss reserve total) to these loans,
which comprised about 80% of the loan portfolio. The Bank also allocated
$103,000 (or approximately 5% of the loan loss reserve total) to residential
mortgages, which comprised about 20% of the loan portfolio. Approximately
$640,000 of the reserve for loan losses is unallocated. The unallocated amount
is determined based on management's judgment which considers, among other
things, the risk of error in the specific allocations, economic conditions and
trends, loan portfolio concentrations, the size of individual credit
relationships, regulatory directives and other factors. Continued softness in
the industrial manufacturing sector of the economy, in particular, has adversely
impacted a number of the bank's commercial loan customers. Management believes
it is prudent to maintain a significant level of unallocated reserves given the
weakness in the manufacturing sector and uncertainty in the future direction of
the economy as a whole in the wake of the events of September 11th. While
management uses the best information available to make its evaluation, future
adjustments to the allowance may be necessary if there are significant changes
in economic conditions.

                  Impaired loans are measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate or,
as a practical expedient, at the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent. A loan is impaired
when it is probable the creditor will be unable to collect all contractual
principal and interest payments due in accordance with the terms of the loan
agreement. Impaired loans totaled $1.94 million as of December 31, 2001 and
$284,000 as of December 31, 2000. Despite the substantial increase, impaired
loans represented just 1.6% of net loans and leases as of December 31, 2001. One
loan totaling $1.11 million accounted for 57% of the impaired loan total. The
gross interest income which would

                                       14

<PAGE>

have been recorded had the nonaccruing loans been current in accordance with
their original terms was $27,000 and $3,000 for 2001 and 2000, respectively,
none of which was recognized. The amount of interest income on nonaccruing loans
that was collected and included in net income was $165,000 and $27,000 for 2001
and 2000, respectively.

                  As presented in Schedule 8, $772,000 of loans were charged-off
in 2001 while there were no loan charge-offs or recoveries during 2000. The
charged-off losses related to loans extended to companies involved in industrial
manufacturing. Management, to the best of its knowledge, was not aware of any
other significant loans, group of loans or segments of the portfolio where there
were serious doubts as to the ability to repay debt. While a comprehensive
analysis of the allowance for loan losses is somewhat problematic due to the
Company's relatively short history, management believed that the 2001 year end
allowance was at an adequate level based on the composition of the portfolio as
well as regulatory guidelines. Management recognizes there are significant
estimates in the process and ultimate losses could be significantly different
from those currently estimated.

                  The following table summarizes the Company's nonperforming
loans as of December 31, 2001 and December 31, 2000.

<TABLE>
<CAPTION>
             NONPERFORMING LOANS                   2001         2000
             -------------------                   ----         ----
<S>                                            <C>           <C>
Nonaccrual Loans                               $ 1,937,882   $ 283,622

Accuring Loans Past Due 90 Days or More (1)    $   707,172   $ 336,244

Restructured Loans (2)                         $         -   $ 613,645
</TABLE>

    (1)  Loans are generally placed on nonaccrual status when contractually past
         due 90 days or more, unless management based upon facts and
         circumstances does not feel it is necessary to put the specific loan on
         nonaccrual status.

    (2)  Loans are considered restructured when the terms are modified due to a
         deterioration in the financial condition of the borrower.

NON-INTEREST INCOME AND EXPENSE

                  Non-interest income in 2001 totaled $1.83 million compared to
$1.56 million in 2000, a 17% increase. Management service fees were the largest
component of non-interest income totaling $992,000 in 2001 and $1.01 million in
2000. The Company charges Bando McGlocklin Small Business Lending Corporation
(BMSBLC), an affiliate of the Company, a management fee for salaries and
employee benefits of common management, as well as a loan servicing fee based on
total loans and leases under management. Service release fees which are received
from the sale of residential mortgages originated for the secondary market
totaled $657,000 and $417,000 in 2001 and 2000, respectively. Service charges
related to deposit accounts and other income totaled $180,000 in 2001 and
$128,000 in 2000. The increase in the cash surrender value of the keyman life
insurance policy accounted for $29,000 of the increase and the remaining amount
of the increase was related to service charges on deposit accounts.

                  Non-interest expense totaled $3.07 million in 2001 compared to
$3.06 million in 2000. Salaries and employee benefits decreased $54,000 totaling
$2.21 million and $2.26 million in 2001 and 2000, respectively. These amounts
included salaries that were reimbursed through the management service fee noted
above. Other operating expenses, which include occupancy and fixed assets
expense, data processing fees, advertising, investor communications and
professional fees were $859,000 compared to $800,000, a 7% increase. Data
processing services increased $37,000 due to the implementation of a new
enhanced software system and regulatory fees increased $20,000 due to an
assessment increase.

                  Amounts provided for income tax expense or benefit are based
on income reported for financial statement purposes and do not necessarily
represent amounts currently payable under tax laws. Deferred income tax assets
and liabilities are computed quarterly for differences between the financial
statement and tax basis of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
As changes in tax laws or rates are enacted, deferred tax assets and liabilities
are adjusted through the provision for income taxes. The

                                       15

<PAGE>

differences relate primarily to tax exempt interest income, tax differences in
the allowance for loan losses and charge-offs, non-accrual interest and
depreciation.

                  In 2001, the Company recorded federal and state income tax
expense of $668,000 compared to $272,000 in 2000. The Company also has a net
deferred tax asset of $850,000 in 2001 and $702,000 in 2000. Management believes
it is more likely than not that the deferred tax asset will be fully realized.
The effective rate for the expense for income taxes for 2001 was 31.2% and for
2000 was 32.6%. The decrease in the effective rate was the result of the Bank
establishing an investment subsidiary in September 2000.

FINANCIAL CONDITION

                  The Company reported total assets of $167.74 million as of
December 31, 2002 versus $133.64 million as of December 31, 2001, a 26%
increase. Cash and due from banks increased to $2.82 million as of December 31,
2002 from $2.00 million at December 31, 2001.

                  The Company's investment securities portfolio decreased 63% to
$1.98 million as of December 31, 2002 from $5.35 million at December 31, 2001 in
order to fund loan growth. Investment securities consist of taxable variable
rate demand notes secured by irrevocable letters of credit issued by federally
insured, domestic financial institutions. Although the notes have a long term
maturity structure (refer to Schedule 4), the interest rate is adjustable weekly
and the holder has the option to liquidate the security at 100% of par value
within seven days upon proper notice. The cost value of these notes approximates
market value. These instruments provide the Company with ready liquidity to
provide for loan funding requirements. While management believes that the
investment portfolio is adequately diversified, a detailed listing of all
investments which exceed 10% of stockholders' equity is provided in Schedule 5.

                  As detailed in Schedule 6, loans increased 25% to $156.50
million as of December 31, 2001 from $125.32 million as of December 31, 2001.
Residential mortgage loans originated for sale on the secondary market totaled
an additional $1.19 million as of December 31, 2002, compared to $284,000 as of
December 31, 2001 due to the volume of mortgage refinancing in December of 2002.
Excluding the mortgage loans originated for sale, the allowance for loan losses
was $1.99 million at December 31, 2002 which was approximately 1.3% of gross
loans. At December 31, 2001, the allowance was $1.88 million which was
approximately 1.5% of gross loans. In addition to loans outstanding, the Bank
has entered into off-balance-sheet financial instruments consisting of
commitments to extend credit, commitments under credit card arrangements,
commercial letters of credit and standby letters of credit. Such financial
instruments are recorded in the financial statements when they are funded or
related fees are incurred or received. The Company had gross unfunded loan
commitments outstanding totaling $26.38 million as of December 31, 2002.

                  Other assets at December 31, 2002 totaled $7.24 million
compared to $2.57 million at the end of 2001. The significant increases in other
assets related to the purchase of the bank building for $2.40 million, purchase
of Federal Home Loan Bank stock for $0.68 million, increase in the fair market
value of interest rate swaps of $0.65 million, increase in cash surrender value
of $0.50 million and increase in current and deferred tax assets of $0.29
million.

                  Total deposits increased 13% to $135.94 million at December
31, 2002 from $120.02 million as of year end 2001. Indexed money market accounts
decreased 33% to $35.24 million at December 31, 2002, from $52.80 million at
December 31, 2001, primarily due to the decreases in interest rates. Time
certificates of deposit increased to $89.19 million compared to $58.66 million
as of the prior year end. Time deposits include brokered CDs with terms ranging
from three months to three years and totaled $57.05 million as of December 31,
2002 and $26.11 million as of December 31, 2001. In order for the Company to
facilitate continued loan growth, management expects to continue to purchase
brokered CDs and to competitively price its money market and certificate of
deposit products. Other deposits as of December 31, 2002 included non-interest
bearing accounts totaling $8.50 million and interest bearing checking accounts
(NOW accounts) of $3.01 million.

                  In addition to deposits, the Company periodically borrows
funds via its correspondent banking relationships. As of year end 2002, the Bank
had purchased $1.48 million in federal funds and borrowed $13.6

                                       16

<PAGE>

million from the Federal Home Loan Bank of Chicago. Trust preferred securities
debt of $5.0 million was also issued during 2002 and was used to pay off $3.0
million in subordinated debt from 2001.

                  Other liabilities increased to $1.37 million as of December
31, 2002 from $0.92 million at December 31, 2001. Other liabilities as of
December 31, 2002, consisted primarily of accrued interest payable totaling
$0.68 million and accrued expenses payable of $0.69 million.

CAPITAL RESOURCES

                  Capital ratios of the Bank and the Company at December 31,
2002 and December 31, 2001 were as follows:

<TABLE>
<CAPTION>
                                      Total     Tier I
                                   Risk-based  Risk-based  Leverage
                                     Capital    Capital     Ratio
                                   ----------  ----------  --------
<S>                                <C>         <C>         <C>
Regulatory Capital Requirements:
   Minimum                             8.0%       4.0%       4.0%
   Well-capitalized                   10.0%       6.0%       5.0%

At December 31, 2002
   Bank                               11.3%      10.1%       9.0%
   Company                            11.7%       9.4%       8.4%

At December 31, 2001
   Bank                               10.9%       9.6%       8.8%
   Company                            10.9%       7.2%       6.6%
</TABLE>

                  The preceding table indicates an increase in the Company's
capital ratios despite the strong level of asset growth experienced in 2002 and
2001. Management intends to maintain capital levels in excess of minimums
established by the regulatory authorities.

                  The Company exceeds all regulatory requirements regarding the
maintenance of capital and was categorized as "well capitalized" under the
regulatory framework for capital adequacy as of December 31, 2002.

                  The Company expects that all earnings will be retained to
finance the growth of the Company and the Bank, as well as to repurchase common
stock of the Company, and that no cash dividends will be paid for the
foreseeable future.

                  To facilitate continued loan growth during 2002, the Company
organized a trust subsidiary that issued $5.0 million in trust preferred
securities which qualify as Tier 1 and Tier 2 capital. This enabled the Company
to continue to maintain strong loan growth levels while maintaining its
regulatory status as a "well capitalized" financial institution.

LIQUIDITY

                  The liquidity of a financial institution reflects its ability
to provide funds to meet loan requests, accommodate possible deposit
withdrawals, and take advantage of interest rate market opportunities in a cost
effective manner. Although primary sources of funds are deposits and repayments
of loan principal, the Company also maintains a significant level of liquid
assets to provide for potential funding needs. In addition to cash balances as
of December 31, 2002, the Company held $1.98 million of marketable securities
and $1.19 million of residential mortgage loans originated and intended for sale
in the secondary market. Should an immediate need for funds arise, these assets
may be readily liquidated with nominal risk of principal loss.

                                       17

<PAGE>

                  Additionally, the Company has access to various off-balance
sheet sources of funds. Currently, the Company has correspondent banking
relationships with three institutions which collectively have approved federal
funds lines for the Bank totaling $13.0 million. The Company also has the
ability to sell loan participations to correspondents and affiliates. Further,
the Company has the ability to acquire funds via the brokered certificate of
deposit market. Management has periodically purchased certificates of deposit
through approved brokers as market conditions dictate to fill funding gaps. The
Bank has been approved with the Federal Reserve Bank of Chicago to borrow funds
from the Discount Window on a secured basis. This will allow the Bank to borrow
up to $10 million on a short-term basis in the event of an unexpected liquidity
shortfall. The actual amount the Bank will be able to borrow will depend on
total capital and on the amount of assets the Bank will pledge. Currently, the
Bank has pledged enough assets to borrow up to $10 million. In February, 2002,
the Bank became a member of the Federal Home Loan Bank of Chicago ("FHLB of
Chicago"). As a member, the Bank purchased $680,000 of FHLB of Chicago stock.
Based upon the amount of loans pledged by the Bank, the Bank has the capacity to
borrow up to approximately $16.0 million from the FHLB of Chicago. Management
believes that current liquidity levels are sufficient to meet anticipated loan
demand as well as absorb potential deposit withdrawals.

ASSET/LIABILITY MANAGEMENT

                  The primary function of asset/liability management is to
identify, measure and control the extent to which changes in interest rates,
commodity prices or equity prices adversely impact a financial institution's
earnings or economic capital. The Company's strategy is to optimize and
stabilize net income across a wide range of interest rate cycles while
maintaining adequate liquidity and conforming to all applicable capital and
other regulatory requirements.

                  Changes in net interest income other than volume related
changes, arise when interest rates on assets reprice in a time frame or interest
rate environment that is different from the repricing period for liabilities.
Changes in net interest income also arise from changes in the mix of interest
earning assets and interest-bearing liabilities.

                  In the normal course of business, the Bank engages in
off-balance sheet activity to hedge interest rate risk. As of December 31, 2002,
the Company had seven interest rate swap agreements outstanding with a notional
value totaling $46.0 million structured as a hedge of specific fixed-rate
deposits whose terms approximate the terms of the swap agreement. The swap
agreements are structured so that the Company receives a fixed interest rate and
pays a variable rate. The variable rate is based upon LIBOR. These instruments
allow management to more closely balance the repricing opportunities of the
Company's assets and liabilities and thereby, reduces potential interest rate
risk exposure. Although swaps reduce interest rate risk, the potential for
profit or loss on interest rate swaps still exists depending upon fluctuations
in interest rates. The Company's interest rate swaps are classified as fair
value hedges with a fair market value of $658,000 at December 31, 2002.

                                       18

<PAGE>

                  The following table summarizes the relationship between
repricing opportunities of interest-bearing assets and liabilities across
various time horizons as of December 31, 2002. "GAP" is defined as the
difference between interest bearing assets and liabilities which mature or
reprice within the specified time period.

