FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



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




FOR QUARTER ENDED                                  COMMISSION FILE NUMBER
SEPTEMBER 30, 1999                                         0-24630





                           MAHASKA INVESTMENT COMPANY
             (Exact Name of Registrant as Specified in its Charter)




         IOWA                                            42-1003699
(State of Incorporation)                   (I.R.S. Employer Identification No.)



                  222 First Avenue East, Oskaloosa, Iowa 52577

                         Telephone Number (515) 673-8448






Indicate by check mark whether the registrant (1) has filed all reports required
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days.

                Yes   X                            No

As of November 1, 1999, there were 4,778,203 shares of common stock $5 par value
outstanding.

<PAGE>
PART 1 -- Item 1. Financial Statements

                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CONDITION

<TABLE>
<CAPTION>
(unaudited)
(dollars in thousands,                                      Sept. 30,   Dec. 31,
except for share amounts)                                     1999        1998
                                                           ---------   ---------
<S>                                                        <C>           <C>
                              ASSETS
Cash and due from banks ................................   $   9,808      9,292
Interest-bearing deposits in banks .....................       1,232      3,559
Federal funds sold .....................................       1,000      9,270
                                                           ---------   ---------
  Cash and cash equivalents ............................      12,040     22,121
                                                           ---------   ---------
Investment Securities:
  Available for sale ...................................      63,460     29,655
  Held to maturity .....................................      32,025     13,679
Loans ..................................................     285,492    165,427
Allowance for loan losses ..............................      (3,349)    (2,177)
                                                           ---------   ---------
    Net loans ..........................................     282,143    163,250
                                                           ---------   ---------

Loan pool participations ...............................      70,707     54,510
Premises and equipment, net ............................       6,866      4,043
Accrued interest receivable ............................       5,104      3,175
Other assets ...........................................       2,748      2,406
Goodwill ...............................................      13,140      5,550
                                                           ---------   ---------
  Total assets .........................................   $ 488,233    298,389
                                                           ---------   ---------

              LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
  Demand ...............................................   $  20,698     23,029
  NOW and Super NOW ....................................      42,265     34,214
  Savings ..............................................      95,244     59,758
  Certificates of deposit ..............................     183,536    115,732
                                                           ---------   ---------
    Total deposits .....................................     341,743    232,733
Federal funds purchased ................................       8,665          0
Federal Home Loan Bank advances ........................      59,986      7,595
Note payable ...........................................      16,250     17,000
Other liabilities ......................................       4,237      2,829
                                                           ---------   ---------
    Total liabilities ..................................     430,881    260,157
                                                           ---------   ---------
Shareholders' equity:
  Common stock, $5 par value; authorized
    20,000,000 shares; issued 4,912,849
    shares as of September 30, 1999 and
    3,636,345 as of December 31, 1998 ..................      24,564     19,038
  Capital surplus ......................................      13,281         17
  Treasury stock at cost, 134,646 shares
    as of September 30, 1999,and 171,156
    shares as of December 31, 1998 .....................      (2,202)    (2,799)
  Retained earnings ....................................      21,880     21,806
  Accumulated other comprehensive income
    (loss) .............................................        (171)       170
                                                            ---------  ---------
     Total shareholders' equity ........................      57,352     38,232
                                                            ---------  ---------
     Total liabilities and shareholders'
       equity ..........................................   $ 488,233    298,389
                                                           ---------  ---------
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

PART 1 -- Item 1. Financial Statements, Continued

                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
(unaudited)                               Three Months Ended  Nine Months Ended
(dollars in thousands,                       September 30        September 30
 except per share)                         1999        1998    1999        1998
                                           -----------------   ----------------
<S>                                        <C>        <C>      <C>       <C>
INTEREST INCOME:
  Interest and fees on loans .........     $4,090     3,986    11,855    11,038
  Interest and discount on
     loan pools ......................      2,162     1,527     5,710     6,182
  Interest on bank deposits ..........          2        21        53       109
  Interest on federal funds sold .....          4        15       178       238
  Interest on investment
     securities:
    Available for sale ...............        404       418     1,277     1,196
    Held to maturity .................        166       217       533       693
                                           ------    ------    ------    ------
      Total interest income ..........      6,828     6,184    19,606    19,456
                                           ------    ------    ------    ------
INTEREST EXPENSE:
  Interest on deposits:
    NOW and Super NOW ................        149       161       445       502
    Savings ..........................        689       553     1,901     1,654
    Certificates of deposit ..........      1,510     1,533     4,649     4,477
  Interest on federal funds
    purchased ........................         57        10        61        11
  Interest on Federal Home Loan
    Bank advances ....................        134       101       351       280
  Interest on note payable ...........        295       271       894       750
                                           ------    ------    ------    ------
      Total interest expense .........      2,834     2,629     8,301     7,674
                                           ------    ------    ------    ------
      Net interest income ............      3,994     3,555    11,305    11,782
  Provision for loan losses ..........        462       307     2,094       594
                                           ------    ------    ------    ------
      Net interest income
      after provision for
      loan losses ....................      3,532     3,248     9,211    11,188
                                           ------    ------    ------    ------
NONINTEREST INCOME:
  Service charges ....................        318       329       935       917
  Data processing income .............         52        48       153       148
  Other operating income .............         70       138       294       307
  Investment security gains ..........          0         0         0        26
                                           ------    ------    ------    ------
         Total noninterest income ....        440       515     1,382     1,398
                                           ------    ------    ------    ------
NONINTEREST EXPENSE:
  Salaries and employee
    benefits expense .................      1,239     1,210     3,830     3,540
  Net occupancy expense ..............        363       348     1,062     1,003
  Professional fees ..................         63        95       488       344
  Other operating expense ............        464       439     1,729     1,334
  Goodwill amortization ..............        134       153       422       459
                                           ------    ------    ------    ------
    Total noninterest expense ........      2,263     2,245     7,531     6,680
                                           ------    ------    ------    ------
  Income before income tax
     expense .........................      1,709     1,518     3,062     5,906
  Income tax expense (benefit) .......        622       541     1,137     2,125
                                           ------    ------    ------    ------
           Net Income ................     $1,087       977     1,925     3,781
                                           ------    ------    ------    ------
  Earnings per common
    share - basic ....................     $ 0.30      0.27      0.53      1.03
  Earnings per common
    share - diluted ..................     $ 0.29      0.26      0.51      0.98
  Dividends per common share .........     $ 0.15      0.14      0.45      0.42

</TABLE>
See accompanying notes to consolidated financial statements.

<PAGE>

PART 1 -- Item 1. Financial Statements, Continued

                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
(unaudited)                               Three Months Ended  Nine Months Ended
(in thousands,                               September 30       September 30
                                          1999         1998   1999        1998
                                          -----------------   ----------------
<S>                                      <C>          <C>      <C>       <C>

Net Income ...........................   $ 1,087      977      1,925     3,781

Other Comprehensive Income:
  Unrealized gains (losses)
  on securities available
  for sale:
    Unrealized holding gains
    (losses) arising during
    the period, net of tax ...........       (64)      94       (341)      120

   Less: reclassification
    adjustment for net (gains)
    losses included in net income,
    net of tax .......................         0        0          0       (17)
                                         -------  -------    -------   -------
Other comprehensive income
  (loss), net of tax .................       (64)      94       (341)      103
                                         -------  -------    -------   -------
Comprehensive income (loss) ..........   $ 1,023    1,071      1,584     3,884
                                         -------  -------    -------   -------

See accompanying notes to consolidated financial statements.

