FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



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




FOR QUARTER ENDED                                       COMMISSION FILE NUMBER
SEPTEMBER 30, 1998                                              0-24630





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




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



                  222 First Avenue East, Oskaloosa, Iowa 52577

                         Telephone Number (515) 673-8448






Indicate by check mark whether the registrant (1) has filed all reports required
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days.
                  Yes   X                       No       
 
As of October 30, 1998, there were 3,631,344 shares of common stock $5 par value
outstanding.

<PAGE>

PART I -- Item 1. Financial Statements
<TABLE>
<CAPTION>
 
                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CONDITION
 
(unaudited)
(dollars in thousands)                            September 30,   December 31,
                                                        1998            1997
<S>                                              <C>              <C>
                  ASSETS
Cash and due from banks                           $    11,951           10,854
Interest-bearing deposits in banks                         76            1,526
Federal funds sold                                      1,955            6,815
 
   Cash and cash equivalents                           13,982           19,195
Investment securities:
   Available for sale                                  26,879           23,228
   Held to maturity                                    16,698           19,833
Loans                                                 166,250          144,333
Allowance for loan losses                              (1,873)          (1,816)
 
   Net loans                                          164,377          142,517
 
Loan pool participations                               56,250           54,326
Premises and equipment, net                             4,143            4,183
Accrued interest receivable                             3,668            2,927
Other assets                                            2,249            2,502
Goodwill                                                5,703            6,162

      Total assets                              $     293,949          274,873

         LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
   Demand                                       $      19,815           21,277
   NOW and Super NOW                                   30,406           33,226
   Savings                                             61,338           59,020
   Certificates of deposit                            108,998          101,785
 
      Total deposits                                  220,557          215,308
Federal funds purchased                                 3,775                0
Federal Home Loan Bank advances                        12,299            6,000
Note payable                                           16,750           14,050
Other liabilities                                       2,635            2,761
 
      Total liabilities                               256,016          238,119

Shareholders' equity:
   Common stock, $5 par value;
         authorized 4,000,000 shares;
         issued 3,807,501 shares                       19,038           19,038
   Capital surplus                                         80              119
   Treasury stock at cost, 176,157
         shares as of September 30, 1998,
         and 142,007 shares as of
         December 31, 1997                             (2,877)          (1,752)
   Retained earnings                                   21,470           19,230
   Accumulated other comprehensive income                 222              119

      Total shareholders' equity                       37,933           36,754

      Total liabilities and shareholders'
        equity                                  $     293,949          274,873

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

<PAGE>

PART I -- Item 1. Financial Statements, Continued
<TABLE>
<CAPTION>
                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
 
(unaudited)                             Three Months Ended    Nine Months Ended
(dollars in thousands,                     September 30,        September 30,
 except per share)                      1998          1997    1998         1997

<S>                                     <C>         <C>      <C>        <C>
Interest income:
   Interest and fees on loans           $ 3,986      3,199    11,038     8,919
   Interest and discount
     on loan pools                        1,527      2,128     6,182     6,545
   Interest on bank deposits                 21         21       109        77
   Interest on federal funds sold            15          2       238        63
   Interest on investment securities:
      Available for sale                    418        413     1,196     1,310
      Held to maturity                      217        295       693       973
         Total interest income            6,184      6,058    19,456    17,887
 
Interest expense:
   Interest on deposits:
      NOW and Super NOW                     161        168       502       501
      Savings                               553        574     1,654     1,679
      Certificates of deposit             1,533      1,358     4,477     4,042
   Interest on federal funds
          purchased                          10         21        11        32
   Interest on Federal Home Loan
          Bank advances                     101         29       280        80
   Interest on note payable                 271        189       750       506
         Total interest expense           2,629      2,339     7,674     6,840

         Net interest income              3,555      3,719    11,782    11,047

Provision for loan losses                   307        145       594       312

         Net interest income
           after provision for
           loan losses                    3,248      3,574    11,188    10,735

Noninterest income:
   Service charges                          329        311       917       846
   Data processing income                    48         48       148       163
   Other operating income                   138        108       307       318
   Investment security gains (losses)         0          0        26        (8)
         Total noninterest income           515        467     1,398     1,319

Noninterest expense:
   Salaries and employee benefits
         expense                          1,210      1,039     3,540     2,988
   Net occupancy expense                    349        304     1,004       863
   FDIC assessment                           12         12        36        30
   Professional fees                         94        163       343       352
   Other operating expense                  427        444     1,298     1,369
   Goodwill amortization                    153        158       459       475
         Total noninterest expense        2,245      2,120     6,680     6,077

         Income before income
           tax expense                    1,518      1,921     5,906     5,977

Income tax expense                          541        675     2,125     2,126

         Net income                   $     977      1,246     3,781     3,851

Earnings per common share - basic     $    0.27       0.34      1.03      1.05
Earnings per common share - diluted   $    0.26       0.33      0.98      1.01
Dividends per common share            $    0.14       0.12      0.42      0.36

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

<PAGE>

PART I -- Item 1. Financial Statements, Continued
<TABLE>
<CAPTION>

                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
(unaudited)                              Three Months Ended    Six Months Ended
(in thousands)                              September 30         September 30,
                                         1998          1997    1998        1997
<S>                                  <C>             <C>      <C>        <C> 
Net income                            $   977         1,246    3,781      3,851
Other Comprehensive Income:
   Unrealized gains (losses)
    on securities available for sale:
      Unrealized holding gains (losses)
         arising during the period, 
         net of tax                        59            50       82         74
        Less: reclassification
          adjustment for net (gains) 
          losses included in net income,
          net of tax                        0             0      (17)         5

Other comprehensive income,
  net of tax                               59            50       65         79
Comprehensive income                    1,036         1,296    3,846      3,930
 
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
 
(unaudited)                                                Nine Months Ended
(dollars in thousands)                                        September 30,
                                                         1998            1997

Cash flows from operating activities:
         Net income                                  $   3,781          3,851
         Adjustments to reconcile net income
           to net cash provided by operating
           activities:
                  Depreciation and amortization            918            838
                  Provision for loan losses                594            312
                  Investment securities (gains) losses     (26)             8
                  Loss on sale of bank premises and
                    equipment                                0             16
                  Amortization of investment
                    securities premiums                    115            176
                  Accretion of investment securities
                    and loan discounts                    (323)          (398)
                  Increase in other assets                (487)        (1,129)
                  (Decrease) increase in other
                    liabilities                           (184)           823
                      Total adjustments                    607            646
                      Net cash provided by operating
                        activities                       4,388          4,497

Cash flows from investing activities:
         Investment securities available for sale:
                  Proceeds from sales                      175            994
                  Proceeds from maturities               3,479          6,755
                  Purchases                             (7,137)        (6,038)
         Investment securities held to maturity:
                  Proceeds from maturities               6,902          5,904
                  Purchases                             (3,849)          (647)
         Purchases of loan pool participations         (21,029)       (12,775)
         Principal recovery on loan pool
           participations                               19,105         16,218
         Net increase in loans                         (22,145)       (20,813)
         Purchases of bank premises and
           equipment                                      (420)          (583)
         Proceeds from sale of bank premises
           and equipment                                     0              7
                  Net cash used in investing
                  activities                           (24,919)       (10,978)

Cash flows from financing activities:
         Net increase (decrease) in deposits             5,249         (1,801)
         Net increase in federal funds purchased         3,775            300
         Advances on note payable                        7,200          3,300
         Principal payments on note payable             (4,500)        (1,000)
         Federal Home Loan Bank advances                 6,300          5,600
         Repayment of Federal Home Loan
           Bank advances                                    (1)        (3,600)
         Dividends paid                                 (1,542)        (1,316)
         Purchases of treasury stock                    (1,768)        (1,610)
         Proceeds from exercise of stock options           605            184
                  Net cash provided by financing
                  activities                            15,318             57

                  Net decrease in cash and cash
                  equivalents                           (5,213)        (6,424)
Cash and cash equivalents at beginning of
  period                                                19,195         16,484
Cash and cash equivalents at end of period          $   13,982         10,060

Supplemental disclosures of cash flow information:
         Cash paid during the period for:
                  Interest                          $    7,627          6,884
                  Income taxes                      $    2,061          1,964
</TABLE>
See accompanying notes to consolidated financial statements.

<PAGE>

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

                           MAHASKA INVESTMENT COMPANY

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

1.       Adjustments and Reclassifications

The  accompanying  consolidated  financial  statements  (unaudited)  include the
accounts and transactions of the Company and its four wholly-owned subsidiaries,
Mahaska State Bank,  Central  Valley Bank,  Pella State Bank and On- Site Credit
Services,  Inc. All material  intercompany  balances and transactions  have been
eliminated in consolidation.

