10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

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

For the fiscal year ended	Commission file number 0-24630
December 31, 2003

or

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

For the transition period from                                  to                                 .

MIDWESTONE FINANCIAL GROUP, INC.

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

222 First Avenue East Oskaloosa, Iowa 52577

Registrant’s telephone number: 641-673-8448

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
None	None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $5 par value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  x.    No  ¨.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  ¨.    No  x.

The aggregate market value of the voting stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2003, was $54,489,258.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most recent practicable date, March 19, 2004.

3,815,034 shares Common Stock, $5 par value

DOCUMENTS INCORPORATED BY REFERENCE

The Annual Report to Shareholders for the 2003 fiscal year is incorporated by reference into Part II hereof to the extent indicated in such Part.

The definitive proxy statement of MidWestOne Financial Group, Inc. for the 2004 annual meeting of shareholders is incorporated by reference into Part II and Part III hereof to the extent indicated in such Parts.

Table of Contents

		Page
Item 1.	Business	1
	A.     General Description	1
	B.     Subsidiaries	1
	C.     Loan Pool Participations	2
	D.     Competition	5
	E.     Supervision and Regulation	6
	F.     Employees	8
	G.     Statistical Disclosure	8
Item 2.	Properties	17
Item 3.	Legal Proceedings	18
Item 4.	Submission of Matters to a Vote of Security Holders	18
	PART II
Item 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters	18
Item 6.	Selected Financial Data	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 7a.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 8.	Financial Statements and Supplementary Data	19
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	20
Item 9A.	Controls and Procedures	20
	PART III
Item 10.	Directors and Executive Officers of the Registrant	20
Item 11.	Executive Compensation	20
Item 12.	Security Ownership of Certain Beneficial Owners and Management	20
Item 13.	Certain Relationships and Related Transactions	20
Item 14.	Principal Accounting Fees and Services	20
	PART IV
Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	21

PART I

Item 1.    Business

A.  General Description

MidWestOne Financial Group, Inc. (the “Company”) is a bank holding company headquartered in Oskaloosa, Mahaska County, Iowa. The Company was incorporated in Iowa in 1973 and is a bank holding company registered under the Bank Holding Company Act of 1956 and formerly a savings and loan holding company under the Savings and Loan Holding Company Act. The Company owns 100% of the stock of four bank subsidiaries (collectively referred to as the “Banks”). These four banks are MidWestOne Bank & Trust (“MBT”), Central Valley Bank (“CVB”), Pella State Bank (“PSB”) and MidWestOne Bank (“MWB”). The Company also owns 100% of the stock of a commercial finance company MIC Financial, Inc. (“MIC Financial”). On February 1, 2003, the Company acquired all the outstanding shares of Belle Plaine Service Corp. (“BPSC”) in a 100 percent cash transaction. BPSC was the parent company of Citizens Bank & Trust of Hudson, Iowa (“CB&T”) with locations in Hudson, Belle Plaine and Waterloo, Iowa. CB&T was merged into MBT on June 14, 2003 and BPSC was dissolved.

During the Company’s annual meeting of shareholders held on April 30, 2003, the shareholders approved a proposal to change the Mahaska Investment Company name to MidWestOne Financial Group, Inc. The new name better describes the Company’s focus and enhances the opportunity for local and regional growth. In June 2003, CB&T was merged into Mahaska State Bank, with the resulting bank adopting the new name of MidWestOne Bank & Trust. Additionally, Midwest Federal Savings and Loan Association of Eastern Iowa changed its name to MidWestOne Bank, thereby strengthening the overall corporate identity.

The Bank subsidiaries engage in retail and commercial banking and related financial services, providing the usual products and services such as deposits, commercial, real estate, and consumer loans, and trust services. MIC Financial has provided factoring, equipment leasing and accounts receivable financing to small business clients. The Company is no longer offering these services and is in the process of collecting the remaining assets of MIC Financial.

Since 1988, the Company, either directly or through the Banks, has invested in loan pool participations that have been purchased by certain non-affiliated independent service corporations (collectively, the “Servicer”) from the Federal Deposit Insurance Corporation (“FDIC”) or from other sources. These loan pool investments generally consist of performing, nonperforming, or distressed loans, that have been sold at prices reflecting varying discounts from the aggregate outstanding principal amount of the underlying loans depending on the credit quality of the portfolio. The Servicer collects these loans from the borrowers.

The Company provides services to the Banks including management assistance, auditing services, human resources administration, marketing assistance and coordination, assistance with respect to accounting and operating systems and procedures, loan review, check processing and data processing. Charges for these services are based on the nature and extent of these services. The Company also provides data processing services to two non-affiliated banks.

B.  Subsidiaries

MidWestOne Bank & Trust—MBT is a full-service, commercial bank that was chartered as an Iowa state bank in 1931. MBT operates in south central and eastern Iowa and serves all of Mahaska county from its main bank and branch office in Oskaloosa, serves portions of Keokuk and Iowa counties from its branch office in North English, serves Black Hawk county from its branch offices in Hudson and Waterloo, and serves Benton county from its branch office in Belle Plaine. MBT also maintains a drive-up automated teller machine located in Oskaloosa. MBT provides a wide array of retail and commercial banking services, including demand, savings and time deposits, loans, and trust services. MBT also provides full-service brokerage services to its customers through an affiliation with an independent broker.

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Central Valley Bank—CVB is a full-service, de novo institution chartered by the Company in June 1994 as a federally chartered savings association. On January 1, 2004, CVB converted to an Iowa state chartered commercial bank. CVB operates in south central Iowa from its main office in Ottumwa, which serves Wapello County, and from its two branches located in Fairfield and one branch in Sigourney, which serve Jefferson and Keokuk counties, respectively. CVB provides retail deposit services including demand, savings, and time deposit products and offers commercial, agricultural, real estate, and consumer loans. CVB also provides crop insurance products and investment brokerage services to its customers.

Pella State Bank—PSB is a full-service, Iowa state chartered commercial bank that the Company formed as a de novo institution in December 1997. PSB mainly serves the community of Pella, Iowa and the surrounding area located in Marion County. The bank relocated its main office to a leased facility in downtown Pella early in 2001 and maintains a branch office on the south side of the community that the Company purchased and renovated in 1997. The Bank provides full retail and commercial banking services to its customers. The Bank also provides full-service brokerage services to its customers through an affiliation with an independent broker.

MidWestOne Bank—MWB is a full-service bank that was acquired by the Company on September 30, 1999 as a federally chartered savings bank. On January 1, 2004, MWB converted to a commercial bank chartered by the state of Iowa. MWB is headquartered in Burlington, located in the southeast part of Iowa. MWB serves the Des Moines county market through its main office and a branch in Burlington. MWB also serves the Lee County market through a branch in Fort Madison and the Louisa County area through a branch in Wapello. MWB is a community-oriented financial institution that offers a variety of financial services to meet the needs of the communities it serves. MWB is primarily engaged in attracting retail deposits from the general public by offering checking accounts, savings accounts, and certificates of deposit. MWB offers residential real estate and construction loans, small-business commercial loans, consumer and other loans in its market area. MWB also sells tax-deferred annuities and other financial products.

MIC Financial, Inc.—MIC Financial is an Iowa corporation that was formed by the Company in 1974 under the name of MIC Leasing Co. The company operated under the name of On-Site Commercial Services until June 1997 when the name was officially changed to On-Site Credit Services, Inc. Effective March 21, 2000, the name was changed to MIC Financial, Inc. In April 1999, the Company’s Board of Directors determined that it would discontinue the activities of MIC Financial and subsequently sold, collected, or charged-off a substantial portion of the entities’ assets. Management continues to evaluate the options and/or alternatives related to the remaining assets of the company. MIC Financial originated and serviced machinery and equipment leases to small businesses and farmers and also provided accounts receivable financing and factoring services to small businesses mainly in the state of Iowa.

C.  Loan Pool Participations

The Company, directly and through the Banks, has participation interests in pools of loans purchased at varying discounts from the aggregate outstanding principal amount of the underlying loans. The Company has been purchasing participation interests in discounted loans since 1988. These pools of loans are currently held and serviced by a separate independent servicing corporation (referred to as the “Servicer”) known as States Resources Corporation. The Company does not have any ownership interest in or control over States Resources Corporation. States Resources Corporation was founded in 1998 and is owned by Randal Vardaman. Prior to the formation of States Resources Corporation, Mr. Vardaman owned various other independent loan servicing corporations. The Company has maintained a business relationship with Mr. Vardaman and the various predecessor corporations owned by him since 1988. Mr. Vardaman has been engaged in credit analysis and loan portfolio management in various positions since 1970.

The Company has invested in loan pools purchased by the Servicer from the FDIC acting as receiver of failed banks and savings and loan institutions, and by other large nonaffiliated banking organizations. The loans comprising the pools were originated throughout the United States. As part of the agreement to purchase

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participation interests in the loan pools, the Company and its subsidiaries have contracted with the Servicer to service the underlying loans within the respective loan pools which are owned of record by the Servicer. The Servicer also evaluates various loan pools prior to purchase and makes recommendations to the Company concerning the creditworthiness of proposed loan pool purchases and proposes appropriate bids to the Company and any other potential loan pool participants.

