SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


                                     to the

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


                    For the Quarter Ended September 30, 1996

                         Commission File Number 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 Number)


                  222 First Avenue East, Oskaloosa, Iowa 52577
                    (Address of principal executive offices)


                                 (515) 673-8448
              (Registrant's telephone number, including area code)


     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required by Section13 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 6, 1996,  2,229,506 shares of common stock $5 par value were
 outstanding. PART 1 -- Item 1. Financial Statementsial Statements

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


                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF CONDITION

<TABLE>
<CAPTION>


(unaudited)
(dollars in thousands) ....................       September 30,    December 31,
                                                          1996             1995

                                                  -------------    ------------
<S>                                                   <C>              <C>
ASSETS

Cash and due from banks ......................       $   9,049        $   6,700
Interest-bearing deposits in banks ...........           4,002            3,439
Federal funds sold ...........................               0           10,682
                                                     ---------        ---------
  Cash and cash equivalents ..................          13,051           20,821
                                                     ---------        ---------
Investment securities:
  Available for sale .........................          23,613           11,169
  Held to maturity ...........................          31,767           31,451
Loans ........................................         118,482           86,475
Less:
  Unearned discount ..........................            (844)            (606)
  Allowance for loan sses ....................          (1,447)          (1,001)
                                                     ---------        ---------
     Net loans ...............................         116,191           84,868
                                                     ---------        ---------
Loan pool participations .....................          59,248           45,318
Premises and equipment, net ..................           3,122            2,495
Accrued interest receivable ..................           3,136            2,203
Other assets .................................           2,064            2,495
Goodwill .....................................           6,971            4,342
                                                     ---------        ---------
   Total assets ..............................       $ 259,163          205,162
                                                     ---------        ---------
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                      LIABILITIES AND SHAREHOLDERS' EQUITY

<S>                                            <C>            <C>
Deposits:
  Demand ..........................           $  17,450       15,480
  NOW and Super NOW ...............              31,887       26,188
  Savings .........................              61,319       46,556
  Certificates of deposit .........              93,791       73,280
                                              ---------    ---------
     Total deposits ...............             204,447      161,504
Federal funds purchased ...........               4,725            0
Note payable ......................              13,700       10,000
Other liabilities .................               2,913        1,552
                                              ---------    ---------
  Total liabilities ...............             225,785      173,056
                                              ---------    ---------

Shareholders' equity:
  Common stock, $5 par value;
    authorized 4,000,000 shares;
    issued 2,284,506 shares .......              11,423       11,423
  Capital surplus .................               7,787        7,787
  Treasury stock at cost,
    55,000 shares as of September 30, 1996,
    and 15,000 shares as of
    December 31, 1995 .............                (853)        (231)
  Retained earnings ...............              15,207       13,070
  Unrealized (loss) gain on
    investments available for sale                 (186)          57
                                              ---------    ---------
    Total shareholders' equity ....              33,378       32,106
                                              ---------    ---------
    Total liabilities and
      SHAREHOLDERS' EQUITY ........           $ 259,163      205,162
                                              ---------    ---------
</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 ........                   September 30,       September 30,
thousands, except ..                    1996     1995         1996     1995
per share) .........                   --------------------------------------
<S>                                         <C>       <C>      <C>      <C>
INTEREST INCOME:

Interest and fees on loans ............     $2,759    2,021    7,428    5,651
Interest and discount on loan pools ...      2,376    1,700    6,230    5,772
Interest on bank deposits                       92       52      204      126
Interest on federal funds sold ........          6       23       83       86
Interest on investment
  securities:
  Available for sale ..................        359      173      901      458
  Held to maturity ....................        419      415    1,265    1,268
                                          -------- -------- -------- --------
     Total interest income ............      6,011    4,384   16,111   13,361


INTEREST EXPENSE:

Interest on deposits:
  NOW and Super NOW ...................        163      155      443      463
  Savings .............................        555      446    1,484    1,334
  Certificates of deposit .............      1,328    1,060    3,514    2,899
Interest on federal
  funds purchased .....................         38        1       41       41
Interest on note payable ..............        292      210      714      439
                                          -------- -------- -------- --------
  Total interest expense ..............      2,376    1,872    6,196    5,176

