AMENDED 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
  JUNE 30, 2000                                                0-24630





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




         IOWA                                                42-1003699
(State of Incorporation)                            (I.R.S. 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 July 31, 2000,  there were  3,939,314  shares of common stock $5 par value
outstanding.
<PAGE>
PART I -- Item 1.  Financial Statements

                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CONDITION

<TABLE>
<CAPTION>
(unaudited)
(dollars in thousands, except for share amounts)
                                                        June 30,    December 31,
                                                          2000         1999
                                                       ----------   -----------
                                  ASSETS
<S>                                                    <C>            <C>
Cash and due from banks ..........................     $   9,324      $  13,354
Interest-bearing deposits in banks ...............         1,063          1,700
Federal funds sold ...............................         1,620          7,865
                                                       ----------   -----------
     Cash and cash equivalents ...................        12,007         22,919
                                                       ----------   -----------
Investment securities:
     Available for sale ..........................        63,956         60,530
     Held to maturity ............................        27,641         29,445
Loans ............................................       305,249        282,091
Allowance for loan losses ........................        (3,616)        (4,006)
                                                       ----------     ---------
     Net loans ...................................       301,633        278,085
                                                       ----------     ---------
Loan pool participations .........................        60,048         67,756
Premises and equipment, net ......................         6,875          6,795
Accrued interest receivable ......................         4,705          4,719
Goodwill and other intangible assets .............        12,287         12,850
Other assets .....................................         5,091          3,090
                                                       ---------      ---------
     Total assets ................................     $ 494,243      $ 486,189
                                                       =========      =========

                   LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
     Demand ........................................   $  21,990      $  23,197
     NOW and Super NOW .............................      42,220         42,378
     Savings .......................................      91,590         96,377
     Certificates of deposit .......................     193,297        186,720
                                                       ----------    ----------
Total deposits .....................................     349,097        348,672
Federal funds purchased ............................       7,200          2,965
Federal Home Loan Bank advances ....................      70,986         63,421
Note payable .......................................      15,100         18,000
Other liabilities ..................................       4,363          2,896
                                                       ----------    ----------
Total liabilities ..................................     446,746        435,954
                                                       ----------    ----------
Shareholders' equity:
     Common stock, $5 par value; authorized
       20,000,000 shares; 4,912,849 shares as
       of June 30, 2000 and December 31, 1999 ......      24,564         24,564
     Capital surplus ...............................      13,127         13,192
     Treasury stock at cost, 973,535 shares as
       of June 30, 2000, 577,735 shares as of
       December 31, 1999 ...........................     (11,869)        (8,525)
     Retained earnings .............................      22,371         21,511
     Accumulated other comprehensive loss ..........        (696)          (507)
                                                       -----------    ---------
Total shareholders' equity .........................      47,497         50,235
                                                       -----------    ---------
Total liabilities and shareholders' equity .........   $ 494,243      $ 486,189
                                                       ===========    =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>

                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

(unaudited)                             Three Months Ended     Six Months Ended
(dollars in thousands, except               June 30,                June 30,
per share)                               ------------------    -----------------
                                          2000       1999       2000       1999
                                         -------   -------    --------  --------
<S>                                      <C>       <C>         <C>       <C>
Interest Income:
   Interest and fees on loans            $ 6,170   $ 3,991     $12,035   $ 7,765
   Interest and discount on loan pools     1,814     1,339       3,908     3,548
   Interest on bank deposits                  27        15          59        51
   Interest on federal funds sold             54        77         127       174
   Interest on investment securities:
     Available for sale                    1,080       427       2,108       873
     Held to maturity                        445       180         905       367
                                         -------   -------    --------  --------
      Total interest income                9,590     6,029      19,142    12,778
                                         -------   -------    --------  --------
Interest expense:
   Interest on deposits:
     NOW and Super NOW                       199       149         385       296
     Savings                                 961       650       1,884     1,212
     Certificates of deposit               2,569     1,560       5,002     3,139
   Interest on federal funds purchased        45         4          80         4
   Interest on Federal Home Loan
     Bank advances                         1,061       109       2,066       217
   Interest on note payable                  343       294         710       599
                                         -------   -------    --------  --------
      Total interest expense               5,178     2,766      10,127     5,467
                                         -------   -------    --------  --------
      Net interest income                  4,412     3,263       9,015     7,311
   Provision for loan losses                 270     1,465         421     1,632
                                         -------   -------    --------  --------
      Net interest income after
        provision for loan losses          4,142     1,798       8,594     5,679

Noninterest income:
   Service charges                           424       313         824       617
   Data processing income                     59        51         109       101
   Other operating income                    156        86         308       224
   Investment security gains (losses)        (17)        0          17         0
                                         --------  -------    --------  --------
      Total noninterest income               622       450       1,258       942
                                         --------  -------    --------  --------
Noninterest expense:
   Salaries and employee benefits expense  1,594     1,254       3,231     2,591
   Net occupancy expense                     434       342         869       699
   Professional fees                         179       339         314       425
   Other operating expense                   809       639       1,724     1,265
   Goodwill amortization                     282       139         563       288
                                         -------   -------    --------  --------
      Total noninterest expense            3,298     2,713       6,701     5,268
                                         -------   -------    --------  --------
      Income (loss) before income
         tax expense                       1,466      (465)      3,151     1,353
      Income tax expense (benefit)           495      (146)      1,067       515
                                         -------   -------    --------  --------
        Net income (loss)                $   971   $  (319)   $  2,084  $    838
                                         =======   =======    ========  ========

Earnings (loss) per common share-basic    $ 0.24   $(0.09)    $ 0.50      $ 0.23
Earnings (loss) per common share-diluted  $ 0.24   $(0.09)    $ 0.50      $ 0.22
Dividends per common share                $ 0.15   $ 0.15     $ 0.30      $ 0.30
</TABLE>

See accompanying notes to consolidated financial statements.
<PAGE>

                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
(unaudited)                              Three Months Ended     Six Months Ended
(in thousands)                               June 30,               June 30,
                                         ------------------     ----------------
                                          2000       1999        2000     1999
                                         -------   -------     -------   -------
<S>                                      <C>       <C>         <C>       <C>
Net income (loss)                        $ 971     $ (319)     $ 2,084   $ 838
Other Comprehensive Income:
    Unrealized gains (losses) on
    securities available for sale:
       Unrealized holding gains (losses)
         arising during the period, net
         of tax                              0       (177)        (176)   (277)
       Less: reclassification adjustment
         for net (gains) losses included in
         net income, net of tax             11          0          (13)      0
                                         -------   -------     -------   -------
Other comprehensive income (loss),
   net of tax                               11       (177)        (189)   (277)
                                         -------   -------     -------   -------
Comprehensive income (loss)             $  982     $ (496)     $ 1,895  $  561
                                         =======   =======     =======   =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>

PART I -- Item 1. Financial Statements, Continued

                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(unaudited)                                               Six Months Ended
(dollars in thousands)                                        June 30,
                                                      -------------------------
                                                          2000          1999
                                                      -----------    ----------
<S>                                                   <C>            <C>
Cash flows from operating activities:
  Net income                                          $   2,084      $      838
                                                      -----------    ----------
    Adjustments to reconcile net income to net
      cash provided by operating activities:
    Depreciation and amortization                           857             618
    Provision for loan losses                               421           1,632
    Investment securities gains                             (17)              0
    (Gain) loss on sale of premises and equipment            (4)              2
    Amortization of investment securities premiums          140              97
    Accretion of investment securities and loan discounts  (111)           (227)
    (Increase) decrease in other assets                  (1,987)            240
    Increase (decrease) in other liabilities              1,575            (375)
                                                      -----------    ----------
        Total adjustments                                   874           1,987
                                                      -----------    ----------
        Net cash provided by operating activities         2,958           2,825
                                                      -----------    ----------
Cash flows from investing activities:
  Investment securities available for sale:
    Proceeds from sales                                   4,884               0
    Proceeds from maturities                              2,867           7,262
    Purchases                                           (11,418)         (5,400)
    Investment securities held to maturity:
      Proceeds from maturities                            4,049           2,178
      Purchases                                          (2,211)         (2,024)
    Net increase in loans                               (23,924)        (12,555)
    Purchases of loan pool participations               (15,211)        (19,999)
    Principal recovery on loan pool participations       22,919          12,063
    Purchases of premises and equipment                    (486)           (207)
    Proceeds from sale of premises and equipment             17               0
                                                      -----------    ----------
        Net cash used in investing activities           (18,514)        (18,682)
                                                      -----------    ----------
Cash flows from financing activities:
  Net increase in deposits                                  473           2,415
  Net increase in federal funds purchased                 4,235           2,898
  Federal Home Loan Bank advances                        33,000               0
  Repayment of Federal Home Loan Bank advances          (25,531)            (14)
  Advances on note payable                                1,900             150
  Principal payments on note payable                     (4,800)         (2,550)
  Dividends paid                                         (1,224)         (1,094)
  Purchases of treasury stock                            (3,433)              0
  Proceeds from exercise of stock options                    24             252
                                                      -----------    ----------
        Net cash provided by financing activities         4,644           2,057
                                                      -----------    ----------
        Net decrease in cash and cash equivalents       (10,912)        (13,800)
Cash and cash equivalents at beginning of period         22,919          22,121
                                                      -----------    ----------
Cash and cash equivalents at end of period            $  12,007      $    8,321
                                                      ===========    ==========
Supplemental disclosures of cash flow information:
  Cash paid (received) during the period for:
    Interest                                          $  10,074        $  5,477
                                                      ===========    ==========
    Income taxes                                      $     298        $  1,179
                                                      ===========    ==========
</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  statements of income and the  consolidated
     statements of comprehensive  income for the three and six months ended June
     30, 1999 and the  consolidated  statements  of cash flow for the six months
     ended June 30, 1999 include the accounts  and  transactions  of the Company
     and its four wholly-owned subsidiaries,  Mahaska State Bank, Central Valley
     Bank, Pella State Bank and MIC Financial,  Inc. The consolidated statements
     of condition as of June 30, 2000 and  December 31, 1999,  the  consolidated
     statement of income and the consolidated  statement of comprehensive income
     for  the  three  and  six  month  periods  ended  June  30,  2000  and  the
     consolidated  statement of cash flow for the six months ended June 30, 2000
     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"),  completed on September 30, 1999. 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 June 30, 2000,  and the results of operations
     for the three months and the six months  ended June 30, 2000 and 1999,  and
     cash flows for the six months ended June 30, 2000 and 1999.

     The results for the three months and the six months ended June 30, 2000 may
     not be indicative of results for the year ending  December 31, 2000, 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 six  months
     ended June 30, 2000 and 1999 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 June 30, 2000 and 1999 was 4,042,690 and 3,652,376, respectively. The
     weighted average number of shares for the six-month  periods ended June 30,
     2000 and 1999 was 4,165,758 and 3,644,405,  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 dilutive potential shares are the dilutive effect of
     additional  potential  common  shares  issuable  under stock  options.  The
     computation of diluted earnings per share used a weighted average number of
     diluted shares  outstanding of 4,046,428 and 3,728,534 for the three months
     ended June 30, 2000 and 1999,  respectively.  For the six months ended June
     30, 2000 and 1999, the diluted earnings per share  computation was based on
     weighted  average  number of diluted  shares  outstanding  of 4,177,683 and
     3,743,010, respectively.

5.   Effect of New Financial Accounting Standards

     SFAS  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
     Activities",  was scheduled to become  effective for the Company  beginning
     January 1, 2000. SFAS No. 137 subsequently deferred  implementation of SFAS
     133 until January 1, 2001. SFAS No. 138 amends the accounting and reporting
     requirements  of SFAS No.  133.  Management  is  evaluating  the impact the
     adoption  of SFAS  No.  133 and SFAS No.  138  will  have on the  Company's
     consolidated  financial  statements  and  expects to adopt SFAS No. 133 and
     SFAS No. 138 when required.

     The  American  Institute  of  Certified  Public  Accountants  has  issued a
     proposed  Statement of Position  ("SOP") which addresses the accounting for
     differences  between  contractual  and  expected  future cash flows from an
     investor's  initial  investment  in certain loans and debt  securities.  It
     includes such loans acquired in purchase  business  combinations  and would
     apply to all  enterprises.  The proposed SOP would limit the yield that may
     be accreted  (accretable yield) to the excess of the investor's estimate of
     undiscounted  expected  future  principal and interest cash flows (expected
     future cash flows) over the investor's  initial investment in the loan. The
     provisions of this proposed SOP would be effective for financial statements
     issued for fiscal years  beginning  after June 15, 2000.  Management of the
     Company does not expect the adoption of this SOP to have a material  effect
     on its financial statements.

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 MIC Financial, Inc.

     On April 23,  1999,  the  Company  announced  that it had elected to seek a
     buyer for MIC Financial,  Inc.  (formerly known as On-Site Credit Services,
     Inc.), its wholly-owned commercial finance subsidiary.  The Company has now
     sold a significant amount of the assets in several transactions. As of June
     30, 2000, MIC  Financial's  loan and lease  portfolio  totaled  $2,764,000,
     approximately 1 percent of the Company's total loans as of that date.