The  accompanying   consolidated  financial  statements  (unaudited)  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  (unaudited) be read in conjunction
with the Company's  most recent audited  financial  statements and notes thereto
contained in the 1997 annual report on Form 10-K. In the opinion of  management,
the  accompanying  consolidated  financial  statements  (unaudited)  contain all
adjustments  (consisting of only normal recurring accruals) necessary to present
fairly the  financial  position as of  September  30,  1998,  and the results of
operations for the three months and the nine months ended September 30, 1998 and
1997, and changes in cash flows for the nine months ended September 30, 1998 and
1997.  Results for the nine months may not be  indicative of the results for the
entire year.

2.       Statements of Cash Flows

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

3.       Income Taxes

Federal   income  tax  expense  for  the  three   months  and  the  nine  months
ended September 30, 1998 and 1997 was computed using the consolidated  effective
federal tax rate. The Company also recognized  income tax expense  pertaining to
state franchise taxes payable individually by the subsidiary banks.

4.       Earnings Per Common Share

Basic earnings per common share  computations  are based on the weighted average
number of shares of common stock  actually  outstanding  during the period.  The
weighted  average number of shares for the  three-month  periods ended September
30,  1998 and  1997  was  3,654,768  and  3,620,953  (restated  to  reflect  the
five-for-three  stock  split  effected  in the  form of a stock  dividend  which
occurred in November  1997),  respectively.  For the  nine-month  periods  ended
September  30,  1998 and 1997,  the  weighted  average  number of common  shares
outstanding  was 3,669,414 and  3,661,591,  respectively.  Diluted  earnings per
share amounts are computed by dividing net income by the weighted average number
of shares and all dilutive  potential shares  outstanding during the period. The
computation  of diluted  earnings  per share used a weighted  average  number of
shares  outstanding  of  3,832,830  and  3,833,380  for the three  months  ended
September 30, 1998 and 1997,  respectively,  and 3,864,608 and 3,822,856 for the
nine months ended September 30, 1998 and 1997, respectively.

5.       Effect of New Financial Accounting Standards

SFAS 130, "Reporting  Comprehensive  Income" became effective for the Company on
January 1, 1998, and  establishes the standards for the reporting and display of
comprehensive   income  in  the  financial   statements.   Comprehensive  income
represents net earnings and certain amounts  reported  directly in shareholders'
equity,  such as net unrealized  gain or loss on available for sale  securities.
The  adoption  of SFAS  130 did not  have a  material  effect  on the  financial
position  and results of  operations,  nor did the adoption  require  additional
resources.


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


                      THREE MONTHS ENDED SEPTEMBER 30, 1998

Net income for the Company was  $977,000  for the quarter  ended  September  30,
1998,  compared with  $1,246,000 for the three months ended  September 30, 1997.
Basic  earnings  per share for the third  quarter of 1998 were $.27 versus basic
earnings of $.34 per share for the third quarter of 1997.  Diluted  earnings per
share for the third quarter of 1998 were $.26 versus diluted  earnings per share
of $.33 for the third  quarter of 1997.  All  historical  per share amounts have
been restated to reflect the five-for-three  stock split effected in the form of
a stock dividend which occurred in November 1997. Actual weighted average shares
outstanding were 3,654,768 and 3,620,953 for the third quarter of 1998 and 1997,
respectively.  The  Company's  return on average  assets for the  quarter  ended
September  30, 1998 was 1.39 percent  compared with a return of 1.94 percent for
the quarter ended September 30, 1997. The Company had a return on average equity
of 10.15  percent for the three  months  ended  September  30, 1998 versus 13.94
percent for the three months ended September 30, 1997.

RESULTS OF OPERATIONS

Net Interest Income

Net  interest  income may  fluctuate  as a result of  changes in the  volumes of
assets and liabilities as well as changes in interest  rates.  The Company's net
interest income for the quarter ended September 30, 1998 was $3,556,000 compared
with  $3,720,000 for the three months ended  September 30, 1997. The decrease of
$164,000 was mainly due to lower interest income and discount  collected on loan
pool  participations  in the third quarter of 1998 compared with 1997.  Interest
and fee income on loans increased  $787,000 (25 percent) in the third quarter of
1998 due to higher loan volumes.  Total interest  income  increased  $126,000 (2
percent) in the third quarter of 1998 compared with 1997. Total interest expense
for the quarter increased $290,000 (12 percent) compared with the same period in
1997 due to the  additional  deposits  and borrowed  funds.  The  Company's  net
interest  margin (on a federal  tax-equivalent  basis) for the third  quarter of
1998 was 5.54 percent  compared  with 6.37 percent in the third quarter of 1997.
Net interest margin is 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.  Most of the reduction in the net interest  margin in the
third  quarter of 1998 is  attributable  to the  decline  in loan pool  interest
income and discount recovery recorded in the third quarter of 1998 compared with
the income recognized in the 1997 period. The Company's overall yield on earning
assets was 9.58 percent for the third  quarter of 1998 compared to 10.32 percent
for  the  third  quarter  of  1997.  The  rate on  interest-bearing  liabilities
increased  in the  third  quarter  of 1998 to 4.76  percent  compared  with 4.66
percent for the third quarter of 1997.

The increase in interest  income and fees on loans in the third  quarter of 1998
compared to the same period in 1997 was mainly the result of higher loan volumes
which produced greater revenues. The average yield on loans rose to 9.67 percent
for the third  quarter of 1998,  up from 9.37 percent for the three months ended
September  30, 1997 as the mix of the  Company's  loan  portfolio  shifted  into
higher-yielding  commercial  loans.  Average loans outstanding were $163,574,000
for the third quarter of 1998 compared with  $135,375,000  for the third quarter
of  1997,  an  increase  of  $28,199,000  (21  percent).  Each of the  Company's
subsidiaries  (except  for Pella  State Bank  which did not open until  December
1997)  experienced  an increase in average  loan volume in the third  quarter of
1998 compared with 1997. Average real estate loan volumes increased  $12,187,000
(21 percent),  commercial  loans averaged  $9,525,000 (28 percent)  higher,  and
agricultural  loans increased  $4,787,000 (18 percent) in average volume for the
third quarter of 1998 compared with the third quarter of 1997.

Interest income and discount  collected on the loan pools was $1,527,000 for the
third quarter of 1998 compared  with  $2,128,000  earned in the third quarter of
1997. The yield on loan pool investments was 12.51 percent for the third quarter
of 1998 compared  with 17.38  percent for the quarter ended  September 30, 1997.
The average loan pool  participation  investment  balance was $48,445,000 during
the third quarter of 1998 compared with an average balance of $48,589,000 in the
third  quarter of 1997.  These loan pool  investments  are pools of  performing,
nonperforming  and distressed 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. Interest income and discount recovery on the
loan pools is recognized on a "cash" basis by the Company.  Collection  expenses
incurred by the servicer to collect these loans are netted directly  against the
income received.  The reduction in loan pool income  recognized in 1998 compared
with 1997  followed  a decline in the  amount of cash  collections  in the third
quarter of 1998.  Since the Company  commenced  purchases of loan pools in 1988,
income recognition on the pools has been uneven.
 
The increase in interest  expense for the third  quarter of 1998  compared  with
1997 was mainly  attributable  to growth in deposits and an increase in borrowed
funds.  Interest expense on deposits increased $147,000 (7 percent) in the third
quarter  of 1998 as  average  interest-bearing  deposits  for  the  period  were
$11,328,000  (6 percent)  greater than in the same period in 1997.  Federal Home
Loan Bank advances during the third quarter of 1998 averaged  $4,263,000 greater
in the third quarter of 1998  compared with the third quarter of 1997  resulting
in an additional $71,000 in interest expense.  Interest expense on the Company's
commercial bank line of credit  borrowed funds  increased  $81,000 as the amount
borrowed  averaged  $4,853,000 higher in the third quarter of 1998 compared with
the third  quarter of 1997.  The Company  utilized  these  borrowings to provide
operating  funds to On-Site  Credit  Services,  Inc., to repurchase  stock to be
reissued as stock options are  exercised,  and to provide  capital to the newly-
chartered Pella State Bank.
Provision for Loan Losses

The  Company's  provision for loan loss expense of $307,000 in the third quarter
of 1998 was  $162,000  greater  than in the third  quarter  of 1997.  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.  During  the third  quarter  of 1998,  management  deemed it  prudent to
increase the provision for loan losses due to growth in total loans, as a result
of difficulties in the agricultural economy, and due to higher loan charge-offs.


Other Income

Other income results from the charges and fees collected by the Company from its
customers for various services  performed,  data processing income received from
nonaffiliated  banks,  miscellaneous other income and gains (or losses) from the
sale of investment  securities  held in the available for sale  category.  Total
other  income  increased  $47,000  (10  percent)  in the third  quarter  of 1998
compared  with 1997,  mainly due to the receipt of a  settlement  of an employee
misappropriation  of customer  funds which  occurred in 1995 and was expensed at
that  time.  Higher  service  charge  income  from  overdraft  fees at the  bank
subsidiaries also  contributed  to the  increase in other  income in the current
quarter.