                                         --------- -------- -------- --------
<PAGE>

  Net interest income ......       3,635      2,512     9,915      8,185
Provision for loan losses ..         208         47       320        122
                               ---------  --------- ---------  ---------
   Net interest income
     after provision for
     loan losses ...........       3,427      2,465     9,595      8,063
                               ---------  --------- ---------  ---------

NONINTEREST INCOME:

  Service charges ..........         257        203       658        562
  Data processing income ...          57         52       173        199
  Other operating income ...         104         64       304        249
  Investment security losses         (56)         0       (68)       (15)
                               ---------  --------- ---------  ---------
    Total noninterest income         362        319     1,067        995
                               ---------  --------- ---------  ---------

NONINTEREST EXPENSE:
  Salaries and employee,
    benefits expense .......         957        761     2,616      2,364
  Net occupancy expense ....         241        234       747        640
  FDIC assessment ..........         237         14       281        181
  Professional fees ........         115         51       365        239
  Other operating expense ..         408        316     1,167      1,049
  Goodwill amortization ....         151         93       353        280
                               ---------  --------- ---------  ---------
    Total noninterest
      expense ..............       2,109      1,469     5,529      4,753
                               ---------  --------- ---------  ---------
    Income before income
      tax expense ..........       1,680      1,315     5,133      4,305
  Income tax expense .......         579        450     1,764      1,466
     Net income ............   $   1,101        865     3,369      2,839
                               ---------  --------- ---------  ---------



Earnings per common share ..   $    0.50       0.39      1.50       1.25


Dividends per common share .   $  0.1825      0.165    0.5475      0.495
</TABLE>

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
<TABLE>
<CAPTION>

(unaudited)                                Six Months Ended
(dollars in thousands)                     September 30,
                                           1996        1995
                                           -------------------
<S>                                          <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income ............................   $ 3,369      2,839
                                            -------    -------
  Adjustments to reconcile net
    income to net cash
    provided by operating activities:
    Depreciation and amortization .......       654        534
    Provision for loan losses ...........       320        122
    Investment securities losses ........        69         15
    Loss on sale of bank premises
      and equipment .....................         7          0
    Amortization of investment securities
      premiums ..........................       239        254
    Accretion of investment securities
      and loan discounts ................      (259)      (164)
    (Increase) decrease in other assets .      (274)      (822)
    Increase in other liabilities .......     1,288        387
                                            -------    -------
      Total adjustments .................     2,044        326
                                            -------    -------
      Net cash provided by operating
        activities ......................     5,413      3,165


<PAGE>
CASH FLOWS FROM INVESTING ACTIVITIES:
  Investment securities available for sale:
    Proceeds from sales ...................     5,027      3,991
    Proceeds from maturities ..............     3,135      2,000
    Purchases .............................   (21,134)    (4,008)
  Investment securities held to maturity:
    Proceeds from maturities ..............     5,178      8,305
    Purchases .............................    (5,661)    (6,313)
  Purchases of loan pool participations ...   (29,410)    (9,956)
  Principal recovery on loan pool
    participations ........................    15,479     10,741
  Net increase in loans ...................   (16,915)   (11,820)
  Purchases of bank premises and equipment       (560)      (284)
  Proceeds from sales of bank premises
    and equipment .........................         1          0
  Proceeds from branch acquisition ........    14,246          0
                                              -------    -------
    Net cash used in investing activities .   (30,614)    (7,344)
                                              -------    -------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase in deposits ................    10,860      7,579
  Net increase (decrease) in federal
    funds purchased .......................     4,725     (4,700)
  Advances on note payable ................     6,400      6,500
  Principal payments on note payable ......    (2,700)    (2,500)
  Dividends paid ..........................    (1,232)    (1,128)
  Purchases of treasury stock .............      (622)      (151)
                                              -------    -------
    Net cash provided by financing
      activities ..........................    17,431      5,600
                                              -------    -------