8.   Acquisition of Midwest Bancshares, Inc.

     The  Company  acquired  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 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 is being  amortized over
     25 years on a straight-line basis. The acquisition has been accounted using
     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 three months or the six month period ended June 30, 1999.

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

                           QUARTER ENDED JUNE 30, 2000

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 was accounted for using
the purchase method of accounting  and,  accordingly,  the Company's  results of
operations  for the three and six months  ended June 30, 1999 do not include the
results of Midwest Federal.

The Company recorded net income of $971,000 for the quarter ended June 30, 2000,
compared with a net loss of $319,000 for the three months ended June 30, 1999, a
net change of  $1,290,000.  Basic and diluted  earnings per share for the second
quarter of 2000 were $.24 versus a loss of $.09 per share for the second quarter
of 1999. Actual weighted average shares outstanding were 4,042,690 and 3,652,376
for the second quarter of 2000 and 1999, 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 increased the average shares  outstanding in the second quarter
of 2000.  The Company's  return on average assets for the quarter ended June 30,
2000 was .80  percent  compared  with a negative  return of .42  percent for the
quarter ended June 30, 1999. The Company's return on average equity increased to
7.99  percent  for the three  months  ended June 30, 2000  compared  with - 3.30
percent for the three months ended June 30, 1999.

During the second quarter of 1999,  management and the board of directors of the
Company  determined that it would seek a buyer for its  wholly-owned  commercial
finance  subsidiary MIC Financial,  Inc., then known as On-Site Credit Services,
Inc. Included in the financial results for the second quarter of 1999 were costs
and charges related to discontinuing the MIC Financial activity  consisting of a
loan loss  provision of $1,243,000,  an estimated loss on sale of $220,000,  and
severance  benefits to employees of $21,000.  These charges and costs were major
factors in the reported loss for the period.


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  additional  earning  assets  and  interest-bearing  liabilities  of Midwest
Federal  included in the second  quarter of 2000  significantly  increased  both
interest  income on investments  and loans and interest  expense on deposits and
borrowed  funds in comparison to the second  quarter of 1999.  The Company's net
interest  income for the quarter ended June 30, 2000  increased  $1,149,000  (35
percent) to $4,412,000 from $3,263,000 for the three months ended June 30, 1999.
This increase was mainly due to increased  interest income earned on higher loan
and  investment  volumes.  Increased  interest  expense on deposits and borrowed
funds  somewhat  offset  the  higher  interest  income.  Total  interest  income
increased  $3,561,000  (59 percent) in the second  quarter of 2000 compared with
the same period in 1999. Exclusive of the additional  $3,264,000 interest income
generated  by  Midwest  Federal in the second  quarter of 2000,  total  interest
income would have increased by $297,000 in comparison to the 1999 second quarter
primarily due to increased  interest income on loans and greater interest income
and discount on loan pool  participations.  The Company's total interest expense
for the second quarter of 2000 increased  $2,412,000 (87 percent)  compared with
the same  period in 1999.  Total  interest  expense,  excluding  the  $2,059,000
related to Midwest  Federal,  increased  $353,000 in the second  quarter of 2000
compared with 1999, primarily due to higher market interest rates. The Company's
net interest margin (on a federal  tax-equivalent  basis) for the second quarter
of 2000 decreased to 4.07 percent (4.56 percent  excluding Midwest Federal) from
4.67 percent in the second quarter of 1999. 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 8.65 percent
(8.98 percent without  Midwest  Federal) for the second quarter of 2000 compared
to 8.78  percent for the second  quarter of 1999.  The rate on  interest-bearing
liabilities  increased  in the  second  quarter  of 2000 to 5.03  percent  (5.00
percent without Midwest Federal) compared to 4.66 percent for the second quarter
of 1999.

Interest  income and fees on loans  (excluding  the  $1,999,000  contributed  by
Midwest  Federal)  increased  $180,000 (4 percent) in the second quarter of 2000
compared to the same  period in 1999,  mainly due to higher  loan  volumes.  The
average yield on loans exclusive of Midwest Federal declined to 8.68 percent for
the second  quarter of 2000,  compared to 9.28 percent in the second  quarter of
1999. The average yield on loans including Midwest Federal in the second quarter
of 2000 was 8.32 percent.  The yield on the Company's loan portfolio is effected
by the amount of nonaccrual  loans,  the mix of the portfolio (real estate loans
generally have a lower overall yield than  commercial and  agricultural  loans),
the effects of competition and the interest rate  environment on the amounts and
volumes of new loan originations, and the mix of variable rate versus fixed rate
loans in the  Company's  portfolio.  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  $298,307,000 for the second quarter of 2000 compared with $177,314,000 for
the second quarter of 1999, an increase of $120,933,000 (68 percent).  Excluding
the  increase  in average  loan  volume  attributable  to Midwest  Federal,  the
Company's  average loans outstanding were $15,974,000 (9 percent) greater in the
second quarter of 2000 than in 1999.

Overall, the Company recognized $475,000 more in interest and discount income on
loan pool  participations  in the  second  quarter of 2000  compared  with 1999,
mainly due to higher collections and the sale of some loans. Interest income and
discount  collected on the loan pool  participations  for the three months ended
June 30, 2000 was $1,814,000  compared with  $1,339,000  collected in the second
quarter of 1999. The yield on loan pool participations was 12.49 percent for the
second  quarter of 2000  compared  with 10.14 percent for the quarter ended June
30, 1999. The average loan pool participation  investment balance was $5,429,000
(10 percent)  greater in the second  quarter of 2000 than in 1999 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.

For the second  quarter,  interest  income on  investment  securities  increased
$918,000  compared with the quarter ended  June 30,  1999 due to the  additional
securities held by Midwest  Federal.  Without Midwest  Federal,  interest income
from  investment  securities was $23,000 lower in the 2000 quarter than in 1999,
generally due to decreased volume in the portfolio.

The $1,370,000 increase in interest expense on deposits in the second quarter of
2000 compared with 1999 was  attributable to the additional  deposits of Midwest
Federal,  generally  higher  market  interest  rates  and to  some  increase  in
deposits. Excluding the $1,169,000 deposit interest expense for Midwest Federal,
the Company's interest expense on deposits increased $201,000.

Average  interest-bearing  deposits  for the  first  quarter  of 2000  increased
$112,248,000  (51  percent)  from the same  period  in 1999.  Excluding  Midwest
Federal, average interest-bearing deposits were $3,504,000 greater in the second
quarter  of 2000  than in 1999.  Interest  expense  on  Federal  Home  Loan Bank
advances was $952,000  higher in the second quarter of 2000  reflecting  Midwest
Federal's  utilization of this alternative  funding method.  Interest expense on
notes  payable was up $49,000 in the second  quarter of 2000  compared with 1999
due to higher  interest  rates on the Company's  commercial  bank line of credit
reflecting the increased prime rate.


Provision for Loan Losses

The  Company  recorded a  provision  for loan  losses of  $270,000 in the second
quarter of 2000, of which $12,000 was recorded by Midwest Federal. MIC Financial
did not have any provision for loan losses in the second quarter of 2000. One of
the Company's  subsidiary  banks  increased its provision for loan losses during
the period due to continued  deterioration in the financial  position of a large
agricultural line of credit. In the second quarter of 1999, the Company recorded
a  provision  for loan  losses of  $1,465,000  ($1,243,000  for MIC  Financial).
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.  Management  believes  that the  allowance  for loan losses is
adequate  based on the  inherent  risk in the  portfolio  as of June  30,  2000,
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.


Noninterest Income

Noninterest  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  noninterest  income was $172,000  (38 percent)  greater in the
second quarter of 2000 compared with 1999. Excluding the contribution of Midwest
Federal of  $153,000,  most of the increase  was due to higher  service  charges
collected on nonsufficient funds checks written by bank customers.


Noninterest Expense

Total noninterest expense for the quarter ended June 30, 2000 increased $585,000
(22 percent)  compared to  noninterest  expense for the second  quarter of 1999.
Excluding  the  $875,000  expense  for the  operation  of Midwest  Federal,  the
Company's   noninterest   expense  actually  decreased  $290,000  (11  percent).
Noninterest  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 second  quarter of 2000  increased  $340,000  (27
percent)  over 1999 as a result of  $350,000 in  additional  expense for Midwest
Federal,  which was partially offset by the reduction in staff at MIC Financial.
Net  occupancy  and  equipment  expenses  increased  $91,000 (27 percent) in the
second quarter of 2000 compared to 1999.  Excluding the $123,000 increase due to
Midwest Federal,  second quarter 2000 net occupancy  expense was down $31,000 in
comparison with 1999 mainly reflecting lower depreciation expense.  Professional
fees in the second quarter of 2000  decreased by $160,000 (47 percent)  compared
to 1999 as a result of lower  legal and annual  report  costs.  Other  operating
expense  increased  by  $170,000  (27  percent)  in the  second  quarter of 2000
compared with the three months ended June 30, 1999.  Excluding  Midwest Federal,
other operating expense  decreased  $69,000 in the 2000 period.  Included in the
other operating  expense decrease was the refund in full of the one-time $80,000
assessment  made by the Treasurer of the State of Iowa in February 2000 to cover
the losses on uninsured  public fund deposits  incurred when a bank in Carlisle,
Iowa was declared  insolvent and closed by the Iowa  Superintendent  of Banking.
This  assessment  was  returned  to the  banks  in June.  Goodwill  amortization
increased in 2000 due to the amortization of the core deposit intangible and the
goodwill attributable to the acquisition of Midwest Federal.


Income Tax Expense

The Company  incurred  income tax expense of $495,000 for the three months ended
June 30, 2000. For the three months ended June 30, 1999, the Company reported an
income tax credit of $146,000 due to the loss  incurred  during the period.  The
effective  income  tax rate as a percent  of income  before  taxes for the three
months ended June 30, 2000 was 33.8 percent.


                         SIX MONTHS ENDED JUNE 30, 2000

The Company  earned  $2,084,000  during the first half of 2000 compared with net
income of $838,000 in the same period of 1999.  Basic and diluted  earnings  per
share  were $.50 for the six  months  ended June 30,  2000  compared  with basic
earnings per share of $.23 and diluted  earnings per share of $.22 for the first
half of 1999. Actual weighted-average shares outstanding in the first six months
of 2000 were  4,165,758  compared  with  3,644,405  in the  first  half of 1999.
Weighted-average diluted shares outstanding were 4,177,683 and 3,743,010 for the
first half of 2000 and 1999, respectively.  The return on average assets for the
first half of 2000 was .86 percent compared with .56 percent in 1999.  Return on
average shareholders' equity was 8.49 percent in 2000 compared with 4.38 percent
for the first half of 1999.


RESULTS OF OPERATION

Net Interest Income

Net interest income increased $1,704,000 in the first half of 2000 compared with
the same period in 1999 reflecting the additional net interest income  generated
by Midwest  Federal in 2000.  Excluding the  $2,493,000  net interest  income of
Midwest  Federal,  the Company's net interest income for the first six months of
2000  was  down   $789,000   primarily  due  to  higher   interest   expense  on
interest-bearing  liabilities and a lower overall yield on earning  assets.  The
Company's net interest  margin for the first half of 2000 was 4.09 percent (4.72
percent  excluding Midwest Federal) compared with 5.34 percent in the first half
of 1999. The yield on earning assets for the first half of 2000 was 8.59 percent
(9.05 percent excluding Midwest Federal) compared with 9.29 percent in 1999. The
overall rate on interest-bearing  liabilities rose to 4.96 percent for the first
half of 2000 from 4.63 percent in 1999.

Interest and fees on loans  increased  $4,270,000 (55 percent) in the first half
of 2000 compared with the same period in 1999. The additional interest income on
loans  attributable  to  Midwest  Federal  was  $3,953,000,  with the  Company's
previously  existing  subsidiaries  having a net increase in interest  income on
loans  totaling  $317,000 (4  percent).  The net  increase was due to the higher
average volume of loans  outstanding  since the average rate earned on loans for
the first half of 2000 (8.28 percent) was lower than in 1999 (9.08 percent). The
average rate on loans  excluding  Midwest  Federal was 8.63 percent in the first
half of 2000.

The amount of interest income and discount collected on loan pool participations
increased 10 percent in the first half of 2000 to $3,908,000  from the first six
months of 1999 total of $3,548,000.  This increase was largely due to the higher
average volume of loan pool participations in 2000 compared with 1999. The yield
on loan pool  participations  decreased  to 12.86  percent for the first half of
2000 compared with 13.50 percent in 1999.

Interest income on investments  increased  $1,773,000 (143 percent) in the first
half of 2000 compared to 1999 as a result of the acquired  securities  portfolio
of Midwest  Federal.  The average  balance of  investment  securities  more than
doubled to $92,827,0000  in 2000 compared with  $44,200,000 in 1999. The average
yield on the portfolio  increased  from 6.08 percent for 1999 to 6.97 percent in
2000.  Without  the  addition  of the Midwest  Federal  securities,  the average
balance of investments would have declined in 2000 as the proceeds from maturing
securities were used to fund loan demand.