Other Expense

Total  other  noninterest  expense  for the  quarter  ended  September  30, 1998
increased  $124,000 (6 percent)  compared to  noninterest  expense for the third
quarter of 1997.  Other expense  includes all the costs  incurred to operate the
Company except for interest  expense,  the loan loss provision and income taxes.
Salaries and benefits  expense for the third quarter of 1998 increased  $171,000
(17  percent)  over the  third  quarter  of 1997,  primarily  as a result of the
additional  employees  at the  newly-chartered  Pella State Bank and also due to
increased staffing at other  subsidiaries.  Net occupancy expenses for the third
quarter of 1998  increased  $43,000  (14  percent)  in  comparison  to the third
quarter of 1997 with most of the increase due to the  additional  facilities  of
Pella State Bank.  Professional  fees decreased $68,000 for the third quarter of
1998  over the  same  period  in 1997.  Other  miscellaneous  operating  expense
decreased by $17,000 (4 percent) in the third  quarter of 1998 compared with the
three months ended September 30, 1997. Goodwill  amortization  expense decreased
$5,000 (3 percent) in the third quarter of 1998 versus 1997 in  accordance  with
the effective yield method of amortization.

Income Tax Expense

Income tax expense for the three months  ended  September  30,  1998,  decreased
$134,000  compared to the amount for the three months ended  September 30, 1997,
primarily  due to the  overall  decrease in taxable  income for the period.  The
effective  income  tax  rate in the  third  quarter  of 1998 was  35.64  percent
compared  with  35.14  percent  in the  third  quarter  of 1997.  The  Company's
effective  income tax rate varies from the  statutory  rate  principally  due to
interest income from tax-exempt  securities and loans.  Changes in the effective
rate for one period in comparison to another are primarily due to changes in the
amount of tax-exempt income.

                      NINE MONTHS ENDED SEPTEMBER 30, 1998

The  Company's  net income for the nine  months  ended  September  30,  1998 was
$3,781,000,  compared with  $3,851,000 for the first nine months of 1997.  Basic
earnings  per share for the nine month  period of 1998 were $1.03  versus  basic
earnings of $1.05 per share for 1997.  Diluted  earnings  per share for the nine
months ended  September 30, 1998 were $.98 versus diluted  earnings per share of
$1.01 in 1997.  All  historical  per share amounts have been restated to reflect
the  five-for-three  stock split  effected in the form of a stock dividend which
occurred in November  1997.  Actual  weighted  average shares  outstanding  were
3,669,414   and   3,661,591  for  the  first  nine  months  of  1998  and  1997,
respectively.  The  Company's  return on average  assets  for the  period  ended
September  30, 1998 was 1.83 percent  compared with a return of 2.04 percent for
the first nine months of 1997.  The  Company  had a return on average  equity of
13.32 percent for the nine months ended  September 30, 1998 versus 14.67 percent
for the nine months ended September 30, 1997.

RESULTS OF OPERATIONS

Net Interest Income

The Company's net interest  income for the nine months ended  September 30, 1998
increased  $735,000 (7 percent) to  $11,782,000  from  $11,047,000  for the nine
months  ended  September  30, 1997.  This was mainly due to  increased  interest
income earned on higher loan volumes.  The increase in total interest income was
offset,  in part, by additional  interest expense related to increased  deposits
and borrowed funds.  Total interest income  increased  $1,569,000 (9 percent) in
the  first  nine  months of 1998  compared  with the same  period  in 1997.  The
Company's  total interest  expense for the nine months ended  September 30, 1998
increased  $834,000  (12  percent)  compared  with the same period in 1997.  The
Company's net interest margin (on a federal  tax-equivalent  basis) for the nine
months  of 1998 was  6.25  percent  compared  with  6.44  percent  in 1997.  The
Company's  overall yield on earning assets was 10.29 percent in 1998 compared to
10.38 percent in 1997.  The rate on  interest-bearing  liabilities  increased in
1998 to 4.75 percent compared with 4.63 percent for 1997.

Interest income and fees on loans increased $2,120,000 (24 percent) in the first
nine  months of 1998  compared  to the same  period  in 1997 due to higher  loan
volumes.  Average loans  outstanding were $154,457,000 for the first nine months
of 1998 compared with $127,776,000 for the nine months ended September 30, 1997,
an increase of $26,681,000 (21 percent). The average yield on loans rose to 9.55
percent  for the nine months of 1998,  up from 9.33  percent for the nine months
ended September 30, 1997.

Interest  income and discount  collected on the loan pools was $6,182,000 in the
nine months of 1998 compared with $6,545,000  earned in the first nine months of
1997.  The yield on loan pool  investments  was 16.98 percent in the 1998 period
compared  with 17.80 percent for the nine months ended  September 30, 1997.  The
average loan pool participation  investment balance for the first nine months of
1998 was $48,663,000 compared with $49,166,000 in the nine months of 1997.
 
The increase in interest  expense for the nine months ended  September  30, 1998
compared with 1997 was mainly attributable to growth in deposits and an increase
in borrowed funds. Average  interest-bearing  deposits for the first nine months
of 1998 were  $10,363,000  (6 percent)  greater  than in the same period in 1997
resulting in an increase in interest  expense on deposits of $411,000.  Interest
expense on Federal  Home Loan Bank  advances  increased  by $200,000  during the
first nine months of 1998  compared  with 1997 as the  average  balance of these
advances  rose  $4,456,000  in  comparison  with the first nine  months of 1997.
Borrowings  on the  Company's  commercial  bank  line of credit  which  averaged
$4,060,000  higher in the first nine months of 1998  compared with 1997 produced
an increase of $243,000 in interest expense for the current period.


Provision for Loan Losses

The  Company's  provision  for loan loss  expense of  $594,000 in the first nine
months of 1998 was  $282,000  greater  than in 1997.  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  deemed it prudent to  increase  the  provision  for loan losses as a
result of the growth of the Company's overall loan portfolio,  concerns with the
agricultural economy, and due to the increased loan charge-offs in 1998.


Other Income

Total  other  income  increased  $78,000 (6 percent) in the first nine months of
1998  compared  with  1997,  mainly due to higher  service  charge  income  from
overdraft fees at the bank  subsidiaries  and due to investment  security gains.
The additional  income was offset,  in part, by reduced data  processing  income
from nonaffiliated banks and lower miscellaneous income.

Other Expense

Total other  noninterest  expense for the nine months ended  September 30,  1998
increased  $603,000 (10 percent)  compared to noninterest  expense for the first
nine months of 1997.  Salaries and benefits  expense in 1998 increased  $552,000
(18 percent) over 1997, primarily as a result of the additional employees at the
newly-chartered  Pella  State Bank and also due to  increased  staffing at other
subsidiaries.  Net  occupancy  expenses  for the nine  months of 1998  increased
$140,000 (16 percent) in comparison to 1997 with most of the increase due to the
additional facilities of Pella State Bank. Other miscellaneous operating expense
decreased  by $71,000 (5 percent) in 1998  compared  with the nine months  ended
September 30, 1997. Goodwill  amortization expense decreased $16,000 (3 percent)
in  1998  versus  1997  in  accordance   with  the  effective  yield  method  of
amortization.

Income Tax Expense

Income tax expense for the nine months ended  September 30, 1998,  was unchanged
compared  to the  amount for the nine  months  ended  September  30,  1997.  The
effective  income  tax rate in the first nine  months of 1998 was 35.98  percent
compared  with 35.57  percent in the first nine  months of 1997.  The  Company's
effective  income tax rate varies from the  statutory  rate  principally  due to
interest income from tax-exempt  securities and loans.  Changes in the effective
rate for one period in comparison to another are primarily due to changes in the
amount of tax-exempt income.

FINANCIAL CONDITION

The  Company's  total  assets as of  September  30, 1998 were  $293,949,000,  an
increase of  $19,076,000  from December 31, 1997. As of September 30, 1998,  the
Company had federal  funds sold of  $1,955,000  compared  with  $6,815,000 as of
December  31, 1997.  Most of the decrease in federal  funds sold was utilized to
fund loan growth.

Investment Securities

Investment  securities available for sale increased $3,651,000 (16 percent) from
December 31, 1997 to the September 30, 1998 total of  $26,879,000 as a result of
the purchase of securities. Investment securities classified as held to maturity
totaled  $16,698,000  as of  September  30,  1998,  a decline of  $3,135,000  as
securities matured or were called during the nine-month period from December 31,
1997. These proceeds were reinvested into securities available for sale.