    Net (decrease) increase in cash and
      cash equivalents ....................    (7,770)     1,421


<PAGE>

Cash and cash equivalents at
   beginning of period .....................................    20,821     7,691
Cash and cash equivalents at end of period .................   $13,051     9,112
                                                               -------   -------

Supplemental disclosures of cash
  flow information:
  Cash paid during the period for:
    Interest ...............................................   $ 6,086     4,802
                                                               -------   -------
    Income taxes ...........................................   $ 1,591     1,615
                                                               -------   -------

</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.       Adjustments and Reclassifications

     The accompanying financial statements for the interim periods were prepared
without  audit.  In the  opinion  of  management,  all  adjustments  which  were
necessary  for  a  fair  presentation  of  financial  position  and  results  of
operations have been made. These adjustments were of a normal recurring nature.

2. Statements of Cash Flows

     In the 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,  1996 and 1995 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 bank and thrift.

4.       Earnings Per Common Share

     Earnings per common share  computations  are based on the weighted  average
number of shares of common  stock  outstanding  during the period.  The weighted
average  number  ofshares  for the  three-month  and  nine-month  periods  ended
September  30, 1996 was  2,239,452  and  2,252,407,  respectively.  The weighted
average  number of shares  for the three-  month and  nine-month  periods  ended
September 30, 1995 was 2,274,506 and 2,279,982, respectively.

<PAGE>

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

     The Company earned  $1,101,000  ($.50 per share) for the three months ended
September 30, 1996, compared with $865,000 ($.39 per share) for the three months
ended September 30,1995.  Weighted average shares outstanding were 2,239,452 and
2,274,506  for the  third  quarters  of 1996 and 1995,  respectively.  Return on
average assets for the quarter ended  September 30, 1996 was 1.72% compared with
a return of 1.76% for the quarter ended  September  30, 1995.  The Company had a
return on average equity of 12.84% for the three months ended September 30, 1996
versus 10.99% for the three months ended September 30,1995.

     For the nine months ended September 30, 1996, the Company earned net income
of $3,369,000  ($1.50 per share) compared with $2,839,000  ($1.25 per share) for
the nine months ended September 30, 1995.  Weighted  average shares  outstanding
for the nine months ended  September  30, 1996 were  2,252,407  compared with an
average of 2,279,982  shares  outstanding  during the first nine months of 1995.
For the first nine  months of both 1996 and 1995,  the  Company  had a return on
average  assets of 2.00%.  The return on average  equity was 13.66% for the nine
months  ended  September  30, 1996  compared to 12.39% for the nine months ended
September 30, 1995.

     On  September  30,  1996,  the Company  incurred a one-time  assessment  of
$213,000 to recapitalize the Savings Association  Insurance Fund (SAIF) which is
reflected in the  increased  FDIC  Assessment  expense  category  for 1996.  The
effects of the acquisition of a bank office by one of the Company's subsidiaries
in late June 1996 were  evidenced  in the  third  quarter  of 1996 by  increased
interest income and expense,  noninterest income, and operating  expenses.  Many
balance sheet items also increased in 1996 as a result of the acquisition.

<PAGE>

RESULTS OF OPERATIONS

Net Interest Income

     Net interest  income for the quarter  ended  September  30, 1996  increased
$1,123,000  (44.7%) to  $3,635,000  from  $2,512,000  for the three months ended
September 30, 1995.  This increase is due to greater  interest  income which was
partially offset by increased interest expense.  Total interest income increased
$1,627,000  (37%) in the third  quarter of 1996 compared with the same period in
1995 mainly due to increased volumes in loans,  investment securities,  and loan
pool  participations.  An increase in the yield on loan pool participations also
contributed to the increase in interest income. A $504,000 (27%) increase in the
amount of  interest  expense was noted as the volume of  deposits  and  borrowed
funds grew.  The  Company's  net interest  margin for the third  quarter of 1996
increased to 6.27% from 5.68% in the third quarter of 1995 as the rate earned on
interest-earning   assets  increased  and  the  rate  paid  on  interest-bearing
liabilities  decreased.  The Company's overall yield on earning assets increased
to 10.3% for the third quarter of 1996 compared to 9.8% for the third quarter of
1995.  The rate  paid on  interest-bearing  liabilities  decreased  in the third
quarter of 1996 to 4.7% from 5.0% in the third quarter of 1995.