Total interest expense on paying liabilities  increased  $4,660,000 in the first
half of 2000 over 1999 due to the  liabilities  assumed with the  acquisition of
Midwest  Federal,  increases in average deposits at existing banks, and the need
to pay higher market  interest rates to retain and attract  deposits.  The rates
paid  on  borrowed  funds  such  as fed  funds  purchased,  FHLB  advances,  and
borrowings  on the  Company's  bank line of credit  all  increased  in 2000 as a
result of higher market rates,  thereby  increasing the interest  expense of the
Company  compared  to  1999.  Excluding  the  interest  expense  on  the  paying
liabilities of Midwest Federal,  the Company's total interest expense  increased
$608,000 (11 percent) in the first half of 2000 compared with 1999.


Provision for Loan Losses

The  year-to-date  2000 provision for loan losses was  $1,211,000  less than the
$1,632,000 for the first six months of 1999. The loss provision by MIC Financial
of  $1,327,000  in 1999 was not repeated in 2000.  Of the $421,000  year-to-date
provision for losses in 2000, only $27,000 was attributable to MIC Financial.


Noninterest Income

Total  noninterest  income for the first six months of 2000  increased  $316,000
over that recorded in 1999. Of that  increase,  $255,000 was due to  noninterest
income for Midwest  Federal.  The remaining  $61,000 increase was largely due to
increased  service  charges  and  gains  on the  sale of  investment  securities
classified as "available for sale" that were sold to meet liquidity needs.


Noninterest Expense

The Company's  noninterest  expense  increased  $1,433,000  during the first six
months of 2000 over 1999. The  noninterest  expense  incurred by Midwest Federal
for the first half of 2000 totaled  $1,764,000.  Excluding Midwest Federal,  the
Company's  noninterest  expense decreased $331,000 in 2000 compared to 1999 with
reductions  noted in  professional  fees (31  percent),  salaries  and  benefits
expense (4 percent), and occupancy expense (11 percent).  Much of this reduction
was due to the down-sizing of the MIC Financial operation.


Income Tax Expense

The Company's  income tax expense of  $1,067,000  for the first half of 2000 was
$552,000  greater  than the $515,000  tax expense for 1999.  Taxable  income was
substantially  higher in 2000.  The  effective  income  tax rate as a percent of
income before taxes for the six months ended June 30, 2000 was 33.8 percent.


FINANCIAL CONDITION

Total assets as of June 30, 2000 were $494,243,000, an increase of $8,054,000 (2
percent) from December 31, 1999. As of June 30, 2000, the Company had $1,620,000
in federal  funds sold and  $7,200,000  federal  funds  borrowed  compared  with
$7,865,000  sold and $2,965,000  borrowed as of December 31, 1999. The Company's
liquidity needs are usually highest during 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 $3,426,000 from December 31,
1999 to the June 30, 2000 total of $63,956,000 as securities  were purchased for
the portfolio.  Investment securities classified as held to maturity declined to
$27,641,000 as of June 30, 2000, compared with $29,445,000 on December 31, 1999,
with the net decrease of $1,804,000 due to the maturity of securities.


Loans

Overall loan volumes  continued to  increase,  with total loans  outstanding  of
$305,249,000 on June 30, 2000, reflecting growth of $23,158,000 (8 percent) from
December 31,  1999.  As of June 30, 2000,  the  Company's  loan to deposit ratio
(excluding loan pool  investments) was 87.4 percent.  This compares with a year-
end 1999  loan to  deposit  ratio of 81.0  percent.  As of June  30,  2000,  MIC
Financial had total loans  outstanding of  $2,764,000,  mostly in the commercial
loan  category.  This  compares  with a  December  31,  1999 loan  total for MIC
Financial of $5,081,000.


Loan Pool Participations

As of June 30, 2000, the Company had loan pool participations of $60,048,000,  a
decrease of  $7,708,000  (11 percent)  from the December 31, 1999  balance.  The
reduction  in the loan pool  participations  is due to  collections  made in the
normal  course of  business  and the sale of most of the loans still held by the
Central States Resources  Corporation,  Midstates Resources  Corporation and All
States Resources Corporation servicing entities. The sale of the majority of the
assets of these  servicing  corporations  was completed in May 2000 with minimal
profits  recognized at that time.  The collection of proceeds from the remaining
assets is expected to continue through the third quarter with the recognition of
any additional  income deferred until the receipt of all remaining  settlements.
Management  of the Company and the servicer  determined  that it was in the best
interest of all parties to sell these remaining  assets in order to maximize the
potential  return on investment  and to reduce credit risk.  The assets in these
servicing  corporations  were  purchased from various  sources  between 1988 and
1997.  These remaining assets were becoming  increasingly  costly to service and
the cash flow from them was  projected  to  decline.  The assets were felt to be
subject to greater than average credit risk in the event of deterioration in the
national economy.

The Company's  involvement  in the loan pool  participations  continues  through
States Resources Corporation which was created by the servicer in 1998. All pool
purchases  since then have been through this  entity.  The loan pool  investment
balance shown as an asset on the Company's Statement of Condition represents the
discounted  purchase  cost of the loan pool  participations.  During  the second
quarter  of 2000 the  Company  was  successful  in  purchasing  three  loan pool
packages totaling $10,575,000. For the first six months of 2000, the Company has
purchased  loan pools  totaling  $15,211,000.  This compares  with  purchases of
$19,999,000  in the first  half of 1999.  The  average  loan pool  participation
balance  of  $61,136,000  for the first six  months of 2000 was  $8,132,000  (15
percent)  higher than the average  balance of $53,003,000  for the first half of
1999.


Deposits

Total deposits as of June 30, 2000 were $349,097,000  compared with $348,672,000
as of December  31,1999.  The Company  typically  experiences  minimal growth in
total deposits from December to June.  Competition for deposits has been intense
in many of the markets served by the Company with management electing not to pay
the highest rates in order to attract depositor funds.


Borrowed Funds

The Company had  $7,200,000 in Federal Funds  purchased on June 30, 2000.  There
was $2,965,000 in Federal Funds purchased on December 31, 1999. During the first
half of 2000,  the  Company  had an average  balance of Fed Funds  purchased  of
$3,159,000.  Advances from the Federal Home Loan Bank totaled  $70,986,000 as of
June 30, 2000 compared with  $63,421,000  as of December 31, 1999. The increases
in Federal  Funds  purchased  and Federal Home Loan Bank  advances  provided the
funds to meet loan demand by customers.


Note Payable

The note  payable  balance  was reduced to  $15,100,000  on June 30, 2000 from a
balance of  $18,000,000 on December 31, 1999. The Company's note matured on June
30,  2000 and was  rewritten  into a  $9,000,000  term loan with one  payment of
$900,000 due December 31, 2000, three annual payments of $1,350,000, and a final
payment of $4,050,000  due on December 31, 2004.  Under the new loan  agreement,
the Company  maintains a revolving  line of credit of up to $9,000,000 (of which
the Company had utilized  $6,100,000  as of June 30, 2000) that matures June 30,
2001.  The interest rate for both the term loan and the revolving line remain at
prime rate less .375%.


Nonperforming Assets

The Company's  nonperforming  assets totaled  $5,165,000  (1.69 percent of total
loans) as of June 30, 2000, compared to $4,965,000 (1.76 percent of total loans)
as of December  31, 1999.  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 MIC Financial, Inc. as
of June 30, 2000 compared with December 31, 1999:
<TABLE>
<CAPTION>
                              Nonperforming Assets
                             (dollars in thousands)
                                  June 30, 2000

                                       MIC
                                      Banks        Financial          Total
                                      -------       ------           -----
<S>                                   <C>          <C>               <C>
Nonaccrual                            $1,700        $1,187           $2,887
Loans 90 days past due                 1,295           414            1,709
Other real estate owned                  569             0              569
                                      -------       ------           -----
                                      $3,564        $1,601           $5,165


                                December 31, 1999

                                       MIC
                                      Banks        Financial          Total
                                      -------       ------           -----

Nonaccrual                            $1,969        $  905           $2,874
Loans 90 days past due                 1,025           401            1,426
Restructured loans                         0           515              515
Other real estate owned                  150             0              150
                                      -------       ------           -----
                                      $3,144        $1,821           $4,965

</TABLE>

From December 31, 1999 to June 30, 2000,  nonaccrual  loans  increased  $13,000.
Loans ninety days past due  increased  $283,000.  Restructured  loans  decreased
$515,000 as the performance on one MIC Financial credit  deteriorated and it was
reclassified  as nonaccrual.  Other real estate owned increased by $419,000 as a
residential  real estate loan was  foreclosed on and a hotel in which one of the
bank  subsidiaries  participated  in a loan  on was  foreclosed.  The  Company's
allowance  for loan  losses as of June 30, 2000 was  $3,616,000,  which was 1.18
percent of total loans as of that date. This compares with an allowance for loan
losses of  $4,006,000  as of December 31, 1999,  which was 1.42 percent of total
loans.  As of June 30, 2000,  the allowance for loan losses was 78.68 percent of
nonperforming  loans compared with 83.20 percent as of December 31,  1999. Based
on the inherent risk in the loan portfolio,  management believes that as of June
30, 2000, the allowance for loan losses is adequate.  For the three months ended
June 30, 2000, the Company  recognized net charge-offs of $204,000 compared with
net  charge-offs  of  $772,000  during  the  quarter  ended June 30,  1999.  Net
charge-offs   recorded  by  MIC  Financial   totaled   $69,000  while  the  bank
subsidiaries  charged off $135,000  during the quarter ended June 30, 2000.  For
the six months ended June 30, 2000, the Company  recognized  net  charge-offs of
$811,000  compared with $1,079,000 for the first half of 1999.  During the first
half of 2000, MIC Financial has $419,000  versus a net charge-off of $791,000 in
the 1999 period.


Capital Resources

As of June 30, 2000, total shareholders'  equity as a percentage of total assets
was 9.61 percent compared with 10.33 percent as of December 31, 1999. During the
second  quarter of 2000,  the Company  repurchased  a total of 77,500  shares of
stock on the open market as part of the 130,000 share  repurchase  authorized by
the  Company's  board of directors on January 21, 2000.  An  additional  250,000
shares of common stock were repurchased by the Company during the second quarter
as authorized by the board of directors on April 27, 2000. The average price per
share of all stock  repurchased  by the  Company on the open  market in 2000 was
$8.21.  Under  risk-based  capital rules, the Company's tier 1 capital ratio was
10.25 percent of risk-weighted assets as of June 30, 2000, and was 11.42 percent
of  risk-weighted  assets as of December  31,  1999,  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 June 30, 2000,  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 $12,007,000 as of June 30, 2000, compared with $22,919,000 as of
December 31, 1999.  Much of the decrease  during the period was utilized to fund
loan  growth  and  to  purchase  investment  securities.  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 June
30, 2000 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 first six months of 2000 changed when
compared to 1999.

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, 1999.


Commitments and Contingencies

In  the  ordinary  course  of  business,  the  Company  is  engaged  in  various
litigation.  Management believes that none of this litigation is material to the
Company's results of operations.


Board of Directors

R. Spencer  Howard  resigned as a director and Vice President of the Company and
President of MIC  Financial  effective  February 29,  2000.  James F. Mathew,  a
director  of the  Company  since  February  1979,  passed away on March 28, 2000
following a long illness.  Another long-term director of the Company,  Martin L.
Bernstein, passed away very unexpectedly on April 28, 2000. The vacancies on the
Company's board of directors created by these events were filled at the June 21,
2000  meeting of the board.  Elected to serve as directors  until the  Company's
annual meeting of shareholders in 2001 were James G. Wake, Michael R. Welter and
Edward C. Whitham,  Jr. These  gentlemen  are all  currently  serving as outside
directors on boards of three of the Company's subsidiary financial institutions.


ESOP Merger

The Company has  maintained an Employee  Stock  Ownership  Plan ("ESOP") for its
employees since 1984. Midwest Federal employees were also covered by an ESOP. As
part of the merger agreement with Midwest  Bancshares,  Inc., it was agreed that
the Midwest ESOP would be merged into the Company's ESOP as soon as practicable.
The Company has submitted notification to and received approval from the Federal
Reserve Bank of Chicago to merge the two ESOP's.  Upon completion of the merger,
the Company ESOP will own 575,950  shares,  or 14.62 percent of the  outstanding
shares of the Company as of July 31, 2000.

The ESOP has borrowed  funds from the Company to purchase  additional  shares of
Company  stock.  The  Company's  board  of  directors  approved  a loan of up to
$700,000 to the ESOP to purchase Company stock. This loan is at the same rate of
interest as the Company's bank line of credit (prime less .375%). As of June 30,
2000, the ESOP had borrowed $82,450 from the Company to purchase shares.


"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.