<PAGE>

PART 1 -- Item 1. Financial Statements, Continued

                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)                                           Nine Months Ended
(dollars in thousands)                                   September 30,
                                                      1999          1998
                                                     --------    --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................   $  1,925       3,781
                                                     --------    --------
Adjustments to reconcile net income
  to net cash provided by operating
  activities:
  Depreciation and amortization ..................        912         918
  Provision for loan losses ......................      2,094         594
  Investment securities gains ....................          0         (26)
  Loss on sale of bank premises and
    equipment ....................................          4           0
  Amortization of investment securities
    premiums .....................................        144         115
  Accretion of investment securities and
    loan discounts ...............................       (369)       (323)
  Increase in other assets .......................       (729)       (487)
  Decrease in other liabilities ..................         (3)       (184)
                                                     --------    --------
    Total adjustments ............................      2,053         607
                                                     --------    --------
    Net cash provided by operating
          activities .............................      3,978       4,388
                                                     --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment securities available for sale:
  Proceeds from sales ............................          0         175
  Proceeds from maturities .......................      9,024       3,479
  Purchases ......................................     (7,177)     (7,137)
Investment securities held to maturity:
  Proceeds from maturities .......................      3,606       6,902
  Purchases ......................................     (2,221)     (3,849)
Purchases of loan pool participations ............    (31,670)    (21,029)
Principal recovery on loan pool
  participations .................................     20,252      19,105
Net increase in loans ............................    (20,924)    (22,145)
Purchases of bank premises and equipment .........       (318)       (420)
Proceeds from acquisition ........................      3,403           0
                                                     --------    --------
    Net cash used in investing activities ........    (26,025)    (24,919)
                                                     --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits .........................      1,846       5,249
Net increase in federal funds purchased ..........      8,665       3,775
Federal Home Loan Bank advances ..................      3,500       6,300

Repayment of Federal Home Loan Bank advances .....        (24)         (1)
Advances on note payable .........................      3,300       7,200
Principal payments on note payable ...............     (4,050)     (4,500)
Dividends paid ...................................     (1,644)     (1,542)
Purchases of treasury stock ......................          0      (1,768)
Proceeds from exercise of stock
  options ........................................        373         605
                                                     --------    --------
    Net cash provided by financing
      activities .................................     11,966      15,318
                                                     --------    --------
    Net decrease in cash
      and cash equivalents .......................    (10,081)     (5,213)
Cash and cash equivalents at beginning
  of period ......................................     22,121      19,195
                                                     --------    --------

Cash and cash equivalents at end of period .......   $ 12,040      13,982
                                                     --------    --------

Supplemental disclosures of cash flow information:
  Cash paid during the period for:
    Interest .....................................   $  8,359       7,627
                                                     --------    --------
    Income taxes .................................   $  1,378       2,061
                                                     --------    --------
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

PART I -- Item 1. Financial Statements, continued.

                           MAHASKA INVESTMENT COMPANY

                   Notes to Consolidated Financial Statements
                                   (Unaudited)


1.       Basis of Presentation

The  accompanying  consolidated  statement of condition as of December 31, 1998,
the  consolidated   statements  of  income,   the  consolidated   statements  of
comprehensive income, and the consolidated  statements of cash flow for the nine
months ended  September  30, 1998 include the accounts and  transactions  of the
Company and its four  wholly-owned  subsidiaries,  Mahaska  State Bank,  Central
Valley Bank, Pella State Bank and On-Site Credit Services, Inc. The consolidated
statement of condition  as of  September  30, 1999  includes the accounts of the
Company and its  aforementioned  subsidiaries  plus Midwest  Federal Savings and
Loan  Association  of Eastern  Iowa  ("Midwest  Federal").  Midwest  Federal was
acquired as a result of the merger  with  Midwest  Bancshares,  Inc.("Midwest"),
which closed on September 30, 1999. The consolidated statement of cash flows for
the nine months  ended  September  30, 1999  presents  the  transactions  of the
Company and the original four  subsidiaries for the nine months and includes the
results  of the merger  transaction  with  Midwest.  All  material  intercompany
balances and transactions have been eliminated in consolidation.

The  accompanying  consolidated  financial  statements have been prepared by the
Company  pursuant to the rules and  regulations  of the  Securities and Exchange
Commission.  Certain information and footnote  disclosures  normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles   have  been  condensed  or  omitted   pursuant  to  such  rules  and
regulations.  Although  management believes that the disclosures are adequate to
make the  information  presented  not  misleading,  it is  suggested  that these
interim  consolidated  financial  statements  be read in  conjunction  with  the
Company's most recent  audited  financial  statements and notes thereto.  In the
opinion  of  management,  the  accompanying  consolidated  financial  statements
contain all adjustments (consisting of only normal recurring accruals) necessary
to present  fairly the  financial  position as of September  30,  1999,  and the
results of operations  for the three months and the nine months ended  September
30, 1999 and 1998,  and cash flows for the nine months ended  September 30, 1999
and 1998.

The results for the three  months and the nine months ended  September  30, 1999
may not be  indicative  of results for the year ended  December 31, 1999, or for
any other period.

2.       Consolidated Statements of Cash Flows

In the consolidated  statements of cash flows, cash and cash equivalents include
cash and due from banks, interest-bearing deposits with banks, and federal funds
sold.

3.       Income Taxes

Federal   income  tax  expense  for  the  three   months  and  the  nine  months
ended September 30, 1999 and 1998 was computed using the consolidated  effective
federal tax rate. The Company also recognized  income tax expense  pertaining to
state franchise taxes payable individually by the subsidiary banks.

4.       Earnings Per Common Share

Basic earnings per common share  computations  are based on the weighted average
number of shares of common stock  actually  outstanding  during the period.  The
weighted  average number of shares for the  three-month  periods ended September
30,  1999 and 1998 was  3,679,991  and  3,654,768,  respectively.  The  weighted
average number of shares for the nine-month periods ended September 30, 1999 and
1998 was  3,656,397  and  3,669,414,  respectively.  Diluted  earnings per share
amounts are computed by dividing net income by the  weighted  average  number of
shares and all dilutive  potential  shares  outstanding  during the period.  The
computation  of diluted  earnings  per share used a weighted  average  number of
shares  outstanding  of  3,768,483  and  3,832,830  for the three  months  ended
September 30, 1999 and 1998,  respectively,  and 3,751,594 and 3,864,608 for the
nine months ended September 30, 1999 and 1998, respectively.

5.       Effect of New Financial Accounting Standards

The  Company  adopted  the  provisions  of  Statement  of  Financial  Accounting
Standards ("SFAS") 131,  "Disclosure about Segments of an Enterprise and Related
Information"  effective  January 1, 1998.  SFAS No. 131  establishes  disclosure
requirements for segment operations. The adoption had no effect on the Company's
financial  statement  disclosures  because  the  Company  operates  as a  single
business segment.

SFAS No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities",
will be  effective  for the Company  beginning  January 1, 2000.  Management  is
evaluating  the impact the  adoption of SFAS No. 133 will have on the  Company's
consolidated  financial  statements and expects to adopt SFAS 133 when required.
SFAS No. 137 has subsequently deferred  implementation of SFAS 133 until January
1, 2001.

6.       Use of Estimates in the Preparation of Financial Statements

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the reported period. Actual
results  could  differ from those  estimates.  A  significant  estimate  that is
particularly sensitive to change is the allowance for loan losses.

7.       Sale of On-Site Credit Services, Inc.

On April 23, 1999, the Company announced that it had elected to seek a buyer for
On-Site Credit Services,  Inc. ("On-Site"),  its wholly-owned commercial finance
subsidiary.  A letter of intent was executed with a potential  buyer for On-Site
on July 28, 1999. It was  anticipated  that a closing on the sale would occur in
the fourth  quarter  of 1999.  In October  of 1999,  it became  apparent  that a
satisfactory  agreement would not be reached with the potential buyer due to the
proposed structure of the transaction (not due to pricing issues). Management is
currently  evaluating  a  number  of  other  alternatives  related  to  On-Site,
including  a modified  transaction  with the  original  potential  buyer.  As of
September 30, 1999,  On-Site's loan and lease portfolio totaled  $8,394,000,  or
approximately  3 percent  of the  Company's  total  loans as of that  date.  The
Company's financial results for the nine months ended September 30, 1999 include
costs  and  charges  related  to  the  proposed  sale  of the  On-Site  activity
consisting of a loan loss  provision of  $1,243,000,  estimated  loss on sale of
$220,000, and $21,000 in severance benefits paid to employees.