     For the nine months  ended  September  30, 1996,  net  interest  income was
$9,915,000,  an increase of $1,729,000  (21%) compared to net interest income of
$8,185,000 for the nine months ended  September 30,  1995.  This increase in net
interest  income was  mainly  attributable  to  increased  volumes  and rates on
interest-earning  assets  offset by increases in the volume of  interest-bearing
liabilities.  The net interest margin  increased  slightly to 6.5% for the first
nine months of 1996  compared  with 6.4% for the first nine months of 1995.  The
yield on earning  assets was 10.5% for the first  nine  months of 1996  compared
with 10.4% for the nine  months  ended  September  30,  1995,  while the rate on
interest-bearing liabilities for 1996 was 4.7% compared with 4.8% in 1995.

     Interest  income and fees on loans  increased  $738,000  (37%) in the third
quarter  of 1996  compared  to the same  period  in 1995 due to  increased  loan
volumes. The increase  attributable to volume was partially offset by a decrease
in the overall yield on loans for the quarter which was due to a slightly  lower
market interest rate environment.  For the nine months ended September 30, 1996,
interest income and fees on loans increased  $1,777,000  (31%) compared with the
first nine months of 1995. The average yield on loans  increased to 9.8% for the
first nine months of 1996, up from 9.5% for the nine months ended  September 30,
1995.  Average loans  outstanding  increased to $101,130,000  for the first nine
months  of 1996  compared  with  $79,687,000  for the same  period  in 1995,  an
increase of $21,443,000 (27%).

<PAGE>

     Loan pool  investments  continued  to provide  the Company  with  increased
amounts of revenue compared to prior year periods.  Interest income and discount
earned on the loan pools  increased  $676,000 (40%) in the third quarter of 1996
to $2,375,000  compared with $1,700,000 earned in the third quarter of 1995. The
yield on loan pool investments  increased to 16.3% for the third quarter of 1996
compared  with  14.3% in the  third  quarter  of 1995.  The  average  loan  pool
participation  investment  balance was  $10,881,000  (23%)  greater in the third
quarter  of 1996 than in 1995.  For the  first  nine  months of 1996,  loan pool
interest income and discount  totaled  $6,230,000,  an increase of $458,000 (8%)
compared to the 1995 year-to-date total of $5,772,000. Year-to-date 1996 average
loan  pool  participation   investments   increased  to  $48,484,000,   up  from
$45,761,000  for the first  nine  months of 1995.  Loan pool yield for the first
nine months of 1996 was 17.2% compared with a yield of 16.9% for the nine months
ended September 30, 1995. 

     For the third  quarter  of 1996 the  Company  experienced  an  increase  of
$185,000 (107%) in interest income on investment  securities  available for sale
compared  with the same  periodin  1995.  This  increase  was  mainly due to the
increased  level of  securities  held in this  category in 1996  compared to the
prior year.  For the nine months ended  September  30,1996,  interest  income on
securities  available for sale increased $443,000 (97%) due to increased volume.
Most  of the  securities  the  Company  has  purchased  during  1996  have  been
classified as "available for sale."