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

The Company's  annual  meeting of  shareholders  was held on April 27, 2000. The
record date for  determination  of shareholders  entitled to vote at the meeting
was February 22, 2000. There were 4,287,014 shares  outstanding as of that date,
each such share being  entitled to one vote.  At the  shareholders'  meeting the
holders of 3,551,892  shares of stock (82.85 percent of the outstanding  shares)
were  represented  in person  or by  proxy,  which  constituted  a  quorum.  The
following proposals were voted on at the meeting:

Proposal 1 - Election of Directors:

The following  members of the Company's board of directors were elected to serve
for the  specified  term or until their  successors  shall have been elected and
qualified. Such persons received the number of votes set opposite their names:
<TABLE>
<CAPTION>

                                                                VOTE
                                       FOR                    WITHHELD
                                      -----                   --------
<S>                                 <C>                       <C>
One-year term (2001):

        Richard R. Donahue          3,402,261                  149,631

Three-year term (2003):

        Martin L. Bernstein         3,292,906                  258,986
        William D. Hassel           3,390,088                  161,804

</TABLE>

Proposal 2 - Ratification of Auditors' Appointment:

A vote was also  taken on the  ratification  of the  appointment  of KPMG LLP as
independent  auditors of the Company  for the fiscal  year ending  December  31,
2000. The results of the vote were as follows:

<TABLE>
<CAPTION>
        <S>              <S>                <S>                 <S>
                                                                 DEALER
        FOR              AGAINST            ABSTAIN             NON-VOTES
    <C>                  <C>                <C>                    <C>
     3,342,608           28,389             180,895                 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. (e)

     3.2    Bylaws of Mahaska Investment Company. (e)

     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. (c)

     10.2.3 1998 Stock Incentive Plan. (d)

     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)

     10.3.4 States Resources Corp. Loan  Participation  and Servicing  Agreement
            dated February 5, 1999 between  States  Resources  Corp. and Mahaska
            Investment Company. (g)

     10.5.1 Amended and Restated Credit  Agreement dated June 30,  2000 between
            Mahaska Investment Company and Harris Trust & Savings Bank.

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

     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 10-K for the year ended
                   December 31, 1996 filed by Mahaska Investment Company.

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

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

            (f)    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.

            (g)    Incorporated by reference to the Form 10-K for the year ended
                   December 31, 1999 filed by Mahaska Investment Company.


(b)  Reports on Form 8-K -- The Company  filed one report on Form 8-K during the
     three  months  ended  June  30,  2000  to  report  the  election  of  three
     individuals  to fill  vacancies on its board of directors.  This report was
     filed June 28, 2000.


                                   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)



August 7, 2000                       /s/ Charles S. Howard
---------------------                ---------------------------------------
Dated                                Charles S. Howard
                                     President


August 7, 2000                       /s/ David A. Meinert
---------------------                ---------------------------------------
Dated                                David A. Meinert
                                     Executive Vice President and Chief
                                     Financial Officer (Principal Accounting
                                     Officer)
<PAGE>
                                 Exhibit 10.5.1

                      Amended and Restated Credit Agreement


Harris Trust and Savings Bank
Chicago, Illinois


Ladies and Gentlemen:

     The  undersigned,  Mahaska  Investment  Company,  an Iowa  corporation (the
"Borrower"),  refers to the Credit  Agreement  dated as of January 31,  1996, as
amended and currently in effect  between the Borrower and you (the "Bank") (such
Credit  Agreement as so amended  being  hereinafter  referred to as the "Present
Credit Agreement") pursuant to which the Bank has extended, subject to the terms
and conditions thereof, a revolving credit facility available to the Borrower in
a principal amount not to exceed  $20,000,000 at any one time  outstanding.  The
Borrower  issued to the Bank under the Present  Credit  Agreement  its Revolving
Credit Note dated as of December 29,  1998,  payable to the order of the Bank in
the principal  amount of $20,000,000  (the "Present  Revolving  Credit Note") to
evidence the indebtedness outstanding on said revolving credit. The Borrower has
requested  that the Bank  modify  the terms  and  conditions  applicable  to the
indebtedness  evidenced by the Present  Revolving Credit Note (the  indebtedness
evidenced by the Present Revolving Credit Note being hereinafter  referred to as
the  "Present  Revolving  Credit  Loans"),  extend the  maturity  thereof,  make
available  to the  Borrower  a term loan in the amount of  $9,000,000,  and thus
provide to the Borrower a restructured  revolving credit facility and a new term
loan facility covering the Present Revolving Credit Loans, all on and subject to
the terms and  conditions  set  forth  below.  Accordingly,  this  Agreement  is
executed and  delivered by the Borrower to the Bank to set forth and confirm the
terms and  conditions  applicable to such credit  facilities  and the covenants,
representations  and  warranties  of  the  Borrower  to be  made  in  connection
therewith.

     The Borrower  acknowledges that it is justly and truly indebted to the Bank
on the Present  Revolving  Credit Loans as of June 30,  2000,  in the  principal
amount of $15,100,000  plus accrued and unpaid interest  thereon.  Substantially
concurrently  herewith, the Borrower is executing and delivering to the Bank the
Notes  hereinafter  identified and defined.  Upon satisfaction of the conditions
precedent to effectiveness set forth in Section 6 hereof,  the Present Revolving
Credit  Loans shall  automatically,  and without  further  action on the part of
either the Bank or the  Borrower,  become  evidenced  by the Notes and,  to that
extent,  the Notes are issued in renewal of, and evidence the same  indebtedness
formerly  evidenced by, the Present Revolving Credit Note, as well as evidencing
all  additional  Loans to be made  pursuant  hereto.  Except as set forth in the
immediately following sentence, all of the Present Revolving Credit Loans shall,
for all purposes of this Agreement,  be treated as though they constituted Loans
under  this  Agreement  in an amount  equal to the  aggregate  unpaid  principal
balance of the Loans made on the date the conditions  precedent to effectiveness
set forth in Section 6  hereof have been  satisfied or duly waived in writing by
the Bank.  Simultaneously  with such  satisfaction  or waiver of such conditions
precedent,  any commitment of the Bank under the Present Credit  Agreement shall
terminate  and the  Borrower  shall  pay to the Bank  all  unpaid  interest  and
commitment  fees  accrued  to such  date on or in  connection  with the  Present
Revolving Credit Loans.

Section 1.  THE CREDIT.

     Section 1.1.  Revolving Credit. Subject to the terms and conditions hereof,
the Bank agrees to extend a revolving  credit  (the  "Revolving  Credit") to the
Borrower  which may be availed of by the  Borrower  from time to time during the
period from and  including  the date hereof to but not  including  the Revolving
Credit  Termination  Date,  at which time the  commitment  of the Bank to extend
credit under the  Revolving  Credit shall expire.  The  Revolving  Credit may be
utilized by the Borrower in the form of loans  (individually a "Revolving  Loan"
and collectively the "Revolving  Loans"),  provided that the aggregate principal
amount  of  Revolving  Loans  outstanding  at any  one  time  shall  not  exceed
$9,000,000 (the  "Revolving  Credit  Commitment",  as such amount may be reduced
pursuant to Section 2.4  hereof).  The Revolving Loans shall be made against and
evidenced  by a  single  promissory  note  of the  Borrower  in the  form  (with
appropriate  insertions)  attached hereto as Exhibit A (the  "Revolving  Note").
Without regard to the principal amount of the Revolving Note stated on its face,
the actual principal amount at any time outstanding and owing by the Borrower on
account  of the  Revolving  Note  shall be the sum of all  Revolving  Loans made
hereunder less all payments of principal  actually  received by the Bank. During
the period from and including the date hereof to but not including the Revolving
Credit Termination Date, the Borrower may use the Revolving Credit Commitment by
borrowing,  repaying and reborrowing Revolving Loans in whole or in part, all in
accordance with the terms and conditions of this Agreement.

     Section 1.2.  Term Loan.  Subject to the terms and conditions  hereof,  the
Bank agrees to make a term loan (the "Term Loan") to the  Borrower  concurrently
herewith  in the  principal  amount of  $9,000,000.  The Term Loan shall be made
against and  evidenced  by a  promissory  note of the Borrower in the form (with
appropriate  insertions)  attached  hereto as Exhibit B (the "Term  Note").  The
Borrower shall make principal  payments on the Term Loan in  installments on the
last day of each year,  commencing with the year ending December 31,  2000, with
the amount of each such  installment  to equal the amount set forth in  Column B
below shown opposite of the relevant due date as set forth in Column A below:

<TABLE>
<CAPTION>

              Column A                           Column B

            Payment Date               Mandatory Scheduled Principal
                                           Payment on Term Loan
             <S>                                <C>

              12/31/00                          $  900,000
              12/31/01                          $1,350,000
              12/31/02                          $1,350,000
              12/31/03                          $1,350,000
       Term Loan Maturity Date                  $4,050,000
</TABLE>

it being agreed that the final payment of both principal and interest not sooner
paid on the Term Loan shall be due and payable on the Term Loan Maturity Date.

     Section 1.3.  Manner and  Disbursement  of Loans.  The Borrower  shall give
written or telephonic notice to the Bank (which notice shall be irrevocable once
given)  by no later  than  11:00 a.m.  (Chicago  time) on the date the  Borrower
requests the Bank to make a Loan  hereunder.  Each such notice shall specify the
date of the Loan requested (which must be a Business Day) and the amount of such
Loan. The Borrower  agrees that the Bank may rely upon any written or telephonic
notice  given by any  person the Bank in good faith  believes  is an  Authorized
Representative  without the necessity of independent  investigation.  Subject to
the  provisions  of  Section 6  hereof,  the proceeds of each Loan shall be made
available  to the  Borrower  at the  principal  office  of the Bank in  Chicago,
Illinois, in immediately available funds.

Section 2. INTEREST, FEES, PREPAYMENTS, TERMINATIONS AND APPLICATIONS.

     Section 2.1. Interest. The outstanding principal balance of the Loans shall
bear interest (which the Borrower hereby promises to pay at the rates and at the
times  set  forth  herein)  prior  to  maturity   (whether  by  lapse  of  time,
acceleration or otherwise) at the rate per annum  determined by subtracting (but
not below  zero) 3/8 of 1% per annum from the Prime Rate as in effect  from time
to  time  and  after  maturity  (whether  by  lapse  of  time,  acceleration  or
otherwise),  whether before or after judgment,  until payment in full thereof at
the rate per annum  determined  by adding 3% to the Prime Rate as in effect from
time to time.  Any change in the  interest  rate on the Loans  resulting  from a
change in the Prime Rate shall be effective  on the date of the relevant  change
in the Prime  Rate.  Interest  on the Loans  shall be computed on the basis of a
year of 360 days for the actual  number of days  elapsed.  Interest on the Loans
shall be payable  quarterly in arrears on the last day of each calendar  quarter
in each year  (commencing  June 30,  2000) and at maturity,  and interest  after
maturity shall be due and payable on demand.

     Section 2.2.  Revolving  Credit  Commitment  Fee.  For the period  from and
including the date hereof to but not including the Revolving Credit  Termination
Date,  the Borrower shall pay to the Bank a commitment fee at the rate of 1/8 of
1% per annum  (computed on the basis of a year of 360 days for the actual number
of days  elapsed) on the average daily unused  portion of the  Revolving  Credit
Commitment.  Such  commitment  fee shall be payable  quarterly in arrears on the
last day of each calendar quarter in each year (commencing June 30, 2000) and on
the Revolving Credit Termination Date.

     Section 2.3.  Prepayments.  (a) Voluntary  Prepayments.  The Borrower shall
have the  privilege of prepaying  without  premium or penalty and in whole or in
part any Note at any time upon notice to the Bank prior to  12:00 noon  (Chicago
time) on the date fixed for prepayment. If such prepayment prepays the Term Note
(in  whole  or in  part)  or the  Revolving  Note  in  full  accompanied  by the
termination in whole of the Revolving  Credit  Commitment,  each such prepayment
shall be made together with accrued interest thereon to the date of prepayment.

     (b) Mandatory  Prepayments.  The Borrower shall, on each date the Revolving
Credit  Commitment  is  reduced  pursuant  to  Section  2.4  hereof,  prepay the
Revolving  Loans by the  amount,  if any,  necessary  to  reduce  the  aggregate
principal  amount of the Revolving Loans then outstanding to the amount to which
the Revolving Credit Commitment has been so reduced.

     Section 2.4.  Terminations.  (a) Optional Terminations.  The Borrower shall
have the  right at any time and from  time to time,  upon one  (1) Business  Day
prior notice to the Bank, to terminate  without  premium or penalty and in whole
or in part  (but if in part,  then in an  amount  not less  than  $100,000)  the
Revolving Credit  Commitment,  provided that the Revolving Credit Commitment may
not be so reduced to an amount less than the aggregate  principal  amount of the
Revolving  Loans then  outstanding.  Any  termination  of the  Revolving  Credit
Commitment pursuant to this Section may not be reinstated.

     (b) Mandatory Termination. After the occurrence of a Change of Control, the
Bank may,  by written  notice to the  Borrower at any time on or before the date
occurring  90 days after the date the Borrower  notifies the Bank of such Change
of Control,  terminate the Revolving Credit Commitment and all other Obligations
of the Bank hereunder on the date stated in such notice (which shall in no event
be sooner than 30 days after the  occurrence of such Change of Control).  On the
date  the  Revolving  Credit  Commitment  is  so  terminated,   all  Outstanding
Obligations  (including,  without  limitation,  all principal of and accrued but
unpaid interest on the Term Note, as well as the Revolving Note) shall forthwith
be due and payable without further demand,  presentment,  protest,  or notice of
any kind.