Loans

Overall loan volumes  continued to  increase,  with total loans  outstanding  of
$166,250,000  as of September  30, 1998  reflecting  growth of  $21,918,000  (15
percent) from  December 31,  1997.  Most of the growth from December 31, 1997 to
September 30, 1998 was spread between real estate,  commercial and  agricultural
loans.  Consumer loans outstanding as of the quarter-end declined  approximately
$334,000  from the December 31, 1997  balance.  As of  September  30, 1998,  the
Company's  loan to deposit ratio  (excluding  loan pool  investments)  was 75.38
percent.  This  compares  with a year-end  1997 loan to  deposit  ratio of 67.04
percent.

As of  September  30, 1998,  the Company had  approximately  $31,987,000  (19.24
percent) of its loan portfolio in agricultural  loans. While this is an increase
of $5,488,000 in comparison with the December 31,  1997 agricultural loan total,
in most years the maximum level of operating loans occurs in the third and early
fourth quarters.  Concerns with the agricultural  economy have caused management
of the Company to require that subsidiary lending officers closely review all ag
lines and  identify  those  specific  credits  that would be more at risk in the
event of continued deterioration in the agricultural economy.  Contingency plans
are being  developed  for these  "weaker"  credits that would enable the lending
officers to work with these  borrowers  in an effort to prevent or minimize  any
potential loss to the Company.

Loan Pool Participations

As  of  September  30,  1998,   the  Company  had   investments   in  loan  pool
participations  of  $56,250,000,  an increase of $1,925,000 (4 percent) from the
prior year-end balance of $54,326,000. The loan pool investment balance shown as
an asset on the Company's Balance Sheet represents the discounted  purchase cost
of the loan pool participations.  The average loan pool participation investment
of  $48,663,000  for the first nine  months of 1998 was 1 percent  less than the
average balance of $49,166,000 for the first nine months of 1997.

The Company actively continues to evaluate and bid on loan pool packages. During
the third quarter of 1998, the Company invested  $14,832,000 in loan pools which
were  acquired from the FDIC and from two private  sellers.  The pools that were
purchased  during  the  quarter  were  primarily  performing  credits  that were
acquired at a higher cost basis.  Although the higher cost basis of the acquired
pools may  result  in a decline  in the  future  overall  yield on the loan pool
investment,  management  felt that it was prudent to  purchase a  higher-quality
performing  loan  asset  in  view of the  uncertainty  of the  current  economic
environment and the lower risk associated with holding a performing credit.

Loan pool  investments  by the Company are  participation  interests in pools of
loans owned by the  independent  servicer.  These loan pool  investments are not
securitized in any manner.  The servicer does not securitize these loan packages
or perform any collection  functions for other outside parties that are involved
in  securitization  activities.  The loans owned by the servicer  are  primarily
secured  by real  estate and do not  include  significant  amounts of  unsecured
consumer  debt  obligations.  These  assets  were  mainly  acquired  from  other
financial  institution  originators  and most were not  categorized  as subprime
credits at the time of origination.

Deposits

Total deposits grew  $5,249,000 (2 percent) during the first nine months of 1998
with the most growth  noted in higher rate  savings and  certificate  of deposit
accounts.  Demand deposit  accounts and NOW account deposits as of September 30,
1998  decreased  $4,281,000  from  December  31,  1997,  mostly due to  seasonal
fluctuation.

Borrowed Funds/Notes Payable

The Company had Fed Funds  purchased of  $3,775,000  on September  30, 1998.  On
December 31, 1997 there were no Fed Funds  Purchased.  Fixed-rate  advances from
the Federal Home Loan Bank totaled  $12,299,000  on September  30, 1998 compared
with  $6,000,000  as of  December  31,  1997.  The  Company  has  increased  its
utilization of FHLB advances as a lower-cost,  longer-term  funding  strategy in
comparison  with customer  deposits.  Notes payable  increased to $16,750,000 on
September  30, 1998 from  $14,050,000  on December 31, 1997 with the  additional
funds  utilized to purchase loan pool  investments,  to  repurchase  outstanding
shares of Company  stock to be reissued as stock  options are  exercised  and to
fund the operating capital needed by the On-Site Credit Services subsidiary.

Nonperforming Loans

The  Company's  nonperforming  loans totaled  $1,691,000  (1.02 percent of total
loans) as of September 30, 1998,  compared to $1,848,000  (1.28 percent of total
loans) as of December 31, 1997. All nonperforming loan totals and related ratios
exclude the loan pool  investments.  The following table presents the categories
of nonperforming loans as of September 30, 1998:

<TABLE>
<CAPTION>
                               Nonperforming Loans
                             (dollars in thousands)
                               September 30, 1998
        <S>                                        <C>
        Nonaccrual                                  $1,147
        Loans 90 days past due                         366
        Renegotiated loans                             166
        Other real estate owned                         12
                                                    $1,691

</TABLE>
From  December  31, 1997 to  September  30,  1998,  nonaccrual  loans  increased
$220,000,  loans ninety days past due  decreased  $155,000,  restructured  loans
decreased $222,000 and other real estate owned remained unchanged. The Company's
allowance  for loan losses as of September  30, 1998 was  $1,873,000,  which was
1.13 percent of total loans as of that date. This compares with an allowance for
loan losses of  $1,816,000  as of December 31,  1997,  which was 1.26 percent of
total loans.  As of September 30, 1998, the allowance for loan losses was 110.79
percent of  nonperforming  loans compared with 98.24 percent as of  December 31,
1997.  Management  believes that as of September 30, 1998 the allowance for loan
losses is adequate.  For the three months ended  September 30, 1998, the Company
recognized a net loan  charge-off of $170,000  compared with a net charge-off of
$25,000  during the quarter ended  September 30, 1997. For the first nine months
of 1998, the Company  experienced net charge-offs of loans totalling  $536,000,
or .46 percent of average loans  outstanding for the period.  This compares with
net loan charge-offs of $63,000 during the first nine months of 1997.


Capital Resources

As of September 30, 1998,  total  shareholders'  equity as a percentage of total
assets was 12.90  percent  compared  with 13.31 percent as of December 31, 1997.
Cash dividends paid to  shareholders  during the third quarter of 1998 were $.14
per share.

The Company held 176,157  shares of treasury stock at a cost of $2,877,000 as of
September 30, 1998.  These shares were  repurchased to satisfy  options  granted
under the Company's Stock Incentive Plans.  During the third quarter of 1998 the
Company  reissued  8,248 shares of treasury  stock as options were  exercised by
employees,  officers and directors.  On January 22, 1998, the Board of Directors
voted to continue the  Company's  stock  repurchase  plan that  provides for the
repurchase  of up to 200,000  shares  through  January  31,  1999.  The  Company
repurchased  58,500  shares of its stock  during the third  quarter of 1998 at a
cost of $1,228,000 (average cost of $20.99 per share).

Under  risk-based  capital  rules,  the Company's tier 1 capital ratio was 13.95
percent of risk-weighted  assets as of September 30, 1998, and was 14.74 percent
of  risk-weighted  assets as of December  31,  1997,  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
and including unrealized gains and losses on investment securities classified as
available for sale in accordance with FASB 115.

The Company continues to pursue acquisition and expansion opportunities that fit
the  organization's  strategic business and financial plans. There are currently
no pending  acquisitions  that would require the Company to secure  capital from
public or private markets.

Liquidity

Liquidity  management  involves meeting the cash flow requirements of depositors
and borrowers.  The Company  conducts  liquidity  management on both a daily and
long-term  basis;  and it adjusts  its  investments  in liquid  assets  based on
expected loan demand,  projected loan  maturities  and payments,  estimated cash
flows  from  the  loan  pool  participations,  expected  deposit  flows,  yields
available   on   interest-bearing   deposits,   and   the   objectives   of  its
asset/liability management program. The Company had liquid assets (cash and cash
equivalents) of $13,982,000 as of September 30, 1998,  compared with $19,195,000
as of December 31, 1997. Some of this decrease is attributable to the additional
funding of loans.  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
non-affiliated  commercial bank that provides liquidity for the purchase of loan
pool participation  investments and other corporate needs.  Management  believes
that the Company has  sufficient  liquidity as of September 30, 1998 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 nine months of 1998 changed when
compared to 1997.

The Company uses a third-party computer software simulation modelling 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, 1997.

YEAR 2000 Compliance

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

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

The  Company  has  established  Year 2000  Committees  and Plans at its bank and
thrift  subsidiaries,  and formal project plans have been developed and adopted.
Testing  and  contingency  plans  have also been  developed  and  adopted by the
Company's  subsidiaries.  Testing procedures are underway and are expected to be
completed  prior to December 31, 1998.  The Company  purchased a new main- frame
computer system that is year 2000 compliant in 1997 at a cost of $430,000.  This
computer  system became fully  operational in the first quarter of 1998 with the
equipment cost being depreciated over a five year period beginning in 1998.