The Servicer and its predecessor organizations have bid on loan pools from various regional offices of the FDIC and from other sources since 1988. The Company and the Banks have purchased participation interests in such pools of loans. The purchase prices paid by the Company for loan pool participations have ranged from 5.5% to 97.7% of the aggregate outstanding principal amount of the loans comprising such pools at the time of purchase. The Servicer acquires the loan pools without recourse against the sellers and, accordingly, the risk of noncollectibility is, for the most part, assumed by the Company and any other investors in a particular pool.

Each pool has a different composition and different characteristics. The composition of a loan pool is generally determined by the seller based on its desire to maximize the price it receives for all loans among the various pools. Many of the pools consist of loans primarily secured by single-family, multi-family, and small commercial real estate. Some pools may consist of a large number of small consumer loans that are secured by other assets such as automobiles or mobile homes, while other pools may consist of small to medium balance commercial loans. Some may contain a mixture of such loans and other types of loans. Most of the pools the Company is currently investing in are comprised primarily of performing loans, although some may contain a number of past-due nonperforming loans. The price bid and paid for such a loan pool is determined based on the composition of the particular pool, the amounts the Servicer believes can be collected on such a pool, and the risks associated with the collection of such amounts.

In considering an investment in a loan pool, the Servicer will evaluate loans owned and being offered and make recommendations to the Company and other prospective investors concerning the creditworthiness of the proposed loan pool purchase. The Servicer performs a comprehensive analysis of the loan pool in an attempt to ensure proper valuation and adequate safeguards in the event of default. The bid price on the loan pools will be reflective of the results of the Servicer’s pre-acquisition review of the loan files. In many cases the loan files may not be current and substantial uncertainties may exist regarding the collectibility of the various loans in the pool. Management believes that in many instances the non-current loans can be brought current once the Servicer has an opportunity to contact the debtor. The Company makes its own decisions as to whether or not to participate in a particular loan pool that has been recommended by the Servicer, based on the Company’s experience with the various categories and qualities of loans.

The sales of loan pools by the FDIC and by other sellers is generally conducted by sealed bid auction. A sealed bid auction requires each bidder to submit a confidential bid on the subject loan pool and the loan pool is awarded to the highest bidder. In recent years, the Servicer and the Company have faced increasing competition in bidding for loan pools.

Since 1988, the Servicer and its predecessor organizations, on behalf of the Company and other investors, have bid on a large number of loan pools and have been successful in purchasing 110 loan pools. The Company and other investors in the loan pools fund the purchase by the Servicer and each investor receives a percentage interest in the loan pool based on its proportional investment relative to the total purchase price of the pool. Each investor receives a loan pool participation certificate reflecting this interest.

The purchased loan pools consist, for the most part, of loans evidenced by promissory notes and secured by either real property or personal property. The value of the collateral may range from nominal to substantial and often may be impossible to establish prior to acquisition of the pools with the level of certainty that is typically required in a financial institution.

Upon the acquisition of a participation interest in a loan pool, the Company assumes the risk that the Servicer will be unable to recover an amount equal to the purchase price plus the carrying costs, if any, collection

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costs and expected profits on such accounts. The extent of such risk is dependent on a number of factors, including the Servicer’s ability to locate the debtors, the debtors’ financial condition, the possibility that a debtor may file for protection under applicable bankruptcy laws, the Servicer’s ability to locate the collateral, if any, for the loan and to obtain possession of such collateral, the value of such collateral, and the length of time it takes to realize the ultimate recovery either through collection procedures or through a resale of the loans following a restructure.

A cost “basis” is assigned to each individual loan acquired on a cents per dollar (discounted price) based on the Servicer’s assessment of the recovery potential of each such loan. This methodology assigns a higher basis to performing loans with greater potential collectibility and a lower basis to those loans identified as having little or no potential for collection.

Loan pool participations are shown on the Company’s balance sheet as a separate asset category. The original carrying value of loan pool participations represents the discounted price paid by the Company to acquire its participation interests in various loan pools purchased by the Servicer. The Company’s investment balance is reduced as the Servicer collects principal payments on the loans and remits the proportionate share of such payments to the Company.

The investment in loan pools is accounted for on a nonaccrual (or cash) basis in one of three methods, depending on the circumstances. First, if a borrower makes regular payments on a loan, the payment received is first applied to interest income in the amount of interest due at the contract rate. Further payments are applied to principal in a ratio reflecting the proportion of cost basis to loan principal amount. Payments in excess of interest and this ratio are recorded as discount income. Discount income earned over the life of a loan represents loan principal collected in excess of the price originally paid to acquire the loan from the FDIC or any other sellers, which price constitutes the cost “basis” of the loan.

Secondly, if the borrower fails to make regular payments, the Servicer evaluates the collateral supporting the loan. If the Servicer determines that the loan is well secured, then payments are applied as previously described. If the Servicer determines that the collateral is deficient, payments are applied to the principal balance of the loan with no recognition of interest due. The cost recovery method governs the application of payments received to the outstanding principal balance. Under this method, any amount received is initially applied to the cost “basis” of the loan and any additional amounts received are recognized as discount income.

Third, where the Servicer negotiates a settlement of a loan for a lump sum, the payment is first applied to principal to the extent of the assigned cost “basis” with the excess treated as discount income up to the original principal value of the loan, and any remainder is treated as interest income on loan pool participations. In each case, where changed circumstances or new information lead the Servicer to believe that collection of the note or recovery of the basis through collateral would be less than originally determined, the cost basis assigned to the loan is written down or written off through a charge against discount income.

Collection expenses incurred by the Servicer are netted against discount income. These costs include salary and benefits paid by the Servicer to its employees, legal fees, costs to maintain and insure real estate owned, and other operating expenses. Discount income is added to interest income and reflected as one amount on the Company’s consolidated statement of income. Profit (or loss) from collection activities is determined on a monthly basis for each servicing corporation from which loan pool participation interests have been purchased.

The Company does not recognize as income any accrued interest receivable on the loan pools. Interest income is only recognized when collected and actually remitted to the Company by the Servicer. Many of the pools that have been purchased by the Servicer do not include purchased interest in the cost basis; thus, interest collected does not have a cost basis and represents profit. Interest income collected by the Servicer is reflected in the Company’s consolidated financial statements as interest income included as part of interest income and discount on loan pool participations.

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The Servicer provides the Company with monthly reports detailing collections of principal and interest, face value of loans collected and those written off, actual operating expenses incurred, remaining asset balances (both in terms of cost basis and principal amount of loans), a comparison of actual collections and expenses with target collections and budgeted expenses, and summaries of remaining collection targets. The Servicer also provides aging reports and “watch lists” for the loan pools purchased by States Resources. Monthly meetings are held between the Company and representatives of the Servicer to review collection efforts and results, to discuss future plans of action, and to discuss potential opportunities. Additionally, the Company’s and the Servicer’s personnel communicate via telephone, fax, and electronic mail on a regular basis to discuss various issues regarding the loan pools. Company management personnel visit the Servicer’s operation in Omaha, Nebraska on a regular basis; and the Company’s loan review officer and its internal auditor perform asset reviews and audit procedures on a regular basis.

Beginning in 1998, all purchases of loan pools were made by the servicing organization called States Resources Corporation. This corporation was created to enable the Company and the Servicer to invest in higher-quality performing assets and still provide both parties with an acceptable return. Under the terms of the States Resources agreement, the Servicer receives a servicing fee based on one percent of the gross monthly collections of principal and interest, net of collection costs. Additionally, the Servicer receives a tiered percentage share of the recovery profit in excess of the investors’ required return on investment on each individual loan pool. In the event that the return on a particular pool does not exceed the required return on investment, the Servicer does not receive a percentage share.

The Company’s overall cost basis in its loan pool participations represents a discount from the aggregate outstanding principal amount of the loans underlying the pools. For example, as of December 31, 2003 and 2002, such cost basis was $89,059,000 and $82,341,000, respectively, while the contractual outstanding principal amounts of the underlying loans as of such dates were approximately $116,257,000 and $105,823,000, respectively. Because this discounted cost basis inherently reflects the assessed collectibility of the underlying loans and thus creates a built-in reserve against the risk of nonpayment in the loan pools, the Company has not established an allowance for loan losses relating to the loan pool participations. The Company does not include any amounts related to the loan pool participations in its totals of nonperforming loans. As part of the on-going collection process, the Servicer may, from time-to-time, foreclose on real estate mortgages and acquire title to property in satisfaction of such debts. This real estate may be held by the servicer as “real estate owned” for a period of time until it can be sold. Since the Company’s investment in loan pools are classified as participtions in pools of loans, the Company does not include the real estate owned that is held by the Servicer with the amount of any other real estate it may hold directly as a result of its own foreclosure activities.

The underlying loans in the loan pool participations include both fixed rate and variable rate instruments, but are accounted for on a nonaccrual basis, and no amounts for interest due are reflected in the carrying value of the loan pool participations. Based on historical experience, the average period of collectibility for loans underlying the Company’s loan pool participations, many of which have exceeded contractual maturity dates, is approximately three to five years. Management has reviewed the recoverability of the underlying loans and believes that the carrying value does not exceed the net realizable value of its investment in loan pool participations.