<TABLE>
<CAPTION>
                                     0-90        91-180        181-360       +360
(000's Omitted)                      DAYS         DAYS           DAYS        DAYS        TOTAL
                                   ---------   -----------    ---------    ---------    ---------
<S>                                <C>         <C>            <C>          <C>          <C>
Investments                        $   1,984   $         -    $       -    $       -    $   1,984
CSV Life Insurance                 $   1,135   $         -    $       -    $       -    $   1,135
Loans                              $ 107,638   $     2,486    $   7,259    $  40,308    $ 157,691
                                   ---------   -----------    ---------    ---------    ---------
  Total Repriceable Assets         $ 110,757   $     2,486    $   7,259    $  40,308    $ 160,810

NOW accounts                       $   2,997   $         -    $       -    $       -    $   2,997
Money Market accounts              $  35,238   $         -    $       -    $       -    $  35,238
Time Deposits of less than $100M   $   6,271   $     3,216    $   4,877    $   8,659    $  23,023
Time Deposits of $100M or more     $   7,801   $     8,155    $     934    $  48,621    $  65,511
Federal Funds Purchased            $   1,475   $         -    $       -    $       -    $   1,475
FHLB Borrowings                    $  13,600   $         -    $       -    $       -    $  13,600
Trust Preferred Securities         $   5,000   $         -    $       -    $       -    $   5,000
Interest Rate Swaps                $  46,000   $         -    $       -    $ (46,000)   $       -
                                   ---------   -----------    ---------    ---------    ---------
  Total Repriceable Liabilities    $ 118,382   $    11,371    $   5,811    $  11,280    $ 146,844

GAP                                $  (7,625)  $    (8,885)   $   1,448    $  29,028
Cumulative GAP                     $  (7,625)  $   (16,510)   $ (15,062)   $  13,966
</TABLE>

Note:  Time Deposits consist of certificates of deposit and are categorized
according to remaining time to maturity.

IMPACT OF INFLATION AND CHANGING PRICES

                  Unlike most industries, virtually all of the assets and
liabilities of the Company are monetary in nature. As a result, interest rates
have a more significant impact on the Company's performance and results of
operations than the effect of general levels of inflation. Interest rates do not
necessarily move in the same direction or magnitude as the prices of goods and
services as measured by the Consumer Price Index. As discussed previously, the
Company's interest rate gap position in conjunction with the direction of the
movement in interest rates is an important factor in the Company's operating
results.

SIGNIFICANT ACCOUNTING POLICIES

                  Allowance for Loan Losses. Loans are charged against the
allowance for loan losses when management believes that the collectibility of
the principal is unlikely. Subsequent recoveries, if any, are credited to the
allowance. The allowance is an amount that management believes will be adequate
to absorb possible losses relating to specifically identified loans that may
become uncollectible based on evaluations as well as possible losses inherent in
the balances of the loan portfolio. The evaluations take into consideration such
factors as changes in the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans, and current economic
conditions that may affect the borrower's ability to repay. In accordance with
FASB Statements 5 and 114, an allowance is provided for losses that have been
incurred as of the balance sheet date and is based on past events and current
economic conditions, and does not include the effects of expected losses on
specific loans or groups of loans that are related to future events or expected
changes in economic conditions.

                  Impaired Loans. A loan is impaired when, based on current
information and events, management does not expect to collect all amounts due
according to the contractual terms of the loan agreement in the normal course of
business. A loan is also impaired when the loan contract is restructured by
extending the due date of either principal or interest payments or by reducing
the interest rate on the loan. A loan is not impaired during a period of delay
in payment if management expects to collect all amounts due including accrued
interest at the contractual interest rate for the period of the delay.

                                       19

<PAGE>

                  Fair Value of Financial Instruments. Financial Accounting
Standard Board Statement No. 107, "Disclosures About Fair Value of Financial
Instruments", requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it is
practicable to estimate that value. In cases where quoted market prices are not
available, fair values are based on estimates using present value or other
valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument.

                  Derivative Instruments. The Company has adopted FAS 133,
"Accounting for Derivative Instruments and Hedging Activities" as amended by FAS
137 "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement 133", and FAS 138, "Accounting for Certain
Derivative Instruments and certain Hedging Activities". These statements require
the Company to designate all derivative instruments as either fair value hedges
or cash flow hedges and to record the hedge on the balance sheet at its fair
market value. The net gain/loss on instruments classified as cash flow hedges
are reported as changes in other comprehensive income. The net gain/loss on
instruments classified as fair value hedges are reported as increases/decreases
in current year earnings.

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

                  This document (including information incorporated by
reference) contains, and future oral and written statements of the Company and
its management may contain, forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 with respect to the financial
condition, results of operations, plans, objectives, future performance and
business of the Company. Forward-looking statements, which may be based upon
beliefs, expectations and assumptions of the Company's management and on
information currently available to management, are generally identifiable by the
use of words such as "believe," "expect," "anticipate," "plan," "intend,"
"estimate," "may," "will," "would," "could," "should" or other similar
expressions. Additionally, all statements in this document, including
forward-looking statements, speak only as of the date they are made, and the
Company undertakes no obligation to update any statement in light of new
information or future events.

                  A number of factors, many of which are beyond the ability of
the Company to control or predict, could cause actual results to differ
materially from those in its forward-looking statements. These factors include,
among others, the following: (i) the strength of the local and national economy;
(ii) the economic impact of future terrorist attacks and threats or acts of war
and the response of the United States to any such attacks or threats; (iii)
changes in state and federal laws, regulations and governmental policies
concerning the Company's general business; (iv) changes in interest rates and
prepayment rates of the Company's assets; (v) increased competition in the
financial services sector and the inability to attract new customers; (vi)
changes in technology and the ability to develop and maintain secure and
reliable electronic systems; (vii) the loss of key executives or employees;
(viii) changes in consumer spending; (ix) unexpected results of acquisitions;
(x) unexpected outcomes of existing or new litigation involving the Company; and
(xi) changes in accounting policies and practices. These risks and uncertainties
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements. Additional information concerning the
Company and its business, including additional factors that could materially
affect the Company's financial results, is included in the Company's filings
with the Securities and Exchange Commission.

                                       20

<PAGE>

                                   SCHEDULE 1
              DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
                              AVERAGE BALANCE SHEET

<TABLE>
<CAPTION>
                                      FOR THE YEAR ENDED   FOR THE YEAR ENDED
                                      DECEMBER 31, 2002    DECEMBER 31, 2001
                                      ------------------   ------------------
<S>                                   <C>                  <C>
Cash and Due From Banks                 $   2,096,129        $   2,486,233
Federal Funds Sold                            230,959              887,003
Investment Securities (Taxable)             3,027,752            7,757,898
Loans:
   Commercial                              35,246,287           31,238,702
   Commercial Real Estate                  70,416,856           64,175,781
   Residential Real Estate                 30,884,950           24,960,508
   Industrial Revenue Bonds                 1,153,572            1,997,198
   Leases                                     757,498            1,127,594
   Installment and Consumer                   302,830              238,885
                                        -------------        -------------
      Total Loans                         138,761,993          123,738,668
   Less: Allowance for Loan Losses         (2,016,798)          (1,965,799)
                                        -------------        -------------
      Net Loans                           136,745,195          121,772,869
Fixed Assets                                  564,068              161,100
Other Assets                                2,816,959            2,257,797
                                        -------------        -------------
      Total Assets                      $ 145,481,062        $ 135,322,900
                                        =============        =============

Demand Deposits                         $   6,859,043        $   7,264,187
Interest Bearing Deposits
   NOW                                      2,003,988            2,113,772
   Money Market                            42,388,186           56,750,217
   Time Deposits                           73,501,313           55,951,694
                                        -------------        -------------
      Total Deposits                      124,752,530          122,079,870
Federal Funds Purchased                     2,195,301              943,167
Other Borrowings                            7,369,042            2,816,438
Other Liabilities                           1,422,930            1,112,456
                                        -------------        -------------
      Total Liabilities                   135,739,803          126,951,931
Equity Capital                              9,741,259            8,370,969
                                        -------------        -------------
      Total Liabilities and Capital     $ 145,481,062        $ 135,322,900
                                        =============        =============
</TABLE>

                                       21

<PAGE>

                                   SCHEDULE 2
                  SUMMARY OF INTEREST RATES AND INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>
                              YEAR ENDED DECEMBER 31, 2002          YEAR ENDED DECEMBER 31, 2001
                              ----------------------------          ----------------------------
                            AVERAGE         RELATED     YIELD     AVERAGE        RELATED      YIELD
                            BALANCE        INTEREST     RATE      BALANCE        INTEREST     RATE
                          ------------   ------------   -----   ------------   ------------   -----
<S>                       <C>            <C>            <C>     <C>            <C>            <C>
Earning Assets:
Federal Funds Sold        $    230,959   $      3,241   1.40%   $    877,003   $     34,506   3.93%
Taxable Securities           3,027,752         84,863   2.80%      7,757,898        355,300   4.58%
Loans (a)(b)               138,761,993      8,095,931   5.83%    123,738,668      9,666,206   7.81%
                          ------------   ------------   ----    ------------   ------------   ----
Total Earning Assets      $142,020,704   $  8,184,035   5.76%   $132,373,569   $ 10,056,012   7.60%

Interest Bearing
Liabilities:
NOW Accounts              $  2,003,988   $     25,037   1.25%   $  2,113,772   $     75,301   3.56%
Money Market                42,388,186        744,588   1.76%     56,750,217      2,384,418   4.20%
Time Deposits               73,501,313      2,401,339   3.27%     55,951,694      3,081,456   5.51%
Federal Funds Purchased      2,195,301         43,838   2.00%        943,167         39,805   4.22%
Other Borrowings             7,369,042        311,504   4.23%      2,816,438        254,781   9.05%
                          ------------   ------------   ----    ------------   ------------   ----
Total Interest Bearing    $127,457,830   $  3,526,306   2.77%   $118,575,288   $  5,835,761   4.92%
Liabilities

Interest Spread                          $  4,657,729   2.99%                  $  4,220,251   2.68%

Interest Margin                          $  4,657,729   3.28%                  $  4,220,251   3.19%
</TABLE>

(a)  Loan interest income includes net loan fees.

(b)  Nonaccruing loans are included in the computation of average balances.

                                       22

<PAGE>

                                   SCHEDULE 3
                     CHANGE IN INTEREST INCOME AND INTEREST EXPENSE

<TABLE>
<CAPTION>
                                NET AMOUNT     INCREASE (DECREASE) DUE TO:
                                OF CHANGE        VOLUME          RATE
                               -----------    -----------    ------------
<S>                            <C>            <C>            <C>
Increase (Decrease) for 2002

Federal Funds Sold             $   (31,265)   $   (25,419)   $    (5,846)
Taxable Securities                (270,437)      (216,634)       (53,803)
Loans                           (1,570,275)     1,173,591     (2,743,866)
                               -----------    -----------    -----------

     Total Interest Income     $(1,871,977)   $   931,538    $(2,803,515)

NOW Accounts                   $   (50,264)        (3,911)   $   (46,353)
Money Market                    (1,639,830)      (603,435)    (1,036,395)
Time Deposits                     (680,117)       966,519     (1,646,636)
Federal Funds Purchased              4,033         52,845        (48,812)
Other Borrowings                    56,723        411,838       (355,115)
                               -----------    -----------    -----------

     Total Interest Expense    $(2,309,455)   $   823,856    $(3,133,311)
                               -----------    -----------    -----------

Net Change for 2002            $   437,478    $   107,682    $   329,796
                               ===========    ===========    ===========
</TABLE>

         Note:  The application of the rate/volume variance has been allocated
                in full to the rate variance.

                                       23

<PAGE>

                                   SCHEDULE 4
                        MATURITY SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
                                             ONE YEAR   FIVE YEARS
                                 LESS THAN   THROUGH     THROUGH        AFTER
                                  ONE YEAR  FIVE YEARS   10 YEARS     10 YEARS       TOTAL
                                 ---------  ----------   --------    -----------     -----
<S>                              <C>        <C>         <C>          <C>           <C>
DECEMBER 31, 2002

Available for Sale Securities
Corporate Demand Notes            $    -     $     -      $    -     $1,295,000    $1,295,000
Weighted Average Yield                                                     1.75%         1.75%

Total Securities                  $    -     $     -      $    -     $1,295,000    $1,295,000
                                  ======     =======      ======     ==========    ==========
Weighted Average
Total Yield                            -           -           -           1.75%         1.75%
                                  ======     =======      ======     ==========    ==========

DECEMBER 31, 2001

Available for Sale Securities
Corporate Demand Notes            $    -     $     -      $    -     $4,780,000    $4,780,000
Weighted Average Yield                                                     2.34%         2.34%

Total Securities                  $    -     $     -      $    -     $4,780,000    $4,780,000
                                  ======     =======      ======     ==========    ==========
Weighted Average
Total Yield                            -           -           -           2.34%         2.34%
                                  ======     =======      ======     ==========    ==========
</TABLE>

                                       24

<PAGE>

                                   SCHEDULE 5
               SCHEDULE OF INVESTMENTS EXCEEDING 10% OF CAPITAL

                  The outstanding book and market values of the following
taxable variable rate demand notes exceeded 10% of shareholders' equity as of
December 31, 2002 and at December 31, 2001. The domestic, federally insured
financial institution issuing the irrevocable letter of credit securing the note
is also detailed below.

<TABLE>
<CAPTION>
        ISSUER          FINANCIAL INSTITUTION    BOOK VALUE    MARKET VALUE
        ------          ---------------------    -----------   ------------
<S>                     <C>                      <C>           <C>
DECEMBER 31, 2002

Junction Point, LLC         Johnson Bank         $ 1,195,000   $ 1,195,000
                                                 ===========   ===========
DECEMBER 31, 2001

Cal-Chlor Corporation       S&T Bank                 900,000       900,000
Blodgett Capital LLC        Citizens Bank            960,000       960,000
Maroon Capital Company      S&T Bank               1,040,000     1,040,000
                                                 -----------   -----------
                                                 $ 2,900,000   $ 2,900,000
                                                 ===========   ===========
</TABLE>

                                       25

<PAGE>

                                   SCHEDULE 6
                                  LOAN SUMMARY

                  The following table summarizes the distribution of the
Company's loan portfolio expressed in dollar amounts and as a percentage of the
total portfolio as of December 31, 2002 and December 31, 2001.

<TABLE>
<CAPTION>
                                 DECEMBER 31, 2002        DECEMBER 31, 2001
                                 -----------------        -----------------
                                AMOUNT      PERCENT      AMOUNT      PERCENT
                                ------      -------      ------      -------
<S>                          <C>            <C>       <C>            <C>
Commercial                   $ 28,279,734    18.07%   $ 28,224,755    22.52%
Real Estate:
   Construction                 8,661,420     5.53%     17,000,955    13.57%
   Commercial                  77,072,033    49.25%     57,997,188    46.28%
   Agricultural                   394,138     0.25%              -        -
   Residential                 39,905,008    25.50%     19,607,032    15.65%
Industrial Revenue Bonds
   and Municipals               1,114,434     0.71%      1,196,306     0.95%
Leasing Finance Receivable        580,850     0.37%      1,022,014     0.82%
Installment and Consumer          345,010     0.22%        272,611     0.21%
Other                             150,000     0.10%              -        -
                             ------------   ------    ------------   ------

Total Loans                  $156,502,627   100.00%   $125,320,861   100.00%
                             ============   ======    ============   ======
</TABLE>

                                       26

<PAGE>

                                   SCHEDULE 7
              LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES

                  The following schedules summarize the maturities and
sensitivity to changes in interest rates of the Company's loan portfolio at
December 31, 2002 and December 31, 2001.