     Section 2.5.  Place and Application of Payments. All payments of principal,
interest,  and all other  Obligations  payable under the Loan Documents shall be
made to the Bank at its office at 111 West Monroe Street, Chicago,  Illinois (or
at such other place as the Bank may  specify) no later than 12:00 noon  (Chicago
time) on the date any such payment is due and payable.  Payments received by the
Bank after 12:00 noon (Chicago time) shall be deemed  received as of the opening
of business on the next Business Day. All such payments  shall be made in lawful
money of the United States of America,  in  immediately  available  funds at the
place of payment, without set-off or counterclaim.  Any amount prepaid under the
Revolving Credit may, subject to the terms and conditions  hereof,  be borrowed,
repaid and borrowed again. No amount prepaid on the Term Note may be reborrowed,
and  partial  prepayments  of the Term  Note  shall be  applied  to the  several
installments thereof in the inverse order of maturity.

     Section 2.6.  Notations. All Loans made against a Note shall be recorded by
the Bank on its books and records or, at its option in any instance, endorsed on
the reverse side of such Note or on a schedule  attached  thereto and the unpaid
principal  balance so  recorded  or  endorsed  by the Bank shall be prima  facie
evidence in any court or other  proceeding  brought to enforce  such Note of the
principal amount remaining unpaid thereon; provided that the failure of the Bank
to  record  any of the  foregoing  shall  not  limit  or  otherwise  affect  the
obligation of the Borrower to repay the  principal  amount of such Note together
with accrued  interest  thereon.  Prior to any negotiation of any Note, the Bank
shall record on the reverse side thereof or on a schedule  thereto the status of
all amounts evidenced thereby.

Section 3.  COLLATERAL.

     The  payment  and  performance  of the  Obligations  shall at all  times be
secured  by all  of  the  issued  and  outstanding  capital  stock  (except  for
directors'  qualifying  shares as  required  by law) of each  Subsidiary  of the
Borrower,  whether  now owned or  hereafter  formed or  acquired,  pursuant to a
Pledge and Security Agreement dated as of October 17,  1997, as amended, between
the  Borrower  and the Bank (the Pledge and  Security  Agreement,  and all other
instruments  and documents as shall from time to time secure the  Obligations or
any part thereof, being hereinafter referred to as the "Collateral  Documents").
The Borrower  agrees that it shall comply with all terms and  conditions of each
of the Collateral Documents and that it shall, at any time and from time to time
as requested by the Bank, execute and deliver such further documents and do such
acts as the Bank may deem  necessary  or  desirable to provide for or protect or
perfect the Lien of the Bank in the Collateral.

Section 4.  DEFINITIONS.

     The  following  terms when used herein  shall have the  following  meanings
(capitalized  terms defined elsewhere in this Agreement shall,  unless otherwise
specified, have the meanings so ascribed to them in all other provisions of this
Agreement):

     "Authorized  Representative"  means  those  persons  shown  on the  list of
officers  provided  by the  Borrower  pursuant to  Section 6.1  hereof or on any
update of any such list  provided by the Borrower to the Bank, or any further or
different  officer of the Borrower so named by any Authorized  Representative of
such Borrower in a written notice to the Bank.

     "Banking  Subsidiary"  means any Subsidiary of the Borrower which is a bank
or thrift  organized under the laws of the United States of America or any state
thereof.

     "Business  Day" means any day other than a Saturday  or Sunday on which the
Bank is not authorized or required to close in Chicago, Illinois.

     "Change of Control"  means any of (a) the  acquisition  by any  "person" or
"group"  (as such terms are used in sections  13(d) and 14(d) of the  Securities
Exchange Act of 1934, as amended) at any time of beneficial  ownership of 40% or
more of the outstanding capital stock of the Borrower on a fully-diluted  basis,
(b) the failure of individuals  who are members of the board of directors of the
Borrower on the date of this  Agreement  (together  with any new or  replacement
directors  whose initial  nomination  for election was approved by a majority of
the  directors  who  were  either  directors  on the date of this  Agreement  or
previously  so approved)  to  constitute a majority of the board of directors of
the Borrower,  or (c) Charles  Howard shall at any time and for any reason cease
to be actively involved in the management of the Borrower.

     "Code"  means  the  Internal  Revenue  Code of 1986,  as  amended,  and any
successor statute thereto.

     "Collateral" means all properties,  rights,  interests, and privileges from
time to  time  subject  to the  Liens  granted  to the  Bank  by the  Collateral
Documents.

     "Collateral Documents" is defined in Section 3 hereof.

     "Consolidated  Net Income"  means,  with  reference to any period,  the net
income  (or net  loss) of the  Borrower  and its  Subsidiaries  for such  period
determined  on a  consolidated  basis  in  accordance  with  generally  accepted
accounting principles consistently applied.

     "Consolidated  Total Assets"  means,  at any time,  the total assets of the
Borrower and its Subsidiaries at such time determined on a consolidated basis in
accordance with generally accepted accounting principles consistently applied.

     "Default" means any event or condition the occurrence of which would,  with
the  passage of time or the giving of notice,  or both,  constitute  an Event of
Default.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended, or any successor statute thereto.

     "Event  of  Default"  means any event or  condition  identified  as such in
Section 8.1 hereof.

     "Lien" means any  mortgage,  lien,  security  interest,  pledge,  charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor  under  any  conditional  sale,  capital  lease or other  title
retention arrangement.

     "Loan  Documents"  means  this  Agreement,  the Notes,  and the  Collateral
Documents.

     "Loans" means the Revolving Loans and the Term Loan.

     "MIC" means MIC  Financial,  Inc., an Iowa  corporation  formerly  known as
On-Site Credit Services, Inc.

     "Non-Performing  Assets" means with reference to any Person, as of any time
the  same is to be  determined,  the sum of all  non-performing  assets  of such
Person  as  determined  in  accordance  with  regulatory  accounting  principles
applicable  to such  Person,  but in any event  including,  without  limitation,
(i) loans or other extensions of credit on which any payment (whether  principal
or interest or  otherwise)  is not made within 90 days of its original due date,
(ii) loans which have been placed on a non-accrual basis, (iii) loans structured
so as to not bear  interest at a then market rate or so that other terms thereof
have been compromised, and (iv) property acquired by repossession or foreclosure
and,   without   duplication,   property   acquired   pursuant  to  in-substance
foreclosure.

     "Notes" means the Revolving Note and the Term Note.

     "Obligations"  means all  obligations  of the Borrower to pay principal and
interest on the Loans,  all fees and charges  payable  hereunder,  and all other
payment  obligations  of the Borrower  arising  under or in relation to any Loan
Document,  in each case  whether now existing or  hereafter  arising,  due or to
become due, direct or indirect, absolute or contingent, and howsoever evidenced,
held or acquired.

     "Person" means an individual,  partnership,  corporation, limited liability
company, association,  trust, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof.

     "Prime Rate" means, for any day, the rate of interest announced by the Bank
from time to time as its prime  commercial  rate,  as in effect on such day,  it
being  understood and agreed that such rate may not be the Bank's best or lowest
rate.

     "Property" means any  interest in any kind of  property or asset,  whether
real, personal or mixed, or tangible or intangible.

     "Revolving Credit  Termination  Date" means June 30,  2001, or such earlier
date on which the Revolving Credit Commitment is terminated in whole pursuant to
Section 2.4, 8.2 or 8.3 hereof.

     "Subsidiary"  means any  corporation  or other  Person more than 50% of the
outstanding  ordinary voting shares or other equity interests of which is at the
time directly or indirectly owned by the Borrower,  by one or more  subsidiaries
of the Borrower, or by the Borrower and one or more of its subsidiaries.

     "Term Loan Maturity Date" means December 31, 2004.

     "Tier I Leverage  Ratio" of any  Person  means,  at any time,  the ratio of
regulatory "core"  capital  (Tier  I)  to  total  assets,  all  as  defined  and
determined  from  time  to  time  by  applicable   bank  or  thrift   regulatory
authorities.

     "Tier I Risk Based  Capital  Ratio"  means the ratio of  regulatory  "core"
capital (Tier I) to  weighted-risk  assets and off-balance  sheet items,  all as
defined and determined from time to time by applicable bank or thrift regulatory
authorities.

     "Total Risk Based  Capital  Ratio" of any Person  means,  at any time,  the
ratio of regulatory "core" capital (Tier I) and  supplementary  capital elements
(Tier II) to  weighted-risk  assets and off-balance  sheet items, all as defined
and  determined  from  time to  time by  applicable  bank or  thrift  regulatory
authorities.

Section 5.  REPRESENTATIONS AND WARRANTIES.

     The Borrower represents and warrants to the Bank as follows:

     Section 5.1.   Organization  and   Qualification.   The  Borrower  is  duly
organized,  validly  existing,  and in good standing as a corporation  under the
laws of the  state of its  incorporation.  The  Borrower  has full and  adequate
corporate  power to own its Property and conduct its business as now  conducted,
and is duly licensed or qualified and in good standing in each  jurisdiction  in
which the nature of the  business  conducted by it or the nature of the Property
owned or leased by it requires such  licensing or qualifying.  Without  limiting
the generality of the foregoing,  the Borrower is a bank holding company and, as
such, the Borrower has received all necessary  approvals from, and has filed all
necessary reports with, all applicable federal and state regulatory authorities.

     Section 5.2.  Subsidiaries.  Each  Subsidiary  is duly  organized,  validly
existing, and in good standing under the laws of the jurisdiction in which it is
incorporated  or organized,  as the case may be, has full and adequate  power to
own its Property and conduct its business as now conducted, and is duly licensed
or qualified  and in good standing in each  jurisdiction  in which the nature of
the business conducted by it or the nature of the Property owned or leased by it
requires such  licensing or  qualifying.  Schedule 5.2  hereto  identifies  each
Subsidiary,  the jurisdiction of its incorporation or organization,  as the case
may be, the  percentage  of issued and  outstanding  shares of each class of its
capital  stock  or  other  equity  interests  owned  by  the  Borrower  and  the
Subsidiaries  and,  if  such  percentage  is  not  100%  (excluding   directors'
qualifying  shares as  required  by law),  a  description  of each  class of its
authorized  capital stock and other equity interests and the number of shares of
each class  issued and  outstanding.  All of the  outstanding  shares of capital
stock and other  equity  interests  of each  Subsidiary  are validly  issued and
outstanding  and fully  paid and  nonassessable,  and all such  shares and other
equity  interests  indicated  on  Schedule 5.2  as  owned by the  Borrower  or a
Subsidiary  are owned,  beneficially  and of  record,  by the  Borrower  or such
Subsidiary  free and clear of all Liens other than the Liens granted in favor of
the Bank.  There are no  outstanding  commitments  or other  obligations  of any
Subsidiary to issue, and no options,  warrants, or other rights of any Person to
acquire,  any shares of any class of capital stock or other equity  interests of
any Subsidiary.

     Section 5.3.  Authority and Validity of Obligations.  The Borrower has full
right and  authority to enter into the Loan  Documents and to perform all of its
obligations thereunder;  and the Loan Documents do not, nor does the performance
or observance by the Borrower of any of the matters and things therein  provided
for,  contravene  or  constitute  a default  under any  provision  of law or any
judgment, injunction, order or decree binding upon the Borrower or any provision
of its  articles  of  incorporation  or by-laws or any  covenant,  indenture  or
agreement of or affecting  the Borrower or any of its  Properties,  or result in
the creation or  imposition  of any Lien on any  Property of the Borrower  other
than Liens granted in favor of the Bank.

     Section 5.4. Purpose; Margin Stock. The Borrower shall use a portion of the
proceeds of the Term Loan in accordance with Section 5.10 hereof and the balance
of the proceeds of the Term Loan and the initial borrowing of Revolving Loans to
refinance  existing  indebtedness  of the Borrower  under the Present  Revolving
Credit Note.  The Borrower  shall use the proceeds of  subsequent  borrowings of
Revolving  Loans  during the term of this  Agreement  solely  for the  following
purposes:  (a) to finance the purchase price of participation  interests in loan
pools, (b) to finance acquisitions  consented to by the Bank pursuant to Section
7.13 hereof,  and (c) to finance its general working capital  requirements.  The
Borrower is not engaged in the business of  extending  credit for the purpose of
purchasing or carrying  margin stock (within the meaning of  Regulation U of the
Board of Governors of the Federal Reserve  System),  and no part of the proceeds
of any Loan made  hereunder  will be used to purchase or carry any margin stock,
or to extend credit to others for the purpose of purchasing or carrying any such
margin stock.

     Section 5.5.  Financial Reports.  All financial  statements of the Borrower
and its  Subsidiaries  heretofore  submitted to the Bank are true and correct in
all material respects,  have been prepared in accordance with generally accepted
accounting principles or regulatory accounting  principles,  as the case may be,
consistently applied, and fairly present the financial condition of the Borrower
and its  Subsidiaries  and the  results  of  operations  and  cash  flows of the
Borrower  and its  Subsidiaries  as of the  dates  thereof  and for the  periods
covered  thereby.  Neither  the  Borrower  nor  any  Subsidiary  has  contingent
liabilities  which are material to it other than as indicated on such  financial
statements  or, with  respect to future  periods,  on the  financial  statements
furnished pursuant to Section 7.5  hereof.  Since  December 31,  1999, there has
been no change in the condition  (financial or otherwise) or business  prospects
of the Borrower or any Subsidiary  except those occurring in the ordinary course
of business,  none of which individually or in the aggregate could reasonably be
expected  to have a  material  adverse  effect  upon the  operations,  business,
Property,  or  condition  (financial  or  otherwise)  of the  Borrower or of the
Borrower and its Subsidiaries taken as a whole.