D.  Competition

The Company competes in the commercial banking and thrift industries through its subsidiary banks. These industries are highly competitive, and all the bank subsidiaries face strong direct competition for deposits, loans, and other financial-related services. The Banks in Benton, Black Hawk, Des Moines, Iowa, Jefferson, Keokuk, Lee, Louisa, Mahaska, Marion, and Wapello counties in south central and eastern Iowa compete with other commercial banks, other thrifts, credit unions, stockbrokers, finance divisions of auto and farm equipment companies, agricultural suppliers, and other agricultural-related lenders. Some of these competitors are local, while others are statewide or nationwide. The Banks compete for deposits principally by offering depositors a

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wide variety of deposit programs, convenient office locations, hours and other services, and for loan originations primarily through interest rates and loan fees they charge, the efficiency and quality of services they provide to borrowers and the variety of their loan products. Some of the financial institutions and financial service organizations with which the Banks compete are not subject to the same degree of regulation as that imposed on bank and thrift holding companies, federally insured Iowa-chartered banks, and federal savings banks. As a result, such competitors have advantages over the Banks in providing certain services. As of December 31, 2003, there were approximately 54 other banks having 159 offices or branches operating within the 11 counties that the Company has locations. Based on deposit information collected by the FDIC as of June 30, 2003, the Company maintained approximately 9 percent of the bank deposits within the 11 counties. New competitors may develop that are substantially larger and have significantly greater resources than any of the Banks. Currently, major competitors in certain of the Company’s markets include banking subsidiaries of Wells Fargo & Company, U.S. Bancorp, and Commercial Federal Bank. As a result of federal legislation to allow unlimited interstate branching, the Company may experience heightened competition from these and other major financial institutions seeking to expand their regional banking presence in Iowa.

The Company also faces competition with respect to its investments in loan pool participations. The Company’s financial success to date is largely attributable to the Servicer’s ability to determine the loan pools to bid on and ultimately purchase, the availability of assets to fund the purchases and the Servicer’s ability to collect on the underlying assets. Investments in loan pools have become increasingly popular in recent years, leading financial institutions and other competitors to become active at loan pool auctions conducted by the FDIC and other sellers. There is no assurance that the Company, through the Servicer, will be able to bid successfully in the future. Certain existing competitors of the Company are substantially larger and have significantly greater financial resources than the Company. Increased participation by new institutions or other investors may also create increased buying interest which could also result in higher bid prices for the type of loan pools considered for investment by the Company. In addition, new and existing competitors may develop due diligence procedures comparable to the Servicer’s procedures. The emergence of such competition could have a material adverse effect on the Company’s business and financial results. The Company expects that its success in the future will depend more on the performance of its bank subsidiaries and less on the investment in loan pool participations.

E.  Supervision and Regulation

Bank holding companies, banks, savings and loan holding companies, and savings and loan associations are extensively regulated under federal and state law. References under this heading to applicable statutes or regulations are brief summaries of the portions thereof which do not purport to be complete and which are qualified in their entirety by reference to those statutes and regulations. Any change in applicable laws or regulation may have a material adverse effect on the business of the Company and the Banks.

The Company, as a bank holding company, is subject to regulation under the Bank Holding Company Act of 1956 (the “Act”) and is registered with the Board of Governors of the Federal Reserve System. Under the Act, the Company is prohibited, with certain exceptions, from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company which is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to affiliated banks, except that the Company may engage in and own shares of companies engaged in certain businesses found by the Board of Governors to be so closely related to banking “as to be proper incident thereto,” such as owning a savings association. The Act does not place territorial restrictions on the activities of bank-related subsidiaries of bank holding companies. The Company is required by the Act to file periodic reports of its operations with the Board of Governors and is subject to examination by the Board of Governors. Under the Act and Federal Reserve Board regulations, the Company and the Bank are prohibited from engaging in certain tie-in arrangements in connection with an extension of credit, lease, sale of property, or furnishing of services.

Iowa law permits bank holding companies domiciled in Iowa to make acquisitions throughout the state. Iowa law also permits bank holding companies located in the Midwestern Region (defined to include Illinois, Iowa, Minnesota, Missouri, Nebraska, South Dakota, and Wisconsin) to acquire banks or bank holding

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companies located in Iowa subject to approval by the Iowa Division of Banking and subject to certain statutory limitations. In addition, the Company may acquire banks or bank holding companies located in the Midwestern Region or outside the Midwestern Region, provided the Company’s principal place of business remains in the Midwestern Region and the acquisition is authorized by the laws of the state in which the acquisition is to be made.

The Company was a savings and loan holding company prior to the January 1, 2004 conversion of its savings association subsidiaries to state-chartered banks. Following the subsidiary conversion, the Company ceased being a savings and loan holding company. As a savings and loan holding company, the Company was subject to federal regulation and examination by the Office of Thrift Supervision (the “OTS”). The OTS had enforcement authority over the Company. This authority permits the OTS to restrict or prohibit activities that are determined to be a serious risk to the subsidiary savings association. Generally, the activities for a bank holding company are more limited than the authorized activities for a savings and loan holding company.

The Company and its subsidiaries are affiliates within the meaning of the Federal Reserve Act. As affiliates, they are subject to certain restrictions on loans by an affiliated bank or thrift (collectively “affiliated banks”) to the Company, other affiliated banks or such other subsidiaries, on investments by an affiliated bank in their stock or securities and on an affiliated bank taking such stock and securities as collateral for loans to any borrower. The Company is also subject to certain restrictions with respect to direct issuance, flotation, underwriting, public sale or distribution of certain securities.

Under Iowa law, the Banks are subject to supervision and examination by the Iowa Division of Banking. As an affiliate of these banks, the Company is also subject to examination by the Iowa Division of Banking.

The deposits of the Banks are insured by the Federal Deposit Insurance Corporation (the “FDIC”) and the Banks are, therefore, also subject to the supervision and examination by the FDIC. The Banks are required to maintain certain minimum capital ratios established by these regulators. The Banks are assessed fees based on the institutions’ deposits by the FDIC, to insure the funds of customers on deposit with the institutions.

In addition, Iowa state law imposes restrictions on the operations of the state-chartered banks including limitations on the amount a bank can lend to a single borrower and limitations on the nature and amount of securities in which it may invest. Among other things, Iowa law imposes restrictions on certain types of loans made by a bank, limiting the bank from making loans (or purchasing participation interests in loan pools) secured by real estate located outside Iowa and its contiguous states in amounts exceeding 25% of its regulatory capital. There can be no assurance that the Iowa or federal regulators will not in the future impose further restrictions or limits on the Company’s loan pool activities.

Iowa law strictly regulates the establishment of bank offices and thus may affect the Company’s future plans to establish additional offices of its banks. Under current Iowa law, a state bank may not establish more than three bank offices outside the corporate limits of the municipality in which the principal place of business of the state bank is located. The number of offices a state bank may establish within the municipal corporation in which the principal place of business of the bank is located is not limited. The limitations on the number of offices will cease effective July 1, 2004.

Central Valley Bank and MidWestOne Bank were subject to the supervision of and were regularly examined by the OTS and were assessed fees by the OTS based upon their individual asset totals. As savings institutions, both CVB and MWB were required to maintain certain minimum capital ratios established by the OTS and were required to meet a qualified thrift lender test (the “QTL”) to avoid certain restrictions upon its operations. The QTL was modified by the passage of the Economic Growth and Regulatory Paperwork Reduction Act of 1996. On December 31, 2003, both CVB and MWB complied with the current minimum capital guidelines and met the QTL test. On January 1, 2004 both CVB and MWB converted to commercial banks chartered as Iowa state banks.

The Company operates within a regulatory structure that continuously evolves. In the last several years significant changes have occurred that affect the Company.

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The FDIC Improvement Act of 1991 (the “FDICIA”) was primarily designed to recapitalize the FDIC’s Bank Insurance Fund (the “BIF”) and the Savings Association Insurance Fund (the “SAIF”). To accomplish this purpose the FDIC was granted additional borrowing authority, granted the power to levy emergency special assessments on all insured depository institutions, granted the power to change the BIF and SAIF rates on deposits on a semiannual basis, and directed to draft regulations that provided for a “Risk-Based Assessment System” that was implemented on January 1, 1994. The FDICIA also imposed additional regulatory safety and soundness standards upon depository institutions and granted additional authority to the FDIC. The FDICIA generally requires that all institutions be examined by the FDIC annually. Under the provisions of the FDICIA, all regulatory authorities are required to examine their regulatory accounting standards and, to the extent possible, are required to conform to generally accepted accounting principles. Finally, the FDICIA requires the federal banking regulators to take prompt corrective action with respect to depository institutions that fall below certain capital standards and prohibits any depository institution from making any capital distribution that would cause it to be undercapitalized.

Legislation became effective on September 30, 1995, which served to lessen or remove certain legal barriers to interstate banking and branching by financial institutions. The legislation has resulted in an increase in the nationwide consolidation activity occurring among financial institutions by facilitating interstate bank operations and acquisitions.

On November 2, 1999, the Gramm-Leach-Bliley Act was enacted into law. This legislation provides for significant financial services reform by repealing key provisions of the Glass Steagall Act thereby permitting commercial banks to affiliate with investment banks, it substantially modifies the Bank Holding Company Act of 1956 to permit companies that own banks to engage in any type of financial activity, and it allows subsidiaries of banks to engage in a broad range of financial activities that are not permitted for banks themselves. The effects of this legislation, both from the opportunities for new activities that the Company may undertake and from the changes in competitors’ activities, have not been fully ascertained at this time.