     Interest expense for the third quarter of 1996 increased  compared with the
third  quarter of 1995 as a result of the  increase in total  deposits  (much of
this due to the deposits acquired by Central Valley Bank) and an increased level
of borrowed funds. The average interest rates paid on all deposit categories and
on borrowed funds were lower in the third quarter of 1996 compared to 1995 which
somewhat offset the higher balances.  Average interest-bearing  deposits for the
third quarter of 1996 increased  $44,335,000 (32%) from the same period in 1995.
Average  federal funds  purchased and notes payable  increased  during the third
quarter of 1996 by $2,545,000 and  $4,436,000,  respectively,  compared with the
third  quarter of 1995 with a resultant  increase  in interest  expense on these
liabilities.  Federal funds were purchased to meet loan pool funding needs,  and
the increase in notes payable wasused to provide  additional  capital to Central
Valley  Bank.  For the nine months ended  September  30,  1996,  total  interest
expense was $1,020,000  (20%) greater than in the first nine months of 1995. The
average rate paid on  interest-bearing  liabilities  was 4.7% for the first nine
months of 1996  compared  with 4.8% in the first  nine  months of 1995.  Average
interest-bearing  liabilities  for the  nine  months  ended  September 30,  1996
increased  $29,394,000  compared  with the same  period in 1995 due to growth in
deposits  at existing  subsidiaries  and the  acquisition  of the bank office by
Central Valley Bank.
<PAGE>


Provision for Loan Losses


Other Income

     Total  noninterest  income increased  $43,000 (14%) in the third quarter of
1996 compared with 1995. The greater total of noninterest  income was mainly due
to  increased  service  charge  income  at  Central  Valley  Bank  (much of this
attributable  to the  acquisition),  increased  trust fees  collected at Mahaska
State  Bank,  and  higher  loan  charges  and  fees   recognized  at  both  bank
subsidiaries.  These increases were partially offset by a loss taken on the sale
of some  investment  securities  held as available for sale that allowed Mahaska
State Bank to reposition a portion of its  investment  portfolio.  For the first
nine  months of 1996,  total  noninterest  income for the Company was up $73,000
(7%) over that recorded in the same period of 1995.

Other Expense

     Total  noninterest  expense  for  the  quarter  ended  September  30,  1996
increased  $640,000 (44%) compared to noninterest  expense for the third quarter
of  1995.  Of  this  increase,   approximately   $209,000   (including  goodwill
amortization)  was  attributable  to the  acquisition  by Central  Valley of the
Sigourney bank office,  $213,000 was the SAIF assessment,  and the remainder was
mainly due to an  increase  in the  number of  employees  at Central  Valley and
On-Site,  resulting in higher  personnel  expense for the quarter.  

     Salaries and employee  benefits  expense  increased  $196,000  (26%) in the
third  quarter of 1996  compared  with  1995.  Of this  increase,  approximately
$76,000 was  attributable  to eight  additional  employees of the acquired  bank
office,  while the remaining  $120,000 was attributable to an increase of eleven
full-time  equivalent  employees  spread  between  On- Site and  Central  Valley
(including the new In-Store branch).

<PAGE>

     The Company's  FDIC  assessment  expense  increased in the third quarter of
1996  primarily  because of the  one-time  assessment  of  $213,000  incurred on
September  30, 1996 to  recapitalize  the SAIF by  bringing  it to its  required
funding  level.  This will  benefit the  Company  through an  approximately  72%
reduction in FDIC premium rates charged on  SAIF-insured  deposits  beginning in
1997. The current SAIF rate charged of $.23 per $100 of insured deposits will be
reduced to $.06.  As of  September  30, 1996,  the  Company s  subsidiaries  had
approximately  $43  million in SAIF  insured  deposits  and  approximately  $161
million of deposits  insured by the Bank  Insurance  Fund (BIF).  In conjunction
with the  SAIF  assessment,  the BIF rate  will  increase  to $.013  per $100 of
deposits  beginning in 1997. The current BIF rate is zero, thus there will be an
increase in FDIC assessment  related to the BIF deposits.  The overall result to
the Company will be favorable in terms of 1997 expense reduction.

     Professional  fees  for the  third  quarter  of  1996  rose  $64,000,  with
approximately  $29,000 of that amount  attributable  to one-time data processing
conversion and legal costs  associated with the branch office  acquisition.  The
remaining  increase is primarily due to higher legal fees associated with credit
administration and other litigation.

     Other operating  expenses  increased  $92,000 for the third quarter of 1996
over 1995 with approximately  $42,000 of this due to the acquisition of the bank
office.  During the third quarter of 1996,  amortization  of goodwill  increased
$57,000 versus the same period in 1995  primarily due to the $50,000  additional
amortization related to the Sigourney office in 1996.