     Section 5.6.  Litigation and Taxes.  There is no litigation or governmental
proceeding or labor  controversy  pending,  nor to the knowledge of the Borrower
threatened, against the Borrower or any Subsidiary which if adversely determined
would (a) impair the validity or enforceability of, or impair the ability of the
Borrower to perform its  obligations  under,  any Loan Document or (b) result in
any material adverse change in the financial condition,  Properties, business or
operations  of the Borrower or any  Subsidiary.  All tax returns  required to be
filed by the Borrower or any Subsidiary in any jurisdiction  have, in fact, been
filed, and all taxes, assessments,  fees and other governmental charges upon the
Borrower or any Subsidiary or upon any of their respective Properties, income or
franchises,  which are shown to be due and  payable in such  returns,  have been
paid.  The Borrower has no knowledge of any proposed  additional  tax assessment
against it or any Subsidiary for which  adequate  provisions in accordance  with
generally accepted accounting principles have not been made on its accounts.

     Section 5.7. Approvals.  No authorization,  consent,  license, or exemption
from, or filing or  registration  with,  any court or  governmental  department,
agency or  instrumentality,  nor any approval or consent of the  stockholders of
the  Borrower  or any  other  Person,  is or  will  be  necessary  to the  valid
execution, delivery or performance by the Borrower of the Loan Documents.

     Section 5.8.  Compliance with Laws. The Borrower and each Subsidiary are in
compliance with the  requirements of all federal,  state and local laws,  rules,
and  regulations  applicable to or  pertaining  to their  Properties or business
operations,  non-compliance  with which could have a material  adverse effect on
the financial condition,  Properties,  business or operations of the Borrower or
any  Subsidiary.  Neither the Borrower (or any of its directors or officers) nor
any Banking  Subsidiary  (or any of its directors or officers) is a party to, or
subject to, any agreement  with, or directive or order issued by, any federal or
state  bank  or  thrift  regulatory  authority  which  imposes  restrictions  or
requirements  on it which are not generally  applicable to banks or thrifts,  or
their holding companies;  and no action or administrative  proceeding is pending
or, to the Borrower's knowledge,  threatened against the Borrower or any Banking
Subsidiary or any of their  directors or officers which seeks to impose any such
restriction or requirement.

     Section 5.9.  Organization and Qualification of ESOT and ESOP. The Borrower
is a party to a Trust Agreement  dated November 17, 1994,  between Mahaska State
Bank, as trustee of the Mahaska  Investment  Company  Employee  Stock  Ownership
Trust (the  "ESOT") and the  Borrower  (the "Trust  Agreement")  entered into in
connection with the  establishment  of the Mahaska  Investment  Company Employee
Stock  Ownership  Plan  (the  "ESOP").  The  ESOT is a duly  organized,  validly
existing  employee stock ownership trust exempt from tax under Section 501(a) of
the Code.  The ESOP is qualified  under Section 401(a) of the Code. The ESOP and
the ESOT,  taken together,  constitute a valid employee stock ownership plan for
the  purposes  of  Section  4975(e)(7)  of the Code and is  entitled  to all the
benefits afforded to employee stock ownership plans thereunder. The ESOP and the
ESOT are in compliance in all material respects with ERISA and the Code, and the
Borrower has received no notice to the contrary.

     Section 5.10.  ESOP Loan Proceeds. Proceeds of the Loans in the approximate
amount of $700,000  shall be loaned by the  Borrower on or before  September 30,
2000,  to the ESOT  (herein,  the "ESOP  Loan")  and  applied by the ESOT to the
payment of the purchase price of  approximately  2% of the equity  securities of
the Borrower (herein,  the "ESOP Shares").  The ESOP Shares being purchased with
the  proceeds  of  ESOP  Loan  shall  be  acquired  for no  more  than  adequate
consideration  within the meaning of  Section 3(18)  of ERISA and in  accordance
with the other  requirements of  Section 408(e) of ERISA. The acquisition of the
ESOP Shares with the proceeds of the ESOP Loan will not, and consummation of the
transactions  provided for in this Agreement shall not,  constitute a prohibited
transaction  for purposes of Section 406 of ERISA or  Section 4975  of the Code.
The  ESOP Shares  are and will at all times  continue to be qualifying  employer
securities for purposes of ERISA and the Code.

     Section 6. CONDITIONS PRECEDENT.

     The obligation of the Bank to make any Loan under this Agreement is subject
to the following conditions precedent:

     Section 6.1.  Initial  Loan.  At or prior to the making of the initial Loan
hereunder, the following conditions precedent shall also have been satisfied:

          (a) the Bank shall have  received the  following  (each to be properly
     executed and  completed)  and the same shall have been  approved as to form
     and substance by the Bank:

               (i) the Notes;

               (ii) the Collateral Documents (including without limitation,  the
          Fourth Amendment to Pledge and Security  Agreement),  duly executed by
          the Borrower,  together with (a) the  original stock  certificates for
          all  the  issued  and  outstanding   shares  of  stock  (exclusive  of
          directors'  qualifying  shares) of each Subsidiary of the Borrower and
          (b) stock  powers which are  necessary or  appropriate  to perfect the
          security interest of the Bank in such Collateral;

               (iii) copies  (executed or certified,  as may be  appropriate) of
          all  legal  documents  or  proceedings  taken in  connection  with the
          execution and delivery of the Loan Documents to the extent the Bank or
          its counsel may reasonably request; and

               (iv) an incumbency  certificate  containing the name,  title, and
          genuine   signatures   of   each   of   the   Borrower's    Authorized
          Representatives;

          (b) the Bank shall have received the initial fees, if any,  called for
     hereby;

          (c) legal  matters  incident to the execution and delivery of the Loan
     Documents   and  to  the   transactions   contemplated   thereby  shall  be
     satisfactory to the Bank and its counsel,  and the Bank shall have received
     the  favorable  written  opinion of counsel  for the  Borrower  in form and
     substance satisfactory to the Bank and its counsel;

          (d) the Bank shall have  received a  certificate  of existence for the
     Borrower  (dated as of the date no  earlier  than 30 days prior to the date
     hereof,  or  otherwise  acceptable  to the  Bank)  from the  office  of the
     secretary  of state of the  state of its  incorporation  and each  state in
     which it is qualified to do business as a foreign corporation; and

          (e) the Bank shall have received such other  agreements,  instruments,
     documents, certificates, and opinions as the Bank may reasonably request.

     Section 6.2.  All  Loans.  As of  the  time  of the  making  of  each  Loan
hereunder: (a) each of the representations and warranties set forth in Section 5
hereof  and in the other  Loan  Documents  shall be true and  correct as of such
time, except to the extent the same expressly relate to an earlier date; (b) the
Borrower shall be in full compliance with all of the terms and conditions of the
Loan  Documents,  and no Default or Event of Default  shall have occurred and be
continuing  or would occur as a result of making such  extension of credit;  and
(c) such extension of credit shall not violate any order,  judgment or decree of
any court or other authority or any provision of law or regulation applicable to
the Bank (including, without limitation,  Regulation U of the Board of Governors
of the Federal Reserve System) as then in effect. The Borrower's request for any
Loan shall  constitute its warranty as to the facts specified in subsections (a)
and (b) above.

     Section 7. COVENANTS.

     The Borrower  agrees that,  so long as any credit is available to or in use
by the Borrower hereunder,  except to the extent compliance in any case or cases
is waived in writing by the Bank:

     Section 7.1.  Maintenance of Business.  The Borrower shall, and shall cause
each  Subsidiary  to,  preserve and keep in full force and effect its existence,
rights (charter or statutory), franchises, and licenses necessary for the proper
conduct of its business;  provided,  however, that nothing in this Section shall
prevent the Borrower from discontinuing the operations and terminating the legal
existence of MIC if such  discontinuation  or  termination  is in the reasonable
business  judgment  of the  Borrower  desirable  in the  proper  conduct  of its
business.

     Section 7.2. Maintenance of Properties. The Borrower shall, and shall cause
each  Subsidiary  to,  maintain,  preserve  and keep  its  property,  plant  and
equipment in good repair,  working order, and condition  (ordinary wear and tear
excepted),  and shall from time to time make all  needful  and  proper  repairs,
renewals, replacements,  additions, and betterments thereto so that at all times
the efficiency  thereof shall be fully  preserved and  maintained it;  provided,
however,   that  nothing  in  this  Section  shall  prevent  the  Borrower  from
discontinuing  the operations and terminating the legal existence of MIC if such
discontinuation  or termination is in the  reasonable  business  judgment of the
Borrower desirable in the proper conduct of its business.

     Section  7.3.  Taxes  and  Assessments.  The  Borrower  shall  duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge, all taxes,
rates,  assessments,  fees, and  governmental  charges upon or against it or its
Properties,  in each case before the same become delinquent and before penalties
accrue  thereon,  unless and to the extent that the same are being  contested in
good faith and by  appropriate  proceedings  which  prevent  enforcement  of the
matter under contest and adequate reserves are provided therefor.

     Section 7.4.  Insurance.  The Borrower  shall insure and keep insured,  and
shall  cause  each  Subsidiary  to  insure  and  keep  insured,  with  good  and
responsible insurance companies,  all insurable Property owned by it which is of
a character  usually  insured by Persons  similarly  situated and operating like
Properties  against  loss or damage  from such  hazards  and risks,  and in such
amounts,  as are  insured by  Persons  similarly  situated  and  operating  like
Properties;  and the Borrower shall insure,  and shall cause each  Subsidiary to
insure, against such other hazards and risks with good and responsible insurance
companies as and to the extent usually insured by Persons similarly situated and
conducting similar businesses.

     Section 7.5.  Financial  Reports.  The Borrower shall, and shall cause each
Subsidiary  to,  maintain a system of accounting in  accordance  with  generally
accepted  accounting  principles and, where  applicable,  regulatory  accounting
principles,   and   shall   furnish   to  the  Bank  and  its  duly   authorized
representatives such information respecting the business and financial condition
of the Borrower and the Subsidiaries  (including  non-financial  information and
examination   reports  and  supervisory  letters  to  the  extent  permitted  by
applicable  regulatory  authorities)  as the Bank may  reasonably  request;  and
without any request, the Borrower shall furnish to the Bank:

          (a) within 45 days after the last day of each fiscal quarter, all call
     reports and other  financial  statements  required to be  delivered  by the
     Borrower and by each Banking  Subsidiary to any  governmental  authority or
     authorities   having   jurisdiction  over  the  Borrower  or  such  Banking
     Subsidiary and all schedules thereto;

          (b) within 90 days after the last day of each fiscal  year,  a copy of
     the  consolidated and  consolidating  balance sheet of the Borrower and the
     Subsidiaries  as of the last day of such fiscal  year and the  consolidated
     and consolidating statements of income, retained earnings and cash flows of
     the  Borrower  and the  Subsidiaries  for the fiscal year then  ended,  and
     accompanying   notes  thereto,   each  in  reasonable   detail  showing  in
     comparative  form the figures for the previous fiscal year,  accompanied by
     an unqualified  opinion thereon of a firm of independent public accountants
     of recognized  standing,  selected by the Borrower and  satisfactory to the
     Bank, to the effect that the  consolidated  financial  statements have been
     prepared in accordance with generally  accepted  accounting  principles and
     present fairly the consolidated financial condition of the Borrower and the
     Subsidiaries  as of the close of such  fiscal year and the results of their
     operations  and cash  flows  for the  fiscal  year  then  ended and that an
     examination of such accounts in connection with such consolidated financial
     statements  has been made in accordance  with generally  accepted  auditing
     standards and,  accordingly,  such  examination  included such tests of the
     accounting  records and such other auditing  procedures as were  considered
     necessary in the circumstances;

          (c)  promptly  upon  the  filing  thereof  (if  any),  copies  of  all
     registration  statements,  Form 10-K,  Form 10-Q,  and Form 8-K reports and
     proxy  statements  which the  Borrower  or any  Subsidiary  files  with the
     Securities and Exchange Commission;

          (d) promptly upon the receipt or execution thereof,  (i) notice by the
     Borrower or any Banking  Subsidiary  that (1) it has  received a request or
     directive from any federal or state regulatory  agency which requires it to
     submit a capital  maintenance or restoration  plan or restricts the payment
     of  dividends  by any  Banking  Subsidiary  to the  Borrower  or (2) it has
     submitted a capital maintenance or restoration plan to any federal or state
     regulatory  agency or has entered into a memorandum  or agreement  with any
     such agency, including,  without limitation,  any agreement which restricts
     the payment of  dividends  by any  Banking  Subsidiary  to the  Borrower or
     otherwise  imposes  restrictions  or  requirements  on  it  which  are  not
     generally  applicable to banks or thrifts or their holding  companies,  and
     (ii) copies of any such plan, memorandum,  or agreement,  unless disclosure
     is prohibited by the terms thereof and,  after the Borrower or such Banking
     Subsidiary  has in good  faith  attempted  to obtain  the  consent  of such
     regulatory  agency,  such agency will not consent to the disclosure of such
     plan, memorandum, or agreement to the Bank; and

          (e) promptly after knowledge  thereof shall have come to the attention
     of any responsible officer of the Borrower, written notice of any Change in
     Control  or  of  any  threatened  or  pending  litigation  or  governmental
     proceeding  or labor  controversy  against the  Borrower or any  Subsidiary
     which, if adversely  determined,  would materially and adversely effect the
     financial condition,  Properties, business or operations of the Borrower or
     any  Subsidiary  or of the  occurrence  of any  Default or Event of Default
     hereunder.