The earnings of the Company are affected by the policies of regulatory authorities, including the Federal Reserve System. Federal Reserve System monetary policies have had a significant effect on the operating results of banks and thrifts in the past and are expected to do so in the future. Because of changing conditions in the economy and in the money markets as a result of actions by monetary and fiscal authorities, interest rates, credit availability and deposit levels may change due to circumstances beyond the control of the Company. Future policies of the Federal Reserve System and other authorities cannot be predicted, nor can their effect on future earnings be predicted.

F.  Employees

On December 31, 2003, the Company had 178 full-time employees and 38 part-time employees of which 67 full-time and 12 part-time employees were employed by MBT, 30 full-time and 6 part-time employees were employed by CVB, 14 full-time and 5 part-time employees were employed by PSB, 37 full-time and 9 part-time employed by MWB, and 30 full-time and 6 part-time employees were employed directly by the Company. The Company provides its employees with a comprehensive program of benefits, some of which are on a contributory basis, including comprehensive medical and dental plans, life insurance, long-term and short-term disability coverage, a 401(k) plan, and an employee stock ownership plan. None of the employees are represented by unions. Management considers its relationship with its employees to be excellent.

G.  Statistical Disclosure

The following statistical disclosures relative to the consolidated operations of the Company have been prepared in accordance with Guide 3 of the Guides for the Preparation and Filing of Reports and Registration Statements under the Securities Exchange Act of 1934. Average balances were primarily calculated on a daily basis.

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I.  Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential

The following table details average balances, interest income/expense and average rates/yield for the Company’s earning assets and interest-bearing liabilities for the years ended December 31, 2003, 2002 and 2001 reported on a fully tax-equivalent basis assuming a 34% tax rate.

	Year ended December 31,
	2003						2002						2001
	Average Balance		Interest Income (2)/ Expense		Average Rate/ Yield		Average Balance		Interest Income (2)/ Expense		Average Rate/ Yield		Average Balance		Interest Income (2)/ Expense		Average Rate/ Yield
	(dollars in thousands)
Average earning assets:
Loans (1)	$	366,754	$	23,894	6.52	%	$	313,041	$	22,845	7.30	%	$	316,033	$	25,172	7.96	%
Loan pool participations		85,959		8,985	10.45			94,861		10,058	10.60			87,970		9,595	10.91
Interest-bearing deposits		1,638		10	0.62			2,346		22	0.92			2,389		56	2.38
Investment securities available for sale:
Taxable investments		89,534		3,758	4.20			67,172		3,215	4.79			52,952		3,258	6.15
Tax exempt investments		3,819		239	6.24			3,324		244	7.33			5,703		430	7.54
Investment securities held to maturity:
Taxable investments		5,544		415	7.48			10,501		742	7.07			15,207		1,106	7.27
Tax exempt investments		7,313		502	6.87			8,162		578	7.09			8,148		580	7.11
Federal funds sold		2,295		27	1.19			8,069		115	1.42			6,838		252	3.69
Total earning assets	$	562,856	$	37,830	6.72		$	507,476	$	37,819	7.45		$	495,240	$	40,449	8.17
Average interest-bearing liabilities:
Interest-bearing demand deposits	$	56,194	$	181	0.32		$	45,010	$	270	0.60		$	42,556	$	521	1.22
Savings deposits		115,042		1,334	1.16			100,172		1,876	1.87			94,762		2,961	3.12
Certificates of deposit		243,073		8,527	3.51			215,250		9,422	4.38			216,328		11,920	5.51
Federal funds purchased		4,763		63	1.32			1,011		21	2.07			1,485		57	3.80
Federal Home Loan Bank advances		70,631		3,880	5.49			84,863		4,872	5.74			82,317		5,166	6.28
Notes payable		7,725		262	3.38			6,572		270	4.11			12,135		802	6.61
Long-term debt		10,310		520	5.05			5,282		296	5.61			—		—	—
Total interest-bearing liabilities	$	507,738	$	14,767	2.91		$	458,160	$	17,027	3.72		$	449,583	$	21,427	4.77
Net interest income			$	23,063	3.81				$	20,792	3.74				$	19,022	3.40
Net interest margin (3)					4.10	%					4.10	%					3.84	%

(1) Average loans outstanding includes the daily average balance of non-performing loans. Interest on these loans does not include additional interest of $142,000, $241,000, and $356,000 for 2003, 2002 and 2001, respectively, which would have been accrued based on the original terms of these loans compared to the interest that was actually recorded. Interest earned on loans includes loan fees (which are not material in amount).

(2) Includes interest income and discount realized on loan pool participations.

(3) Net interest margin is net interest income divided by average total earning assets.

9

The following table sets forth an analysis of volume and rate changes in interest income and interest expense of the Company’s average earning assets and average interest-bearing liabilities reported on a fully tax-equivalent basis assuming a 34% tax rate. The table distinguishes between the changes related to average outstanding balances (changes in volume holding the initial interest rate constant) and the changes related to average interest rates (changes in average rate holding the initial outstanding balance constant). The change in interest due to both volume and rate has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

	Year ended December 31,
	2003 Compared to 2002 Increase/ (Decrease) Due to									2002 Compared to 2001 Increase/ (Decrease) Due to
	Volume			Rate			Net			Volume			Rate			Net
	(in thousands)
Interest income from average earning assets:
Loans	$	3,661		$	(2,612	)	$	1,049		$	(237	)	$	(2,090	)	$	(2,327	)
Loan pool participations (1)		(932	)		(141	)		(1,073	)		736			(273	)		463
Interest-bearing deposits		(6	)		(6	)		(12	)		(1	)		(33	)		(34	)
Investment securities available for sale:
Taxable investments		974			(431	)		543			768			(811	)		(43	)
Tax exempt investments		34			(39	)		(5	)		(174	)		(12	)		(186	)
Investment securities held to maturity:
Taxable investments		(369	)		42			(327	)		(334	)		(30	)		(364	)
Tax exempt investments		(58	)		(18	)		(76	)		1			(3	)		(2	)
Federal funds sold		(71	)		(17	)		(88	)		40			(177	)		(137	)
Total income from earning assets		3,233			(3,222	)		11			799			(3,429	)		(2,630	)
Average expense of average interest-bearing liabilities:
Interest-bearing demand deposits		56			(145	)		(89	)		29			(280	)		(251	)
Savings deposits		249			(791	)		(542	)		160			(1,245	)		(1,085	)
Certificates of deposit		1,123			(2,018	)		(895	)		(59	)		(2,439	)		(2,498	)
Federal funds purchased		52			(10	)		42			(15	)		(21	)		(36	)
Federal Home Loan Bank advances		(789	)		(203	)		(992	)		156			(450	)		(294	)
Notes payable		43			(51	)		(8	)		(291	)		(241	)		(532	)
Long-term debt		257			(33	)		224			148			148			296
Total expense form interest-bearing liabilities		991			(3,251	)		(2,260	)		128			(4,528	)		(4,400	)
Net interest income	$	2,242		$	29		$	2,271		$	671		$	1,099		$	1,770

(1) Includes interest income and discount realized on loan pool participations.

10

Interest Rate Sensitivity Analysis

The following table sets forth the scheduled repricing or maturity of the Company’s assets and liabilities as of December 31, 2003, based on the assumptions described below. The effect of these assumptions is to quantify the dollar amount of items that are interest rate sensitive and can be repriced within each of the periods specified. The table does not necessarily indicate the impact of general interest rate movements on the Company’s net interest margin because the repricing of certain categories of assets and liabilities is subject to competitive and other pressures beyond the Company’s control. As a result, certain assets and liabilities indicated as maturing or otherwise repricing within a stated period may, in fact, mature or reprice at different times and at different volumes.

	Three Months or Less			Over Three Months to One Year			One to Three Years			Three Years or More			Total
	(dollars in thousands)
Interest earning assets:
Loans	$	64,155		$	74,644		$	86,597		$	151,621		$	377,017
Loan pool participations		7,421			22,264			59,374			—			89,059
Interest-bearing deposits in banks		857			—			—			—			857
Investment securities:
Available for sale		11,968			23,307			41,329			24,244			100,848
Held to maturity		656			453			2,068			7,419			10,596
Total interest earning assets		85,057			120,668			189,368			183,284			578,377
Interest-bearing liabilities:
Now accounts		57,795			—			—			—			57,795
Savings deposits		120,274			—			—			—			120,274
Certificates of deposit		46,393			86,990			67,843			33,251			234,477
Federal funds purchased		10,450			—			—			—			10,450
Federal Home Loan Bank advances		3,641			2,602			23,428			49,273			78,944
Notes payable		9,000			—			—			—			9,000
Long-term debt		10,310			—			—			—			10,310
Total interest-bearing liabilities		257,863			89,592			91,271			82,524			521,250
Interest sensitivity gap per period	$	(172,806	)	$	31,076		$	98,097		$	100,760
Cumulative Interest sensitivity gap	$	(172,806	)	$	(141,730	)	$	(43,633	)	$	57,127
Interest sensitivity gap ratio		0.33	%		1.35	%		2.07	%		2.22	%
Cumulative Interest sensitivity gap ratio		0.33	%		0.59	%		0.90	%		1.11	%

In the table above, NOW accounts and savings deposits are included as interest-bearing liabilities in the three months or less category.

Loan pool participations are included in the interest rate sensitivity analysis using an estimated three-year average life. The historical average for the return of original investment on the pools is approximately 36 months. Given the non-performing aspect of the loan pool portfolio, management feels that the use of contractual weighted-average maturity data is inappropriate.

11

II.  Investment Portfolio

The following table sets forth certain information with respect to the book value of the Company’s investment portfolio as of December 31, 2003, 2002 and 2001.