                                 LOAN MATURITIES

<TABLE>
<CAPTION>
                                             ONE YEAR
                              LESS THAN       THROUGH         AFTER
                               ONE YEAR      FIVE YEARS      5 YEARS         TOTAL
                             ------------   ------------   ------------   ------------
<S>                          <C>            <C>            <C>            <C>
DECEMBER 31, 2002
  Commercial                 $ 16,551,225   $  7,021,954   $  4,706,555   $ 28,279,734
  Real Estate Construction      4,351,095      2,937,471      1,372,854      8,661,420
  Real Estate Commercial        2,226,582     56,603,310      8,242,141     77,072,033
                             ------------   ------------   ------------   ------------
    Total                    $ 33,128,902   $ 66,562,735   $ 14,321,550   $114,013,187
                             ============   ============   ============   ============

DECEMBER 31, 2001
  Commercial                 $ 15,682,120   $  8,702,830   $  3,839,805   $ 28,224,755
  Real Estate Construction      6,846,900      7,934,055      2,220,000     17,000,955
  Real Estate Commercial        4,088,929     43,907,329     10,000,930     57,997,188
                             ------------   ------------   ------------   ------------
    Total                    $ 26,617,949   $ 60,544,214   $ 16,060,735   $103,222,898
                             ============   ============   ============   ============
</TABLE>

                    AMOUNTS WITH MATURITIES EXCEEDING 1 YEAR

<TABLE>
<CAPTION>
                                           FLOATING OR
                            PREDETERMINED  ADJUSTABLE
                                RATES         RATE          TOTAL
                            -------------  -----------   -----------
<S>                         <C>            <C>           <C>
DECEMBER 31, 2002
  Commercial                 $ 1,404,482   $10,324,027   $11,728,509
  Real Estate Construction     1,101,044     3,209,281     4,310,325
  Real Estate Commercial      22,835,096    42,010,355    64,845,451
                             -----------   -----------   -----------
    Total                    $25,340,622   $55,543,663   $80,884,285
                             ===========   ===========   ===========

DECEMBER 31, 2001
  Commercial                 $ 2,954,309   $ 9,588,326   $12,542,635
  Real Estate Construction     3,472,090     6,681,965    10,154,055
  Real Estate Commercial      26,188,637    27,719,622    53,908,259
                             -----------   -----------   -----------
    Total                    $32,615,036   $43,989,913   $76,604,949
                             ===========   ===========   ===========
</TABLE>

                                       27

<PAGE>

                                   SCHEDULE 8
                    ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
                                     2002           2001
                                  -----------    -----------
<S>                               <C>            <C>
Beginning Loan Loss Reserve       $ 1,884,331    $ 1,808,813

CHARGE-OFFS:
      Commercial                     (370,500)      (771,717)
      Real Estate:
         Construction                       0              0
         Commercial                         0              0
         Residential                        0              0
      Installment & Consumer                0              0

RECOVERIES:
      Commercial                          708              0
      Real Estate:
         Construction                       0              0
         Commercial                         0              0
         Residential                        0              0
      Installment & Consumer                0              0
                                  -----------    -----------
Net Charge-offs/Recoveries           (369,792)      (771,717)

Provision charged to operations       471,537        847,235
                                  -----------    -----------
Balance at end of period          $ 1,986,076    $ 1,884,331
                                  ===========    ===========
</TABLE>

                                       28

<PAGE>

                                   SCHEDULE 9
                           SUMMARY OF AVERAGE DEPOSITS

<TABLE>
<CAPTION>
                                          YEAR ENDED             YEAR ENDED
                                          ----------             ----------
                                       DECEMBER 31, 2002      DECEMBER 31, 2001
                                       -----------------      -----------------
                                       AVERAGE      RATE      AVERAGE      RATE
                                       BALANCE      PAID      BALANCE      PAID
                                     ------------   ----    ------------   ----
<S>                                  <C>            <C>     <C>            <C>
DEPOSITS IN DOMESTIC BANK OFFICES:

Non-Interest Bearing Demand          $  6,859,043      -    $  7,264,187      -
NOW Accounts                            2,003,988   1.25%      2,113,772   3.56%
Money Market Accounts                  42,388,186   1.76%     56,750,217   4.20%
Time Deposits                          73,501,313   3.27%     55,951,694   5.51%
                                     ------------   ----    ------------   ----
Total Deposits                       $124,752,530   2.54%   $122,079,870   4.54%
                                     ============   ====    ============   ====
</TABLE>

                                       29

<PAGE>

ITEM 7.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          Index to Financial Statements

<TABLE>
<S>                                                                   <C>
Independent Auditor's Report .......................................  31

Consolidated Balance Sheet (December 31, 2002 and 2001) ............  32

Consolidated Statements of Income
         (For the years ended December 31, 2002, 2001 and 2000).....  33

Consolidated Statements of Changes in Stockholders' Equity
         (For the years ended December 31, 2002, 2001 and 2000).....  34

Consolidated Statements of Cash Flows
         (For the years ended December 31, 2002, 2001 and 2000).....  35

Notes ..............................................................  36

</TABLE>

                                       30

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

Board of Directors
InvestorsBancorp, Inc. and Subsidiaries
Waukesha, Wisconsin

We have audited the accompanying consolidated balance sheets of
InvestorsBancorp, Inc. and Subsidiaries as of December 31, 2002 and 2001 and the
related consolidated statements of income, changes in stockholders' equity, and
cash flows for the years ended December 31, 2002, 2001 and 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of InvestorsBancorp,
Inc. and Subsidiaries as of December 31, 2002 and 2001, and the results of their
operations and their cash flows for the years ended December 31, 2002, 2001 and
2000, in conformity with accounting principles generally accepted in the United
States of America.

                                              VIRCHOW, KRAUSE & COMPANY, LLP

                                              /s/ VIRCHOW, KRAUSE & COMPANY, LLP

Milwaukee, Wisconsin
January 30, 2003

                                       31

<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                                          2002             2001
                                                                      -------------    -------------
<S>                                                                   <C>              <C>
                                     ASSETS
   Cash and due from banks                                            $   2,819,527    $   2,004,926
   Available for sale securities - stated at fair value                   1,983,567        5,347,264
   Loans, less allowance for loan losses of $1,986,076 and
       $1,884,331 in 2002 and 2001, respectively                        154,516,551      123,436,530
   Loans held for sale                                                    1,188,075          284,000
   Premises and equipment, net                                            2,527,165          182,360
   Cash surrender value of life insurance                                 1,134,908          632,349
   Accrued interest receivable and other assets                           3,570,156        1,756,340
                                                                      -------------    -------------

          TOTAL ASSETS                                                $ 167,739,949    $ 133,643,769
                                                                      =============    =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
   Deposits
       Demand                                                         $   8,498,777    $   6,239,453
       Savings and NOW                                                   38,249,871       55,119,150
       Other time                                                        89,192,094       58,663,131
                                                                      -------------    -------------
          Total Deposits                                                135,940,742      120,021,734
   Federal funds purchased                                                1,475,000          815,000
   Other borrowings                                                      13,600,000        3,000,000
   Guaranteed preferred beneficial interest in the company's junior
       subordinated debt                                                  5,000,000                -
   Accrued interest payable and other liabilities                         1,367,413          915,620
                                                                      -------------    -------------
       Total Liabilities                                                157,383,155      124,752,354
                                                                      -------------    -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Preferred stock, $.01 par value, 1,000,000 shares authorized,
       none issued                                                                -                -
   Common stock, $.01 par value, 9,000,000 shares authorized,
       1,050,000 shares issued                                               10,500           10,500
   Surplus                                                                7,316,900        7,316,900
   Retained earnings                                                      4,047,189        2,374,996
   Treasury stock, 126,235 and 110,000 shares in 2002 and 2001,
       respectively, at cost                                             (1,017,795)        (810,981)
                                                                      -------------    -------------
       Total Stockholders' Equity                                        10,356,794        8,891,415
                                                                      -------------    -------------

          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $ 167,739,949    $ 133,643,769
                                                                      =============    =============
</TABLE>

           See accompanying notes to consolidated financial statements

                                       32

<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                  Years Ended December 31, 2002, 2001 and 2000

<TABLE>
<CAPTION>
                                                                            2002              2001              2000
                                                                      ----------------  ----------------  ----------------
<S>                                                                   <C>               <C>               <C>
INTEREST INCOME
   Interest and fees on loans                                         $      8,095,931  $      9,666,206  $      8,663,299
   Interest on investment securities - taxable                                  84,863           355,300           547,503
   Interest on federal funds sold                                                3,241            34,506           103,483
                                                                      ----------------  ----------------  ----------------
       Total Interest Income                                                 8,184,035        10,056,012         9,314,285
                                                                      ----------------  ----------------  ----------------

INTEREST EXPENSE
   Interest on deposits                                                      3,170,964         5,541,175         5,711,680
   Interest on federal funds purchased                                          43,838            39,805            45,134
   Interest on other borrowings                                                165,857           254,781           186,849
   Interest on guaranteed preferred beneficial interest in the
       company's junior subordinated debt                                      145,647                 -                 -
                                                                      ----------------  ----------------  ----------------
       Total Interest Expense                                                3,526,306         5,835,761         5,943,663
                                                                      ----------------  ----------------  ----------------

Net interest income before provision for loan losses                         4,657,729         4,220,251         3,370,622
   Provision for loan losses                                                   471,537           847,235         1,038,040
                                                                      ----------------  ----------------  ----------------
Net interest income after provision for loan losses                          4,186,192         3,373,016         2,332,582
                                                                      ----------------  ----------------  ----------------

NONINTEREST INCOME
   Service fees                                                                178,299           147,709           119,330
   Management service fees                                                     985,720           991,511         1,012,023
   Gain on sale of loans                                                       625,508           657,349           416,989
   Increase in cash surrender value of life insurance                           58,973            24,224                 -
   Other income                                                                 33,334             7,670             8,478
                                                                      ----------------  ----------------  ----------------
       Total Noninterest Income                                              1,881,834         1,828,463         1,556,820
                                                                      ----------------  ----------------  ----------------

NONINTEREST EXPENSES
   Salaries                                                                  1,837,950         1,734,741         1,786,222
   Employee benefits                                                           549,895           482,643           477,796
   Occupancy                                                                   105,584           118,214           110,723
   Furniture and equipment expenses                                            140,175           119,635           107,364
   Data processing services                                                    169,101           154,273           116,845
   Other expenses                                                              711,427           451,063           455,775
                                                                      ----------------  ----------------  ----------------
       Total Noninterest Expenses                                            3,514,132         3,060,569         3,054,725
                                                                      ----------------  ----------------  ----------------
Income before income taxes                                                   2,553,894         2,140,910           834,677
   Less: Applicable income taxes                                               881,701           667,862           272,229
                                                                      ----------------  ----------------  ----------------
       NET INCOME                                                     $      1,672,193  $      1,473,048  $        562,448
                                                                      ================  ================  ================

         Basic earnings per share                                     $           1.79  $           1.53  $           0.54
                                                                      ================  ================  ================

         Diluted earnings per share                                   $           1.70  $           1.51  $           0.54
                                                                      ================  ================  ================

         Weighted average shares outstanding                                   936,483           964,410         1,042,538
                                                                      ================  ================  ================
</TABLE>

           See accompanying notes to consolidated financial statements

                                       33

<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                  Years Ended December 31, 2002, 2001 and 2000

<TABLE>
<CAPTION>
                                                           COMMON                     RETAINED     TREASURY
                                                           STOCK        SURPLUS       EARNINGS       STOCK           TOTAL
                                                        -----------  ------------  -------------  -----------   ----------------
<S>                                                     <C>          <C>           <C>            <C>           <C>
BALANCES - December 31, 1999                            $    10,500  $  7,316,900  $     339,500  $         -   $     7,666,900
       Net income - 2000                                          -             -        562,448            -           562,448
   Purchased 37,351 shares of treasury stock                      -             -              -     (263,163)         (263,163)
                                                        -----------  ------------  -------------  -----------   ---------------

BALANCES - December 31, 2000                                 10,500     7,316,900        901,948     (263,163)        7,966,185
       Net income - 2001                                          -             -      1,473,048            -         1,473,048
   Purchase of 72,649 shares of treasury stock                    -             -              -     (547,818)         (547,818)
                                                        -----------  ------------  -------------  -----------   ---------------

BALANCES - December 31, 2001                                 10,500     7,316,900      2,374,996     (810,981)        8,891,415
       Net income - 2002                                                               1,672,193                      1,672,193
   Purchase of 16,235 shares of treasury stock                    -             -              -     (206,814)         (206,814)
                                                        -----------  ------------  -------------  -----------   ---------------

BALANCES - December 31, 2002                            $    10,500  $  7,316,900  $   4,047,189  $(1,017,795)  $    10,356,794
                                                        ===========  ============  =============  ===========   ===============
</TABLE>

           See accompanying notes to consolidated financial statements

                                       34

<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                  Years Ended December 31, 2002, 2001 and 2000

<TABLE>
<CAPTION>
                                                                    2002            2001            2000
                                                                ------------    ------------    ------------
<S>                                                             <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net Income                                                  $  1,672,193    $  1,473,048    $    562,448
    Adjustments to reconcile net income to net cash flows
      from operating activities
        Depreciation                                                  85,034          60,286          38,105
        Gain on sale of loans                                       (625,508)       (657,349)       (416,989)
        Gain on disposal of premises and equipment                         -               -          (2,446)
        Provision for loan losses                                    471,537         847,235       1,038,040
        Provision (benefit) for deferred taxes                      (128,733)       (147,816)       (408,217)
        Net change in
           Loans due to origination and sale of
              loans held for sale                                   (278,567)        473,349         883,089
           Accrued interest receivable and other assets             (988,642)            (76)       (604,092)
           Accrued interest payable and other liabilities            451,793        (109,198)        312,509
                                                                ------------    ------------    ------------
        Net Cash Flows from Operating Activities                     659,107       1,939,479       1,402,447
                                                                ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of Federal Home Loan Bank stock                        (680,000)              -               -
    Activity in available for sale securities
        Maturities, prepayments, sales and calls                   6,363,697      14,778,930      10,835,000
        Purchases                                                 (3,000,000)     (5,735,000)    (18,966,194)
    Net increase in loans                                        (31,551,558)     (5,505,038)    (43,510,220)
    Purchase of life insurance policies                             (519,000)              -        (635,330)
    Proceeds from sales of premises and equipment                          -               -           4,500
    Additions to premises and equipment                           (2,429,839)       (155,107)        (34,220)
                                                                ------------    ------------    ------------
        Net Cash Flows from Investing Activities                 (31,816,700)      3,383,785     (52,306,464)
                                                                ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net increase (decrease) in deposits                           15,919,008      (8,789,159)     52,014,635
    Net change in federal funds purchased                            660,000         815,000        (925,000)
    Proceeds from other borrowings                                13,600,000         500,000       2,500,000
    Repayment of other borrowings                                 (3,000,000)              -               -
    Proceeds from guaranteed preferred beneficial interest in
      the company's junior subordinated debt                       5,000,000               -               -
    Purchase of treasury stock                                      (206,814)       (547,818)       (263,163)
                                                                ------------    ------------    ------------
        Net Cash Flows from Financing Activities                  31,972,194      (8,021,977)     53,326,472
                                                                ------------    ------------    ------------

           NET CHANGE IN CASH AND CASH EQUIVALENTS                   814,601      (2,698,713)      2,422,455

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR                      2,004,926       4,703,639       2,281,184
                                                                ------------    ------------    ------------

    CASH AND CASH EQUIVALENTS - END OF YEAR                     $  2,819,527    $  2,004,926    $  4,703,639
                                                                ============    ============    ============

SUPPLEMENTAL CASH FLOW DISCLOSURES
    Cash paid for interest                                      $  3,442,893    $  6,276,249    $  5,400,054
    Cash paid for income taxes                                       646,500       1,143,113         949,982
</TABLE>

           See accompanying notes to consolidated financial statements

                                       35

<PAGE>


                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Consolidation

The consolidated financial statements of InvestorsBancorp, Inc. and Subsidiaries
(the "Company") include the accounts of its wholly owned subsidiaries,
InvestorsBancorp Capital Trust I and InvestorsBank (the "subsidiary Bank").
InvestorsBank includes the accounts of its wholly owned subsidiary, Investors
Business Credit, Inc. The consolidated financial statements have been prepared
in conformity with accounting principles generally accepted in the United States
of America and conform to general practices within the banking industry. All
significant intercompany accounts and transactions have been eliminated in the
consolidated financial statements.