8.       Acquisition of Midwest Bancshares, Inc.

The Company  announced  on February 2, 1999,  that it entered  into a definitive
agreement  to acquire all the  outstanding  shares of Midwest  Bancshares,  Inc.
("Midwest") of  Burlington,  Iowa.  Midwest  Bancshares is the parent company of
Midwest  Federal  Savings  and  Loan   Association  of  Eastern  Iowa  ("Midwest
Federal"),   a   community-oriented   thrift  institution,   with  locations  in
Burlington,  West Burlington,  Fort Madison, and Wapello,  Iowa. The transaction
with Midwest was accounted for using the purchase method of accounting.

On July 22, 1999, the Federal Reserve Bank of Chicago  approved the acquisition.
The acquisition was approved by shareholders of both companies on  September 22,
1999, with the closing  occurring on September 30,  1999.  Following the merger,
Midwest Federal became a wholly-owned  subsidiary of the Company,  retaining its
separate  thrift  charter.  As of September 30, 1999,  Midwest Federal had total
assets of $176,929,000,  loans of $100,239,000 and deposits of $107,164,000. The
purchase price for Midwest totaled $19,237,000  including  transaction  expenses
for attorney fees,  investment banking fees,  accounting,  employment  agreement
settlements,  and stock registration costs totaling $640,000. The purchase price
was determined  based on the Company's  average share price at the  announcement
date times the 1,105,348  shares of Company common stock that were issued to the
former shareholders of Midwest on September 30, 1999. The excess of the purchase
price  over  the  identifiable  fair  value  of the  tangible  and  identifiable
intangible  assets  acquired  and the  liabilities  assumed  of  $6,234,000  was
recorded as goodwill  and will be  amortized  over 25 years on a straight-  line
basis.  The  acquisition  has  been  accounted  for by the  purchase  method  of
accounting and, accordingly,  the income and earnings results of Midwest Federal
are not  included  with  the  results  of the  Company  for the  periods  ending
September 30. The balance sheet data as of September 30, 1999,  does include the
amounts acquired from Midwest.

The following  unaudited  proforma financial  information  presents the combined
results of operations of the Company and Midwest  Federal as if the  acquisition
had been effective January 1, 1998, after giving effect to certain  adjustments,
including  amortization  and  accretion  of  discounts,  premiums,  goodwill and
deposit base intangibles and related income tax effects.  The proforma financial
information  does not  necessarily  reflect the results of operations that would
have  occurred had the Company and Midwest  Federal  constituted a single entity
during such periods.

<TABLE>
<CAPTION>
                                                   Pro Forma
Proforma Condensed                                 Acquisition    Pro Forma
Statement of Income      Mahaska     Midwest       Adjustment     Consolidated
-------------------      -------     -------       ----------     ------------
Nine Months ended
September 30, 1999:
(in thousands, except
per share amounts)
<S>                     <C>            <C>            <C>           <C>

Interest income         $ 19,608       8,531          455           28,592
Interest expense           8,301       5,392          (61)          13,632
                         -------      ------        -----           ------
Net interest income       11,305       3,139          516           14,960
Provision for loan
  losses                   2,094          36            -            2,130
Noninterest income         1,382         451            -            1,833
Noninterest expense        7,531       2,520          467           10,518
                         -------      ------        -----           ------
Income before income
  tax expense              3,062       1,034           49            4,145
Income tax expense         1,137         382            -            1,519
                         -------      ------        -----           ------
Net income                 1,925         652           49            2,626
                         -------       -----        -----           ------
Earnings per common
 share - basic              0.53        0.59                          0.55
Earnings per common
  share - diluted           0.51        0.59                          0.54


Nine Months ended
September 30, 1998:

Interest income         $ 19,456       8,521          455           28,432
Interest expense           7,674       5,399          (61)          13,012
                        --------       -----        -----           ------
Net interest income       11,782       3,122          516           15,420
Provision for loan
  losses                     594          36            -              630
Noninterest income         1,398         543            -            1,941
Noninterest expense        6,680       2,123          467            9,270
                         --------      -----        -----           ------
Income before income
  tax expense              5,906       1,506           49            7,461
Income tax expense         2,125         456            -            2,581
                         -------       -----        -----           ------
Net income                 3,781       1,050           49            4,880
                         -------       -----        -----           ------
Earnings per common
 share - basic              1.03        1.01                          1.04
Earnings per common
  share - diluted           0.98        0.95                          0.98

</TABLE>

<PAGE>

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

                        QUARTER ENDED SEPTEMBER 30, 1999

On September 30, 1999, the Company acquired all of the outstanding  common stock
of Midwest  Federal  Savings  and Loan  Association  of Eastern  Iowa  ("Midwest
Federal") as a result of an exchange of Company stock with the  shareholders  of
Midwest  Bancshares,  Inc.  ("MWBI"),  the thrift  holding  company  for Midwest
Federal.  A total of 1,105,348 shares of Company common stock were issued to the
former  shareholders of MWBI in a transaction  valued at $19,237,000,  including
transaction expenses.  The acquisition of Midwest Federal is being accounted for
using the  purchase  method of  accounting  as of September  30,  1999,  Midwest
Federal had total assets of  $176,929,000,  deposits of  $107,164,000  and total
loans of  $100,239,000.  Midwest  Federal  will  remain a separate  wholly-owned
subsidiary of the Company.

The Company  recorded net income of $1,087,000  for the quarter ended  September
30,  1999,  compared  with net income of  $977,000  for the three  months  ended
September  30,  1998,  an  increase  of $110,000  (11  percent).  Net income and
earnings  results for the quarter do not include  results from Midwest  Federal,
since the acquisition was accounted for using the purchase method of accounting.
Basic  earnings per share for the third quarter of 1999 was $.30 versus $.27 per
share for the third  quarter of 1998.  Diluted  earnings per share for the third
quarter of 1999 was $.29 versus diluted earnings per share of $.26 for the third
quarter of 1998.  Actual weighted average shares  outstanding were 3,679,991 and
3,654,768 for the third quarter of 1999 and 1998, respectively.  The issuance of
1,105,348  shares on September 30, 1999, to  shareholders of MWBI as a result of
the merger  into the  Company  did not  materially  change the  average  for the
quarter, but will increase the average shares outstanding in future periods. The
Company's  return on average assets for the quarter ended September 30, 1999 was
1.41  percent  compared  with a return of 1.39  percent  for the  quarter  ended
September 30, 1998.  The Company had a return on average equity of 11.24 percent
for the three months ended September 30, 1999 versus 10.15 percent for the three
months ended September 30, 1998.


RESULTS OF OPERATIONS

Net Interest Income

Net interest income is computed by subtracting total interest expense from total
interest income. Fluctuations in net interest income can result from the changes
in the volumes of assets and  liabilities as well as changes in interest  rates.
The  Company's  net interest  income for the quarter  ended  September  30, 1999
increased  $439,000 (12 percent) to  $3,994,000  from  $3,555,000  for the three
months  ended  September  30,  1998.  This  increase was mainly due to increased
interest income and discount recovery on loan pool  participations and increased
interest  income earned on higher loan volumes.  Increased  interest  expense on
deposits and borrowed funds somewhat  offset the higher interest  income.  Total
interest  income  increased  $644,000 (10 percent) in the third  quarter of 1999
compared with the same period in 1998. The Company's total interest  expense for
the quarter  increased  $205,000 (8  percent)  compared  with the same period in
1998. The Company's net interest margin (on a federal  tax-equivalent basis) for
the third  quarter of 1999 rose to 5.62  percent  from 5.54 percent in the third
quarter  of  1998.  Net  interest  margin  is a  measure  of the net  return  on
interest-earning  assets and is  computed by dividing  annualized  net  interest
income by the average of total  interest-  earning  assets for the  period.  The
Company's overall yield on earning assets was 9.56 percent for the third quarter
of 1999  compared  to 9.58  percent for the third  quarter of 1998.  The rate on
interest-bearing liabilities also decreased in the third quarter of 1999 to 4.62
percent compared with 4.76 percent for the third quarter of 1998.