	December 31,
	2003		2002		2001
	(in thousands)
Securities available for sale:
U.S. government agency securities	$	65,038	$	49,610	$	20,579
Obligations of states and political subdivisions		3,844		3,173		3,450
Other investment securities		31,966		38,410		26,177
Total securities available for sale		100,848		91,193		50,206
Securities held to maturity:
U.S. government agency securities		2,846		7,259		12,047
Obligations of states and political subdivisions		7,685		9,329		9,098
Other investment securities		65		83		187
Total securities held to maturity		10,596		16,671		21,332
Total investment securities	$	111,444	$	107,864	$	71,538

The following table sets forth the contractual maturities of investment securities as of December 31, 2003, and the weighted average yields (for tax-exempt obligations on a fully tax-equivalent basis assuming as 34% tax rate) of such securities. As of December 31, 2003, the Company held no securities with a book value exceeding 10% of shareholders’ equity.

	Maturity
	Within One Year					After One but Within Five Years				After Five but Within Ten Years				After Ten Years
	Amount		Yield			Amount		Yield		Amount		Yield		Amount		Yield
	(dollars in thousands)
Securities available for sale:
U.S. government agency securities	$	12,984	$	4.05	%	$	36,196	3.59	%	$	15,105	3.99	%	$	753	6.54	%
Obligations of states and political subdivisions		667		6.12			2,720	5.25			457	8.33			—	—
Other investment securities		7,550		6.18			18,782	4.94			—	—			5,634	2.54
Total securities available for sale		21,201		4.87			57,698	4.11			15,562	4.12			6,387	3.01
Securities held to maturity:
U.S. government agency securities		18		7.65			230	6.52			1,035	6.44			1,563	6.58
Obligations of states and political subdivisions		500		5.80			2,100	5.83			4,920	7.21			165	7.57
Other investment securities		—		—			65	7.15			—	—			—	—
Total securities held to maturity		518		5.86			2,395	5.93			5,955	7.08			1,728	6.67
Total investment securities	$	21,719		4.90	%	$	60,093	4.18	%	$	21,517	4.94	%	$	8,115	3.79	%

12

III.  Loan Portfolio

The Company’s loan portfolio largely reflects the profile of the communities in which it operates. Approximately two-thirds of the total loans as of December 31, 2003, were agricultural, commercial or residential real estate loans. The following table shows the composition of the Company’s loan portfolio as of the dates indicated.

	December 31,
	2003				2002				2001				2000				1999
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
	(dollars in thousands)
Agricultural	$	56,036	12.4	%	$	38,004	12.4	%	$	41,084	12.7	%	$	45,404	14.5	%	$	42,022	14.9	%
Commercial		60,532	12.9			39,324	12.9			40,180	12.5			39,081	12.5			38,238	13.6
Real estate:
1-4 family residences		132,801	43.7			133,850	43.7			138,900	43.0			139,098	44.6			131,925	46.7
5+ residential property		7,323	1.4			4,373	1.4			3,712	1.2			3,675	1.2			4,064	1.4
Agricultural		42,809	9.5			28,947	9.5			28,075	8.7			23,855	7.6			21,677	7.7
Construction		10,475	2.6			8,058	2.6			12,555	3.9			10,007	3.2			5,593	2.0
Commercial		56,360	13.6			41,622	13.6			39,884	12.4			30,239	9.7			23,613	8.4
Real estate total		249,768	70.8			216,850	70.8			223,126	69.2			206,874	66.3			186,872	66.2
Installment		10,415	3.8			11,517	3.8			17,854	5.5			20,196	6.5			13,866	4.9
Lease financing		266	0.1			329	0.1			437	0.1			526	0.2			1,093	0.4
Total loans (1)	$	377,017	100.0	%	$	306,024	100.0	%	$	322,681	100.0	%	$	312,081	100.0	%	$	282,091	100.0	%
Total assets	$	623,306			$	537,026			$	545,160			$	513,814			$	486,368
Loans to total assets			60.5	%			57.0	%			59.2	%			60.7	%			58.0	%

(1) Total loans do not include the Company’s investments in loan pool participations.

The following table sets forth the remaining maturities for certain loan categories as of December 31, 2003.

	Due Within One Year		Due in One to Five Years		Due After Five Years		Total		Total for Loans Due After One Year Having:
									Fixed Rates		Variable Rates
	(in thousands)
Agricultural	$	28,970	$	17,540	$	9,526	$	56,036	$	12,637	$	14,429
Commercial		27,959		26,178		6,395		60,532		26,896		5,677
Real estate—construction		7,583		653		2,239		10,475		2,035		857
Total	$	64,512	$	44,371	$	18,160	$	127,043	$	41,568	$	20,963

The following table provides information on the Company’s non-performing loans as of the dates indicated.

	December 31,
	2003			2002			2001			2000			1999
	(dollars in thousands)
90 days past due	$	825		$	1,401		$	926		$	910		$	1,426
Restructured		567			206			—			—			515
Nonaccrual		1,737			1,038			2,559			2,042			2,874
Total non-performing loans	$	3,129		$	2,645		$	3,485		$	2,952		$	4,815
Ratio of nonperforming loans to total loans		0.83	%		0.86	%		1.08	%		0.95	%		1.71	%

13

IV.  Summary of Loan Loss Experience

The following table sets forth loans charged off and recovered by the type of loan and an analysis of the allowance for loan losses for the years ended December 31, 2003, 2002, 2001, 2000 and 1999.

	Year ended December 31,
	2003			2002			2001			2000			1999
	(dollars in thousands)
Amount of loans outstanding at end of period (net of unearned interest) (1)	$	377,017		$	306,024		$	322,681		$	312,081		$	282,091
Average amount of loans outstanding for the period (net of unearned interest)	$	366,754		$	313,041		$	316,033		$	302,153		$	202,733
Allowance for loan losses at beginning of period	$	3,967		$	3,381		$	2,933		$	4,006		$	2,177
Charge-offs:
Agricultural		65			43			1,130			695			303
Commercial		44			204			166			1,125			1,724
Real estate—construction		—			—			—			—			—
Real estate—mortgage		150			221			114			131			229
Installment		88			105			76			92			56
Lease financing		—			—			—			143			63
Total charge-offs		347			573			1,486			2,186			2,375
Recoveries:
Agricultural		5			42			3			—			26
Commercial		7			15			52			182			2
Real estate—construction		—			—			—			—			—
Real estate—mortgage		7			1			92			1			6
Installment		22			31			11			22			12
Lease financing		—			—			—			16			14
Total recoveries		41			89			158			221			60
Net loans charged off		306			484			1,328			1,965			2,315
Provision for loan losses		589			1,070			1,776			892			3,628
Allowance at date of acquisition		607			—			—			—			516
Allowance for loan losses at end of period	$	4,857		$	3,967		$	3,381		$	2,933		$	4,006
Net loans charged off to average loans		0.08	%		0.15	%		0.42	%		0.65	%		1.14	%
Allowance for loan losses to total loans at end of period		1.29	%		1.30	%		1.05	%		0.94	%		1.42	%

(1) Loans do not include, and the allowance for loan losses does not include any allowance for investments in loan pool participations.

14

The Company has allocated the allowance for loan losses to provide for loan losses being incurred within the categories of loans set forth in the the table below. The allocation of the allowance and the ratio of loans within each category to total loans as of the dates indicated are as follows:

	December 31,
	2003				2002				2001				2000				1999
	Allowance Amount		Percent of Loans to Total Loans		Allowance Amount		Percent of Loans to Total Loans		Allowance Amount		Percent of Loans to Total Loans		Allowance Amount		Percent of Loans to Total Loans		Allowance Amount		Percent of Loans to Total Loans
	(dollars in thousands)
Agricultural	$	1,231	14.9	%	$	831	12.4	%	$	916	12.7	%	$	593	14.5	%	$	597	14.9	%
Commercial		1,038	16.1			626	12.9			497	12.5			791	12.5			545	13.6
Real estate—mortgage		2,329	66.1			2,199	70.8			1,642	69.2			1,329	66.3			2,652	66.2
Installment		183	2.8			255	3.8			273	5.5			194	6.5			196	4.9
Lease financing		76	0.1			56	0.1			53	0.1			26	0.2			16	0.4
Total	$	4,857	100.0	%	$	3,967	100.0	%	$	3,381	100.0	%	$	2,933	100.0	%	$	4,006	100.0	%

V.  Deposits

The following table sets forth the average amount of and the average rate paid on deposits by deposit category for the years ended December 31, 2003, 2002 and 2001.

	Year ended December 31,
	2003				2002				2001
	Average Balance		Rate		Average Balance		Rate		Average Balance		Rate
	(dollars in thousands)
Non-interest bearing demand deposits	$	35,151	N/A		$	24,917	N/A		$	23,511	N/A
Interest-bearing demand (NOW and money market)		56,194	0.32	%		45,010	0.60	%		42,556	1.22	%
Savings deposits		115,042	1.16			100,172	1.87			94,762	3.12
Certificates of deposit		243,073	3.51			215,250	4.38			216,328	5.51
Total deposits	$	449,460	2.23	%	$	385,349	3.00	%	$	377,157	4.08	%

The following table summarizes certificates of deposit in amounts of $100,000 or more by time remaining until maturity as of December 31, 2003. These times deposits are made by individuals, corporations and public entities, all of which are located in the Company’s market area or are State of Iowa public funds.