    Nature of Banking Activities

The consolidated income of the Company is principally from the income of its
wholly owned subsidiary, the subsidiary Bank. The subsidiary Bank grants
commercial, residential and consumer loans to and accepts deposits from
customers primarily in southeastern Wisconsin. The subsidiary Bank is subject to
competition from other financial institutions and nonfinancial institutions
providing financial products. Additionally, the Company and the subsidiary Bank
are subject to the regulations of certain regulatory agencies and undergo
periodic examination by those regulatory agencies.

    Use of Estimates

In preparing consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the balance sheet and reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates. Material estimates that are particularly
susceptible to significant change in the near term relate to the determination
of the allowance for loan losses, deferred tax assets, and loan servicing
rights.

    Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash and
balances due from banks and federal funds sold and securities purchased under
agreements to resell, all of which mature within ninety days.

The subsidiary Bank maintains amounts due from banks which, at times, may exceed
federally insured limits. The subsidiary Bank has not experienced any losses in
such accounts.

    Interest Bearing Deposits in Banks

Interest bearing deposits in banks mature within one year and are carried at
cost, which approximates fair value.

    Available for Sale Securities

Securities classified as available for sale are those debt securities that the
subsidiary Bank intends to hold for an indefinite period of time, but not
necessarily to maturity. Any decision to sell a security classified as available
for sale would be based on various factors, including significant movements in
interest rates, changes in the maturity mix of the subsidiary Bank's assets and
liabilities, liquidity needs, regulatory capital consideration, and other
similar factors. Securities classified as available for sale are carried at fair
value. Unrealized gains or losses are reported as increases or decreases in
other comprehensive income, net of the related deferred tax effect. Realized
gains or losses, determined on the basis of the cost of specific securities
sold, are included in earnings.

                                       36
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

    Loans

Loans that management has the intent and ability to hold for the foreseeable
future or until maturity or payoff are reported at the amount of unpaid
principal, reduced by the allowance for loan losses and any deferred fees or
costs in originating loans. Interest income is accrued on the unpaid principal
balance. The accrual of interest income on impaired loans is discontinued when,
in the opinion of management, there is reasonable doubt as to the borrower's
ability to meet payment of interest or principal when they become due. When
interest accrual is discontinued, all unpaid accrued interest is reversed. Cash
collections on impaired loans are credited to the loan receivable balance and no
interest income is recognized on those loans until the principal balance is
current. Loans are returned to accrual status when the principal and interest
amounts contractually due are brought current and future payments are reasonably
assured.

    Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at
the lower of cost or estimated market value in the aggregate. Net unrealized
losses are recognized through a valuation allowance by charges to income. All
sales are made without recourse. The subsidiary Bank also services loans that
have been sold with servicing retained by the subsidiary Bank. Such loans are
not included in the accompanying consolidated balance sheets.

    Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have
occurred through a provision for loan losses charged to earnings. Loan losses
are charged against the allowance when management believes the uncollectibility
of a loan balance is confirmed. Subsequent recoveries, if any, are credited to
the allowance. The allowance for loan losses is adequate to cover probable
credit losses relating to specifically identified loans, as well as probable
credit losses inherent in the balance of the loan portfolio. The allowance is
provided for losses that have been incurred as of the balance sheet date and is
based on past events and current economic conditions, and does not include the
effects of expected losses on specific loans or groups of loans that are related
to future events or expected changes in economic conditions. While management
uses the best information available to make its evaluation, future adjustments
to the allowance may be necessary if there are significant changes in economic
conditions.

A loan is considered impaired when, based on current information and events, it
is probable that the subsidiary Bank will be unable to collect the scheduled
payments of principal or interest when due according to the contractual terms of
the loan agreement. Factors considered by management in determining impairment
include payment status, collateral value, and the probability of collecting
scheduled principal and interest payments when due. Impairment is measured on a
loan by loan basis for commercial and construction loans by either the present
value of expected future cash flows discounted at the loan's effective interest
rate, the loan's obtainable market price, or the fair value of the collateral if
the loan is collateral dependent.

In addition, various regulatory agencies periodically review the allowance for
loan losses. These agencies may require the subsidiary Bank to make additions to
the allowance for loan losses based on their judgments of collectibility based
on information available to them at the time of their examination.

                                       37
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

    Servicing Rights

Servicing assets are recognized as separate assets when rights are acquired
through purchase or through the sale of financial assets. Capitalized servicing
rights are valued at estimated fair market value, reported in other assets, and
amortized into noninterest income in proportion to, and over the period of, the
estimated future net servicing income of the underlying financial assets. Fair
value is determined using prices for similar assets with similar
characteristics. Management periodically evaluates the carrying value and
remaining amortization periods of servicing rights for impairment. The
evaluation takes into consideration certain risk characteristics including loan
type, note rate, prepayment trends, and external market factors. Impairment is
recognized through a valuation allowance to the extent that fair value is less
than the capitalized amount.

    Premises and Equipment

Depreciable assets are stated at cost less accumulated depreciation. Provisions
for depreciation are computed on straight-line and accelerated methods over the
estimated useful lives of the assets, which range from 3 to 7 years for
furniture and equipment and 40 years for buildings.

    Profit-Sharing Plan

The Company has established a trusteed contributory 401(k) profit-sharing plan
for qualified employees. Contributions to the plan are made in accordance with
specified formulas or at the discretion of the Board of Directors of the
Company. The Company's policy is to fund contributions as accrued.

    Stock-Based Compensation Plan

At December 31, 2002, the Company has a stock-based employee compensation plan
which is described more fully in Note 12. The Company accounts for this plan
under the recognition and measurement principles of APB Opinion No. 25,
Accounting for Stock Issued to Employees, and related Interpretations. No
stock-based employee compensation cost is reflected in net income, as all
options granted under this plan had an exercise price equal to the approximate
market value of the underlying common stock on the date of grant. The following
table illustrates, in accordance with SFAS No. 148 Accounting for Stock-Based
Compensation - Transition and Disclosure, the effect on net income and earnings
per share if the Company had applied the fair value recognition provisions of
SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation.

<TABLE>
<CAPTION>
                                                    2002          2001          2000
                                                -----------    -----------   ---------
<S>                                             <C>            <C>           <C>
Net income - as reported                        $ 1,672,193    $ 1,473,048   $ 562,448
Deduct: Total stock-based employee
  compensation expense determined under a
  fair value based method for all awards
  granted, net of related tax effects                10,707          3,137       9,897
                                                -----------    -----------   ---------
     Pro forma net income                       $ 1,661,486    $ 1,469,911   $ 552,551
                                                ===========    ===========   =========
Basic earnings per share - as reported          $      1.79    $      1.53   $    0.54
     Pro forma basic earnings per share         $      1.77    $      1.52   $    0.53
Diluted earnings per share - as reported        $      1.70    $      1.51   $    0.54
     Pro forma diluted earnings per share       $      1.69    $      1.51   $    0.53
</TABLE>

                                       38
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

    Income Taxes

The Company files a consolidated federal income tax return and individual state
income tax returns. Accordingly, amounts equal to tax benefits of those
companies having taxable federal losses or credits are reimbursed by the other
companies that incur federal tax liabilities.

Amounts provided for income tax expense are based on income reported for
financial statement purposes and do not necessarily represent amounts currently
payable under tax laws. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes. The differences relate principally to the reserve
for loan losses, nonaccrual loan income, deferred compensation and fixed assets.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.

    Off-Balance Sheet Financial Instruments

In the ordinary course of business the subsidiary Bank has entered into
off-balance-sheet financial instruments consisting of commitments to extend
credit, commitments under credit card arrangements, commercial letters of credit
and standby letters of credit. Such financial instruments are recorded in the
financial statements when they are funded or related fees are incurred or
received.

    Derivative Financial Instruments

As part of the Company's asset/liability management, the Company uses interest
rate swap agreements to hedge various exposures or to modify interest rate
characteristics of various balance sheet accounts. Derivatives that are used as
part of the asset/liability management process are linked to specific assets or
liabilities and have high correlation between the contract and the underlying
item being hedged, both at inception and throughout the hedge period. The swap
agreements are accounted for on the "accrual" method. Under that method, the
interest component associated with the contract is recognized over the life of
the contract in net interest income.

All derivative instruments are designated as either fair value hedges or cash
flow hedges and recorded on the balance sheet at fair market value. The net
gain/loss on instruments classified as cash flow hedges are reported as changes
in other comprehensive income. The net gain/loss on instruments classified as
fair value hedges are reported as increases/decreases in current year earnings.

Contracts that do not meet the hedging criteria are classified as trading
activities and are recorded at fair value with changes in fair value recorded in
earnings.

    Earnings Per Share

Earnings per share are computed based upon the weighted average number of common
shares outstanding during each year. In the computation of diluted earnings per
share, all dilutive stock options are assumed to be exercised at the beginning
of each year and the proceeds are used to purchase shares of the Company's
common stock at the average market price during the year.

                                       39
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

    Fair Value of Financial Instruments

Financial Accounting Standards Board Statement No. 107, "Disclosures About Fair
Value of Financial Instruments", requires disclosure of fair value information
about financial instruments, whether or not recognized in the balance sheet, for
which it is practicable to estimate that value. In cases where quoted market
prices are not available, fair values are based on estimates using present value
or other valuation techniques. Those techniques are significantly affected by
the assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument. Statement No. 107 excludes certain
financial instruments from its disclosure requirements. Accordingly, the
aggregate fair value amounts presented do not represent the underlying value of
the Company.

The following methods and assumptions were used by the Company in estimating the
fair value of its financial instruments:

         CARRYING AMOUNTS APPROXIMATE FAIR VALUES FOR THE FOLLOWING INSTRUMENTS

                  Cash and cash equivalents
                  Available for sale securities
                  Non marketable equity securities
                  Variable rate loans that reprice frequently where no
                     significant change in credit risk has occurred
                  Accrued interest receivable
                  Demand deposits
                  Variable rate money market accounts
                  Variable rate certificates of deposit
                  Accrued interest payable

         DISCOUNTED CASH FLOWS

         Using interest rates currently being offered on instruments with
         similar terms and with similar credit quality:

                  All loans except variable rate loans described above
                  Fixed rate certificates of deposit
                  Other borrowings
                  Interest rate swaps
                  Guaranteed preferred beneficial interest in the Company's
                     junior subordinated debt

         QUOTED FEES CURRENTLY BEING CHARGED FOR SIMILAR INSTRUMENTS

         Taking into account the remaining terms of the agreements and the
         counterparties' credit standing:

            Off-balance-sheet instruments

                  Guarantees
                  Letters of credit
                  Lending commitments

Since the majority of the Company's off-balance-sheet instruments consist of
nonfee-producing, variable rate commitments, the Company had determined these do
not have a distinguishable fair value.

                                       40
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

    Recent Statement of Financial Accounting Standards (SFAS) Pronouncements

SFAS No. 143, Accounting for Asset Retirement Obligations, addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. The
statement requires that the fair value of a liability for an asset retirement
obligation be recognized in the period it is incurred if a reasonable estimate
of fair value can be made. The associated retirement costs are capitalized as a
component of the carrying amount of the long-lived asset and allocated to
expense over the useful life of the asset. The statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002.
Management does not believe the adoption of this statement will have a material
impact on the consolidated financial statements.

SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
establishes accounting and reporting standards for the impairment or disposal of
long-lived assets. This statement supercedes SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed. SFAS
No. 144 provides one accounting model to be used for long-lived assets to be
disposed of by sale, whether previously held for use or newly acquired and
broadens the presentation of discontinued operations to include more disposal
transactions. The provisions of SFAS No. 144 are effective for financial
statements issued for fiscal years beginning after December 15, 2001. The
Company adopted this statement as of January 1, 2002 and the implementation of
this standard did not have a material impact on the consolidated financial
statements.

SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections, rescinds SFAS No. 4, Reporting
Gains and Losses from Extinguishment of Debt, and amends SFAS No. 64,
Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. It also
rescinds SFAS No. 44, Accounting for Intangible Assets of Motor Carriers. It
further amends SFAS No. 13, Accounting for Leases, to eliminate an inconsistency
between the required accounting for sale-leaseback transactions and the required
accounting for certain lease modifications that have economic effects that are
similar to sale-leaseback transactions and amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions. Most provisions of this
statement are effective for financial statements issued for fiscal years
beginning after May 15, 2002. Adoption of this statement is not expected to have
a material impact on the consolidated financial statements.

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities,
addresses financial accounting and reporting for costs associated with exit or
disposal activities and requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is incurred. The
provisions of this statement are effective for exit or disposal activities that
are initiated after December 31, 2002. Adoption of this statement is not
expected to have a material impact on the consolidated financial statements.

SFAS No. 147, Acquisitions of Certain Financial Institutions, removes
acquisitions of financial institutions from the scope of both SFAS No. 72,
Accounting for Certain Acquisitions of Banking or Thrift Institutions, and
requires that those transactions be accounted for in accordance with SFAS No.
141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible
Assets. Thus, the requirement under SFAS No. 72 to recognize (and subsequently
amortize) any excess of fair value of liabilities assumed over the fair value of
tangible and identifiable intangible assets acquired as an unidentifiable
intangible asset no longer applies. The provisions of this statement are
effective on October 1, 2002, with earlier application permitted. Adoption of
this statement did not have a material impact on the consolidated financial
statements.

    Reclassification

Certain 2001 and 2000 amounts have been reclassified to conform with the 2002
presentation. The reclassifications have no effect on reported amounts of net
income or equity.

                                       41
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 2 - CASH AND DUE FROM BANKS

The Company's subsidiary Bank is required to maintain vault cash and reserve
balances with Federal Reserve Banks based upon a percentage of deposits. These
requirements approximated $130,000 and $101,000 at December 31, 2002 and 2001,
respectively.