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

The  Company  anticipates  that it will  incur  internal  staff  costs and other
expenses  related to the  enhancements  necessary to become Year 2000 compliant.
Based on the  Company's  current  knowledge,  the  expense  related to Year 2000
compliance is not expected to have a material effect on the Company's  financial
position or results of  operations.  It is estimated  that the costs incurred by
the Company for Year 2000 compliance will be approximately $20,000, exclusive of
costs associated with the new main-frame computer.

Effect of New Accounting Standards

Statement of Financial  Accounting  Standards  ("SFAS") No. 133,  Accounting for
Derivative Instruments and Hedging Activities, will be effective for the Company
beginning  January 1, 2000.  Management is evaluating the impact the adoption of
SFAS No. 133 will have on the Company's  consolidated  financial  statements and
expects to adopt SFAS 133 when required.
 
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT

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

<PAGE>

Part II -- Item 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, As Amended through April 30, 1998.

          3.2              Amended and Restated Bylaws of Mahaska Investment
                           Company, dated July 23, 1998.

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

         10.2.1   1993 Stock Incentive Plan. (a)

         10.2.2   1996 Stock Incentive Plan. (d)

         10.2.3   1998 Stock Incentive Plan. (e)

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

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

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

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

         10.5.2   Fourth Amendment to Revolving Loan Agreement and
                  Revolving Loan Note between Mahaska Investment
                  Company and Harris Trust & Savings Bank dated
                  June 30, 1998. (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 8-K filed by
                           Mahaska Investment Company on February 29, 1996.

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

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

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

(b)      Reports on Form 8-K -- No reports on Form 8-K were filed
         during the three months ended September 30, 1998.


                                   SIGNATURES


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


                                       MAHASKA INVESTMENT COMPANY   
                                       (Registrant)



November 4, 1998                       /s/ Charles S. Howard         
 Dated                                 Charles S. Howard
                                       President



November 4, 1998                       /s/ David A. Meinert          
 Dated                                 David A. Meinert
                                       Executive Vice President and
                                       Chief Financial Officer
                                       (Principal Accounting Officer)



<PAGE>
<TABLE>
<CAPTION>
                                   Exhibit 11


                           MAHASKA INVESTMENT COMPANY
                                AND SUBSIDIARIES
                 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
 
                                      Three Months Ended     Nine Months Ended
                                        September 30,          September 30,
                                      1998          1997     1998         1997
<S>                                  <C>        <C>         <C>       <C>
Earnings per Share Information:

Weighted average number of
  shares outstanding during
  the year                           3,654,768  3,620,953   3,669,414 3,661,591

Weighted average number of
  shares outstanding during
  the year including all
  dilutive potential shares          3,832,830  3,833,380   3,864,608 3,822,856

Net earnings                        $  977,218  1,245,908   3,780,895 3,851,381

Earnings per share - basic          $     0.27       0.34        1.03      1.05

Earnings per share - diluted        $     0.26       0.33        0.98      1.01

</TABLE>
<PAGE>

                                   Exhibit 3.1
                            ARTICLES OF INCORPORATION
                                       OF
                           MAHASKA INVESTMENT COMPANY
                       (As Amended Through April 30, 1998)


     We, the undersigned,  acting as  incorporators  of a corporation  under the
Iowa Business  Corporation  Act,  Chapter 496 A, Code of Iowa, 1971, as amended,
adopt the following Articles of Incorporation for such corporation:

                                   ARTICLE I.

     The name of the corporation is MAHASKA INVESTMENT COMPANY.

                                   ARTICLE II.

     The period of duration of the corporation shall be perpetual.

                                  ARTICLE III.

     The  corporation  shall have  unlimited  power to engage in, and to do, any
lawful act concerning any and all lawful business for which  corporations may be
organized under said Act.

                                   ARTICLE IV.

     The aggregate  number of shares which the corporation  shall have authority
to issue is Twenty Million  (20,000,000) shares of common stock of the par value
of Five Dollars ($5.00) each.

     A holder  or  subscriber  to shares  of the  corporation  shall be under no
obligation to the corporation or its creditors with respect to such shares other
than the obligation to pay to the corporation the full  consideration  for which
such shares were issued or are to be issued.

                                   ARTICLE V.

     The  address of the initial  registered  office of the  corporation  is 110
North Market Street in the City of Oskaloosa, Mahaska County, Iowa, and the name
of its initial registered agent at such address is C. A. Williams, Jr.

                                   ARTICLE VI.

     The number of directors of the corporation shall be not less than 5 and not
greater than 15, and,  effective as of the annual meeting of shareholders of the
corporation in 1996, the Board of Directors shall be divided into three classes,
designated  Class I, Class II, and Class III.  Such  classes  shall be as nearly
equal in number as possible.  The term of directors of one class shall extend to
each annual meeting of shareholders and in all cases as to each director,  until
his  successor  shall  be  elected  and  shall  qualify,  or until  his  earlier
resignation, removal from office, death or incapacity.  Additional directorships
resulting from an increase in number of directors shall be apportioned among the
classes as equally as possible. The initial term of office of directors of Class
I shall extend to the annual meeting of  shareholders  in 1997, that of Class II
shall extend to the annual  meeting in 1998,  and that of Class III shall extend
to the annual  meeting in 1999,  and in all cases as to each director  until his
successor  shall be elected and shall qualify or until his earlier  resignation,
removal  from  office,   death  or   incapacity.   At  each  annual  meeting  of
shareholders,  the number of  directors  equal to the number of directors of the
class whose term  extends to the time of such  meeting  shall be elected to hold
office until the third  succeeding  annual meeting of  shareholders  after their
election.  The Board of  Directors  may,  upon a majority  vote of its  members,
increase or decrease the number of directors  within the limits set forth above.
Any vacancy  occurring  in the Board of  Directors  and any  directorship  to be
filled by reason of an increase in the number of directors, may be filled by the
affirmative  vote of a majority of the  remaining  directors  though less than a
quorum of the Board of Directors.  Any director  elected to fill a vacancy other
than by reason of an  increase in the number of  directors  shall be elected for
the unexpired term of his or her predecessor in office.  Any director elected to
fill a vacancy by reason of an increase in the number of directors  may continue
in office only until the next election of directors by the shareholders.

                                  ARTICLE VII.

     The name and address of each incorporator is as follows:

           Name                                   Address

     R. S. Howard, Jr.             116 Highland Avenue, Oskaloosa, Iowa
     C. A. Williams, Jr.           837 High Avenue East, Oskaloosa, Iowa
     Ralph E. Lyddon               1219 North Third Street, Oskaloosa, Iowa

                                  ARTICLE VIII.

     No contract or other  transaction  between  the  corporation  and any other
corporation shall be affected or invalidated by the fact that any one or more of
the directors of this  corporation  is or are interested in, or is a director or
officer,  or are  directors  or  officers  of such  other  corporation,  and any
director or directors,  individually  or jointly may be a party or parties to or
may be interested in any  contract or  transaction  of this  corporation  or in
which this  corporation  is interested;  and no contract,  act or transaction of
this  corporation  with any person or  persons,  firm or  association,  shall be
affected  or  invalidated  by the fact that any  director or  directors  of this
corporation is a party, or are parties to, or interested in, such contract,  act
or  transaction,  or in any way connected  with such person or persons,  firm or
association,  and each and  every  person  who may  become  a  director  of this
corporation  is hereby  relieved from any liability that might  otherwise  exist
from  contracting with the corporation for the benefit of himself or any firm or
corporation in which he may be in any wise interested so long as he acts in good
faith and in a manner he reasonably believes to be in or not opposed to the best
interests of the corporation.

                                   ARTICLE IX.

     All deeds,  mortgages,  releases and other instruments in writing affecting
real  estate  which  shall  be made by the  corporation  shall be  executed  and
acknowledged  in its name by the president or any vice president and attested by
the secretary or any assistant secretary with the corporate seal attached.

                                   ARTICLE X.

     The  initial  bylaws of the  corporation  shall be  adopted by the board of
directors which shall have the power to alter, amend or repeal the same or adopt
new bylaws at any  regular  meeting or at any  special  meeting  called for that
purpose,  and said bylaws may contain  provisions  restricting  the  transfer of
shares of stock of the corporation.

                                   ARTICLE XI.

     No holder of any shares of the capital stock of the corporation  shall have
a  pre-emptive  right to acquire any unissued or treasury  shares or  securities
convertible into such shares or carrying a right to subscribe to or acquire such
shares, and any such unissued or treasury shares or securities  convertible into
such shares or carrying a right to  subscribe  to or acquire  such shares may be
issued and disposed of pursuant to resolutions of the Board of Directors to such
persons, firms, corporations, or associations and upon such terms and conditions
as may be deemed  advisable  by the Board of  Directors  in the  exercise of its
discretion.

                                  ARTICLE XII.