Interest  income and fees on loans  increased  $104,000 (3 percent) in the third
quarter of 1999  compared to the same period in 1998,  mainly due to higher real
estate loan volumes. The average yield on loans declined to 8.94 percent for the
third quarter of 1999,  compared to 9.67 percent in the third quarter of 1998 as
competition  for loans  forced the  Company to reduce  some of its loan rates to
remain  competitive  in its  markets.  Recent  moves by the  Federal  Reserve to
increase  interest  rates may benefit the Company in future  periods as variable
rate loans tied to prime have been adjusted upward. Competition for loans in the
market areas served by the Company  remains  strong.  Average loans  outstanding
were  $181,547,000 for the third quarter of 1999 compared with  $163,574,000 for
the third  quarter  of 1998,  an  increase  of  $17,973,000  (11  percent).  The
Company's  subsidiaries  all  experienced  an  increase  in average  loan volume
between the third  quarter of 1999 and 1998.  Average  real estate loan  volumes
increased  $18,128,000  (26  percent),  commercial  loans  averaged  $633,000 (1
percent)  lower,  and  agricultural  loans  increased  $2,625,000 (8 percent) in
average  volume for the third  quarter  of 1999  compared  with  1998.  Loans to
individuals  declined an average of $1,782,000 (13 percent) in the third quarter
of 1999 compared with 1998 as the Company  generally does not attempt to compete
for the consumer loan business (especially new car loans).

The Company recognized an additional $635,000 in interest and discount income on
loan pool participations in the third quarter of 1999 compared with 1998, mainly
due to higher loan pool volumes.  Interest income and discount  collected on the
loan pool  participations  for the three  months  ended  September  30, 1999 was
$2,162,000 compared with $1,527,000  collected in the third quarter of 1998. The
yield on loan pool participations rose to 13.69 percent for the third quarter of
1999 compared with 12.51 percent for the quarter ended  September 30, 1998.  The
average loan pool participation  investment balance was $14,230,000 (29 percent)
greater in the third  quarter of 1999 than in 1998 as a result of new  purchases
of pools.  Newly  purchased  loan pools  typically  do not produce  income for a
period of up to 120 days from date of purchase which  significantly  impacts the
yield on the investment.  These loan pool participations are pools of performing
and  distressed  and  nonperforming  loans that the Company has  purchased  at a
discount  from the  aggregate  outstanding  principal  amount of the  underlying
loans.  Income is derived from this investment in the form of interest collected
and the  repayment  of the  principal  in excess of the  purchase  cost which is
herein  referred to as  "discount  recovery."  The Company  recognizes  interest
income and discount  recovery on its loan pool  participations  on a cash basis.
The loan pool  participations  have traditionally been a high-yield activity for
the Company,  but this yield has  fluctuated  from period to period based on the
amount of cash collections,  discount recovery,  and net collection  expenses of
the  servicer  in  any  given  period.   The  income  and  yield  on  loan  pool
participations may vary in future periods due to the volume and discount rate on
loan pools purchased.

The increase in interest expense in the third quarter of 1999 compared with 1998
was mainly attributable to growth in deposits and an increase in borrowed funds.
Average  interest-bearing  deposits  for the  third  quarter  of 1999  increased
$17,000,000  (9 percent) from the same period in 1998 with the largest  increase
occurring  in  the  savings  deposit  category.   Borrowings  on  the  Company's
commercial bank line of credit averaged  $1,470,000  higher in the third quarter
of 1999 compared with 1998 as the Company  borrowed  funds to provide  operating
cash to purchase loan pools.  Federal Home Loan Bank  advances  during the third
quarter of 1999 averaged $2,438,000 greater than in 1998 as the Company utilized
these  advances  to fund  asset  growth.  The  higher  average  balance of these
borrowed  funds  resulted in increased  interest  expense in 1999  compared with
1998, even though the average rate on all interest-bearing liabilities declined.
The Company's  overall rate on  interest-bearing  liabilities  decreased to 4.62
percent for the third quarter of 1999 compared to 4.76 percent in 1998.


Provision for Loan Losses

The  Company  recorded a  provision  for loan  losses of  $462,000  in the third
quarter of 1999, of which $207,000 was recorded by On-Site Credit Services, Inc.
In the third quarter of 1998,  the Company  recorded a provision for loan losses
of  $307,000.  Management  determines  an  appropriate  provision  based  on its
evaluation of the adequacy of the allowance for loan losses in relationship to a
continuing review of problem loans, the current economic conditions, actual loss
experience and industry  trends.  In addition to the large provision at On-Site,
one of the Company's banks recorded a significant  charge-off on an agricultural
loan which  necessitated an additional  provision of $100,000 during the period.
Management  believes that the allowance for loan losses is adequate based on the
inherent  risk in the  portfolio as of September  30, 1999,  however,  continued
growth in the loan  portfolio and the  uncertainty of the  agricultural  economy
require that  management  continue to evaluate the adequacy of the allowance for
loan  losses  and  make  additional  provisions  in  future  periods  as  deemed
necessary.


Other Income

Other income results from the charges and fees collected by the Company from its
customers for various services  performed,  data processing income received from
nonaffiliated  banks,  miscellaneous other income and gains (or losses) from the
sale of investment  securities  held in the available for sale  category.  Total
other  income  was  $74,000  (14  percent)  lower in the third  quarter  of 1999
compared with 1998,  mainly due a nonrecurring  receipt in the 1998 quarter of a
settlement of an employee misappropriation of funds.


Other Expense

Total  other  noninterest  expense  for the  quarter  ended  September  30, 1999
increased  $19,000 (1  percent)  compared to  noninterest  expense for the third
quarter of 1998.  Other expense  includes all the costs  incurred to operate the
Company except for interest  expense,  the loan loss provision and income taxes.
Salaries and benefits expense for the third quarter of 1999 increased $29,000 (2
percent) over 1998, primarily as a result of higher salary levels. Net occupancy
and  equipment  expenses for the 1999 quarter  increased  $15,000 (4 percent) in
comparison to 1998 with most of the increase due to the additional facilities of
Pella  State  Bank  and  the  increased  depreciation  expense  incurred  on the
Company's new mainframe  computer.  Professional  fees in the September 30, 1999
quarter declined by $32,000 compared to 1998. Other operating  expense increased
by $25,000 in the third  quarter of 1999  compared  with the three  months ended
September 30, 1998.

Income Tax Expense

The Company  incurred  income tax expense of $621,000 for the three months ended
September 30, 1999.  For the three months ended  September 30, 1998, the Company
incurred  income tax  expense of  $541,000.  The  increased  tax expense for the
September 1999 quarter was mainly due to higher overall  taxable income compared
to the same period in the prior year.


                      NINE MONTHS ENDED SEPTEMBER 30, 1999

The  Company's  net income for the nine months of 1999 was  $1,925,000  compared
with  $3,781,000  earned in the nine months of 1998. The losses  attributable to
the On-Site  operation and a decline in loan pool income in 1999 were  primarily
responsible  for the overall  reduction  in net income.  The income and earnings
results for the period do not include Midwest Federal, since the acquisition was
required  to be  accounted  for using the  purchase  method.  Basic and  diluted
earnings per share for the nine months of 1999 were $.53 and $.51, respectively,
compared  with 1998 basic  earnings  per share of $1.03 and diluted  earnings of
$.98 per share.  Actual weighted-  average shares  outstanding were 3,656,397 in
the nine months of 1999 and 3,669,414 in 1998.  The Company's  return on average
assets  was .85  percent  in the nine  months of 1999 and 1.83  percent in 1998.
Return on average  equity was 6.68  percent  in 1999 and 13.32  percent  for the
first nine months of 1998.