NOTE 3 - AVAILABLE FOR SALE SECURITIES

Amortized costs and fair values of available for sale securities as of December
31, 2002 and 2001 are summarized as follows:

<TABLE>
<CAPTION>
                                                             2002
                          --------------------------------------------------------------------------
                                             Gross Unrealized   Gross Unrealized
                            Amortized Cost         Gains              Losses           Fair Value
                          ----------------   ----------------   ----------------    ----------------
<S>                       <C>                <C>                <C>                 <C>
Corporate bonds           $      1,295,000   $             -     $             -    $      1,295,000
Mutual funds                       688,567                 -                   -             688,567
                          ----------------   ---------------     ---------------    ----------------
        Totals            $      1,983,567   $             -     $             -    $      1,983,567
                          ================   ===============     ===============    ================
</TABLE>

<TABLE>
<CAPTION>
                                                             2001
                          --------------------------------------------------------------------------
                                             Gross Unrealized   Gross Unrealized
                            Amortized Cost        Gains              Losses            Fair Value
                          ----------------   ----------------   ----------------    ----------------
<S>                       <C>                <C>                <C>                 <C>
Corporate bonds           $      4,780,000   $             -    $              -    $      4,780,000
Mutual funds                       567,264                 -                   -             567,264
                          ----------------   ---------------    ----------------    ----------------
        Totals            $      5,347,264   $             -    $              -    $      5,347,264
                          ================   ===============    ================    ================
</TABLE>

The amortized cost and fair value of available for sale securities as of
December 31, 2002, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities in mutual funds since the anticipated
maturities are not readily determinable. Therefore, these securities are not
included in the maturity categories in the following maturity summary listed
below:

<TABLE>
<CAPTION>
                                              2002
                              -----------------------------------
                               Amortized Cost       Fair Value
                              ----------------   ----------------
<S>                           <C>                <C>
Due in one year or less       $      1,295,000   $      1,295,000
                              ================   ================
</TABLE>

                                       42
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 4 - LOANS

Major classification of loans are as follows at December 31:

<TABLE>
<CAPTION>
                                                2002               2001
                                         ----------------   ----------------
<S>                                      <C>                <C>
Commercial                               $     28,279,734   $     28,224,755
Real estate
     Construction                               8,661,420         17,000,955
     Commercial                                77,072,033         57,997,188
     Agricultural                                 394,138                  -
     Residential                               39,905,008         19,607,032
Installment and consumer                          345,010            272,611
Municipal loans                                 1,114,434          1,196,306
Other loans                                       730,850          1,022,014
                                         ----------------   ----------------
                                              156,502,627        125,320,861
Less: Allowance for loan losses                (1,986,076)        (1,884,331)
                                         ----------------   ----------------
     Net Loans                           $    154,516,551   $    123,436,530
                                         ================   ================
</TABLE>

Impaired loans of $2,093,434 and $1,937,882 at December 31, 2002 and 2001,
respectively, have been recognized in the consolidated financial statements. The
average recorded amount of impaired loans during 2002 and 2001 was $1,542,590
and $1,665,779, respectively. The total allowance for loan losses related to
these loans was $244,354 and $256,610 at December 31, 2002 and 2001,
respectively. Interest income on impaired loans of $49,201, $165,374, and
$27,279 was recognized for cash payments received in 2002, 2001 and 2000,
respectively.

Certain directors and executive officers of the Company, and their related
interests, had loans outstanding in the aggregate amounts of $5,458,966 and
$511,379 at December 31, 2002 and 2001, respectively. During 2002, $7,835,379 of
new loans were made and repayments totaled $2,887,792. These loans were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the same time for comparable transactions with other persons and
did not involve more than normal risks of collectibility or present other
unfavorable features.

NOTE 5 -  LOAN SERVICING

The unpaid principal balance of loans serviced for others, which are not
included in the consolidated financial statements, was $108,606,523 and
$115,138,199 at December 31, 2002 and 2001, respectively. A portion of these
loans, with balances of $85,186,577 and $108,704,327 at December 31, 2002 and
2001, respectively, are loans serviced for The Middleton Doll Company, a related
company. Revenue relating to loan servicing for The Middleton Doll Company was
$279,459, $311,031 and $328,569 for the years ended December 31, 2002, 2001 and
2000, respectively and is reported in management service fees.

                                       43
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 6 -  ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses reflected in the accompanying consolidated
financial statements represents the allowance available to absorb loan losses.
An analysis of changes in the allowance is presented in the following tabulation
as of December 31:

<TABLE>
<CAPTION>
                                               2002                2001               2000
                                         ----------------    ----------------   ----------------
<S>                                      <C>                 <C>                <C>
BALANCE - Beginning of Year              $      1,884,331    $      1,808,813   $        770,773
   Charge-offs                                   (370,500)           (771,717)                -
   Recoveries                                         708                   -                 -
   Provision charged to operations                471,537             847,235          1,038,040
                                         ----------------    ----------------   ----------------
BALANCE - End of Year                    $      1,986,076    $      1,884,331   $      1,808,813
                                         ================    ================   ================
</TABLE>

NOTE 7 - PREMISES AND EQUIPMENT

Premises and equipment are stated at cost less accumulated depreciation at
December 31 and are summarized as follows:

<TABLE>
<CAPTION>
                                               2002               2001
                                         ----------------   ----------------
<S>                                      <C>                <C>
Land                                     $        557,000   $              -
Building                                        1,843,011                  -
Furniture and equipment                           382,573            352,745
                                         ----------------   ----------------
    Total                                       2,782,584            352,745
Less: Accumulated depreciation                   (255,419)          (170,385)
                                         ----------------   ----------------
    Net Premises and Equipment           $      2,527,165   $        182,360
                                         ================   ================
</TABLE>

Depreciation expense amounted to $85,034, $60,286, and $38,105 in 2002, 2001 and
2000, respectively.

NOTE 8 - ACCRUED INTEREST RECEIVABLE AND OTHER ASSETS

A summary of accrued interest receivable and other assets at December 31 is as
follows:

<TABLE>
<CAPTION>
                                                     2002         2001
                                                  ----------   ----------
<S>                                               <C>          <C>
Accrued interest receivable                          686,560      603,262
Federal Home Loan Bank stock                         680,000            -
Fair market value of interest rate swaps             658,024        8,052
Deferred tax assets                                  978,631      849,898
Prepaids expenses and other assets                   566,941      295,128
                                                  ----------   ----------

                                                  $3,570,156   $1,756,340
                                                  ==========   ==========
</TABLE>

                                       44
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 9 - DEPOSITS

The aggregate amount of time deposits, each with a minimum denomination of
$100,000, was $65,510,641 and $33,854,061 at December 31, 2002 and 2001,
respectively.

At December 31, 2002, the scheduled maturities of time deposits are as follows:

<TABLE>
<S>               <C>
2003              $     31,912,173
2004                     4,473,779
2005                     4,629,168
2006                    15,476,347
2007                    13,700,627
Thereafter              19,000,000
                  ----------------
                  $     89,192,094
                  ================
</TABLE>

NOTE 10 - OTHER BORROWINGS

Other borrowings consist of the following at December 31:

<TABLE>
<CAPTION>
                                                 2002               2001
                                           ----------------   ----------------
<S>                                        <C>                <C>
Federal Home Loan Bank advances            $     13,600,000   $              -
Borrowings from affiliated companies                      -          3,000,000
                                           ----------------   ----------------
                                           $     13,600,000   $      3,000,000
                                           ================   ================
</TABLE>

In 2002, the subsidiary Bank entered into a master contract agreement with the
Federal Home Loan Bank (FHLB) which provides for borrowing up to the maximum of
60% of the carrying value of the Bank's first lien 1-4 family real estate loans,
approximately $26,603,000, at December 31, 2002. FHLB provides both fixed and
floating rate advances. Floating rates are tied to short-term market rates of
interest, such as LIBOR, Federal funds or Treasury Bill rates. Fixed rate
advances are priced in reference to market rates of interest at the time of the
advance, namely the rates that FHLB pays to borrowers at various maturities.
Advances with call provisions permit the FHLB to request payment beginning on
the call date and quarterly thereafter. Prepayments may be subject to penalties.

Various advances were obtained with total outstanding balances as stated above,
with applicable interest rates ranging from 1.67% to 2.13%. Interest is payable
monthly with principal payment due at maturity. The advances are collaterized by
a security agreement pledging a portion of the subsidiary Bank's real estate
mortgages with a carrying value of $22,666,700 at December 31, 2002.

At December 31, 2002, the future principal payments of the $13,600,000 of FHLB
advances are due in 2003.

In 2000, the Company borrowed $2,500,000 from The Middleton Doll Company, an
affiliated company. In 2001, the Company borrowed $500,000 from the Schonath
Family Partnership, an affiliated company. Both of the borrowings with
affiliated companies were paid in full during 2002.

                                       45
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 11 - GUARANTEED PREFERRED BENEFICIAL INTEREST IN THE COMPANY'S JUNIOR
SUBORDINATED DEBT

The Company has sponsored a trust with a total outstanding balance of $5,000,000
in trust preferred securities at December 31, 2002, as follows:

<TABLE>
<CAPTION>
                                       Trust Preferred                       Junior Subordinated Debt Owned by Trust
                          --------------------------------------------  -----------------------------------------------
                                             Initial                       Initial
                             Issuance      Liquidation    Distribution    Principal                        Redeemable
                               Date           Value           Rate          Amount          Maturity        Beginning
                          -------------   -------------   ------------  -------------    -------------    -------------
<S>                       <C>             <C>             <C>           <C>              <C>              <C>
InvestorsBancorp                                           LIBOR plus
   Capital Trust I        June 27, 2002   $   5,000,000       3.65%     $   5,155,000    June 30, 2032    June 30, 2007
</TABLE>

The trust is a statutory business trust organized for the sole purpose of
issuing trust preferred securities and investing the proceeds thereof in junior
subordinated debentures of the Company, the sole asset of the trust. The common
securities of the trust are wholly-owned by the Company. The trust preferred
securities and common securities of the trust represent preferred undivided
beneficial interests in the assets of the trust, and the holder of the preferred
securities will be entitled to a preference over the common securities of the
trust payable on redemption or liquidation. Twenty-five percent of the Company's
Tier 1 capital can be made up of trust preferred securities, with the remainder
of the trust preferred issue qualifying as Tier 2 capital to the Company. As
part of the formation of the trust subsidiary, InvestorsBancorp, Inc. was
required to purchase common stock equal to 3% of the trust preferred issue of
InvestorsBancorp Capital Trust I. The stock purchase accounts for the additional
$155,000 of junior subordinated debt of the Company. The Company used the
proceeds from the sales of the debentures for general corporate purposes.
Distributions on these securities are included in interest expense on guaranteed
preferred beneficial interest.

The trust preferred securities are manditorily redeemable upon maturity or early
redemption of the debentures, as provided in the indentures. The Company has the
right to redeem debentures in whole or in part in minimum amounts and increments
on or after specified dates. The trust's ability to pay amounts due on the trust
preferred securities is solely dependent upon the Company making payment on the
related junior subordinated debentures to the trust. The Company's obligations
under the junior subordinated debentures constitute a full and unconditional
guarantee by the Company of the trust's obligations under the trust securities
issued by the trust.

NOTE 12 - STOCKHOLDERS' EQUITY

The Company has a Nonqualified Stock Option Plan providing for the granting of
options up to 100,000 shares of common stock to key officers and employees of
the Company. Options are granted at the current market price. Options may be
exercised based on the vesting schedule outlined in each agreement.

The fair value of the awards is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions in 2002, 2001 and 2000, respectively: no dividend yield, expected
volatility of 31.5, 11.8, and 23.4 percent, risk-free interest rate of 4.20,
4.88, and 6.99 percent, and expected lives of 10 years.

                                       46
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 12 - STOCKHOLDERS' EQUITY (cont.)

Activity is summarized in the following table:

<TABLE>
<CAPTION>
                                                2002                     2001                   2000
                                       ----------------------     ------------------   --------------------
                                                    Weighted                Weighted               Weighted
                                                     Average                 Average               Average
                                          Shares      Price       Shares      Price     Shares      Price
                                       -----------  ---------   ---------   --------   --------   ---------
<S>                                    <C>          <C>         <C>         <C>        <C>        <C>
OUTSTANDING - Beginning of Year             14,750  $    7.07      13,475   $   7.13     11,025   $    7.55
    Options
      Granted                                5,940      10.10       4,400       7.00      8,150        6.75
      Cancelled or forfeited                     -          -      (3,125)     (7.24)    (5,700)      (7.39)
                                       -----------              ---------              --------
         Net Change                          5,940                  1,275                 2,450
OUTSTANDING - End of Year                   20,690       7.94      14,750       7.07     13,475        7.13
                                       ===========              =========              ========

Exercisable at year end                     18,188                 11,890                 8,495
Weighted average fair value of:
    Options granted                    $      2.73              $    1.92              $   3.65
Available for future grant at year
    end                                     79,310                 85,250                86,525
</TABLE>

The following table summarizes information about Plan awards outstanding at
December 31, 2002:

<TABLE>
<CAPTION>
                                 Options Outstanding                 Options Exercisable
                   -------------------------------------------  ---------------------------
                                                    Weighted
                                 Weighted Average    Average                   Weighted
                     Number         Remaining      Exercisable     Number       Average
Exercise Price     Outstanding   Contractual Life     Price     Exercisable  Exercise Price
--------------     -----------   ----------------  -----------  -----------  --------------
<S>                <C>           <C>               <C>          <C>          <C>
$ 6.75 - 7.33        13,175         4.27 years        $ 6.95       11,775        $ 6.97
 8.00 - 10.10         7,515         5.30 years          9.68        6,413          9.95
                     ------                                        ------
                     20,690                                        18,188
                     ======                                        ======
</TABLE>

The Company applies APB Opinion 25 and related interpretations in accounting for
its Plan. Accordingly, no compensation cost has been recognized for its stock
options awards.

                                       47
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 12 - STOCKHOLDERS' EQUITY (cont.)

A reconciliation of the numerators and the denominators of earnings per share
and earnings per share assuming dilution are:

<TABLE>
<CAPTION>
                                            Income        Shares    Per Share Amount
                                         -----------    ---------   ----------------
<S>                                      <C>            <C>         <C>
2002
     Earnings                            $ 1,672,193      936,483         $ 1.79
                                                                          ======
     Effect of options                                     47,899
                                                        ---------
     Earnings - assuming dilution        $ 1,672,193      984,382         $ 1.70
                                         ===========    =========         ======
2001
     Earnings                            $ 1,473,048      964,410         $ 1.53
                                                                          ======
     Effect of options                                      8,859
                                                        ---------
     Earnings - assuming dilution        $ 1,473,048      973,269         $ 1.51
                                         ===========    =========         ======
2000
     Earnings                            $   562,448    1,042,538         $ 0.54
                                                                          ======
     Effect of options                                          -
                                                        ---------
     Earnings - assuming dilution        $   562,448    1,042,538         $ 0.54
                                         ===========    =========         ======
</TABLE>

NOTE 13 - INCOME TAXES

The provision for income taxes included in the accompanying consolidated
financial statements consists of the following components at December 31:

<TABLE>
<CAPTION>
                                              2002            2001          2000
                                          -----------    ------------   ------------
<S>                                       <C>            <C>            <C>
Current Taxes
     Federal                              $   983,690    $    811,253   $    565,695
     State                                     26,744           4,425        114,751
                                          -----------    ------------   ------------
                                            1,010,434         815,678        680,446
                                          -----------    ------------   ------------

Deferred Income Taxes (Benefit)
     Federal                                 (111,231)       (127,719)      (352,716)
     State                                    (17,502)        (20,097)       (55,501)
                                          -----------    ------------   ------------
                                             (128,733)       (147,816)      (408,217)
                                          -----------    ------------   ------------
     Total Provision for Income Taxes     $   881,701    $    667,862   $    272,229
                                          ===========    ============   ============
</TABLE>

                                       48
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 13 - INCOME TAXES (cont.)