	December 31, 2003
	(in thousands)
Three months or less	$	9,566
Over three through six months		5,100
Over six months through one year		9,629
Over one year		11,417
Total	$	35,712

15

VI.  Return on Equity and Assets

Various operating and equity ratios for the years indicated are presented below:

	Year ended December 31,
	2003		2002		2001
Return on average total assets	0.98	%	1.07	%	0.82	%
Return on average equity	10.52		10.91		8.59
Dividend payout ratio	41.56		42.95		54.55
Average equity to average assets	9.32		9.81		9.58
Equity to assets ratio (at period end)	9.01		10.37		9.32

VII.  Borrowed Funds

The following table summaries the outstanding amount of and the average rate on borrowed funds as of December 31, 2003, 2002 and 2001.

	December 31,
	2003				2002				2001
	Balance		Average Rate		Balance		Average Rate		Balance		Average Rate
	(dollars in thousands)
Long-term debt (1)	$	10,310	4.80	%	$	10,310	5.46	%	$	—	—	%
Notes payable (2)		9,000	3.20			—	3.45			9,200	3.95
Federal Home Loan Bank advances		78,944	4.62			69,293	5.26			91,174	5.56
Federal funds purchased		10,450	1.14			1,500	1.28			10,650	2.10
Total	$	108,704	4.19	%	$	81,103	5.21	%	$	111,024	5.09	%

(1) On June 27, 2002, the Company obtained $10,310,000 in long-term subordinated debt from its participation in the issuance of a pooled trust preferred security. The trust preferred has a 30 year maturity, does not require any principal amortization and is callable after five years at par at the issuers’ option. The interest rate is variable based on the three month Libor rate plus 3.65 percent, with interest payable quarterly.

(2) The notes payable balance at December 31, 2003, consists of $3,000,000 in advances on a revolving line of credit and $6,000,000 on a term note, both with an unaffiliated bank. Both notes have a variable interest rate at 0.30 percent below the lender’s prime rate. Interest is payable quarterly. The revolving line of credit has a maximum limit of $9,000,000 and matures June 30, 2004. The term note calls for semi-annual payments of $500,000 for the next two and a half years with a final payment of $3,500,000 due at maturity on November 30, 2006.

The maximum amount of borrowed funds outstanding at any month end for the years ended December 31, 2003, 2002 and 2001 were as follows:

	2003		2002		2001
	(in thousands)
Long-term debt	$	10,310	$	10,310	$	—
Notes payable		9,173		12,200		13,200
Federal Home Loan Bank advances		78,945		92,204		91,174
Federal funds purchased		16,250		5,800		10,650

16

The following table sets forth the average amount of and the average rate paid on borrowed funds for the years ended December 31, 2003, 2002 and 2001.

	Year ended December 31,
	2003				2002				2001
	Average Balance		Average Rate		Average Balance		Average Rate		Average Balance		Average Rate
	(dollars in thousands)
Long-term debt	$	10,310	5.05	%	$	5,282	5.61	%	$	—	—	%
Notes payable		7,725	3.38			6,572	4.11			12,135	6.61
Federal Home Loan Bank advances		70,631	5.49			84,863	5.74			82,317	6.28
Federal funds purchased		4,763	1.32			1,011	2.07			1,485	3.80
Total	$	93,429	5.06	%	$	97,728	5.59	%	$	95,937	6.28	%

Item 2.  Properties

The Company’s headquarters are located at 222 First Avenue East, Oskaloosa, Iowa. This building is a two-story combination office, data processing facility, and motor bank that was constructed in 1975. The Company’s offices are located on the second floor and the data processing area is located on the first floor. MBT rents the first floor motor bank area, which includes four drive-up lanes and two walk-up windows and the basement from the Company. The basement contains a meeting room, kitchen, and storage. MBT’s lease runs through the year 2005.

The principal offices of MidWestOne Bank & Trust are located at 124 South First Street, Oskaloosa, Iowa, in a two-story building owned by MBT that contains a full banking facility. MBT also owns a second building in Oskaloosa located at 301 A Avenue West. This one-story banking facility includes two drive-up lanes and is located five blocks northwest of the bank’s principal offices. In addition, MBT owns a 24-hour automatic teller machine located at 211 South First Street, Oskaloosa, Iowa. MBT also has four branch locations located outside of Oskaloosa in the communities of North English, Belle Plaine, Hudson and Waterloo, Iowa. All of these branches are full-banking facilities. North English is located 40 miles northeast of Oskaloosa and the branch has two drive-up lanes and a 24-hour automatic teller machine. Belle Plaine is located 60 miles northeast of Oskaloosa and the branch is in a 6,500 square foot building. This branch also has a motor bank located one block away with one drive-up lane and a 24-hour automatic teller machine. Hudson is located 80 miles north of Oskaloosa and the 2,592 square foot branch has two drive-up lanes and a 24-hour automatic teller machine. Waterloo is located 90 miles north of Oskaloosa and the 3,837 square foot branch has one drive-up lane.

Central Valley Bank owns four facilities in the communities of Ottumwa, Fairfield, and Sigourney, Iowa. The Ottumwa building is a single-story brick structure constructed in 1981. The approximately 4,200 square foot building has several offices and a potential for three drive-up lanes, with two presently in operation. The building is located at 116 West Main in Ottumwa’s downtown business district. The Fairfield facility is a two-story building located at 58 East Burlington on the southeast corner of the downtown square. The building’s 8,932 square feet is all utilized by CVB. In 2001, CVB occupied a new 3,500 square foot branch facility at 2408 West Burlington Street in Fairfield. The Sigourney facility located at 112 North Main Street is one-half block northwest of the community’s courthouse square in the downtown business district. The 4,596 square foot one-story masonry building was constructed in 1972 as a banking facility with one drive-up window.

Pella State Bank’s main office is a leased facility in Pella’s downtown business district that opened on January 29, 2001. The 5,700 square foot facility is located in a newly-constructed retail/office complex and is leased for a period of ten years with options to renew. PSB owns a branch facility at 500 Oskaloosa Street in Pella, Iowa. The facility is located approximately six blocks south of the community’s main business district. The building was acquired in the summer of 1997 and was completely renovated to become a modern banking facility containing approximately 1,860 square feet of usable space with two drive-up teller lanes.

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MidWestOne Bank owns its main office in Burlington, Iowa and three of its branch office facilities. The main office located at 3225 Division Street, on the western side of the community, is adjacent to one of the major highways through Burlington. It is a one-story facility of approximately 10,300 square feet, constructed in 1974, with four drive-up lanes and one ATM. MWB also owns a branch facility located in Burlington’s main downtown business district at 323 Jefferson Street. This facility is approximately 2,400 square feet and was the main office until 1974. The branch located in Fort Madison, Iowa at 926 Avenue G was acquired in 1975, has one drive-up window, and contains approximately 3,300 square feet on one level. The 960 square foot Wapello, Iowa branch is located on Highway 61 and was acquired in 1974.

Item 3.  Legal Proceedings

MidWestOne Financial Group, Inc. and its subsidiaries are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position or results of operations.

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

There were no matters submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise.

PART II

Item 5.  Market for the Registrant’s Common Equity and Related Stockholder Matters

The information appearing on page 12 of the Company’s Annual Report, filed as Exhibit 13 hereto, is incorporated herein by reference.

There were approximately 441 holders of record of the Company’s $5 common stock as of March 1, 2004. Additionally, there are an estimated 1,100 beneficial holders whose stock was held in street name by brokerage houses as of that date. The closing price of the Company’s common stock was $18.30 on March 19, 2004.

The Company paid dividends to common shareholders in 2003 of $.64 per share, which is the same amount paid in 2002. Dividend declarations are evaluated and determined by the Board of Directors on a quarterly basis. In February 2004, the Board of Directors declared a dividend of $.17 per common share. The Company’s loan agreement requires that the Company not pay any dividends in excess of sixty percent of net income without the lenders’ permission. Except for certain regulatory restrictions that may affect dividend payments, there are no other restrictions on the Company’s present or future ability to pay dividends. The Company currently anticipates that comparable cash dividends will continue to be paid in the future.

The following table presents a summary of the Company’s repurchase of its common stock during the fourth quarter of 2003:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May be Purchased Under the Plan
Month #1 October 1 thru 31, 2003	20,000	$	18.250	20,000	52,300
Month #2 November 1 thru 30, 2003	32,300	$	18.477	32,300	32,300
Month #3 December 1 thru 31, 2003	0		0	0	0
Total	52,300	$	18.390	52,300	52,300

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The Company repurchased shares on the open market throughout 2003 as authorized by an extension to the stock repurchase program adopted by the Board of Directors on February 20, 2003. The Board authorized the repurchase of up to 5 percent of the outstanding shares of the Company through December 31, 2003. The Company repurchased shares in 2003 as follows:

Month	Total Number of Shares Purchased
January	20,000
February	0
March	19,000
April	18,300
May	11,000
June	45,000
July	0
August	0
September	10,000
October	20,000
November	32,300
December	0
Total	175,600

The Company has a stock incentive plan under which shares of common stock are reserved for issuance pursuant to options or other awards that may be granted to officers, key employees and certain nonaffiliated directors of the Company. The stock incentive plan has been approved by the Company’s shareholders. A summary of the shares that potentially could be issued, the weighted-average price and the remaining shares as of December 31, 2003 follows:

Plan Category	Number of Securities to be issued upon exercise of outstanding options	Weighted-average exercise price of outstanding options		Number of securities remaining available for future issuance
Stock incentive plan approved by shareholders	573,453	$	14.19	227,858

Item 6.  Selected Financial Data

The information appearing on page 2 of the Company’s Annual Report, filed as Exhibit 13 hereto, is incorporated herein by reference.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information appearing on pages A-1 through A-14 of the Appendix to the Company’s definitive proxy Statement, is incorporated herein by reference.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

The information appearing on page A-10 of the Appendix to the Company’s definitive proxy statement, is incorporated herein by reference.