On April 23, 1999, the Company announced that it had elected to seek a buyer for
On-Site Credit Services,  Inc. ("On-Site"),  its wholly-owned commercial finance
subsidiary.  A letter of intent was executed with a potential  buyer for On-Site
on July 28, 1999. It was  anticipated  that a closing on the sale would occur in
the fourth  quarter  of 1999.  In October  of 1999,  it became  apparent  that a
satisfactory  agreement would not be reached with the potential buyer due to the
proposed structure of the transaction (not due to pricing issues). Management is
currently  evaluating  a  number  of  other  alternatives  related  to  On-Site,
including  a modified  transaction  with the  original  potential  buyer.  As of
September 30, 1999,  On-Site's loan and lease portfolio totaled  $8,394,000,  or
approximately  3 percent  of the  Company's  total  loans as of that  date.  The
Company's financial results for the nine months ended September 30, 1999 include
costs  and  charges  related  to  the  proposed  sale  of the  On-Site  activity
consisting of a loan loss  provision of  $1,243,000,  estimated  loss on sale of
$220,000,  and $21,000 in severance  benefits  paid to  employees.  For the nine
months of 1999, net after-tax losses related to On-Site amounted to $877,000, or
$.24 per share basic and $.23 per share diluted. Without the On-Site losses, the
Company's   year-to-date   income  from  on-going  operations  would  have  been
$2,802,000, or $.77 per share basic.

RESULTS OF OPERATIONS

Net Interest Income

Net  interest  income for the nine months  ended  September  30,  1999  declined
$477,000  (4  percent)  compared  with the prior  year,  mostly  due to  reduced
interest  income and  discount  recovery  on loan pools and  increased  interest
expense.  Total  interest  income  increased  $150,000 (1 percent) in 1999 while
interest expense increased  $627,000 (8 percent) in 1999 compared with 1998. The
Company's net interest margin for the first nine months of 1999 was 5.43 percent
compared with 6.25 percent in 1998. The overall yield on earning assets was 9.38
percent  in 1999  and  10.29  percent  in  1998.  The  rate on  interest-bearing
liabilities  decreased  in 1999 to 4.63  percent  compared  with 4.75 percent in
1998.

Interest and fees on loans increased  $817,000 (7 percent) in the nine months of
1999 compared with 1998 primarily due to increased  loan volumes.  Average loans
outstanding of $175,490,000 in 1999 were  $21,033,000  greater than in 1998. The
overall  yield on loans  declined  to 9.03  percent in 1999  compared  with 9.55
percent in 1998 as market interest rates were lower on average.

The interest income and discount  collected on loan pools decreased  $472,000 (8
percent)in  the  first  nine  months of 1999  compared  with 1998 as a result of
higher  collection  costs  incurred  by the  servicer  on  loans  that  had been
purchased in 1996 and 1997, and the reduced  overall profit margin  attributable
to the purchase of higher  quality assets in more recent  periods.  The yield on
loan pool  investments  for the nine months of 1999 was 13.57  percent  compared
with  16.98  percent  in  1998.  Average  loan  pool  investments  in 1999  were
$56,263,000 compared with $48,663,000 for 1998.

Growth in deposits,  additional  advances  from the Federal Home Loan Bank,  and
increased  borrowings  on the  Company's  commercial  bank line of  credit  were
responsible  for the higher  interest  expense  incurred by the Company in 1999.
Total interest expense on deposits  increased $362,000 (5 percent) in 1999 while
interest on borrowed  funds  (including  notes payable)  increased  $265,000 (26
percent) over 1998.  Increased  borrowings on the Company's  bank line of credit
were primarily used to fund the On-Site activities and the purchase of loan pool
investments.

Provision for Loan Losses

The  year-to-date  loan loss provision for 1999 was $2,094,000,  with $1,534,000
related to On-Site.  The subsidiary  banks'  provision for loss totaled $560,000
for the first  nine  months  of 1999.  For the first  nine  months of 1998,  the
Company's  provision for loan losses was $594,000,  with $180,000 of that amount
attributable to On-Site and $414,000 recorded by the bank subsidiaries.

Other Income

Non-interest  income  totaled  $1,382,000  for the  first  nine  months  of 1999
compared  with  $1,398,000  in 1998,  a  decline  of  $16,000  in 1999.  Minimal
increases  were noted in service  charges  collected on deposit  accounts and in
data processing  income. The Company did record a gain on the sale of investment
securities totaling $26,000 in 1998 while there were no sales in 1999.

Other Expense

Total  non-interest  expense  increased  $851,000 (13 percent) in the first nine
months of 1999 compared with 1998.  Salaries and benefits  increased $290,000 (8
percent)  mainly as a result of  increased  staffing  at Mahaska  State Bank and
Pella State Bank and higher salary levels. Occupancy and equipment expenses rose
$59,000 (6 percent) due to higher  maintenance  contract and  licensing  fees on
check processing equipment. Professional fees increased $144,000 (42 percent) in
1999  compared  with 1998 mainly due to fees  related to the sale of the On-Site
subsidiary  totaling  $220,000.  A loss on the sale of real  estate  held by the
Company in the amount of $91,000 and liquidation  costs  associated with problem
credits at On-Site  contributed  to the $395,000 (30 percent)  increase in Other
operating  expenses in the nine months ended  September  30, 1999  compared with
1998.

Income Tax Expense

The  Company  recognized  income tax  expense of  $1,137,000  for the first nine
months  of 1999  compared  with  $2,125,000  for the same  period  in 1998.  The
Company's  effective  income  tax rate for the 1999  period  was  37.12  percent
compared with 35.98 percent in the nine months ended September 30, 1998.


FINANCIAL CONDITION

The  Company's  total  assets as of  September  30, 1999 were  $488,233,000,  an
increase of $189,844,000  from December 31, 1998. The consummation of the merger
with  Midwest  Bancshares,  Inc.  (MWBI) on  September  30, 1999 added assets of
$176,929,000  to the Company  total.  As of September 30, 1999,  the Company had
$1,000,000  in federal  funds sold and  $8,665,000  in  federal  funds  borrowed
compared with $9,270,000  sold as of December 31, 1998. The Company's  liquidity
needs are usually  highest in the second and third  quarters of each year due to
seasonal loan demand and minimal  deposit growth in the first nine months of the
year.  Federal funds are borrowed on a short-term  basis to meet this  liquidity
need.


Investment Securities

Investment securities available for sale increased $33,805,000 from December 31,
1998 to the September 30, 1999 total of $63,460,000.  Midwest Federal's total of
$36,285,000  was  added  while  the  Company's   securities  maturing  were  not
reinvested.  Investment  securities  classified  as  held  to  maturity  rose to
$32,025,000 as of September 30, 1999,  compared with $13,679,000 on December 31,
1998, with the net increase due to the addition of Midwest Federal.


Loans

Overall loan volumes  continued to  increase,  with total loans  outstanding  of
$285,492,000  on  September  30,  1999,  reflecting  growth of  $19,003,000  (11
percent) from  December 31,  1998 in the Company's  originated  loans, and loans
totaling $100,239,000  attributable to the acquisition of Midwest Federal. As of
September 30, 1999,  the Company's  loan to deposit ratio  (excluding  loan pool
investments)  was 83.5  percent.  This  compares  with a  year-end  1998 loan to
deposit ratio of 71.1 percent. As of September 30, 1999, On-Site had total loans
outstanding of $8,394,000, mostly in the commercial loan category. This compares
with a December 31, 1998 loan total for On-Site of $13,246,000.


Loan Pool Participations

As  of  September  30,  1999,   the  Company  had   investments   in  loan  pool
participations of $70,707,000,  an increase of $16,197,000 (30 percent) from the
December 31, 1998 balance.  Included in the September 30, 1999 loan pool balance
is  $4,779,000 of pools  purchased by Midwest  Federal prior to the quarter end.
The loan pool  investment  balance  shown as an asset on the  Company's  Balance
Sheet represents the discounted  purchase cost of the loan pool  participations.
The Company actively  continued to evaluate and bid on loan pool packages in the
third  quarter of 1999 and was  successful in investing  $11,848,000  during the
period  (plus   $5,000,000   invested  by  Midwest   Federal).   The  loan  pool
participation  investment as of December 31, 1998 was $54,510,000.  During 1999,
the Company has invested  $31,670,000 in loan pool participations  compared with
$21,029,000   in  the  first  nine  months  of  1998.   The  average  loan  pool
participation  investment of  $56,262,000  for the first nine months of 1999 was
$7,599,000 (16 percent) higher than the average balance of $48,663,000 for 1998.