The net deferred tax assets in the accompanying consolidated balance sheets
include the following amounts of deferred tax assets and liabilities at December
31:

<TABLE>
<CAPTION>
                                      2002          2001
                                  -----------   -----------
<S>                               <C>           <C>
Deferred Tax Assets
     Allowance for loan losses    $   899,651   $   814,932
     Deferred compensation             82,322        23,610
     Organizational costs                   -        14,787
     Other                             19,695        21,303
Deferred Tax Liabilities
     Depreciation                     (23,037)      (24,734)
                                  -----------   -----------
                                  $   978,631   $   849,898
                                  ===========   ===========
</TABLE>

Management believes it is more likely than not, that the gross deferred tax
assets will be fully realized. Therefore, no valuation allowance has been
recorded as of December 31, 2002 and 2001.

A reconciliation of statutory federal income taxes based upon income before
taxes to the provision for federal and state income taxes for the period, as
summarized previously, is as follows:

<TABLE>
<CAPTION>
                                               2002                       2001                       2000
                                     ------------------------   ------------------------    -----------------------
                                                  % of Pretax                % of Pretax                % of Pretax
                                        Amount       Income       Amount        Income       Amount        Income
                                     ----------   -----------   ----------   -----------    ---------   -----------
<S>                                  <C>          <C>           <C>          <C>            <C>         <C>
Reconciliation of statutory to
  effective rates
  Federal income taxes at
    statutory rate                   $  868,324      34.00%     $  727,909      34.00%      $ 283,790      34.00%
      Adjustments for
         Tax exempt interest on
           municipal obligations         (3,275)     (0.13)        (12,698)     (0.59)        (25,111)     (3.01)
         Increases in taxes
           resulting from state
           income taxes, net of
           federal tax benefit              720       0.03         (16,666)     (0.78)         22,290       2.67
         Other - net                     15,932       0.62         (30,683)     (1.43)         (8,740)     (1.05)
                                     ----------   --------      ----------      -----       ---------      -----
Effective Income Taxes -
  Operations                         $  881,701      34.52%     $  667,862      31.20%      $ 272,229      32.61%
                                     ==========   ========      ==========      =====       =========      =====
</TABLE>

NOTE 14 - FACILITIES LEASE

On October 31, 2002, the Company purchased, at the appraised value, the building
previously leased from Bando McGlocklin Small Business Lending Corporation, an
affiliated entity. Monthly rents were variable based on LIBOR with an agreed
upon floor. Lease expenses were $55,230, $64,979, and $62,827 in 2002, 2001 and
2000, respectively.

                                       49
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 15 - RETIREMENT PLANS

The Company has a contributory 401(k) profit-sharing plan covering substantially
all employees. Any contributions to the 401(k) plan by the Company are
discretionary and based on factors related to profits. Total expenses related to
the plan were $54,934, $39,337, and $39,497 in 2002, 2001 and 2000,
respectively.

The Company provides additional supplemental retirement benefits for an
executive officer. Such benefits totaled $121,548, $67,753 and $44,583 in 2002,
2001 and 2000, respectively, net of reimbursement from The Middleton Doll
Company's management fee. The payments were made at the sole discretion of the
Board of Directors. The payments are included in the calculation of the
mangement fee charged to a related company.

NOTE 16 - COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company is involved in various legal
proceedings. In the opinion of management, any liability resulting from such
proceedings would not have a material adverse effect on the consolidated
financial statements.

The Company is party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit, financial guarantees
and standby letters of credit. They involve, to varying degrees, elements of
credit risk in excess of amounts recognized on the consolidated balance sheets.

The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual notional amount of
those instruments. The Company uses the same credit policies in making
commitments and issuing letters of credit as they do for on-balance-sheet
instruments.

A summary of the contract or notional amount of the Company's exposure to
off-balance-sheet risk as of December 31, 2002 and 2001 is as follows:

<TABLE>
<CAPTION>
                                                                                            2002               2001
                                                                                      ----------------   ----------------
<S>                                                                                   <C>                <C>
Financial instruments whose contract amounts represent credit risk:
         Commitments to extend credit                                                 $     24,538,428   $     21,708,619
         Credit card commitments                                                      $        535,013   $        539,793
         Standby letters of credit                                                    $      1,305,111   $        780,671
</TABLE>

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. Standby letters of credit are conditional
commitments issued to guarantee the performance of a customer to a third party.
Those guarantees are primarily issued to support public and private borrowing
arrangements. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to customers.
The Company evaluates each customer's credit worthiness on a case-by-case basis.
The amount of collateral obtained, if deemed necessary by the Company upon
extension of credit, is based on management's credit evaluation of the
counterparty. Collateral held varies but may include accounts receivable,
inventory, property and equipment, and income-producing commercial properties.
Credit card commitments are unsecured.

                                       50
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 17 - INTEREST RATE SWAPS

The Company has entered into various interest rate swap agreements with other
companies to manage interest rate exposure. The interest rate swap agreements
are structured as hedges of specific fixed-rate deposits whose terms
approximates the terms of the swap agreements. Under the terms of the swap
agreements, the parties exchange interest payment streams calculated on the
notional principal amount. The swap agreements are structured so that the
Company pays a variable interest rate and receives a fixed rate based on various
rate indexes. The swap agreements' expirations coincide with the maturity of the
fixed rate deposits. Although these swaps reduce interest rate risk, the
potential for profit or loss on interest rate swaps still exists depending upon
fluctuations in interest rates. The Company may be susceptible to risk with
respect to interest rate swap agreements to the extent of nonperformance by the
financial institutions participating in the interest rate swap agreements.
However, the Company does not anticipate nonperformance by these institutions.

The following table summarizes the interest rate swap agreements in effect at
December 31, 2002 and 2001, all of which are classified as fair value hedges.

<TABLE>
<CAPTION>
                                                                                       Expiration or
    Notional     Fair Value at     Fair Value at    Variable Rate       Fixed Rate      Termination
     Amount        12/31/02           12/31/01          Paid             Received          Date            Rate Index
--------------   -------------     -------------    -------------       ----------     -------------     --------------
<S>              <C>               <C>              <C>                 <C>            <C>               <C>
$    5,000,000    $   54,082        $          -       1.43375%            3.00%         07/08/06             LIBOR
     5,000,000       161,966                   -       1.42250%            5.25%         12/04/07         3 month LIBOR
     5,000,000             -              21,786       1.87375%            5.75%         06/04/02         1 month LIBOR
     6,000,000        (1,016)                  -       1.42375%            3.00%         04/07/08        LIBOR minus 1%
     6,000,000         1,003                   -       1.41875%            3.25%         06/23/08             LIBOR
     7,000,000       118,196                   -       1.42500%            3.00%         09/03/07             LIBOR
     7,000,000       108,169                   -       1.40125%            3.50%         05/12/08        LIBOR minus 2%
    10,000,000       215,624                   -       1.41000%            3.50%         12/19/05         3 month LIBOR
    10,000,000             -             (13,734)      1.87375%            6.00%         06/17/02         1 month LIBOR
                  ----------        ------------
         Total    $  658,024        $      8,052
                  ==========        ============
</TABLE>

There was no net gain/loss recognized in earnings in 2002, 2001 and 2000. As a
result of hedge arrangements, the Company recognized a decrease in interest
expense of $541,130, $340,914, and $49,370 in 2002, 2001 and 2000, respectively.
The impact on earnings due to ineffectiveness was immaterial.

NOTE 18 - CONCENTRATION OF CREDIT RISK

Practically all of the subsidiary Bank's loans, commitments, and commercial and
standby letters of credit have been granted to customers in the subsidiary
Bank's market area. Although the subsidiary Bank has a diversified loan
portfolio, the ability of their debtors to honor their contracts is dependent on
the economic conditions of the counties surrounding the subsidiary Bank. The
concentration of credit by type of loan is set forth in Note 4.

                                       51
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 19 - RETAINED EARNINGS

The principal source of income and funds of InvestorsBancorp, Inc. are dividends
from its subsidiary Bank.

Dividends declared by the subsidiary Bank that exceed the retained net income
for the most current year plus retained net income for the preceding two years
must be approved by Federal and State regulatory agencies. Under this formula,
dividends of approximately $2,913,000 may be paid without prior regulatory
approval. Maintenance of adequate capital at the subsidiary Bank effectively
restricts potential dividends to an amount less than $2,913,000.

NOTE 20 - REGULATORY CAPITAL REQUIREMENTS

The Company (on a consolidated basis) and the subsidiary Bank are subject to
various regulatory capital requirements administered by the federal and state
banking agencies. Failure to meet minimum capital requirements can initiate
certain mandatory, and possibly additional discretionary, actions by regulators
that, if undertaken, could have a direct material effect on the Company's and
the subsidiary Bank's financial statements. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the Company and the
subsidiary Bank must meet specific capital guidelines that involve quantitative
measures of their assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk-weightings, and other factors. Prompt corrective action
provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy
requires the Company and the subsidiary Bank to maintain minimum amounts and
ratios (set forth in the table that follows) of total and Tier 1 capital (as
defined in the regulations) to risk-weighted assets (as defined) and Tier 1
capital (as defined) to average assets (as defined). Management believes that as
of December 31, 2002 and 2001 the Company and the subsidiary Bank met all
capital adequacy requirements to which they are subject.

As of December 31, 2002, the most recent notification from the regulatory
agencies categorized the subsidiary Bank as well-capitalized under the
regulatory framework for prompt corrective action. To be categorized as
well-capitalized, an institution must maintain minimum total risk-based, Tier 1
risk-based, and Tier 1 leverage ratios as set forth in the following table.
There are no conditions or events since these notifications that management
believes have changed the institution's category.

                                       52
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 20 - REGULATORY CAPITAL REQUIREMENTS (cont.)

Listed below is a comparison of the Company's and the subsidiary Bank's actual
capital amounts with the minimum requirements for well capitalized and
adequately capitalized banks, as defined by the federal regulatory agencies'
Prompt Corrective Action Rules, as of December 31, 2002 and 2001.

<TABLE>
<CAPTION>
                                                                                                   To Be Well Capitalized
                                                                      For Capital Adequacy         Under Prompt Corrective
                                                 Actual                      Purposes                 Action Provisions
                                       --------------------------   --------------------------   --------------------------
                                            Amount          Ratio        Amount          Ratio        Amount          Ratio
                                       ---------------      -----   ---------------      -----   ---------------      -----
<S>                                    <C>                  <C>     <C>                  <C>     <C>                  <C>
As of December 31, 2002
   Total capital (to risk weighted
      assets)
                                       $    17,195,656      11.7%   $    11,768,717       8.0%         N/A             N/A
                                       $    16,613,098      11.3%   $    11,735,428       8.0%   $    14,669,285      10.0%
   Tier 1 capital (to risk weighted
      assets)
                                       $    13,809,058       9.4%   $     5,884,358       4.0%         N/A             N/A
                                       $    14,779,437      10.1%   $     5,867,714       4.0%   $     8,801,571       6.0%
   Tier 1 capital (to average assets)
                                       $    13,809,058       8.4%   $     6,551,621       4.0%         N/A             N/A
                                       $    14,779,437       9.0%   $     6,544,733       4.0%   $     8,180,916       5.0%
As of December 31, 2001
   Total capital (to risk weighted
      assets)
                                       $    13,429,361      10.9%   $     9,842,856       8.0%         N/A             N/A
                                       $    13,337,639      10.9%   $     9,833,357       8.0%   $    12,291,697      10.0%
   Tier 1 capital (to risk weighted
      assets)
                                       $     8,891,415       7.2%   $     4,921,428       4.0%         N/A             N/A
                                       $    11,801,176       9.6%   $     4,916,679       4.0%   $     7,375,018       6.0%
   Tier 1 capital (to average assets)
                                       $     8,891,415       6.6%   $     5,365,979       4.0%         N/A             N/A
                                       $    11,801,176       8.8%   $     5,365,501       4.0%   $     6,706,876       5.0%
</TABLE>

                                       53
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 21 - RELATED ENTITY

The Company shares common ownership and management with The Middleton Doll
Company. The Company charges The Middleton Doll Company a management fee for
salaries and employee benefits of common management. The Company also charges a
loan servicing fee for loans serviced for the related entity and a leased
property servicing fee. The management services fees for the years ended
December 31, 2002, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                       2002                2001               2000
                                 ----------------    ----------------   ----------------
<S>                              <C>                 <C>                <C>
Salaries and benefits            $        534,046    $        505,173   $        506,236
Leased property servicing                 172,215             175,307            177,218
Loan servicing                            279,459             311,031            328,569
                                 ----------------    ----------------   ----------------

                                 $        985,720    $        991,511   $      1,012,023
                                 ================    ================   ================
</TABLE>

NOTE 22 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of financial instruments at December 31, 2002 and 2001
are as follows:

<TABLE>
<CAPTION>
                                                              2002                                   2001
                                              ------------------------------------   -----------------------------------
                                                                   Estimated Fair                        Estimated Fair
                                               Carrying Amount         Value         Carrying Amount          Value
                                              ----------------    ----------------   ----------------   ----------------
<S>                                           <C>                 <C>                <C>                <C>
FINANCIAL ASSETS

    Cash and cash equivalents                 $      2,819,527    $      2,819,527   $      2,004,926   $      2,004,926
                                              ================    ================   ================   ================
    Marketable securities                     $      1,983,567    $      1,983,567   $      5,347,264   $      5,347,264
                                              ================    ================   ================   ================
    Non marketable equity securities          $        680,000    $        680,000   $              -    $             -
                                              ================    ================   ================   ================
    Loans, net                                $    154,516,551    $    154,611,160   $    123,436,530   $    123,757,693
                                              ================    ================   ================   ================
    Loans held for sale                       $      1,188,075    $      1,188,075   $        284,000   $        284,000
                                              ================    ================   ================   ================
    Cash surrender value of life insurance
      policies                                $      1,134,908    $      1,134,908   $        632,349   $        632,349
                                              ================    ================   ================   ================
    Interest rate swaps                       $        658,024    $        658,024   $          8,052   $          8,052
                                              ================    ================   ================   ================
    Accrued interest receivable               $        686,560    $        686,560   $        603,262   $        603,262
                                              ================    ================   ================   ================
FINANCIAL LIABILITIES

    Deposits                                  $    135,940,742    $    136,274,861   $    120,021,734   $    121,962,393
                                              ================    ================   ================   ================
    Federal funds purchased                   $      1,475,000    $      1,475,000   $        815,000   $        815,000
                                              ================    ================   ================   ================
    Other borrowings                          $     13,600,000    $     13,600,000   $      3,000,000   $      3,000,000
                                              ================    ================   ================   ================
    Guaranteed preferred beneficial interest
      in the company's junior subordinated
      debt                                    $      5,000,000    $      5,000,000   $              -    $             -
                                              ================    ================   ================   ================
    Accrued interest payable                  $        677,050    $        677,050   $        593,637   $        593,637
                                              ================    ================   ================   ================
</TABLE>

The estimated fair value of fee income on letters of credit at December 31, 2002
and 2001 is insignificant. Loan commitments on which the committed interest rate
is less than the current market rate are also insignificant at December 31, 2002
and 2001.

                                       54
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 22 - FAIR VALUE OF FINANCIAL INSTRUMENTS (cont.)