     Any action  required or  permitted by Chapter 490 of the 1993 Code of Iowa,
as amended,  or by these Articles or the Bylaws of the corporation,  to be taken
at a shareholders meeting may be taken without a meeting or vote, and, except as
provided below, without prior notice, if one or more written consents describing
the action taken are signed by the holders of outstanding shares having not less
than 51% of the  votes  entitled  to be cast at a meeting  at which  all  shares
entitled to vote on the action were present and voted, and such written consents
are delivered to the corporation for inclusion in the minutes or filing with the
corporate records; provided, however, that in the event any provision of Chapter
490 of the 1993 Code of Iowa,  as  amended,  requires  that  notice of  proposed
action be given to  shareholders  not  entitled  to vote and the action is to be
taken by consent  of the voting  shareholders,  the  corporation  shall give all
shareholders  written notice of the proposed action at least ten days before the
action is taken,  in the form and in the manner  required  by Chapter 490 of the
1993 Code of Iowa, as amended.  Any such written  consent shall bear the date of
signature of each shareholder who signs the consent and no written consent shall
be effective to take the  corporate  action  referred to in the consent  unless,
within 60 days of the earliest  dated consent  delivered in the manner  required
above to the  corporation,  written  consents  signed by a sufficient  number of
holders to take action are  delivered to the  corporation.  Prompt notice of the
taking of  corporate  action  without a meeting by less than  unanimous  written
consent shall be given to those shareholders who have not consented in writing.

      Dated at Oskaloosa, Iowa, this 14th day of February, 1973.


                                        /s/ R. S. Howard, Jr.             
                                        R. S. Howard, Jr.


                                        /s/ C. A. Williams, Jr.           
                                        C. A. Williams, Jr.


                                        /s/ Ralph E. Lyddon               
                                        Ralph E. Lyddon

                                        INCORPORATORS


STATE OF IOWA              )
                           ) SS.
MAHASKA COUNTY             )

     On this 14th day of  February,  1973,  before  me, the  undersigned  Notary
Public,  personally appeared R. S. Howard, Jr., C. A. Williams, Jr. and Ralph E.
Lyddon,  to me known to be the  identical  persons named in and who executed the
foregoing  Articles of  Incorporation,  and acknowledged  that they executed the
same as their voluntary act and deed.

                                        /s/ Alice M. Parlet                
                                        Notary Public in and for said County
                                        and State.

<PAGE>



                                   Exhibit 3.2

                           AMENDED AND RESTATED BYLAWS
                                       OF
                           MAHASKA INVESTMENT COMPANY
                                  JULY 23, 1998

                       ARTICLE I. OFFICES OF CORPORATION.

     Section 1. Principal Office. The principal office of the corporation in the
State of Iowa shall be located in the City of Oskaloosa,  Mahaska County,  Iowa.
The corporation may have such other offices,  either within or without the State
of Iowa,  as the board of  directors  may  designate  or as the  business of the
corporation may require from time to time.

     Section 2.  Registered  Office.  The registered  office of the  corporation
required by the Iowa Business  Corporation  Act to be maintained in the State of
Iowa may be, but need not be,  identical with the principal  office in the State
of Iowa,  and the address of the  registered  office may be changed from time to
time by the board of directors.

                            ARTICLE II. SHAREHOLDERS.

     Section 1. Annual Meeting. The annual meeting of the share holders shall be
held on any day in the month of April in each year, other than Sundays and legal
holidays,  commencing  at an hour  between  8:00 a.m.  and 5:00  p.m.  as may be
specified  from  year to year by the  board of  directors,  for the  purpose  of
electing  directors  and  transacting  such other  business as may properly come
before the meeting.  If the election of directors  shall not be held on the date
designated  for any  annual  meeting  of the  shareholders,  or any  adjournment
thereof, the board of directors shall cause the election to be held at a special
meeting of the  shareholders as soon  thereafter as conveniently  may be. If the
annual meeting is not held within any eighteen-month  period, the District Court
of the county wherein the registered  office of the  corporation is located may,
upon the written  application of any shareholder,  order an annual meeting to be
held.

     Section 2. Special Meetings. Special meetings of the shareholders,  for any
purpose or purposes,  unless otherwise  prescribed by statute,  may be called by
the president or by the board of directors, and shall be called by the president
at the request of the holders of not less than  one-half of all the  outstanding
shares of the corporation entitled to vote at the meeting.

     Section 3. Place of Meetings.  The board of  directors  may  designate  any
place,  either  within or without the State of Iowa, as the place of meeting for
any annual meeting or for any special meeting called by the board of directors.

     Section 4. Notice of Meetings. Written or printed notice stating the place,
day and hour of the meeting  and, in case of a special  meeting,  the purpose or
purposes for which the meeting is called,  shall be delivered  not less than ten
nor more than sixty days before the date of the meeting, either personally or by
mail, by or at the direction of the president,  the secretary, or the officer or
persons calling the meeting,  to each  shareholder of record entitled to vote at
such  meeting.  If mailed,  such  notice  shall be deemed to be  delivered  when
deposited in the United States mail, addressed to the shareholder at his address
as it appears  on the stock  transfer  books of the  corporation,  with  postage
thereon  prepaid.  Any  shareholder  may waive  notice of any regular or special
meeting of shareholders at any time.

     Section  5.  Fixing  of  Record  Date.   For  the  purpose  of  determining
shareholders  entitled to notice of or to vote at any meeting of shareholders or
any  adjournment  thereof,  or  shareholders  entitled to receive payment of any
dividend,  or in order to make a  determination  of  shareholders  for any other
proper  purpose,  the board of directors of the corporation may fix in advance a
date as the record date for any such determination of shareholders, such date in
any  case to be not  more  than  seventy  days  and,  in case  of a  meeting  of
shareholders,  not less than ten days prior to the date on which the  particular
action,  requiring such  determination  of  shareholders,  is to be taken.  If a
record  date is not fixed for the  determination  of  shareholders  entitled  to
notice of or to vote at a meeting of shareholders,  or shareholders  entitled to
receive payment of a dividend, the date on which notice of the meeting is mailed
or the date on which the  resolution  of the board of directors  declaring  such
dividend  is  adopted,  as the case may be,  shall be the  record  date for such
determination of shareholders.  When a determination of shareholders entitled to
vote at any meeting of  shareholders  has been made as provided in this section,
such  determination  shall apply to any adjournment  thereof,  if the meeting is
adjourned  to a date  within  120 days  after the date  fixed  for the  original
meeting.

     Section 6. Voting  Lists.  The officer or agent having  charge of the stock
transfer books for shares of the corporation shall make,  beginning two business
days after  notice of the meeting is given for which the list was  prepared  and
continuing through the meeting, a complete list of the shareholders  entitled to
vote at such  meeting,  or any  adjournment  thereof,  arranged in  alphabetical
order,  with the  address of and the number of shares  held by each,  which list
shall be kept on file at the registered  office of the  corporation and shall be
subject to  inspection  by any  shareholder  at any time during  usual  business
hours.  Such list shall also be produced  and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting. The original stock transfer book shall be prima facie
evidence  as to who  are the  shareholders  entitled  to  examine  such  list or
transfer books or to vote at any meeting of shareholders.

     Section 7. Quorum. A majority of the outstanding  shares of the corporation
entitled to vote,  represented in person or by proxy,  shall constitute a quorum
at a meeting of shareholders,  and if a quorum is present,  the affirmative vote
of the majority of the shares represented at the meeting and entitled to vote on
the subject  matter shall be the act of the  shareholders,  unless the vote of a
greater number is required by law or the articles of incorporation. If less than
a majority of the outstanding shares are represented at a meeting, a majority of
the shares so  represented  may adjourn the  meeting  from time to time  without
further notice.  At such adjourned meeting at which a quorum shall be present or
represented,  any business may be transacted which might have been transacted at
the meeting as originally notified. The shareholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.

     Section 8. Proxies. At all meetings of shareholders, a shareholder may vote
by proxy  executed  in  writing  by the  shareholder  or by his duly  authorized
attorney  in  fact.  Such  proxy  shall  be  filed  with  the  secretary  of the
corporation before or at the time of the meeting.  No proxy shall be valid after
eleven months from the date of its execution,  unless otherwise  provided in the
proxy.

     Section 9. Voting of Shares.  Each outstanding share entitled to vote shall
be  entitled to one vote upon each  matter  submitted  to a vote at a meeting of
shareholders.

     Section 10.  Voting of Shares by Certain  Holders.  Shares  standing in the
name of another corporation may be voted by such officer,  agent or proxy as the
bylaws of such corporation may prescribe,  or, in the absence of such provision,
as the board of directors of such corporation may determine.

     Shares held by an administrator,  executor,  guardian or conservator may be
voted by him,  either in person or by proxy,  without a transfer  of such shares
into his name.  Shares  standing  in the name of a trustee  may be voted by him,
either in person or by proxy,  but no trustee  shall be  entitled to vote shares
held by him without a transfer of such shares into his name.