     Total  noninterest  expense for the nine months  ended  September  30, 1996
increased  $777,000 (16%)  compared with the first nine months of 1995.  Much of
this increase is due to the costs of additional personnel,  the costs associated
with the acquisition and operation of the Sigourney branch office,  and the SAIF
assessment.

Income Tax Expense

     Income tax expense for the three months ended September 30, 1996, increased
$129,000 (29%)  compared to the amount for the three months ended  September 30,
1995, due to the overall increase in taxable income for the period. For the nine
months ended  September 30,  1996,  the Company's  income tax expense  increased
$298,000  (20%)  compared  with the first  nine  months of 1995.  The  Company's
effective tax rate was 34% for all periods.

<PAGE>

FINANCIAL CONDITION

     The Company's total assets as of September 30, 1996 were  $259,163,000,  an
increase of $54.0 million (26%) from December 31, 1995. Total deposits increased
$42.9 million  during this time period with  approximately  $32.1 million of the
increase attributable to the acquired bank office. Subsequent to the acquisition
on June 21,  1996,  there has been very  minimal  run-off of acquired  deposits.
Exclusive of the growth in deposits attributable to the acquisition, the Company
experienced  deposit growth of approximately  $10.8 million (7%). Deposit growth
at Mahaska  State Bank from  December  31, 1995 through  September  30, 1996 was
approximately  $5.4  million and existing  branches of Central  Valley Bank also
grew approximately $5.4 in the same time period. The Company had $4.0 million in
interest-bearing  deposits in banks and no federal  funds sold on September  30,
1996, compared with interest-bearing bank deposits of $3.4 million and fed funds
sold of $10.7  million on  December  31,  1995.  Fed funds  purchased  were $4.7
million on September  30, 1996 with none on December 31, 1995.  The note payable
balance was $13.7 million on September 30, 1996,  compared with $10.0 million on
December 31, 1995 reflecting the additional  borrowing of $5.0 million  incurred
by the Company to inject additional capital into Central Valley Bank required by
the bank office acquisition.  The Company did pay down $1.3 million on the notes
payable as loan pool collections were received.

Loan Pool Participations

     As of  September  30,  1996,  the  Company  had  investments  in loan  pool
participations  of  $59,248,000.  New loan pool  investments  during the quarter
totaled  $6,869,000,   with  the  year-to-date   investment  for  1996  totaling
$29,410,000. The new loan pool investments purchased during the third quarter of
1996 were acquired from a private seller. The loan pool participation investment
as of December 31, 1995 was  $45,318,000.  The Company received a total of $15.5
million in recovery of loan pool investment for the first nine months of 1996.

Loans

     Loan volumes  continued to increase,  with total loans as of September  30,
1996 reflect inggrowth of $32.0 million from December 31,  1995.  Central Valley
purchased  approximately  $14.6  million in loans from  Boatmen's as part of the
Sigourney  acquisition.  Most of the  approximately  $17.4 million (20%) in loan
growth  at  existing  subsidiaries  was in the real  estate,  agricultural,  and
commercial  loans  categories.  Central Valley Bank experienced much of the loan
growth  (approximately  $9.0 million),  while loan volumes at Mahaska State Bank
and leases and receivables at On-Site Commercial Services also increased.

<PAGE>


Nonperforming Loans

     The Company's  nonperforming loans totaled $2,582,000 (2.2% of total loans)
as of  September  30,  1996,  compared  to $694,000  (.8% of total  loans) as of
December 31, 1995. All nonperforming  loan totals and related ratios exclude the
loan  pool   investments.   The  following  table  presents  the  categories  of
nonperforming loans as of September 30, 1996:
<TABLE>
<CAPTION>

                               Nonperforming Loans
                             (dollars in thousands)
                               September 30, 1996
         <S>                                 <C>
         90 days past due                   $   678
         Renegotiated                           375
         Nonaccrual                           1,529
         Other real estate owned                  0
                                            --------
                                            $ 2,582
</TABLE>