     Section 7.6.  Non-Performing Assets. The Borrower shall, as of the last day
of each fiscal quarter,  maintain on a consolidated  basis with its Subsidiaries
(excluding,  for purposes of this determination only, MIC as a Subsidiary of the
Borrower), and shall cause each Banking Subsidiary to maintain as of such day on
an individual  basis,  a ratio of  (a) Non-Performing  Assets of the Borrower on
such  consolidated  basis or such  Banking  Subsidiary,  as the case may be,  to
(b) the sum of  (i) stockholders'  equity for the  Borrower or core  capital for
such Banking Subsidiary, as the case may be, plus loan loss reserves established
by the Borrower on such consolidated  basis or such Banking  Subsidiary,  as the
case may be, in accordance with regulatory  accounting  principles applicable to
the Borrower or such Banking Subsidiary, in an amount less than .20 to 1.0.

     Section 7.7. Regulatory Capital Requirements.

          (a) The  Borrower  shall  maintain  on a  consolidated  basis with its
     Banking  Subsidiaries,  and shall cause each Banking Subsidiary to maintain
     on an individual basis:

               (i) a Tier I Leverage Ratio of greater than 6% or, in the case of
          any Banking  Subsidiary,  such greater amount as may be required to be
          considered  "well  capitalized" by applicable  regulatory  authorities
          from time to time;

               (ii) a Total Risk Based Capital Ratio of greater than 10% or, the
          case of any Banking Subsidiary, such greater amount as may be required
          to  be  considered   "well   capitalized" by   applicable   regulatory
          authorities from time to time; and

               (iii) a Tier I Risk Based Capital Ratio of greater than 8% or, in
          the case of any  Banking  Subsidiary,  such  greater  amount as may be
          required to be considered "well capitalized" by applicable  regulatory
          authorities from time to time.

          (b)  Each  Banking  Subsidiary  shall at all  times be at least  "well
     capitalized"  as  defined  in the  Federal  Deposit  Insurance  Corporation
     Improvement  Act of 1991 and any  regulations to be issued  thereunder,  as
     such statute or regulations may each be amended or  supplemented  from time
     to time.

          (c) Each requirement  described in subsections (a) and (b) above shall
     be computed and determined in accordance  with the rules and regulations as
     in effect from time to time  established  by the  appropriate  governmental
     authority having jurisdiction over the Borrower or such Banking Subsidiary.
     In addition to the  provisions  set forth above,  the Borrower  shall,  and
     shall cause each  Banking  Subsidiary  to,  comply with any and all capital
     guidelines and  requirements as in effect from time to time  established by
     the relevant governmental authority or authorities having jurisdiction over
     the Borrower or any Banking Subsidiary.

     Section 7.8. Return on Assets. As of the last day of each June and December
in each year, the Borrower shall maintain a ratio of Consolidated Net Income for
the 12-month period then ended to  Consolidated  Total Assets as at the last day
of such  12-month  period then ended of not less than  (a) as of June 30,  2000,
 .0045 to 1.0, and (b) as of  December 31,  2000,  and as of the last day of each
June and December thereafter, .0090 to 1.0.

     Section 7.9.  Indebtedness.  The Borrower shall not issue,  incur,  assume,
create,  or have  outstanding any  indebtedness for borrowed money (including as
such  for all  purpose  of this  Agreement  any  indebtedness  representing  the
deferred  purchase  price of  property,  any  liability  in respect of  banker's
acceptances  or letters of credit,  any  indebtedness,  whether or not  assumed,
secured by liens on property  acquired by the  Borrower  existing at the time of
the  acquisition  thereof,  and any  liability  under any lease which  should be
capitalized under generally accepted accounting principles);  provided, however,
that the foregoing shall not restrict nor operate to prevent:

          (a)   indebtedness  of  the  Borrower  on  the  Notes  and  any  other
     indebtedness of the Borrower from time to time owing to the Bank;

          (b) trade  accounts  payable for property or services  acquired by the
     Borrower in the ordinary  course of business and payable in accordance with
     ordinary trade terms; and

          (c)  indebtedness  not  otherwise   covered  hereby  in  an  aggregate
     principal amount not exceeding $200,000 at any one time outstanding.

     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
purchase,  redeem or  otherwise  acquire  or retire  any of its  capital  stock;
provided, however, that the Borrower may:

          (a) declare and pay  dividends  and purchase or  otherwise  redeem its
     capital stock during the fiscal year ending  December 31,  2000, so long as
     at the time of,  and  after  giving  effect  to,  the  payment  of any such
     dividend,  repurchase,  or  redemption no Default or Event of Default shall
     exist and (i) the  aggregate  amount of all such dividends made during such
     fiscal year ending December 31, 2000, does not exceed 60% of the Borrower's
     year-to-date  reported  Consolidated Net Income for the then current fiscal
     year, and (ii) in addition to amounts permitted under clause (a)(i)  above,
     the aggregate amount of repurchases and redemptions made during such fiscal
     year  ending  December 31,  2000,  does not  exceed  70% of the  Borrower's
     year-to-date  reported  Consolidated Net Income for the then current fiscal
     year; and

          (b) declare and pay  dividends  and purchase or  otherwise  redeem its
     capital  stock during any fiscal year ending after  December 31,  2000,  so
     long as at the time of, and after giving effect to, the payment of any such
     dividend,  repurchase, or redemption no Default or Event of Default exists,
     and the aggregate amount of all such dividends, repurchases and redemptions
     during  any  such  fiscal  year  does  not  exceed  60% of  the  Borrower's
     year-to-date  reported  Consolidated Net Income for the then current fiscal
     year.

     Section 7.11.  Compliance  with Laws. The Borrower  shall,  and shall cause
each Subsidiary to, comply in all respects with the requirements of all federal,
state and local laws, rules, regulations, ordinances and orders applicable to or
pertaining  to their  Properties  or  business  operations  (including,  without
limitation,  the  Code  and  ERISA  with  respect  to the  ESOP  and the  ESOT),
non-compliance  with which could have a material adverse effect on the financial
condition, Properties, business or operations of such Borrower or any Subsidiary
or could result in a Lien upon any of their Property.

     Section 7.12.  Maintenance of Subsidiaries.  The Borrower shall not assign,
sell, or transfer, or permit any Subsidiary to issue, assign, sell, or transfer,
any shares of capital stock or other equity  interest of a Subsidiary;  provided
that the foregoing shall not prevent (a) the issuance,  sale, or transfer to any
person of any shares of capital stock or other equity  interests of a Subsidiary
solely for the purpose of qualifying,  and only to the extent legally  necessary
to qualify, such person as a director of such Subsidiary and (b) the sale of MIC
to  another  Person  not  affiliated  with the  Borrower  which  sale is, in the
reasonable business judgment of the Borrower, desirable in the proper conduct of
its business.

     Section 7.13. Acquisitions. The Borrower shall not, nor shall it permit any
of its Subsidiaries  to, directly or indirectly,  acquire all or any substantial
part of the assets or business of any other Person or division  thereof  without
the prior written  consent of the Bank (which consent shall not be  unreasonably
withheld).

     Section 8. EVENTS OF DEFAULT AND REMEDIES.

     Section 8.1.  Events of  Default.  Any one or more of the  following  shall
constitute an "Event of Default" hereunder:

          (a)  default  in the  payment  when  due of  all  or any  part  of the
     Obligations payable by the Borrower under any Loan Document,  or default in
     the payment when due of any other indebtedness or liability of the Borrower
     or any of its Subsidiaries owing to the Bank; or

          (b) default in the  observance or  performance of any provision of any
     Loan  Document  which is not  remedied  within ten (10) days after  written
     notice thereof is given to the Borrower by the Bank; or

          (c) any  representation  or warranty  made by the Borrower in any Loan
     Document,  or in any  statement  or  certificate  furnished  by it pursuant
     thereto,  or in connection with any Loan made  hereunder,  proves untrue in
     any material respect as of the date of the issuance or making thereof; or

          (d) any event occurs or condition  exists (other than those  described
     in  subsections (a)  through (c) above)  which is  specified as an event of
     default in any other Loan Document,  or any of the Loan Documents shall for
     any reason not be or shall cease to be in full force and effect,  or any of
     the  Loan  Documents  is  declared  to be  null  and  void,  or  any of the
     Collateral  Documents  shall  for any  reason  fail to  create a valid  and
     perfected  first  priority  Lien in  favor  of the  Bank in any  Collateral
     purported to be covered thereby except as expressly  permitted by the terms
     thereof; or

          (e)  the   Borrower  or  any   Subsidiary   shall   (i) have   entered
     involuntarily  against  it an order  for  relief  under the  United  States
     Bankruptcy  Code,  as  amended,  (ii) not  pay,  or  admit in  writing  its
     inability to pay, its debts  generally  as they become due,  (iii) make  an
     assignment for the benefit of creditors,  (iv) apply for, seek, consent to,
     or  acquiesce  in,  the  appointment  of a  receiver,  custodian,  trustee,
     examiner,  liquidator or similar official for it or any substantial part of
     its Property,  (v) institute any proceeding seeking to have entered against
     it an order for relief under the United States Bankruptcy Code, as amended,
     to   adjudicate  it  insolvent,   or  seeking   dissolution,   winding  up,
     liquidation,  reorganization,  arrangement, adjustment or composition of it
     or  its  debts  under  any  law  relating  to  bankruptcy,   insolvency  or
     reorganization  or  relief  of  debtors  or fail to file an answer or other
     pleading  denying the material  allegations  of any such  proceeding  filed
     against it,  (vi) take any corporate  action in  furtherance  of any matter
     described in parts (i) through (v) above,  or (vii) fail to contest in good
     faith any appointment or proceeding described in Section 8.1(f) hereof; or

          (f) a custodian,  receiver,  trustee, examiner,  liquidator or similar
     official  shall be  appointed  for the  Borrower or any  Subsidiary  or any
     substantial   part  of  its   Property,   or  a  proceeding   described  in
     Section 8.1(e)(v)   shall  be  instituted   against  the  Borrower  or  any
     Subsidiary,  and such appointment continues undischarged or such proceeding
     continues undismissed or unstayed for a period of 30 days; or

          (g) dissolution or termination of the existence of the Borrower or any
     Banking Subsidiary; or

          (h)  Borrower  or  any  Subsidiary  shall  fail  to  pay  any  of  its
     indebtedness  to any other entity or shall  default in the  performance  or
     observance  of  the  terms  of  any  instrument   pursuant  to  which  such
     indebtedness was created or securing such  indebtedness,  beyond any period
     of  grace  applicable  thereto,  if  the  effect  of  such  default  is  to
     accelerate,  or to give to the holder thereof the right to accelerate,  the
     maturity of any such indebtedness; or

          (i) any judgment or judgments,  writ or writs,  or warrant or warrants
     of attachment, or any similar process or processes, the aggregate amount of
     which  (after  reduction  by  the  amount  covered  by  insurance)  exceeds
     $500,000,  shall be entered or filed against the Borrower or any Subsidiary
     or against any of their  Property and which  remains  unvacated,  unbonded,
     unstayed or unsatisfied for a period of 30 days; or

          (j) any conservator or receiver shall be appointed for the Borrower or
     any Banking  Subsidiary under applicable federal or state law applicable to
     banks, thrifts, or their holding companies, or any Banking Subsidiary shall
     suspend payment of its obligations,  or any Banking  Subsidiary shall cease
     to be a federally  insured  depositary  institution,  or a cease and desist
     order shall be issued  against the Borrower or any  Subsidiary  pursuant to
     applicable  federal or state law  applicable  to banks,  thrifts,  or their
     holding  companies,  or the Borrower or any Subsidiary shall enter into any
     commitment to maintain the capital of an insured depository  institution in
     a required amount with any federal or state regulator or any such regulator
     shall  require  the  Borrower  or  any   Subsidiary  to  submit  a  capital
     maintenance or restoration plan; or

          (k) any change  occurs in the  condition  (financial  or otherwise) or
     business prospects of the Borrower or any Subsidiary which the Bank regards
     as materially adverse.

     Section 8.2.  Non-Bankruptcy  Defaults. When any Event of Default described
in  Section 8.1  has occurred and is continuing  (other than an Event of Default
described in subsection (e)  or (f) of Section 8.1),  the Bank may, by notice to
the  Borrower,  take one or more of the  following  actions:  (a) terminate  the
obligation of the Bank to extend any further credit hereunder on the date (which
may be the date thereof) stated in such notice; (b) declare the principal of and
the accrued  interest on the Notes to be forthwith due and payable and thereupon
the Notes,  including  both  principal  and interest  and all other  Obligations
payable  under  the Loan  Documents,  shall be and  become  immediately  due and
payable without further demand, presentment,  protest or notice of any kind; and
(c) enforce any and all rights and remedies available to the Bank under the Loan
Documents or applicable law.