     Shares  standing in the name of a receiver  may be voted by such  receiver,
and  shares  held by or under the  control  of a  receiver  may be voted by such
receiver  without the  transfer  thereof  into his name if authority so to do be
contained  in an  appropriate  order of the  court by which  such  receiver  was
appointed.

     A custodian  of  securities  under the Iowa  Uniform Gift to Minors Act may
vote a security which is custodial property.

     Section 11.  Informal  Action by  Shareholders.  Any action  required to be
taken at a meeting of the  shareholders,  or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting if a consent in
writing,  setting  forth  the  action  so  taken,  shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.

     Section 12. Meetings of All Shareholders.  If all of the shareholders shall
meet at any time and  place,  either  within or without  the State of Iowa,  and
consent to the holding of a meeting at such time and place,  such meeting  shall
be valid without call or notice, and at such meeting any corporate action may be
taken.

     Section 13. Method of Voting.  Voting by shareholders on any question or in
any election may be viva voce unless the  presiding  officer  shall order or any
shareholders shall demand that voting be by ballot.

                        ARTICLE III. BOARD OF DIRECTORS.

     Section 1. General  Powers.  The  business  and affairs of the  corporation
shall be managed by its board of directors. The board of directors may authorize
any officer or officers,  agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the corporation,  and
such authority may be general or confined to specific instances.

     Section 2. Number,  Tenure and  Qualifications.  The number of directors of
the corporation shall be not less than 5 and not greater than 15, and, effective
as of the annual meeting of  shareholders  of the corporation in 1996, the Board
of Directors shall be divided into three classes,  designated Class I, Class II,
and Class III. Such classes shall be as nearly equal in number as possible.  The
term  of  directors  of one  class  shall  extend  to  each  annual  meeting  of
shareholders and in all cases as to each director,  until his successor shall be
elected  and shall  qualify,  or until his  earlier  resignation,  removal  from
office, death or incapacity. Additional directorships resulting from an increase
in number of  directors  shall be  apportioned  among the  classes as equally as
possible. The initial term of office of directors of Class I shall extend to the
annual  meeting of  shareholders  in 1997,  that of Class II shall extend to the
annual meeting in 1998, and that of Class III shall extend to the annual meeting
in 1999,  and in all  cases as to each  director  until his  successor  shall be
elected and shall qualify or until his earlier resignation, removal from office,
death or  incapacity.  At each  annual  meeting of  shareholders,  the number of
directors  equal to the number of  directors  of the class whose term extends to
the time of such  meeting  shall be  elected  to hold  office  until  the  third
succeeding  annual meeting of shareholders  after their  election.  The Board of
Directors  may,  upon a majority  vote of its members,  increase or decrease the
number of  directors  within the limits set forth above.  Directors  need not be
residents of the State of Iowa or, except as required by the Board of Directors,
shareholders of the corporation.

     Section 3. Place and Notice of Meetings.  A regular meeting of the board of
directors shall be held without other notice than this bylaw immediately  after,
and at the same place as, the annual meeting of the  shareholders.  The board of
directors  may provide,  by  resolution,  the time and place,  either  within or
without  the State of Iowa,  for the  holding  of  additional  regular  meetings
without  other  notice than such  resolution.  Special  meetings of the board of
directors  may be  called  by or at the  request  of the  president  or any  two
directors.  The person or persons  authorized  to call  special  meetings of the
board of  directors  may fix any place,  either  within or without  the State of
Iowa,  as the place for holding any  special  meeting of the board of  directors
called by him or them.  Notice of any special  meeting of the board of directors
shall be  given  at  least  two days  previously  thereto  by  notice  delivered
personally or mailed to each director at his business address.  If mailed,  such
notice shall be deemed to be delivered  when deposited in the United States mail
so addressed, with postage thereon prepaid. Any director may waive notice of any
meeting.  The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting  unless the director at the beginning of the meeting,  or
promptly  upon the  director's  arrival,  objects  to  holding  the  meeting  or
transacting  business at the meeting and does not thereafter  vote for or assent
to  action  taken at the  meeting.  Members  of the board of  directors,  or any
committees  designated by the board,  may participate in a meeting of such board
or committee by  conference  telephone  or similar  communications  equipment by
means of which all persons  participating in the meeting can simultaneously hear
each other during the meeting,  and  participation in a meeting pursuant to this
provision shall constitute presence in person at such meeting.

     Section  4.  Quorum.  A majority  of the total  number of  directors  shall
constitute a quorum for the  transaction of business at any meeting of the board
of directors, but if less than such majority is present at a meeting, a majority
of the  directors  present may adjourn  the  meeting  from time to time  without
further notice.

     Section  5.  Manner of Acting.  The act of the  majority  of the  directors
present at a meeting at which a quorum is present  shall be the act of the board
of directors.

     Section 6. Vacancies.  Any vacancy  occurring in the board of directors may
be filled by the  affirmative  vote of a  majority  of the  remaining  directors
though  less  than a quorum of the board of  directors.  The term of a  director
elected to fill a vacancy,  including a vacancy  caused by reason of an increase
in the  number  of  directors,  shall be  filled  by the  affirmative  vote of a
majority of the remaining  directors,  at any regular or special  meeting of the
board of  directors  called  for that  purpose in which a quorum of the board of
directors is present, and the director or directors so elected shall serve until
the next meeting of the shareholders at which directors are elected.

     Section 7.  Compensation.  By  resolution  of the board of  directors,  the
directors may be paid their  expenses,  if any, of attendance at each meeting of
the board of directors,  and may be paid such compensation for their services as
shall be fixed by the board of directors from time to time. No payment  received
by any director  shall  preclude him from serving the  corporation  in any other
capacity and receiving compensation therefor.

     Section 8.  Presumption  of Assent.  A director of the  corporation  who is
present at a meeting of the board of  directors  or a committee  of the board of
directors at which action on any corporate  matter is taken shall be presumed to
have  assented to the action taken unless the director  objects at the beginning
of the  meeting  or  promptly  upon the  director's  arrival  to  holding  it or
transacting  business at the meeting,  the director's dissent or abstention from
the action  taken is entered in the  minutes  of the  meeting,  or the  director
delivers written notice of the director's dissent or abstention to the presiding
officer in the meeting before its adjournment or to the corporation  immediately
after  adjournment  of the meeting.  The right of dissent or  abstention  is not
available to a director who votes in favor of the action taken.

     Section 9. Informal Action by Directors. Any action required to be taken at
a meeting of the directors,  or any other action which may be taken at a meeting
of the  directors,  may be taken  without a meeting  if a  consent  in  writing,
setting  forth  the  action so  taken,  shall be signed by all of the  directors
entitled to vote with respect to the subject matter thereof.

     Section 10. Committees. The board of directors may designate from among its
members an executive  committee and one or more other  committees  and define or
limit the extent of authority of each of such  committees in compliance with the
law and these bylaws.

                              ARTICLE IV. OFFICERS.

     Section 1. Number.  The officers of the  corporation  shall be a president,
one or more vice presidents (the number thereof to be determined by the board of
directors), a secretary,  and a treasurer,  each of whom shall be elected by the
board of directors. Such other officers,  assistant officers and acting officers
as may  be  deemed  necessary  may be  elected  or  appointed  by the  board  of
directors. Any two or more offices may be held by the same person. Officers need
not be  residents  of the  State of Iowa or  directors  or  shareholders  of the
corporation.

     Section  2.  Election  and Term of  Office.  The  initial  officers  of the
corporation  shall be elected by the board of  directors  at their  organization
meeting and thereafter  the officers  shall be elected  annually by the board of
directors at the first meeting of the board of directors  held after each annual
meeting of the  shareholders.  If the election of officers  shall not be held at
such meeting, such election shall be held as soon thereafter as conveniently may
be. Each  officer  shall hold office  until his  successor  shall have been duly
elected and shall have  qualified or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided.

     Section 3. Removal.  Any officer or agent elected or appointed by the board
of directors  may be removed by the board of directors  whenever in its judgment
the best interests of the corporation would be served thereby,  but such removal
shall be without  prejudice  to the  contract  rights,  if any, of the person so
removed.

     Section  4.   Vacancies.   A  vacancy  in  any  office  because  of  death,
resignation,  removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term.

     Section  5.  President.  The  president  shall be the  principal  executive
officer  of the  corporation  and,  subject  to the  control  of  the  board  of
directors,  shall in general  supervise  and  control  all of the  business  and
affairs of the corporation.  He shall, when present,  preside at all meetings of
the shareholders and of the board of directors.  He shall in general perform all
duties  incident  to the office of  president  and such  other  duties as may be
prescribed by the bylaws or by the board of directors from time to time.