Item 8.  Financial Statements and Supplementary Data

The information appearing on pages F-1 through F-28 of the Appendix to the Company’s definitive proxy statement, is incorporated herein by reference.

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Within the twenty-four months prior to the date of the most recent financial statements, there have been no changes in or disagreements with accountants of the Company.

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Item 9A.  Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 240.13a-15(e)). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s current disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There were no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART III

Item 10.  Directors and Executive Officers of the Registrant

The definitive proxy statement of MidWestOne Financial Group, Inc. containing information about the directors and executive officers of the registrant is incorporated herein by reference. Also incorporated herein by reference from the definitive proxy statement is the information pertaining to Section 16(a) Beneficial Ownership Reporting Compliance.

The Company has adopted a code of ethics which applies to all directors, officers and employees, including the chairman, president and chief executive officer, chief financial officer and controller. The chairman, president and chief executive officer, chief financial officer and controller have each signed such code of ethics and agreed to be bound by same. A copy of the code of ethics is filed as Exhibit 14 to this Form 10-K.

Item 11.  Executive Compensation

The definitive proxy statement of MidWestOne Financial Group, Inc. is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

The definitive proxy statement of MidWestOne Financial Group, Inc. is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

The definitive proxy statement of MidWestOne Financial Group, Inc. is incorporated herein by reference.

Item 14.  Principal Accounting Fees and Services

Fees billed for the last two fiscal years for services provided by the principal accountant for audit fees, audit-related fees, tax fees and all other fees is incorporated herein by reference to page 15 of the definitive proxy statement of MidWestOne Financial Group, Inc.

The Audit Committee pre-approved the fees for the audit and tax services provided by the principal accountant for the year 2003. Included in the Audit-Related Fees for 2003 was $27,968 in loan review fees for services performed by the principal accountant in connection with the year-end 2002 audit. These fees and the other audit-related services preformed in 2003 were not pre-approved by the audit committee. Additionally, the All Other Fees paid during 2003 in connection with the acquisition of BPSC were not pre-approved by the audit committee. None of the fees paid in 2002 were pre-approved by the audit committee.

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PART IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

The following exhibits and financial statement schedules are filed as part of this report:

(a)	1.	Financial Statements: See the financial statements on pages F-1 through F-28 of the Appendix to the Company’s definitive proxy statement, which are incorporated by reference herein.
	2.	Exhibits (not covered by independent auditors’ report).
	Exhibit 3.1
	Articles of Incorporation, as amended through April 30, 1998, of Mahaska Investment Company. The Articles of Incorporation, as amended, of Mahaska Investment Company are incorporated by reference to the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 1998.
	Exhibit 3.1.1
	Amendment to the Articles of Incorporation of Mahaska Investment Company changing the name of the corporation to MidWestOne Financial Group, Inc. is incorporated by reference to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2003.
	Exhibit 3.2
	Bylaws of Mahaska Investment Company. The Amended and Restated Bylaws of Mahaska Investment Company dated July 23, 1998, are incorporated by reference to the Company’s quarterly report on Form 10-Q for the Quarter ended September 30, 1998.
	Exhibit 10.1
	Mahaska Investment Company Employee Stock Ownership Plan & Trust as restated and amended. This Plan & Trust is incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1994.
	Exhibit 10.2.1
	1993 Stock Incentive Plan. This 1993 Stock Incentive Plan is incorporated by reference to Form S-1 Registration Number 33-81922 of Mahaska Investment Company.
	Exhibit 10.2.2
	1996 Stock Incentive Plan. This 1996 Stock Incentive Plan is incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1996.
	Exhibit 10.2.3
	1998 Stock Incentive Plan. This 1998 Stock Incentive Plan is incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997.
	Exhibit 10.3
	States Resources Corp. Loan Participation and Servicing Agreement dated February 5, 1999 between States Resources Corp. and Mahaska Investment Company. This agreement is incorporated herein by reference to the Form 10-K report filed by Mahaska Investment Company for the Year ended December 31, 1999.
	Exhibit 10.5
	Amended and Restated Credit Agreement dated June 30, 2000 between Mahaska Investment Company and Harris Trust and Savings Bank. This Amended and Restated Credit Agreement is incorporated herein by reference to the Form 10-Q report filed by Mahaska Investment Company for the Quarter ended September 30, 2000.

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		Exhibit 10.5.1
		Second Amendment to Amended and Restated Credit Agreement dated November 30, 2003 between MidWestOne Financial Group, Inc. and Harris Trust and Savings Bank.
		Exhibit 10.6
		Stock Purchase Agreement By and Between Mahaska Investment Company and Belle Plaine Service Corp. dated October 4, 2002. This Stock Purchase Agreement is incorporated herein by reference to the Company’s Form 10-K Annual Report for the year ended December 31, 2002.
		Exhibit 11
		Computation of Per Share Earnings
		Exhibit 13
		The Annual Report to Shareholders of MidWestOne Financial Group, Inc. for the 2003 calendar year.
		Exhibit 14
		MidWestOne Financial Group, Inc. and Subsidiaries Code of Ethics
		Exhibit 21
		Subsidiaries
		Exhibit 23
		Consent of Independent Auditor
		Exhibit 31.1
		Certification of Chief Executive Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934.
		Exhibit 31.2
		Certification of Chief Financial Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934.
		Exhibit 32.1
		Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934 and 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
The Company will furnish to any shareholder upon request and upon payment of a fee of $.50 per page, a copy of any exhibit. Requests for copies should be directed to Karen K. Binns, Secretary/Treasurer, MidWestOne Financial Group, Inc., P.O. Box 1104, Oskaloosa, Iowa 52577-1104.
	(b)	Reports on Form 8-K: The Company filed a Form 8-K on October 28, 2003 reporting the quarterly earnings for the three months ended September 30, 2003.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

MIDWESTONE FINANCIAL GROUP, INC.
(Registrant)
By:	/s/    CHARLES S. HOWARD
	Charles S. Howard
	Chairman, President, Chief Executive Officer and Director

March 26, 2004

By:	/s/    DAVID A. MEINERT
	David A. Meinert
	Executive Vice President, Chief Financial Officer and Director

March 26, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/    RICHARD R. DONAHUE         Richard R. Donahue	Director	March 26, 2004
/s/    WILLIAM D. HASSEL         William D. Hassel	Director	March 26, 2004
/s/    CHARLES S. HOWARD         Charles S. Howard	Director, Chairman of the Board, President and Chief Executive Officer	March 26, 2004
/s/    DAVID A. MEINERT         David A. Meinert	Director, Executive Vice President and Chief Financial Officer (Principal Accounting Officer)	March 26, 2004
/s/    JOHN P. POTHOVEN         John P. Pothoven	Director	March 26, 2004
/s/    JOHN W. N. STEDDOM         John W. N. Steddom	Director	March 26, 2004
/s/    JAMES G. WAKE         James G. Wake	Director	March 26, 2004
/s/    MICHAEL R. WELTER         Michael R. Welter	Director	March 26, 2004
/s/    EDWARD C. WHITHAM         Edward C. Whitham	Director	March 26, 2004

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EX-10.5.1

Exhibit 10.5.1

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Harris Trust and Savings Bank

Chicago, Illinois

Ladies and Gentlemen:

The undersigned, MidWestOne Financial Group, Inc., an Iowa corporation formerly known as Mahaska Investment Company (the “Borrower”), refers to the Amended and Restated Credit Agreement dated as of June 30, 2000, as amended and currently in effect between the Borrower and you (the “Bank”) (such Amended and Restated Credit Agreement as so amended being hereinafter referred to as the “Present Credit Agreement”) pursuant to which the Bank has extended, subject to the terms and conditions thereof, a revolving credit facility available to the Borrower in a principal amount not to exceed $9,000,000 at any one time outstanding. The Borrower issued to the Bank under the Present Credit Agreement its Revolving Credit Note dated as of June 30, 2000, payable to the order of the Bank in the principal amount of $9,000,000 (the “Present Revolving Credit Note”) to evidence the indebtedness outstanding on said revolving credit. The Borrower has requested that the Bank modify the terms and conditions applicable to the indebtedness evidenced by the Present Revolving Credit Note (the indebtedness evidenced by the Present Revolving Credit Note being hereinafter referred to as the “Present Revolving Credit Loans”), extend the maturity thereof, make available to the Borrower a new term loan in the amount of $6,000,000, and thus provide to the Borrower a restructured revolving credit facility and a new term loan facility covering the Present Revolving Credit Loans, all on and subject to the terms and conditions set forth below. Accordingly, this Agreement is executed and delivered by the Borrower to the Bank to set forth and confirm the terms and conditions applicable to such credit facilities and the covenants, representations and warranties of the Borrower to be made in connection therewith.