Deposits

Total  deposits  as of  September  30,  1999  were  $341,743,000  compared  with
$232,733,000   as  of  December   31,1998.   Midwest  Federal  had  deposits  of
$107,164,000 as of the merger date while deposits at the other bank subsidiaries
increased minimally during the nine months of 1999.


Borrowed Funds/Notes Payable

The Company had  $8,665,000 in Federal Funds  purchased on  September 30,  1999.
There were no Federal  Funds  purchased on December  31, 1998.  During the first
nine months of 1999, the Company had an average  balance of Fed Funds  purchased
of $1,493,000.  Advances from the Federal Home Loan Bank totaled  $59,986,000 as
of September 30, 1999  compared  with  $7,595,000 as of December 31, 1998. As of
September30,  1999,  Midwest  Federal had $48,915,000 in variable and fixed rate
advances  from  the  Federal  Home  Loan  Bank.   Notes   payable   declined  to
$16,250,000,000 on September 30, 1999 from $17,000,000 on December 31, 1998.


Nonperforming Assets

The Company's  nonperforming  assets totaled  $3,059,000  (1.07 percent of total
loans) as of September 30, 1999,  compared to  $1,400,000  (.85 percent of total
loans) as of December  31,  1998.  All  nonperforming  asset  totals and related
ratios  exclude the loan pool  investments.  The  following  table  presents the
categories of  nonperforming  assets for the bank  subsidiaries  and for On-Site
Credit Services, Inc. as of September 30, 1999 compared with December 31, 1998:

<TABLE>
<CAPTION>

                              Nonperforming Assets
                             (dollars in thousands)
                               September 30, 1999

<S>                               <C>               <C>              <C>
                                   Banks            On-Site           Total
                                  ------            ------           ------
Nonaccrual                        $  592            $1,082           $1,674
Loans 90 days past due               735               643            1,378
Other real estate owned                7                 0                7
                                  ------            ------           ------
                                  $1,334            $1,725           $3,059


                                December 31, 1998

                                   Banks            On-Site           Total
                                  ------            ------           ------
Nonaccrual                        $  423            $  138           $  561
Loans 90 days past due               244               419              663
Restructured loans                   164                 0              164
Other real estate owned               12                 0               12
                                  ------            ------           ------
                                  $  843            $  557           $1,400

</TABLE>

From  December  31, 1998 to  September  30,  1999,  nonaccrual  loans  increased
$1,113,000  primarily due to concerns related to commercial  finance lines which
have  experienced  financial  difficulties  resulting  in them being placed on a
nonaccrual classification.  Additionally, on September 30, 1999, Midwest Federal
had  $207,000 in loans on a  nonaccrual  status which  increased  the  Company's
overall  totals.  As of  that  date,  Midwest  Federal  had no  other  loans  in
nonperforming  categories.  Loans  ninety  days  past  due  increased  $715,000,
primarily  related to a Mahaska State Bank loan to a cattle  feeding  operation.
Restructured  loans  decreased  $164,000  as these loans were paid off and other
real estate owned decreased by $5,000.  The Company's  allowance for loan losses
as of September 30, 1999 was  $3,349,000,  which was 1.17 percent of total loans
as of that date.  This  compares with an allowance for loan losses of $2,177,000
as of December 31, 1998,  which was 1.32 percent of total loans.  The  allowance
acquired from Midwest Federal totaled  $516,000 which accounted for a portion of
the $1,172,000  increase  between  December 31, 1998 and September 30, 1999 with
the remainder  related to On-Site.  As of September 30, 1999,  the allowance for
loan  losses was 109.70  percent of  nonperforming  loans  compared  with 156.80
percent  as of  December 31,  1998.  Based  on the  inherent  risk  in the  loan
portfolio, management believes that as of September 30,  1999, the allowance for
loan losses is  adequate.  For the three months ended  September  30, 1999,  the
Company  recognized  a net  loan  charge-off  of  $359,000  compared  with a net
charge-off of $170,000 during the quarter ended September 30, 1998. For the nine
months ended September 30, 1999, the Company charged off net loans of $1,438,000
compared  with net  charge-offs  of  $536,000  in the first nine months of 1998.
During the nine months of 1999,  net  charge-offs  recorded  by On-Site  totaled
$1,024,000 while the bank subsidiaries charged off $414,000. In comparison,  for
the nine months ended  September 30, 1998,  On-Site  recorded net charge-offs of
$307,000 versus bank net charge-offs of $229,000.


Capital Resources

As of September 30, 1999,  total  shareholders'  equity as a percentage of total
assets was 11.75  percent  compared  with 12.81 percent as of December 31, 1998.
The Company held 134,646  shares of treasury stock at a cost of $2,202,000 as of
September  30,  1999.  During the third  quarter of 1999,  the Company  reissued
13,592  shares of treasury  stock as a result of the  exercise of stock  options
previously granted to directors, officers, and employees. On September 30, 1999,
the  Company  issued  a  total  of  1,105,348  shares  of  common  stock  to the
shareholders  of Midwest  Bancshares,  Inc. in connection with the merger of the
companies.  The Company did not  repurchase  any shares of its stock  during the
third quarter of 1999.  Under  risk-based  capital  rules,  the Company's tier 1
capital  ratio was 12.97  percent of  risk-weighted  assets as of September  30,
1999,  and was 14.02  percent of  risk-weighted  assets as of December 31, 1998,
compared to a 4.00 percent  requirement.  Risk-based  capital guidelines require
the  classification  of  assets  and  some  off-balance-sheet  items in terms of
credit-risk  exposure  and the  measuring  of  capital  as a  percentage  of the
risk-adjusted  asset  totals.  Tier 1  capital  is the  Company's  total  common
shareholders'  equity  reduced by  goodwill.  Management  believes  that,  as of
September 30,  1999,  the  Company  and its  subsidiary  banks meet all  capital
adequacy  requirements to which they are subject.  As of that date, all the bank
subsidiaries were "well  capitalized"  under regulatory prompt corrective action
provisions.


Liquidity

Liquidity  management  involves meeting the cash flow requirements of depositors
and borrowers.  The Company  conducts  liquidity  management on both a daily and
long-term  basis;  and it adjusts  its  investments  in liquid  assets  based on
expected loan demand,  projected loan  maturities  and payments,  estimated cash
flows  from  the  loan  pool  participations,  expected  deposit  flows,  yields
available   on   interest-bearing   deposits,   and   the   objectives   of  its
asset/liability management program. The Company had liquid assets (cash and cash
equivalents) of $12,040,000 as of September 30, 1999,  compared with $22,121,000
as of December 31, 1998. Much of the decrease during the quarter was utilized to
fund loan growth and to purchase loan pool participations. Investment securities
classified  as  available  for sale could be sold to meet  liquidity  needs,  if
necessary.  Additionally,  the bank  subsidiaries  maintain lines of credit with
correspondent  banks and the  Federal  Home Loan Bank that  would  allow them to
borrow  federal  funds on a  short-term  basis if  necessary.  The Company  also
maintains a line of credit with a major commercial bank that provides  liquidity
for the  purchase of loan pool  participation  investments  and other  corporate
needs.  Management  believes  that the Company has  sufficient  liquidity  as of
September 30, 1999 to meet the needs of borrowers and depositors.


Market Risk Management

Market risk is the risk of earnings volatility that results from adverse changes
in interest  rates and market  prices.  The  Company's  market risk is primarily
comprised of interest  rate risk arising  from its core  banking  activities  of
lending  and  deposit  taking.  Interest  rate risk is the risk that  changes in
market  interest rates may adversely  affect the Company's net interest  income.
Management  continually  develops and applies  strategies to mitigate this risk.
Management does not believe that the Company's primary market risk exposures and
how  those  exposures  were  managed  in the nine  months of 1999  changed  when
compared to 1998.