     Section 8.3.  Bankruptcy  Defaults.  When any Event of Default described in
subsection (e)  or (f) of Section 8.1  has occurred and is continuing,  then the
Notes,  including both principal and interest, and all other Obligations payable
under the Loan  Documents,  shall  immediately  become due and  payable  without
presentment,  demand,  protest or notice of any kind,  and the obligation of the
Bank  to  extend  further  credit  pursuant  to any of the  terms  hereof  shall
immediately  terminate.  In addition, the Bank may exercise any and all remedies
available to it under the Loan Documents or applicable law.

     Section 9. MISCELLANEOUS.

     Section 9.1.  Non-Business  Day. If any payment  hereunder  becomes due and
payable on a day which is not a Business Day, the due date of such payment shall
be extended to the next succeeding Business Day on which date such payment shall
be due and payable. In the case of any payment of principal falling due on a day
which is not a Business Day, interest on such principal amount shall continue to
accrue during such extension at the rate per annum then in effect, which accrued
amount  shall be due and payable on the next  scheduled  date for the payment of
interest.

     Section 9.2.  Amendments,  Etc. No delay or failure on the part of the Bank
in the exercise of any power or right shall operate as a waiver thereof or as an
acquiescence  in any  default,  nor shall any single or partial  exercise of any
power or right preclude any other or further exercise thereof or the exercise of
any other  power or right.  The rights and  remedies  hereunder  of the Bank are
cumulative  to, and not  exclusive  of, any  rights or  remedies  which it would
otherwise  have.  No  amendment,  modification,  termination  or  waiver  of any
provision  of any Loan  Document,  nor consent to any  departure by the Borrower
therefrom,  shall in any event be effective  unless the same shall be in writing
and signed by the Bank. No notice to or demand on the Borrower in any case shall
entitle  the  Borrower  to any other or  further  notice or demand in similar or
other circumstances.

     Section 9.3. Costs and Expenses.  The Borrower  agrees to pay on demand the
costs and expenses of the Bank in connection with the negotiation,  preparation,
execution  and  delivery of the Loan  Documents  and the other  instruments  and
documents to be delivered  thereunder,  and in connection with the  transactions
contemplated  thereby,  and in  connection  with  any  consents  or  waivers  or
amendments thereto, including the fees and expenses of counsel for the Bank with
respect to all of the foregoing  (whether or not the  transactions  contemplated
thereby are  consummated).  The Borrower  further  agrees to pay to the Bank all
costs and expenses (including court costs and attorneys' fees), if any, incurred
or paid by the Bank in  connection  with any  Default  or Event of Default or in
connection with the enforcement of any Loan Document or any other  instrument or
document  delivered  thereunder.  The  obligations  of the  Borrower  under this
Section shall survive the termination of this Agreement.

     Section 9.4.   Survival  of   Representations.   All   representations  and
warranties made in the Loan Documents or in certificates  given pursuant thereto
shall  survive  the  execution  and  delivery of the Loan  Documents,  and shall
continue in full force and effect with respect to the date as of which they were
made as long as any credit is in use or available hereunder.

     Section 9.5.  Notices.  Except as otherwise  specified herein,  all notices
hereunder shall be in writing  (including notice by telecopy) and shall be given
to the relevant  party at its address or telecopier  number set forth below,  or
such other address or telecopier  number as such party may hereafter  specify by
notice to the other given by United  States  certified or  registered  mail,  by
telecopy  or by other  telecommunication  device  capable of  creating a written
record of such notice and its receipt. Notices hereunder shall be addressed:


     to the Borrower at:                to the Bank at:

     222 First Avenue East              111 West Monroe Street
     Oskaloosa, Iowa  52577             Chicago, Illinois  60603
     Attention: Mr. Charles Howard      Attention: Mr. Robert G. Bomben
     Telephone: (515) 673-1538          Telephone: (312) 461-7519
     Telecopy:  (515) 673-7836          Telecopy:  (312) 765-8382

Each such notice, request or other communication shall be effective (i) if given
by  telecopier,  when such  telecopy is  transmitted  to the  telecopier  number
specified in this Section and a confirmation  of such telecopy has been received
by the sender,  (ii) if given by mail, five (5) days after such communication is
deposited in the mail,  certified or registered  with return receipt  requested,
addressed as aforesaid or (iii) if  given by any other means,  when delivered at
the addresses specified in this Section; provided that any notice given pursuant
to Section 1 hereof shall be effective only upon receipt.

     Section 9.6. Construction, Etc. Nothing contained herein shall be deemed or
construed to permit any act or omission  which is prohibited by the terms of any
of the other Loan Documents, the covenants and agreements contained herein being
in  addition  to and  not in  substitution  for  the  covenants  and  agreements
contained in the other Loan Documents.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof or  affecting  the  validity or
enforceability  of such provision in any other  jurisdiction.  Section  headings
used in this Agreement are for  convenience of reference only and are not a part
of this Agreement for any other purpose.

     Section 9.7.  Binding  Nature,  Governing  Law, Etc. This  Agreement may be
executed  in any number of  counterparts,  and by  different  parties  hereto on
separate  counterpart  signature pages, and all such counterparts taken together
shall be deemed to constitute on and the same  instrument.  This Agreement shall
be binding upon the Borrower and its successors and assigns,  and shall inure to
the benefit of the Bank and the benefit of its successors and assigns, including
any subsequent holder of the Obligations. The Borrower may not assign its rights
hereunder  without the written consent of the Bank.  This Agreement  constitutes
the entire  understanding  of the parties  with  respect to the  subject  matter
hereof and any prior  agreements,  whether written or oral, with respect thereto
are superseded  hereby.  This Agreement and the rights and duties of the parties
hereto shall be governed by, and construed in accordance with, the internal laws
of the State of Illinois without regard to principles of conflicts of laws.

     Upon your  acceptance  hereof in the manner  hereinafter  set  forth,  this
Agreement  shall  constitute  a contract  between  us for the uses and  purposes
hereinabove set forth.

     Dated as of this 30th day of June, 2000.

                                        MAHASKA INVESTMENT COMPANY


                                     By /s/ Charles S. Howard
                                        --------------------------------------
                                        President


     Accepted  and agreed to at Chicago,  Illinois,  as of the day and year last
above written.

                                        HARRIS TRUST AND SAVINGS BANK


                                     By /s/ Robert G. Bomben
                                        --------------------------------------
                                        Vice President
<PAGE>

                                                                  Exhibit 10.5.1

                                    Exhibit A

                              Revolving Credit Note

                                                               Chicago, Illinois
$9,000,000                                                        June ___, 2000

     On the  Termination  Date, for value  received,  the  undersigned,  Mahaska
Investment Company, an Iowa corporation (the "Borrower"), hereby promises to pay
to the order of Harris  Trust And  Savings  Bank (the  "Bank")  at its office at
111 West Monroe Street, Chicago, Illinois, the principal sum of (i) Nine Million
Dollars  ($9,000,000),  or (ii)  such  lesser  amount  as may at the time of the
maturity hereof,  whether by acceleration or otherwise,  be the aggregate unpaid
principal  amount of all  Revolving  Loans  owing from the  Borrower to the Bank
under the  Revolving  Credit  provided for in the Credit  Agreement  hereinafter
mentioned.

     This Note is issued in substitution  and replacement for, and evidences the
indebtedness  currently  evidenced by, that certain Revolving Credit Note of the
Borrower dated  December __,  1998 in the principal amount of $20,000,000.  This
Note evidences  additional Revolving Loans made or to be made to the Borrower by
the Bank under the Revolving  Credit provided for under that certain Amended and
Restated Credit  Agreement dated as of June __,  2000,  between the Borrower and
the  Bank  (said  Credit  Agreement,  as the same may be  amended,  modified  or
restated from time to time, being referred to herein as the "Credit Agreement"),
and the Borrower hereby  promises to pay interest at the office  described above
on such Revolving  Loans  evidenced  hereby at the rates and at the times and in
the manner specified therefor in the Credit Agreement.

     This Note is issued by the Borrower  under the terms and  provisions of the
Credit  Agreement  and  is  secured  by,  among  other  things,  the  Collateral
Documents;  and  this  Note is  entitled  to all of the  benefits  and  security
provided for thereby or referred to therein,  to which  reference is hereby made
for a statement thereof.  This Note may be declared to be, or be and become, due
prior to its expressed  maturity and voluntary  prepayments  may be made hereon,
all in the  events,  on the terms and with the  effects  provided  in the Credit
Agreement.  All capitalized terms used herein without  definition shall have the
same meanings herein as such terms are defined in the Credit Agreement.

     The  Borrower  hereby  promises  to pay all costs and  expenses  (including
attorneys'  fees)  suffered or incurred by the holder hereof in collecting  this
Note or enforcing any rights in any  collateral  therefor.  The Borrower  hereby
waives  presentment  for  payment and demand.  This Note shall be  construed  in
accordance  with,  and governed  by, the internal  laws of the State of Illinois
without regard to principles of conflicts of laws.

                                        MAHASKA INVESTMENT COMPANY


                                     By
                                        --------------------------------------
                                        Name----------------------------------
                                        Title---------------------------------


<PAGE>

                                                                 Exhibit 10.5.1


                                    Exhibit B

                                    Term Note

                                                               Chicago, Illinois
$9,000,000.00                                                     June ___, 2000

     For Value Received,  the undersigned,  Mahaska Investment  Company, an Iowa
corporation (the  "Borrower"),  promises to pay to the order of Harris Trust and
Savings  Bank (the  "Bank") at its office at 111 West  Monroe  Street,  Chicago,
Illinois,  the principal sum of Nine Million and no/100 Dollars  ($9,000,000.00)
in five  (5) consecutive  annual principal  installments in amounts and on dates
set  forth  in  the  hereinafter  identified  Credit  Agreement,  with  a  final
installment  in the amount of all principal not sooner paid due on the Term Loan
Maturity Date, the final maturity hereof.

     This Note  evidences  the Term Loan made to the  Borrower by the Bank under
that certain Amended and Restated Credit  Agreement dated as of June ___,  2000,
between the  Borrower and the Bank (said  Credit  Agreement,  as the same may be
amended, modified or restated from time to time, being referred to herein as the
"Credit  Agreement"),  and the Borrower  hereby  promises to pay interest at the
office  described  above on such Term Loan evidenced  hereby at the rates and at
the times and in the manner specified therefor in the Credit Agreement.

     This Note is issued by the Borrower  under the terms and  provisions of the
Credit  Agreement  and  is  secured  by,  among  other  things,  the  Collateral
Documents;  and  this  Note is  entitled  to all of the  benefits  and  security
provided for thereby or referred to therein,  to which  reference is hereby made
for a statement thereof.  This Note may be declared to be, or be and become, due
prior to its expressed maturity,  voluntary  prepayments may be made hereon, and
certain  prepayments are required to be made hereon,  all in the events,  on the
terms and with the effects  provided in the Credit  Agreement.  All  capitalized
terms used herein without definition shall have the same meanings herein as such
terms are defined in the Credit Agreement.

     The  Borrower  hereby  promises to pay all  reasonable  costs and  expenses
(including  attorneys'  fees)  suffered  or  incurred  by the  holder  hereof in
collecting  this Note or enforcing any rights in any  collateral  therefor.  The
Borrower hereby waives  presentment  for payment and demand.  This Note shall be
construed in accordance with, and governed by, the internal laws of the State of
Illinois without regard to principles of conflicts of laws.


                                        MAHASKA INVESTMENT COMPANY


                                     By
                                        --------------------------------------
                                        Name----------------------------------
                                        Title---------------------------------


<PAGE>
                                                                 Exhibit 10.5.1



                                  Schedule 5.2

                                  Subsidiaries
<TABLE>
<CAPTION>


                                        Jurisdiction          Percentage
           Name                       of Incorporation        Ownership
           ----                       ----------------        ---------
<S>                                        <C>                   <C>

Mahaska State Bank                          Iowa                 100%

Central Valley Bank                    United States
                                         of America              100%

MIC Financial, Inc.,
f/k/a Credit Service, Inc.                  Iowa                 100%

Pella State Bank                            Iowa                 100%

Midwest Federal Savings & Loan              Iowa                 100%

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                   Exhibit 11

                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS


                                      Three Months Ended       Six Months Ended
                                           June 30,                June 30,
                                    --------------------      ------------------
Earnings per Share Information:       2000         1999        2000        1999
                                    --------     -------      -------    -------
<S>                                 <C>        <C>          <C>        <C>
Weighted average number of shares
  outstanding during the year       4,042,690  3,652,376    4,165,758  3,644,405

Weighted average number of shares
  outstanding during the year
  including all dilutive potential
  shares                            4,046,428  3,743,010    4,177,683  3,728,534

Net earnings                       $  971,088 $ (319,172)  $2,084,420 $  838,072

Earnings per share - basic         $     0.24 $    (0.09)  $     0.50 $     0.23

Earnings per share - diluted       $     0.24 $    (0.08)  $     0.50 $     0.22
</TABLE>