The subsidiary Bank assumes interest rate risk (the risk that general interest
rate levels will change) as a result of its normal operations. As a result, fair
values of the subsidiary Bank's financial instruments will change when interest
rate levels change and that change may be either favorable or unfavorable to the
subsidiary Bank. Management attempts to match maturities of assets and
liabilities to the extent believed necessary to minimize interest rate risk.
However, borrowers with fixed rate obligations are less likely to prepay in a
rising rate environment and more likely to repay in a falling rate environment.
Conversely, depositors who are receiving fixed rates are more likely to withdraw
funds before maturity in a rising rate environment and less likely to do so in a
falling rate environment. Management monitors rates and maturities of assets and
liabilities and attempts to minimize interest rate risk by adjusting terms of
new loans and deposits and by investing in securities with terms that mitigate
the subsidiary Bank's overall interest rate risk.

NOTE 23 - INVESTORSBANCORP, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION

                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                     December 31,
                                                                          -------------------------------
                                                                               2002              2001
                                                                          -------------     -------------
<S>                                                                       <C>               <C>
ASSETS
   Cash and due from banks                                                $     126,236     $       6,498
   Investment in subsidiaries                                                14,934,437        11,801,176
   Accrued interest receivable and other assets                                 453,398           118,734
                                                                          -------------     -------------

          TOTAL ASSETS                                                    $  15,514,071     $  11,926,408
                                                                          =============     =============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
   Other borrowings                                                       $           -     $   3,000,000
   Debenture to subsidiary                                                    5,155,000                 -
   Accrued interest payable and other liabilities                                 2,277            34,993
                                                                          -------------     -------------
       Total Liabilities                                                      5,157,277         3,034,993
                                                                          -------------     -------------
STOCKHOLDERS' EQUITY
   Preferred stock, $.01 par value, 1,000,000 shares authorized,
     none issued                                                                      -                 -
   Common stock, $.01 par value, 9,000,000 shares authorized,
     1,050,000 shares issued                                                     10,500            10,500
   Surplus                                                                    7,316,900         7,316,900
   Retained earnings                                                          4,047,189         2,374,996
   Treasury stock, 126,235 and 110,000 shares in 2002 and 2001,
     respectively, at cost                                                   (1,017,795)         (810,981)
                                                                          -------------     -------------
       Total Stockholders' Equity                                            10,356,794         8,891,415
                                                                          -------------     -------------

          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $  15,514,071     $  11,926,408
                                                                          =============     =============
</TABLE>

                                       55
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 23 - INVESTORSBANCORP, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
(cont.)

                         CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                Years Ended December 31,
                                                          ------------------------------------
                                                              2002        2001         2000
                                                          ----------    ----------   ---------
<S>                                                       <C>           <C>          <C>
INCOME
   Dividends from subsidiaries                            $  835,000    $  300,000   $ 157,000
   Other income                                                4,379             -       5,657
                                                          ----------    ----------   ---------
       Total Income                                          839,379       300,000     162,657
                                                          ----------    ----------   ---------

EXPENSES
   Interest on other borrowings                               98,199       254,781     186,849
   Interest on debenture to subsidiary                       145,647             -           -
   Other expenses                                             50,030        41,645           -
                                                          ----------    ----------   ---------
       Total Expenses                                        293,876       296,426     186,849
                                                          ----------    ----------   ---------
Income before income taxes and equity in
   undistributed earnings of subsidiaries                    545,503         3,574     (24,192)
   Less: Applicable income taxes (benefit)                   (98,429)     (100,785)    (71,053)
                                                          ----------    ----------   ---------
Income before equity in undistributed earnings of
   subsidiaries                                              643,932       104,359      46,861
   Equity in undistributed earnings of subsidiaries        1,028,261     1,368,689     515,587
                                                          ----------    ----------   ---------

       NET INCOME                                         $1,672,193    $1,473,048   $ 562,448
                                                          ==========    ==========   =========
</TABLE>

                                       56
<PAGE>

                     INVESTORSBANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

NOTE 23 - INVESTORSBANCORP, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
(cont.)

                        CONDENSED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
                                                                             Years Ended December 31,
                                                              -------------------------------------------------------
                                                                    2002               2001                2000
                                                              ----------------   ----------------    ----------------
<S>                                                           <C>                <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net Income                                                $      1,672,193   $      1,473,048    $        562,448
    Adjustments to reconcile net income to net cash
      flows from operating activities
        Equity in undistributed income of subsidiary                (1,028,261)        (1,368,689)           (515,587)
        Net change in
           Accrued interest receivable and other assets               (334,664)           (47,681)            (71,053)
           Accrued interest payable and other liabilities              (32,716)           (10,966)             45,959
                                                              ----------------   ----------------    ----------------
        Net Cash Flows from Operating Activities                       276,552             45,712              21,767
                                                              ----------------   ----------------    ----------------
CASH FLOWS FROM INVESTING ACTIVITIES -
    Capital contribution to bank                                    (2,105,000)                 -          (2,250,000)
                                                              ----------------   ----------------    ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from other borrowings                                           -            500,000           2,500,000
    Repayment of other borrowings                                   (3,000,000)                 -                   -
    Purchase of treasury stock                                        (206,814)          (547,818)           (263,163)
    Proceeds from issuance of debentures to subsidiary               5,155,000                  -                   -
                                                              ----------------   ----------------    ----------------
        Net Cash Flows from Financing Activities                     1,948,186            (47,818)          2,236,837
                                                              ----------------   ----------------    ----------------
           NET CHANGE IN CASH AND CASH EQUIVALENTS                     119,738             (2,106)              8,604

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR                            6,498              8,604                   -
                                                              ----------------   ----------------    ----------------

    CASH AND CASH EQUIVALENTS - END OF YEAR                   $        126,236   $          6,498    $          8,604
                                                              ================   ================    ================

SUPPLEMENTAL CASH FLOW DISCLOSURES
    Cash paid for interest                                    $        133,192   $        265,747    $        140,890
</TABLE>

                                       57

<PAGE>


ITEM 8.           CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE

                  Not applicable.

                                    PART III

ITEM 9.           DIRECTORS AND OFFICERS OF THE REGISTRANT

                  DIRECTORS         The Company's directors are as follows:

                  TERRY L. MATHER (60) has been a partner of Critical Solutions,
Inc., a business consulting firm headquartered in Milwaukee, Wisconsin, since
1992.

                  JON MCGLOCKLIN (59) has been the president of Healy Awards,
Inc., Menomonee Falls, Wisconsin, since 1997, and an announcer for the Milwaukee
Bucks since 1976. He was also a senior vice president of the Company and the
Bank from their establishment in 1997 until February, 2001. In July, 1997, Mr.
McGlocklin was appointed senior vice president of Bando McGlocklin Capital
Corporation and in November 2001 his title was changed to vice president. Until
July, 1997, he served as a director (since 1980) and president (since 1991) of
Bando McGlocklin Capital Corporation, now known as The Middleton Doll Company.

                  DONALD L. MENEFEE (61) has been the president and chief
executive officer of Silent Partners, a management consulting firm based in Door
County, Wisconsin, since he founded the company in 1996. He has 32 years of
banking experience focused on marketing and strategic planning for banks in
Illinois, Wisconsin and Arizona. From 1994 to 1996, Mr. Menefee served in
various capacities with Johnson International, Inc., Racine, Wisconsin,
including director of corporate marketing and president of private banking, as
well as president and chairman of both Biltmore Investors Bancorp, Phoenix,
Arizona, and Johnson Asset Management Company, Milwaukee, Wisconsin.

                  GEORGE. R. SCHONATH (62) has been the president and chief
executive officer of the Company and the Bank since they were established in
1997. In July, 1997, Mr. Schonath was appointed president of Bando McGlocklin
Capital Corporation and also currently serves as its chief executive officer
(since 1983). Until July, 1997, he served as a director (since 1980) and
chairman of the board (since 1984) of Bando McGlocklin Capital Corporation, now
known as The Middleton Doll Company. In May 2001, he returned as a director of
The Middleton Doll Company.

                  DONALD E. SYDOW (67) has been the president of Oconomowoc
Manufacturing Corp., a ball-bearing manufacturer located in Oconomowoc,
Wisconsin, since 1982.

                  MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES

                  During 2002, the board of directors of the Company and the
Bank each held four meetings. No director attended fewer than 75% of the total
number of meetings of the board of directors of the Company or the Bank held
during 2002. The Company's board of directors has appointed an audit and finance
committee and a compensation committee. The full board of directors acts upon
nominations for directors.

                  The audit and finance committee consists of Messrs. Mather,
Menefee and Sydow, each of which is deemed to be "independent" as such term is
defined in the listing standards of the Nasdaq Stock Market, Inc. The audit
committee reviews audit reports and related matters to ensure effective
compliance with regulations and internal policies and procedures. This committee
also recommends to the board the accounting firm to perform the Company's and
the Bank's annual audit and acts as the liaison between the auditors and the
board. The committee also is responsible for reviewing, approving and
recommending to the board financial policies and strategies of the Bank and
significant expenditures proposed to be made by the Company or the Bank. During
2002, the audit committee met two times.

                                       58
<PAGE>

                  The compensation committee consists of Messrs. Mather, Menefee
and Sydow. The compensation committee meets to review the performance, salary
and other compensation of the chief executive officer and officers of the
Company and makes recommendations to the board with respect to stock options and
other incentive awards. During 2002, the compensation committee did not meet. In
2002, the full board of directors met to determine the salaries and compensation
of the executive officers. Messrs. McGlocklin and Schonath did not participate
in decisions regarding their respective compensation.

                  COMPENSATION OF DIRECTORS

                  Directors of the Company, who are not also officers, received
an annual fee of $10,000 for 2002 as well as $1,000 for each board or committee
meeting attended. Directors who are also officers of the Company do not receive
additional compensation for their services as directors of the Company.

                  EXECUTIVE OFFICERS  The Company's executive officers who are
not also directors are as follows:

                  SUSAN J. HAUKE, 37, has been the Company's controller and vice
president-finance since 1997, was elected secretary in 1999, and was elected
chief financial officer in 2002. Ms. Hauke also serves as vice
president-finance, controller, and treasurer of the Bank. In addition, she is
the chief financial officer, vice president-finance, secretary and treasurer of
The Middleton Doll Company. Prior to joining The Middleton Doll Company in 1991,
Ms. Hauke was a senior accountant at PriceWaterhouseCoopers, LLP.

                  GLENN A. MICHAELSEN, 40, was elected a senior vice president
of the Company and the Bank in October, 2002. Mr. Michaelsen also serves as
senior vice president of The Middleton Doll Company. Prior to joining the
Company in June, 1998, Mr. Michaelsen served as assistant vice president,
Business Banking, at Marshall & Ilsley from 1997 to 1998. From 1987 to 1997 Mr.
Michaelsen was an assistant vice president, Business Banking, at US Bank
(formerly Firstar Bank).

                  GREG A. MIESKE, 43, was elected vice president-operations and
compliance officer of the Company and the Bank in October 1999. He also serves
as secretary of the Bank. Prior to joining the Company in December 1998, Mr.
Mieske served as a financial examiner for the Department of Financial
Institutions of the State of Wisconsin from 1987 until 1998.

                  KIM E. DEMARTINO, 43, was elected senior vice president of the
Company and Bank in February 2001. She has served as a mortgage banking officer
since joining the Company in 1997. From June 1997 to September 1997, Ms.
DeMartino served as a mortgage banking officer of The Middleton Doll Company.
Prior to joining The Middleton Doll Company, she served as a mortgage loan
originator with M&I Bank from 1996 to 1997 and a mortgage loan originator with
Old Kent Bank, Kalamazoo, Michigan from 1995 to 1996.

                  There are no arrangements or understandings between any of the
executive officers or any other persons pursuant to which any of the executive
officers have been selected for their respective positions.

                  COMPLIANCE WITH SECTION 16(a) REPORTING COMPLIANCE

                  Section 16(a) of the Exchange Act requires executive officers
and directors and persons who own more than 10% of the common stock to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Such persons are also required to furnish us with copies of all
Section 16(a) forms they file. Based solely upon our review of these forms and,
if appropriate, representations made to us by any reporting person concerning
whether a Form 5 was required to be filed for 2002, we are not aware that any of
our directors or executive officers or 10% shareholders failed to comply with
the filing requirements of Section 16(a) during 2002.

                                       59
<PAGE>

ITEM 10.          EXECUTIVE COMPENSATION

                  The following table sets forth information concerning the
compensation paid or granted by InvestorsBancorp or InvestorsBank to the chief
executive officer and to each of the other executive officers of
InvestorsBancorp and InvestorsBank whose aggregate salary and bonus exceeded
$100,000 for the fiscal year ended December 31, 2002. The persons named in the
table below are sometimes referred to herein as the named executive officers.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                        Long-Term Compensation
                                         Annual Compensation                    Awards
                                 -----------------------------------    -----------------------
                                                                                        (g)              (h)
                                                            (e)            (f)       Securities          All
                                    (c)          (d)    Other Annual    Restricted   Underlying         Other
        (a)               (b)      Salary       Bonus   Compensation       Stock       Option/      Compensation
 Name and Position       Year       ($)          ($)        ($)          Award ($)     SARs(#)           ($)
---------------------    ----    --------     --------  ------------    ----------   -----------    ------------
<S>                      <C>     <C>          <C>       <C>             <C>          <C>            <C>
George R. Schonath,      2002    $280,000     $ 93,472    $ - - -        $ - - -       - - -        $ 131,985 (2)
President and Chief      2001     200,000       60,741      - - -          - - -       - - -           67,754 (2)
Executive Officer (1)    2000     154,000      115,208      - - -          - - -       - - -           48,083 (2)

Glenn A. Michaelsen,     2002    $105,000     $  - - -    $ - - -        $ - - -       - - -        $   5,251 (3)
Senior Vice President    2001      90,333       22,150      - - -          - - -       - - -            5,624 (3)
                         2000      82,400       10,590      - - -          - - -       - - -            4,650 (3)

Kim DeMartino,           2002    $100,000     $ 40,000    $ - - -        $ - - -       - - -        $   7,001 (3)
Senior Vice President    2001      80,000        5,000      - - -          - - -       - - -            4,250 (3)
                         2000      65,000        - - -      - - -          - - -       - - -            3,250 (3)
-----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Amounts paid are net of the amount reimbursed by The Middleton Doll Company
pursuant to the Management Services and Allocation of Expenses Agreement. Under
this agreement, 44% of Mr. Schonath's 2002 salary, 52.38% of his 2001 salary and
58.82% of his 2000 salary was paid by The Middleton Doll Company. Also included
are amounts deferred under the 401(k) plan.

(2) Represents InvestorsBank's contribution for supplemental retirement benefits
and contributions to the 401(k) plan.

(3) Represents InvestorsBank's contributions to the 401(k) plan.

                                       60
<PAGE>

                  STOCK OPTIONS

                  The following table sets forth certain information concerning
stock options held by the named executive officers at December 31, 2002. No
stock options were exercised in 2002 by such persons. In January, 2002, George
Schonath was granted 5,940 stock options at an option price of $10.10. These
were the only stock options granted in 2002.

             AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
                        FISCAL YEAR END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                             Shares                       Number of Securities               Value of Unexercised
                          Acquired on     Value          Underlying Unexercised              In-the-Money Options/
                            Exercise     Realized     Options/SARs at Year-End (#)           SARs at Year-End ($)
     Name                      (#)          ($)       Exercisable     Unexercisable    Exercisable       Unexercisable
----------------------------------------------------------------------------------------------------------------------
<S>                      <C>             <C>          <C>             <C>              <C>               <C>
George R. Schonath             - -         $ - -         14,490              - -        $ 64,636.90        $     - -
Glenn A. Michaelsen            - -         $ - -          622.5          1,452.5        $  3,041.10        $7,095.90
Kim DeMartino                  - -         $ - -            300              700        $  1,733.00        $4,137.00
-------------------      ------------    --------     -----------     -------------    ------------      -------------
</TABLE>

                  COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

                  During 2002, the full board of directors considered and
approved the compensation packages of the employees of InvestorsBancorp and
InvestorsBank. Except for Messrs. McGlocklin and Schonath, none of the directors
was an officer or employee during 2002, or a former officer or employee of
InvestorsBancorp or its subsidiaries. Messrs. McGlocklin and Schonath do not
participate in decisions regarding their respective compensation. Messrs.
McGlocklin and Schonath were directors and officers of The Middleton Doll
Company prior to the distribution by The Middleton Doll Company and its
shareholders of all of its shares of InvestorsBancorp.

ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                  The following table sets forth certain information with
respect to the beneficial ownership of common stock at March 1, 2003, by each
person known by us to be the beneficial owner of more than five percent of the
outstanding common stock, by each director and by all directors and executive
officers of InvestorsBancorp as a group. The address of each 5.0% shareholder is
the Company's address.

<TABLE>
<CAPTION>
    NAME OF INDIVIDUAL AND                     AMOUNT AND NATURE OF                   PERCENT
  NUMBER OF PERSONS IN GROUP                  BENEFICIAL OWNERSHIP (1)                OF CLASS
---------------------------------             ------------------------                --------
<S>                                           <C>                                      <C>
DIRECTORS AND 5% SHAREHOLDERS
Terry L. Mather                                             -                              -
Jon McGlocklin                                              -                              -
Donald L. Menefee                                         325                               *
George R. Schonath                                    474,565 (2)                       45.5%
Donald E. Sydow                                         4,201                               *
Thomas Evans                                          170,103 (3)                       18.4%
ALL DIRECTORS AND EXECUTIVE
OFFICERS AS A GROUP (10 PERSONS)                      488,916 (4)                       46.7%
</TABLE>

* Less than one percent (1%).

                                       61
<PAGE>

(1)               Information contained in this column is based upon information
         furnished to us by the persons named above and the members of the
         designated group, except as set forth in the footnotes below. The
         nature of beneficial ownership for shares shown in this column is sole
         voting and investment power, except as set forth in the footnotes
         below. Inclusion of shares shall not constitute an admission of
         beneficial ownership or voting and investment power over included
         shares. Pursuant to the rules and regulations of the Securities and
         Exchange Commission and the Securities Exchange Act of 1934, as
         amended, share amounts include shares obtainable through the exercise
         of stock options or warrants within 60 days of the date of information
         contained in this table.

(2)               Includes 132,943 and 105,000 shares obtainable through the
         exercise of warrants, which are held by the Schonath Family Partnership
         of which Mr. Schonath is the general partner. Mr. Schonath has no
         voting and sole investment power with regard to these shares. Includes
         1,262.49 shares over which Mr. Schonath shares voting and investment
         power with his spouse, 215,288 shares held in Mr. Schonath's
         self-directed 401(k) account, and 14,490 shares obtainable through the
         exercise of options. Excludes 159,727.90 shares held in irrevocable
         trusts for the benefit of his daughters, 6,333.12 shares held directly
         by his daughters, and 3,460 shares held for other employees by the
         401(k) plan, for which Mr. Schonath is the trustee and may be deemed to
         have shared voting power.

(3)               Includes 79,860 shares held by the Emily A. Schonath
         Irrevocable Trust and 79,860 shares held by the Sarah E. Schonath
         Irrevocable Trust for each of which Mr. Evans is the trustee.

(4)               Includes 123,545 shares obtainable through the exercise of
         options or warrants. Excludes shares held for other employees by the
         401(k) plan, for which Mr. Schonath is the trustee and may be deemed to
         have shared voting power, and excludes shares for which Mr. Evans is
         the trustee.

                  EQUITY COMPENSATION PLAN INFORMATION

                  The following table set forth the following information as of
December 31, 2002, for (i) all compensation plans previously approved by the
Company's shareholders and (ii) all compensation plans not previously approved
by the Company's shareholders:

                  (a)      the number of securities to be issued upon the
                           exercise of outstanding options, warrants and rights;

                  (b)      the weighted-average exercise price of such
                           outstanding options, warrants and rights;

                  (c)      other than securities to be issued upon the exercise
                           of such outstanding options, warrants and rights, the
                           number of securities remaining available for future
                           issuance under the plans.

                               EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
                                         NUMBER OF SECURITIES TO BE       WEIGHTED-AVERAGE     NUMBER OF SECURITIES
                                           ISSUED UPON EXERCISE OF       EXERCISE PRICE OF     REMAINING AVAILABLE
       PLAN CATEGORY                         OUTSTANDING OPTIONS        OUTSTANDING OPTIONS    FOR FUTURE ISSUANCE
-------------------------------------------------------------------------------------------------------------------
                                                     (a)                        (b)                     (c)
<S>                                      <C>                            <C>                    <C>
Equity compensation plans
approved by security holders                       20,690                      $7.94                  79,310

Equity compensation plans
not approved by security holders                        0                          0                       0
                                         --------------------------------------------------------------------------
Total                                              20,690                      $7.94                  79,310
-------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       62
<PAGE>

ITEM 12.          CERTAIN RELATIONSHIPS AND TRANSACTIONS

                  Directors and officers of InvestorsBancorp and InvestorsBank,
and their associates, were customers of and had transactions with
InvestorsBancorp and InvestorsBank during 2002. InvestorsBank and The Middleton
Doll Company also purchase loan participations from each other from time to time
and, pursuant to a management services and allocation of expenses agreement,
InvestorsBank performs certain loan servicing and administration services to The
Middleton Doll Company. Additional transactions may be expected to take place in
the future.

                  All outstanding loans, commitments to make loans, transactions
in repurchase agreements and certificates of deposit and depository and loan
participation and servicing relationships, in the opinion of management, were
made in the ordinary course of business, on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than the
normal risk of collectibility or present other unfavorable features.
InvestorsBank received an aggregate of $985,720 in loan servicing and
administration fees from The Middleton Doll Company in 2002. InvestorsBancorp
and InvestorsBank leased space for their main offices from The Middleton Doll
Company for ten months during 2002. The rent during that period, including real
estate taxes and furnishings, was approximately $90,000. During October, 2002,
InvestorsBank purchased the premises from The Middleton Doll Company for $2.4
million based on the current fair market value of the premises. After the
purchase of the building the Bank received $9,666 in rental income from The
Middleton Doll Company.

                  During 2002, a $2.5 million subordinated note to The Middleton
Doll Company was repaid and a $500,000 subordinated note to the Schonath Family
Partnership was repaid. Both of these notes were on substantially the same terms
and conditions as could be obtained from unrelated third parties. At December
31, 2002, there were no other similar transactions outstanding.

                                       63
<PAGE>

                                     PART IV

ITEM 13.          EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
                  FORM 8-K

                  (a)(1)   INDEX TO FINANCIAL STATEMENTS

                           See page 30.

                  (a)(2)   FINANCIAL STATEMENT SCHEDULES

                           None required.

                  (a)(3)   SCHEDULE OF EXHIBITS

                           The exhibit index which immediately follows the
                           signature pages to this Form 10-KSB is incorporated
                           by reference.

                  (b)      REPORTS ON FORM 8-K

                           There were no reports on Form 8-K filed during the
                           fourth quarter of 2002.

                  (c)      EXHIBITS

                           The exhibit index to this Form 10-KSB is incorporated
                           by reference.

                           The exhibits required to be filed with this Form
                           10-KSB are included with this Form 10-KSB and are
                           located immediately following the Exhibit Index to
                           this Form 10-KSB.

ITEM 14.          CONTROLS AND PROCEDURES

                  Based upon an evaluation within the 90 days prior to the
filing date of this report, the Company's Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
the Company's internal controls subsequent to the date of the evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

                                       64
<PAGE>

                                   SIGNATURES

                  In accordance with Section 13 or 15(d) of the Exchange Act, as
amended, the issuer caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on March 27, 2003.

                                          INVESTORSBANCORP, INC.

                                          By:/s/ George R. Schonath
                                          ------------------------------------
                                          George R. Schonath,
                                          Chief Executive Officer

                                          By:/s/ Susan J. Hauke
                                          ------------------------------------
                                          Susan J. Hauke, Vice President Finance
                                          And Chief Financial Officer

                  In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the issuer and in the
capacities and on March 27, 2003.

                  Signature                                    Title

         /s/ Terry L. Mather                                  Director
         -----------------------------------
         Terry L. Mather

         /s/ Jon McGlocklin                                   Director
         -----------------------------------
         Jon McGlocklin

         /s/ Donald L. Menefee                                Director
         -----------------------------------
         Donald L. Menefee

         /s/ George R. Schonath                               Director
         -----------------------------------
         George R. Schonath

         /s/ Donald E. Sydow                                  Director
         -----------------------------------
         Donald E. Sydow

                                       65
<PAGE>

I, George R. Schonath, Chief Executive Officer of the Company, certify that:

         1.       I have reviewed this annual report on Form 10-KSB of
                  InvestorsBancorp, Inc.;

         2.       Based on my knowledge, this annual report does not contain any
                  untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  annual report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in the Report, fairly present
                  in all material respects the financial condition, results of
                  operations and cash flows of the registrant as of, and for,
                  the periods presented in this annual report;

         4.       The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14) for the registrant and we have:

                  (a)      designed such disclosure controls and procedures to
                  ensure that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;

                  (b)      evaluated the effectiveness of the registrant's
                  disclosure controls and procedures as of a date within 90 days
                  prior to the filing date of this annual report (the
                  "Evaluation Date"); and

                  (c)      presented in this annual report our conclusions about
                  the effectiveness of the disclosure controls and procedures
                  based on our evaluation as of the Evaluation Date;

         5.       The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of registrant's
                  board of directors (or persons performing the equivalent
                  function):

                  (a)      all significant deficiencies in the design or
                  operation of internal controls which could adversely affect
                  the registrant's ability to record, process, summarize and
                  report financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

                  (b)      any fraud, whether or not material, that involves
                  management or other employees who have a significant role in
                  the registrant's internal controls; and

         6.       The registrant's other certifying officers and I have
                  indicated in this annual report whether or not there were
                  significant changes in internal controls or in other factors
                  that could significantly affect internal controls subsequent
                  to date of their evaluation, including any corrective actions
                  with regard to significant deficiencies and material
                  weaknesses.

Date: March 27, 2003                                     /s/ George R. Schonath
                                                         ----------------------
                                                         George R. Schonath
                                                         Chief Executive Officer

                                       66
<PAGE>

I, Susan J. Hauke, Chief Financial Officer of the Company, certify that:

         1.       I have reviewed this annual report on Form 10-KSB of
                  InvestorsBancorp, Inc.;

         2.       Based on my knowledge, this annual report does not contain any
                  untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  annual report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in the Report, fairly present
                  in all material respects the financial condition, results of
                  operations and cash flows of the registrant as of, and for,
                  the periods presented in this annual report;

         4.       The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14) for the registrant and we have:

                  (a)      designed such disclosure controls and procedures to
                  ensure that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;

                  (b)      evaluated the effectiveness of the registrant's
                  disclosure controls and procedures as of a date within 90 days
                  prior to the filing date of this annual report (the
                  "Evaluation Date"); and

                  (c)      presented in this annual report our conclusions about
                  the effectiveness of the disclosure controls and procedures
                  based on our evaluation as of the Evaluation Date;

         5.       The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of registrant's
                  board of directors (or persons performing the equivalent
                  function):

                  (a)      all significant deficiencies in the design or
                  operation of internal controls which could adversely affect
                  the registrant's ability to record, process, summarize and
                  report financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

                  (b)      any fraud, whether or not material, that involves
                  management or other employees who have a significant role in
                  the registrant's internal controls; and

         6.       The registrant's other certifying officers and I have
                  indicated in this annual report whether or not there were
                  significant changes in internal controls or in other factors
                  that could significantly affect internal controls subsequent
                  to date of their evaluation, including any corrective actions
                  with regard to significant deficiencies and material
                  weaknesses.

Date: March 27, 2003                                  /s/ Susan J. Hauke
                                                      ------------------
                                                      Susan J. Hauke
                                                      Vice President Finance and
                                                      Chief Financial Officer

                                       67
<PAGE>

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT                                                  INCORPORATED HEREIN                  FILED
  NO.        DESCRIPTION OF EXHIBITS                        BY REFERENCE TO                 HEREWITH
<S>      <C>                                     <C>                                        <C>
 3.1     Restated Articles of                    Exhibit 2(a) to the Form 10-SB filed
         Incorporation, as amended,              with the Commission on July 24, 1997
         of InvestorsBancorp, Inc.               (SEC File No. 000-29400)

 3.2     ByLaws of                               Exhibit 2(b) to the Form 10-SB filed
         InvestorsBancorp, Inc.                  with the Commission on July 24, 1997
                                                 (SEC File No. 000-29400)

 4.1     Specimen Common Stock Certificate        Exhibit 4.1 to the Form 10-SB filed
         of InvestorsBancorp, Inc.               with the Commission on July 24, 1997
                                                 (SEC File No. 000-29400)

10.1     InvestorsBancorp, Inc. 1997             Exhibit 6(c) to the Form 10-SB filed
         Equity Incentive Plan                   with the Commission on July 24, 1997
                                                 (SEC File No. 000-29400)

10.2     Amended and Restated                    Exhibit 10.2 to the Form 10-KSB filed
         Management Services and                 with the Commission on March 29, 2002
         Allocation of Expenses                  (SEC File No. 000-29400)
         Agreement dated May 1, 2001

10.3     Tax Allocation and  Services            Exhibit 6(b) to the Form 10-SB filed
         Agreement                               with the Commission on July 24, 1997
                                                 (SEC File No. 000-29400)

10.4     Capital and Dividend Plan               Exhibit 10.6 to the Form 10-KSB filed
         dated November 6, 2001                  with the Commission on March 29, 2002
                                                 (SEC File No. 000-29400)

10.5     Indenture by and between                Exhibit 10 to the Form 10-QSB filed
         InvestorsBancorp, Inc. and Wells        with the Commission on August 14, 2002
         Fargo Bank, National Association,       (SEC File No. 000-29400)
         as Trustee dated June 27, 2002

10.6     Agreement and Plan of Merger,           Exhibit 2.1 to the Form 8-K filed
         dated as of March 25, 2003, by          with the Commission on March 26, 2003
         and between InvestorsBancorp,           (SEC File No. 000-29400)
         Inc. and Investors Subsidiary, Inc.

21.1     Subsidiaries of                                                                        X
         InvestorsBancorp, Inc.

99.1     Chief Executive Officer Certification                                                  X

99.2     Chief Financial Officer Certification                                                  X
</TABLE>