The Company uses a third-party  computer software simulation modeling program to
measure its exposure to potential  interest  rate changes.  For various  assumed
hypothetical  changes in market interest rates,  numerous other  assumptions are
made such as prepayment speeds on loans and securities backed by mortgages,  the
slope of the  Treasury  yield  curve,  the rates and  volumes  of the  Company's
deposits and the rates and the volumes of the  Company's  loans.  This  analysis
measures  the  estimated   change  in  net  interest  income  in  the  event  of
hypothetical  changes in interest rates. This analysis of the Company's interest
rate risk was presented in the Form 10-K filed by the Company for the year ended
December 31, 1998.


Year 2000 Compliance

A critical issue has emerged in the banking industry and for the economy overall
regarding how existing computer application software programs, operating systems
and hardware can  accommodate the date value for the year 2000. This issue is an
area of major  emphasis as management is actively  working with its software and
hardware  vendors to assure that the  Company is  compliant.  Additionally,  the
Company is working with material non-information system providers, including but
not limited to security, telephone, utilities, ATM cards, elevators, heating and
cooling systems, check clearing services, teller machines and proof equipment to
determine their year 2000 compliance. An assessment of the readiness of vendors,
significant  customers  and other  third  parties  with which the  Company  does
business is also underway.

The Company could be faced with severe  consequences if Year 2000 issues are not
identified and resolved in a timely manner.  A worst-case  scenario would result
in  the  short-term  inability  to  update  customer  financial  records  due to
unforseen  processing  issues.  This would result in  customers  being unable to
receive timely  information  regarding their account  balances.  In addition,  a
worst-case  scenario  for the Company is that major  suppliers  of  electricity,
communication  links and outside data  processing  services may fail in spite of
their best efforts to remediate  their  systems and in spite of our best efforts
to test their systems.  The major risk as a result of these  possibilities would
be a loss of customer confidence.

The  Company  has  established  Year 2000  Committees  and Plans at its bank and
thrift  subsidiaries,  and formal project plans have been developed and adopted.
Testing  and  contingency  plans  have also been  developed  and  adopted by the
Company's subsidiaries.  Testing procedures are completed for all currently used
hardware  and  software.   Any  new  hardware  or  software   acquired   through
December 31, 1999 will be tested upon installation.  The Company purchased a new
main-frame  computer  system in 1997 that is Year  2000  compliant  at a cost of
$430,000.  This computer system became fully operational in the first quarter of
1998 with the equipment cost being depreciated over a five year period beginning
in 1998.

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

The  Company  anticipates  that it will  incur  internal  staff  costs and other
expenses  related to the  enhancements  necessary to become Year 2000 compliant.
Based on the  Company's  current  knowledge,  the  expense  related to Year 2000
compliance is not expected to have a material effect on the Company's  financial
position or results of  operations.  It is estimated  that the costs incurred by
the Company for Year 2000 compliance will be approximately $35,000, exclusive of
costs associated with the new main-frame computer.

The acquisition of Midwest Federal does not  significantly  change the Company's
Year 2000 readiness or contingency  planning.  Midwest  Federal will continue to
utilize a third party data  processor  until  converting to the  Company's  data
system (currently  planned for the second quarter of 2000).  Midwest Federal has
developed,  implemented and tested its own year 2000 readiness  procedures which
have been  evaluated and examined by regulators and as part of the Company's due
diligence prior to the acquisition.


Midwest Federal

The  acquisition  of Midwest  Federal  on  September  30,  1999,  increased  the
Company's total assets 59 percent in comparison to December 31, 1998 and allowed
the entry into four new  markets.  Midwest  Federal  has been a  community-based
thrift institution and it is managements'  intention that it will remain as such
in the future.  The Company expects that the acquisition of Midwest Federal will
enhance future revenues through improved interest rate margins and fee income as
a result  of  expanded  product  and  service  offerings  to  Midwest  Federal's
customers.  The Company also expects to achieve operating cost savings primarily
through the  consolidation of certain functions such as data processing and back
office  operations.  The revenue  enhancements  and  operating  cost savings are
expected  to be achieved in various  amounts at various  times  during the years
subsequent to the acquisition of Midwest Federal and not ratably over, or at the
beginning or end of, such periods.


"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT

With the exception of the historical  information  contained in this report, the
matters  described herein contain  forward-looking  statements that involve risk
and  uncertainties  that  individually  or mutually  impact the  matters  herein
described,  including but not limited to financial  projections,  product demand
and  market  acceptance,  the  effect  of  economic  conditions,  the  impact of
competitive  products  and  pricing,   governmental   regulations,   results  of
litigation,  technological difficulties and/or other factors outside the control
of the  Company,  which  are  detailed  from time to time in the  Company's  SEC
reports.  The  Company  disclaims  any  intent or  obligation  to  update  these
forward-looking statements.

<PAGE>

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


A special  meeting of  shareholders  was held on September 22, 1999.  The record
date for  determination  of  shareholders  entitled  to vote at the  meeting was
August 11, 1999. There were 3,670,380  shares  outstanding as of that date, each
such share being entitled to one vote. At the shareholders'  meeting the holders
of  3,081,394  shares of stock  were  represented  in person or by proxy,  which
constituted a quorum. The following proposal was voted on at the meeting:

Proposal 1 - Agreement and Plan of Merger dated February 2, 1999, by and between
the Company and Midwest Bancshares, Inc.:

The  merger  whereby  Midwest  Bancshares,  Inc.  would  merge with and into the
Company and the Midwest  Shareholders  would receive one share of Company common
stock for each share of Midwest  common  stock owned was approved by the Company
shareholders with the votes cast as follows:

<TABLE>
<CAPTION>
                                                                       DEALER
         FOR                    AGAINST               ABSTAIN         NON-VOTES
         ---                    -------               -------         ---------
<S>    <C>                       <C>                   <C>               <C>

       2,994,869                 73,454                13,071             0

</TABLE>

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

(a)   The following exhibits are filed with this Report or, if so indicated,
      incorporated by reference:

      Exhibits

      3.1      Articles of Incorporation of Mahaska Investment Company. (f)

      3.2      Bylaws of Mahaska Investment Company. (f)

      10.1     Mahaska Investment Company Employee Stock Ownership Plan & Trust
               as restated and amended. (b)

      10.2.1   1993 Stock Incentive Plan. (a)

      10.2.2   1996 Stock Incentive Plan. (d)

      10.2.3   1998 Stock Incentive Plan. (e)

      10.3.1   Midstates  Resources  Corp. Loan  Participation  and  Servicing
               Agreement dated  December 9, 1992  between Midstates  Resources
               Corp., Mahaska Investment Company, and Mahaska State Bank. (a)

      10.3.2   Central States Resources Corp. Liquidation Agreement dated April
               18, 1988 between Central States Resources  Corp.,  Mahaska State
               Bank, National Bank & Trust Co., and Randal Vardaman. (a)

      10.3.3   All States Resources Corp. Loan   Participation  and  Servicing
               Agreement dated September 13, 1993 between All States Resources
               Corp., Mahaska Investment Company, and West Gate Bank. (a)

      10.5.1   Revolving Loan Agreement dated January 31, 1996 between  Mahaska
               Investment Company and Harris Trust & Savings Bank. (c)

      10.5.2   Sixth  Amendment to Revolving Loan Agreement and Revolving Loan
               Note  between  Mahaska  Investment  Company  and  Harris  Trust
               & Savings Bank dated June 30, 1999.

      10.6     Agreement  and Plan of Merger By and Between  Mahaska  Investment
               Company and Midwest Bancshares, Inc. dated February 2, 1999. (g)

      11       Computation of Per Share Earnings.

      27       Financial Data Schedule.

               (a)  Incorporated by reference to the Form S-1 Registration
                    Number 33-81922 of Mahaska Investment Company.

               (b)  Incorporated by reference to the Form 10-K for the year
                    ended December 31, 1994 filed by Mahaska Investment Company.