     From  December 31, 1995 to September  30, 1996,  loans 90 days past due and
still accruing  increased  $544,000 while  restructured loans decreased $34,000,
nonaccrual  loans increased  $1,405,000,  and other real estate owned of $27,000
was sold.  The increase in loans past due 90 days and still  accruing was mainly
due to slow payment by two agricultural lines that are ninety percent guaranteed
by the FmHA.  These two loans were placed on nonaccural  subsequent to September
30, 1996, and both are now in mediation.  It is anticipated that both lines will
be  liquidated  with minimal loss.  The increase in  nonaccrual  loans is due to
concerns with some accounts  receivable  financing  lines at On-Site  Commercial
Services.  On-Site  Commercial  Services provides leasing,  accounts  receivable
financing,  and factoring services to small business  customers.  These types of
activities  are  inherently  more  risky  than the  traditional  commercial  and
agricultural  lending activities of the bank subsidiaries.  The final resolution
of these credits is undetermined at this time,  however,  management felt it was
prudent to increase  the loan loss  provision  for the third  quarter of 1996 in
light of the situation.  The Company's allowance for loan losses as of September
30, 1996 was  $1,447,000,  which was 1.2% of total  loans as of that date.  This
compares  with an  allowance  for loan losses of  $1,001,000  as of December 31,
1995, which was 1.1% of total loans. As of September 30, 1996, the allowance for
loan  losses  to  nonperforming  loans  was  56.0%  compared  with  144.3% as of
December 31,  1995.  Management  believes  that as of September  30,  1996,  the
allowance for loan losses is adequate.  For the three months ended September 30,
1996, the Company recognized a net loan charge-off of $28,000 compared

<PAGE>
with a net  charge-off  of $3,000  during the quarter  ended  September 30,
1995.  The Company  recognized a net  charge-off  of $44,000 for the nine months
ended  September 30, 1996 and net recovery of loans  previously  charged-off  of
$5,000 during the nine months ended September 30, 1995.
Capital Resources

     As of September  30, 1996,  total  shareholders' equity as a percentage of
total assets was 12.9% compared with 15.7% as of December 31, 1995. The decrease
in total equity to assets was due to the increase in the Company's total assets,
a substantial portion of which was the acquisition of the bank office by Central
Valley.  The Company held 55,000 shares of treasury  stock at a cost of $853,000
as of September 30, 1996. The Company repurchased 20,000 shares during the third
quarter  of 1996 at an average  cost of $15.72 per share.  During the first nine
months of 1996, the Company has repurchased 40,000 shares of stock at an average
cost of $15.55 per share.  Under  risk-based  capital rules, the Company's total
capital was 17.5% of  risk-weighted  assets as of September  30,  1996,  and was
20.6% of  risk-weighted  assets as of  December  31,  1995,  compared to an 8.0%
requirement.

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 13,051,000 as of September 30, 1996,  compared with  $20,821,000
as of December 31, 1995.  Some of this decrease is  attributable to the increase
in loans,  investment securities available for sale, and to the increase in loan
pool participations (all of which utilized liquid assets). 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 that would allow them to borrow  federal  funds on a short-
term basis if necessary.  Management  believes  that the Company has  sufficient
liquidity  as of  September  30,  1996  to  meet  the  needs  of  borrowers  and
depositors.

<PAGE>


PART II -- Item 5.  Other Information.

     William E.  Masterson,  a director of the Company  since 1981,  passed away
suddenly on September 2, 1996. As of the date of this filing, no replacement for
Mr. Masterson has been found.

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

     (b)  Reports on Form 8-K -- There were no reports on Form 8-K filed for the
three month sended September 30, 1996.


<PAGE>

                                    SIGNATURE

     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



Date:   November 12, 1996                   By: /S/Charles S. Howard
                                                --------------------
                                                  Charles S. Howard
                                                  President




Date:   November 12, 1996                   By: /s/ David A. Meinert
                                                --------------------
                                                  David A. Meinert,
                                                  Chief Financial Officer
                                                  and Executive Vice
                                                  President
                                                  (Principal Accounting Officer)
[TEST]