     Section 6. Vice Presidents. In the absence of the president or in the event
of his death,  inability or refusal to act, the executive vice president (or the
vice  president  in the event of the absence of the  executive  vice  president)
shall perform the duties of the  president,  and when so acting,  shall have all
the powers of and be subject to all the restrictions upon the president;  and in
addition  thereto,  shall perform such other duties as may be assigned to him by
the president or by the board of directors or prescribed by the bylaws.

     Section 7.  Secretary.  The  secretary  shall:  (a) keep the minutes of the
shareholders'  and of the  board of  directors'  meetings  in one or more  books
provided for that purpose; (b) see that all notices are duly given in accordance
with the  provisions  of these bylaws or as required by law; (c) be custodian of
the corporate  records and of the seal of the  corporation and see that the seal
of the  corporation is affixed to all documents the execution of which on behalf
of the corporation under its seal is duly authorized; (d) work with the transfer
agent to keep a register of the post office  address of each  shareholder  which
shall be furnished to the secretary by such shareholder;  (e) provide assistance
to the stock  transfer  agent in  maintaining  the stock  transfer  books of the
corporation;  and (f) in general  perform  all duties  incident to the office of
secretary  and such other  duties as from time to time may be assigned to him by
the president or by the board of directors.

     Section 8. Treasurer.  The treasurer  shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation;  receive and
give  receipts  for moneys due and  payable to the  corporation  from any source
whatsoever,  and deposit all such moneys in the name of the  corporation in such
banks,  trust companies or other depositories as shall be selected in accordance
with the provisions of Article V of these bylaws; and (b) in general perform all
of the duties  incident to the office of treasurer and such other duties as from
time  to  time  may be  assigned  to him by the  president  or by the  board  of
directors.

     Section 9. Assistant  Secretaries and Assistant  Treasurers.  The assistant
secretaries,  when  authorized  by the  board of  directors,  may sign  with the
president or a vice president  certificates  for shares of the  corporation  the
issuance of which shall have been  authorized  by a  resolution  of the board of
directors. The assistant secretaries and assistant treasurers, in general, shall
perform  such  duties  as  shall be  assigned  to them by the  secretary  or the
treasurer, respectively, or by the president or the board of directors.

     Section 10. Other  Assistants and Acting  Officers.  The board of directors
shall have the power to appoint any person to act as  assistant  to any officer,
or to  perform  the  duties  of  such  officer  whenever  for any  reason  it is
impracticable  for such officer to act personally,  and such assistant or acting
officer so appointed  by the board of directors  shall have the power to perform
all the duties of the office to which he is so appointed to be assistant,  or as
to which he is so  appointed  to act,  except  as such  power  may be  otherwise
defined or restricted by the board of directors.

     Section 11. Salaries. The salaries of the officers shall be fixed from time
to time by the  board  of  directors  and no  officer  shall be  prevented  from
receiving  such  salary by reason of the fact that he is also a director  of the
corporation.

               ARTICLE V. WRITTEN INSTRUMENTS, LOANS AND DEPOSITS.

     Section 1. Written  Instruments.  Subject to the specific directions of the
board of directors,  all deeds,  mortgages,  releases and other  instruments  in
writing  affecting  real estate made by the  corporation  shall be executed  and
acknowledged  in its name by the president or any vice president and attested by
the secretary or any assistant  secretary with the corporate seal attached.  All
other written contracts and agreements to which the corporation shall be a party
shall be executed in its name by such officer or officers as shall be authorized
by the  board  of  directors.  The  signatures  of the  proper  officers  of the
corporation on the bonds,  notes,  debentures or other evidences of indebtedness
of the  corporation  may be facsimiles and such  facsimiles on such  instruments
shall be deemed the equivalent of and constitute the written  signatures of such
officers for all purposes  including,  but not limited to, the full satisfaction
of any  signature  requirements  of the laws of the State of Iowa on the  bonds,
notes, debentures and other evidence of indebtedness of the corporation.

     Section 2. Loans. No loans shall be contracted on behalf of the corporation
and no evidences of indebtedness  shall be issued in its name unless  authorized
by a resolution  of the board of  directors.  Such  authority  may be general or
confined to specific instances.

     Section 3. Checks,  Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation, shall be signed by such officer or officers, agent or agents of
the  corporation  and in such manner as shall from time to time be determined by
resolution of the board of directors.

     Section 4. Deposits.  All funds of the corporation  not otherwise  employed
shall be deposited  from time to time to the credit of the  corporation  in such
banks,  trust  companies or other  depositories  as the board of  directors  may
select.

             ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER.

     Section 1.  Certificates for Shares.  Certificates  representing shares of
the  corporation  shall be in such form as shall be  determined  by the board of
directors.  Such  certificates  shall  be  signed  by  the  president  or a vice
president and by the secretary or an assistant  secretary.  All certificates for
shares shall be  consecutively  numbered or otherwise  identified.  The name and
address of the person to whom the shares  represented  thereby are issued,  with
the number of shares and date of issue,  shall be entered on the stock  transfer
books of the corporation.  All  certificates  surrendered to the corporation for
transfer  shall be canceled  and no new  certificate  shall be issued  until the
former  certificate for a like number of shares shall have been  surrendered and
canceled,  except that in case of a lost,  destroyed or mutilated  certificate a
new one may be issued  therefor upon such terms and indemnity to the corporation
as the board of directors may prescribe.

     Section 2. Transfer of Shares.  Transfer of shares of the corporation shall
be made only on the stock  transfer  books of the  corporation  by the holder of
record thereof or by his legal representative, who shall furnish proper evidence
of authority to transfer,  or by his attorney  thereunto  authorized by power of
attorney duly executed and filed with the secretary of the  corporation,  and on
surrender for  cancellation of the  certificate  for such shares.  The person in
whose name shares stand on the books of the  corporation  shall be deemed by the
corporation to be the owner thereof for all purposes.

     Section 3. Stock  Regulations.  The board of directors shall have the power
and authority to make all such further rules and  regulations  not  inconsistent
with the  statutes  of Iowa as they may deem  expedient  concerning  the  issue,
transfer,   and  registration  of  certificates   representing   shares  of  the
corporation.

                            ARTICLE VII. FISCAL YEAR.

     The fiscal year of the  Corporation  shall be the calendar year  commencing
with the calendar year 1985.

                            ARTICLE VIII. DIVIDENDS.

     The board of directors may from time to time declare,  and the  corporation
may pay,  dividends on its  outstanding  shares in the manner and upon the terms
and conditions provided by law and its articles of incorporation.

                                ARTICLE IX. SEAL.

     The board of  directors  shall  provide a  corporate  seal  which  shall be
circular in form and shall have  inscribed  thereon the name of the  corporation
and the state of incorporation and word, "Seal."

                ARTICLE X. VOTING OF SHARES OWNED BY CORPORATION.

     Subject  always to the specific  directions of the board of directors,  any
share or shares of stock issued by any other corporation and owned or controlled
by the  corporation  may be voted at any  shareholders'  meeting  of such  other
corporation  by the  president of the  corporation  if he be present,  or in his
absence by any vice president of the corporation  who may be present.  Whenever,
in the judgment of the president, or in his absence, of any vice presidents,  it
is  desirable  for the  corporation  to execute a proxy or give a  shareholders'
consent  in  respect  to any  share or  shares  of  stock  issued  by any  other
corporation  and  owned  by the  corporation,  such  proxy or  consent  shall be
executed  in the name of the  corporation  by the  president  or one of the vice
presidents  of the  corporation  and shall be  attested by the  secretary  or an
assistant  secretary  of  the  corporation  under  the  corporate  seal  without
necessity of any authorization by the board of directors.  Any person or persons
designated in the manner above stated as the proxy or proxies of the corporation
shall have full right,  power and authority to vote the share or shares of stock
issued by such other  corporation  and owned by the corporation the same as such
share or shares might be voted by the corporation.

                          ARTICLE XI. WAIVER OF NOTICE.

     Whenever any notice is required to be given to any  shareholder or director
of the  corporation  under the  provisions of the articles of  incorporation  or
under the provisions of the Iowa Business  Corporation  Act, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated  therein,  shall be deemed  equivalent to the giving of
such notice.

                            ARTICLE XII. AMENDMENTS.

     These  bylaws may be  altered,  amended or  repealed  and new bylaws may be
adopted by the board of directors at any regular or special meeting of the board
of directors.

                    ARTICLE XIII. INDEMNIFICATION; INSURANCE.

     The corporation shall have the power to make  indemnification in the manner
and in the instances  authorized by Section  490.851 et seq of the Code of Iowa,
1997,  as  amended  from  time to  time,  with  the  understanding  (a) that any
reference to the corporation shall include any of its subsidiaries, and (b) that
in the  judgment of the board of  directors  the  corporation  may  purchase and
maintain  insurance on behalf of persons entitled to indemnification as provided
in Section 490.857.