               (c)  Incorporated by reference to the Form 8-K filed by Mahaska
                    Investment Company on February 29, 1996.

               (d)  Incorporated by reference to the Form 10-K for the year
                    ended December 31, 1996 filed by Mahaska Investment Company.

               (e)  Incorporated by reference to the Form 10-K for the year
                    ended December 31, 1997 filed by Mahaska Investment Company.

               (f)  Incorporated by reference to the Form 10-Q for the quarter
                    ended September 30, 1998 filed by Mahaska Investment
                    Company.

               (g)  Incorporated by reference to the Amendment No. 1 to the
                    Form S-4 Registration number 333-79291 filed by Mahaska
                    Investment Company on August 17, 1999.

(b)   Reports on Form 8-K -- The Company did not file any reports on Form 8-K
      for the three months ended September 30, 1999.

                                   SIGNATURES

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


                                       MAHASKA INVESTMENT COMPANY
                                       (Registrant)



November 10, 1999                      /s/ Charles S. Howard
Dated                                  Charles S. Howard
                                       President


November 10, 1999                      /s/ David A. Meinert
Dated                                  David A. Meinert
                                       Executive Vice President and
                                       Chief Financial Officer
                                       (Principal Accounting Officer)

<PAGE>

                                 Exhibit 10.5.2

                           MAHASKA INVESTMENT COMPANY
                 SIXTH AMENDMENT AND WAIVER TO CREDIT AGREEMENT


Harris Trust and Savings Bank
Chicago, Illinois

Ladies and Gentlemen:

     Reference  is hereby  made to that  certain  Credit  Agreement  dated as of
January 31, 1996, as amended (the "Credit Agreement"),  between the undersigned,
Mahaska Investment Company,  an Iowa corporation (the "Borrower"),  and you (the
"Bank").  All capitalized  terms used herein without  definition  shall have the
same meanings herein as such terms have in the Credit Agreement.

     The Borrower has requested that the Bank extend the Termination Date of the
credit  facility to June 30, 2000,  amend the dividend  and  restricted  payment
covenant, and update the list of its Subsidiaries, and the Bank is willing to do
so under the terms and  conditions  set  forth in this  agreement  (herein,  the
"Amendment").

1.   AMENDMENTS.

     Subject  to the  satisfaction  of the  conditions  precedent  set  forth in
Section 2 below, the Credit Agreement shall be and hereby is amended as follows:

          1.1 The definition of "Termination Date" appearing in Section 4 of the
     Credit Agreement shall have be and hereby is amended as follows:

          "Termination  Date" means June 30, 2000, or such earlier date on which
          the  Commitment is terminated in whole pursuant to Section 2.4, 8.2 or
          8.3 hereof.

          1.2 Section 7.10 of the Credit Agreement shall be amended and restated
     in its entirety to read as follows:

          Section 7.10.  Dividends and Certain Other  Restricted  Payments.  The
          Borrower  shall not declare or pay any  dividends on or make any other
          distributions  in respect of any class or series of its capital  stock
          or directly or indirectly , redeem or otherwise  acquire or retire any
          of its capital stock,  except that the Borrower may, during any fiscal
          year,  declare and pay dividends and purchase or otherwise  redeem its
          capital stock,  so long as at the time of, and after giving effect to,
          the payment of any such dividend,  repurchase, or redemption,  (a) the
          aggregate  amount of all such  dividends,  repurchases and redemptions
          during  any  fiscal  year of the  Borrower  does not exceed 60% of the
          Borrower's  Consolidated  Net Income  from the  immediately  preceding
          fiscal year (computed  exclusive of the  extraordinary  loss booked by
          the  Borrower  during the 1999  fiscal  year  relating  to its sale of
          On-Site Credit Services,  Inc.) and (b) no Default or Event of Default
          shall  have  occurred  and be  continuing  or would  occur as a result
          thereof.

          1.3 Schedule 5.2 of the Credit Agreement shall be updated and restated
     to read as set forth on Annex A attached hereto.

2.   CONDITIONS PRECEDENT.

     The  effectiveness  of this Amendment is subject to the satisfaction of all
of the following conditions precedent:

          2.1 The Borrower and the Bank shall have executed and  delivered  this
     Amendment.

          2.2 Legal  matters  incident  to the  execution  and  delivery of this
     Amendment shall be satisfactory to the Bank and its counsel.

3.   REPRESENTATIONS.

     In order to induce the Bank to execute  and  deliver  this  Amendment,  the
Borrower  hereby  represents  to  the  Bank  that  as of  the  date  hereof  the
representations  and warranties  set forth in Section 5 of the Credit  Agreement
are and shall be and remain true and correct  (except  that the  representations
contained  in Section 5.5 shall be deemed to refer to the most recent  financial
statements  of the  Borrower  delivered to the Bank) and the Borrower is in full
compliance  with all of the terms and conditions of the Credit  Agreement and no
Default or Event of Default  has  occurred  and is  continuing  under the Credit
Agreement or shall result after giving effect to this Amendment.

4.   MISCELLANEOUS.

     4.1 The Borrower has heretofore  executed and delivered to the Bank certain
Collateral  Documents  and the  Borrower  hereby  acknowledges  and agrees that,
notwithstanding  the execution and delivery of this  Amendment,  the  Collateral
Documents  remain in full force and effect  and the rights and  remedies  of the
Bank  thereunder,  the obligations of the Borrower  thereunder and the liens and
security  interests created and provided for thereunder remain in full force and
effect and shall not be affected,  impaired or discharged hereby. Nothing herein
contained  shall in any manner  affect or impair the  priority  of the liens and
security  interests  created and provided for by the Collateral  Documents as to
the  indebtedness  which would be secured thereby prior to giving effect to this
Amendment.

     4.2 Except as  specifically  amended  herein or waived  hereby,  the Credit
Agreement  shall  continue  in full  force  and  effect in  accordance  with its
original  terms.  Reference to this specific  Amendment  need not be made in the
Credit  Agreement,  the Note, or any other  instrument  or document  executed in
connection therewith,  or in any certificate,  letter or communication issued or
made pursuant to or with respect to the Credit  Agreement,  any reference in any
of such items to the Credit  Agreement  being  sufficient to refer to the Credit
Agreement as amended hereby.

     4.3 The  Borrower  agrees to pay on demand  all  costs and  expenses  of or
incurred by the Bank in connection with the negotiation,  preparation, execution
and delivery of this  Amendment,  including the fees and expenses of counsel for
the Bank.

     4.4 This  Amendment may be executed in any number of  counterparts,  and by
the different  parties on different  counterpart  signature  pages, all of which
taken together shall  constitute one and the same agreement.  Any of the parties
hereto may execute this  Amendment by signing any such  counterpart  and each of
such  counterparts  shall for all  purposes  be deemed to be an  original.  This
Amendment shall be governed by the internal laws of the State of Illinois.

     This Sixth Amendment and Waiver to Credit Agreement is dated as of June 30,
1999.

                                        MAHASKA INVESTMENT COMPANY



                                        By \s\ David A. Meinert
                                           Its Executive Vice President & CFO

Accepted  and agreed to in Chicago,  Illinois as of the date and year last above
written.

                                        HARRIS TRUST AND SAVINGS BANK



                                        By \s\ Patrick A. Horne
                                           Its Vice President


<PAGE>

                                   Exhibit 11


                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
                                     Three Months Ended       Nine Months Ended
                                       September 30             September 30
                                      1999       1998          1999      1998
                                     ------------------        ----------------
Earnings per Share Information:
<S>                                <C>         <C>          <C>        <C>

Weighted average number
of shares outstanding
during the year                    3,679,991   3,654,768    3,656,397  3,669,414

Weighted average number
of shares outstanding
during the year including
all dilutive potential
shares                             3,768,483   3,832,830    3,751,594  3,864,608

Net earnings                       1,087,288     977,218    1,925,360  3,780,895

Earnings per share - basic        $     0.30        0.27         0.53       1.03

Earnings per share - diluted      $     0.29        0.26         0.51       0.98

</TABLE>