The Borrower acknowledges that it is justly and truly indebted to the Bank on the Present Revolving Credit Loans as of November 24, 2003, in the principal amount of $8,600,000 plus accrued and unpaid interest thereon. Substantially concurrently herewith, the Borrower is executing and delivering to the Bank the Notes hereinafter identified and defined. Upon satisfaction of the conditions precedent to effectiveness set forth in Section 6 hereof, the Present Revolving Credit Loans shall automatically, and without further action on the part of either the Bank or the Borrower, become evidenced by the Revolving Credit Note referred to in Section 1.1 below and, to that extent, the Revolving Credit Note is issued in renewal of, and evidence the same indebtedness formerly evidenced by, the Present Revolving Credit Note, as well as evidencing all additional Revolving Loans to be made pursuant hereto. All of the Present Revolving Credit Loans shall, for all purposes of this Agreement, be treated as Revolving Loans under this Agreement on the date the conditions precedent to effectiveness set forth in Section 6 hereof have been satisfied or duly waived in writing by the Bank. Simultaneously with such satisfaction or waiver of such conditions precedent, the Borrower shall pay to the Bank all unpaid interest and commitment fees accrued to such date on or in connection with the Present Revolving Credit Loans, and the existing defaults by the Borrower under Section 7.6 of the Present Credit Agreement (Non-Performing Assets) for the periods ended March 31, 2003, and

June 30, 2003, and September 30, 2003, shall be deemed waived hereby. Except as specifically waived hereby, all of the terms of the Present Credit Agreement as amended and restated by this Agreement shall be and remain in full force and effect.

SECTION 1. THE CREDIT.

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

Section 1.2. Term Loan. Subject to the terms and conditions hereof, the Bank agrees to make a term loan (the “Term Loan”) to the Borrower concurrently herewith in the principal amount of $6,000,000. The Term Loan shall be made against and evidenced by a promissory note of the Borrower in the form (with appropriate insertions) attached hereto as Exhibit B (the “Term Note”). The Borrower shall make semi-annual principal installment payments on the Term Loan on the last day of May and November of each year, commencing May 31, 2004, with the amount of each such principal installment to equal the amount set forth in Column B below shown opposite of the relevant due date as set forth in Column A below:

COLUMN A	COLUMN B
PAYMENT DATE	MANDATORY SCHEDULED PRINCIPAL PAYMENT ON TERM LOAN
05/31/04	$	500,000
11/30/04	$	500,000
05/31/05	$	500,000
11/30/05	$	500,000
05/31/06	$	500,000
11/30/06	$	3,500,000

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, it being agreed that the final payment of both principal and interest not sooner paid on the Term Loan shall be due and payable on November 30, 2006, the final maturity thereof.

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

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

Section 2.1. Interest. The outstanding principal balance of the Loans shall bear interest (which the Borrower hereby promises to pay at the rates and at the times set forth herein) prior to maturity (whether by lapse of time, acceleration or otherwise) at the rate per annum determined by subtracting (but not below zero) 0.30% per annum from the Prime Rate as in effect from time to time and after maturity (whether by lapse of time, acceleration or otherwise), whether before or after judgment, until payment in full thereof at the rate per annum determined by adding 3% to the Prime Rate as in effect from time to time. Any change in the interest rate on the Loans resulting from a change in the Prime Rate shall be effective on the date of the relevant change in the Prime Rate. Interest on the Loans shall be computed on the basis of a year of 360 days for the actual number of days elapsed. Interest on the Loans shall be payable quarterly in arrears on the last day of each calendar quarter in each year (commencing on the first such date occurring after the date hereof) and at maturity, and interest after maturity shall be due and payable on demand.

Section 2.2. Revolving Credit Commitment Fee. For the period from and including the date hereof to but not including the Revolving Credit Termination Date, the Borrower shall pay to the Bank a commitment fee at the rate of 0.125% per annum (computed on the basis of a year of 360 days for the actual number of days elapsed) on the average daily unused portion of the Revolving Credit Commitment. Such commitment fee shall be payable quarterly in arrears on the last day of each calendar quarter in each year (commencing June 30, 2000) and on the Revolving Credit Termination Date.

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

(b) Mandatory Prepayments. The Borrower shall, on each date the Revolving Credit Commitment is reduced pursuant to Section 2.4 hereof, prepay the Revolving Loans by

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the amount, if any, necessary to reduce the aggregate principal amount of the Revolving Loans then outstanding to the amount to which the Revolving Credit Commitment has been so reduced.

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

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

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

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

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SECTION 3. COLLATERAL.

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

SECTION 4. DEFINITIONS.

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

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

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

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

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

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

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

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“Collateral Documents” is defined in Section 3 hereof.

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

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

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

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

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

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

“Loan Documents” means this Agreement, the Notes, the Collateral Documents, and all other instruments and documents delivered pursuant to the terms thereof or in connection therewith.

“Loans” means the Revolving Loans and the Term Loan.

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

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

“Notes” means the Revolving Note and the Term Note.

“Obligations” means all obligations of the Borrower to pay principal and interest on the Loans, all fees and charges payable hereunder, and all other payment obligations of the Borrower arising under or in relation to any Loan Document, in each case whether now existing or

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hereafter arising, due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired.

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

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

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

“Revolving Credit Termination Date” means November 30, 2004, or such earlier date on which the Revolving Credit Commitment is terminated in whole pursuant to Section 2.4, 8.2 or 8.3 hereof.

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

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

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

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

SECTION 5. REPRESENTATIONS AND WARRANTIES.

The Borrower represents and warrants to the Bank as follows:

Section 5.1. Organization and Qualification. The Borrower is duly organized, validly existing, and in good standing as a corporation under the laws of the state of its incorporation. The Borrower has full and adequate corporate power to own its Property and conduct its business as now conducted, and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business conducted by it or the nature of the Property owned or leased by it requires such licensing or qualifying. Without limiting the generality of the foregoing,

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the Borrower is a bank holding company and, as such, the Borrower has received all necessary approvals from, and has filed all necessary reports with, all applicable federal and state regulatory authorities.

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

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

Section 5.4. Purpose; Margin Stock. The Borrower shall use the proceeds of the Loans during the term of this Agreement solely for the following purposes: (a) to refinance existing indebtedness, (b) to finance the purchase price of participation interests in loan pools, (c) to finance acquisitions consented to by the Bank pursuant to Section 7.11 hereof, and (d) to finance its general working capital requirements. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Loan made hereunder will be used to purchase or carry any margin stock, or to extend credit to others for the purpose of purchasing or carrying any such margin stock.

Section 5.5. Financial Reports. All financial statements of the Borrower and its Subsidiaries heretofore submitted to the Bank are true and correct in all material respects, have been prepared in accordance with generally accepted accounting principles or regulatory accounting principles, as the case may be, consistently applied, and fairly present the financial

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condition of the Borrower and its Subsidiaries and the results of operations and cash flows of the Borrower and its Subsidiaries as of the dates thereof and for the periods covered thereby. Neither the Borrower nor any Subsidiary has contingent liabilities which are material to it other than as indicated on such financial statements or, with respect to future periods, on the financial statements furnished pursuant to Section 7.5 hereof. Since December 31, 2002, there has been no change in the condition (financial or otherwise) or business prospects of the Borrower or any Subsidiary except those occurring in the ordinary course of business, none of which individually or in the aggregate could reasonably be expected to have a material adverse effect upon the operations, business, Property, or condition (financial or otherwise) of the Borrower or of the Borrower and its Subsidiaries taken as a whole.

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

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

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

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SECTION 6. CONDITIONS PRECEDENT.

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

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

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

(i) the Notes;

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

(iii) copies of resolutions of the Borrower’s Board of Directors (or similar governing body) authorizing the execution, delivery, and performance of the Loan Documents by the Borrower and the consummation of the transactions contemplated thereby, together with specimen signatures of the persons authorized to execute such documents on the Borrower’s behalf, all certified to by the Borrower’s Secretary or Assistant Secretary; and

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

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

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

(d) the Bank shall have received a certificate of existence for the Borrower (dated as of the date no earlier than 30 days prior to the date hereof, or otherwise acceptable to the Bank) from the office of the secretary of state of the state of its incorporation; and

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

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

SECTION 7. COVENANTS.

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

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

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

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

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

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risks with good and responsible insurance companies as and to the extent usually insured by Persons similarly situated and conducting similar businesses.

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

(a) within 45 days after the last day of each fiscal quarter, all call reports and other financial statements required to be delivered by the Borrower and by each Banking Subsidiary to any governmental authority or authorities having jurisdiction over the Borrower or such Banking Subsidiary and all schedules thereto and, to the extent not included in the foregoing, loan pool performance reports for the Borrower and for each of its Subsidiaries for the fiscal quarter and the fiscal year-to-date period then ended and in form and substance acceptable to the Bank;

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

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

(d) promptly upon the receipt or execution thereof, (i) notice by the Borrower or any Banking Subsidiary that (1) it has received a request or directive from any federal or state regulatory agency which requires it to submit a capital maintenance or restoration plan or restricts the payment of dividends by any Banking Subsidiary to the Borrower or (2) it has submitted a capital maintenance or restoration plan to any federal or state regulatory agency or has entered into a memorandum or agreement with any such agency,

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including, without limitation, any agreement which restricts the payment of dividends by any Banking Subsidiary to the Borrower or otherwise imposes restrictions or requirements on it which are not generally applicable to banks or thrifts or their holding companies, and (ii) copies of any such plan, memorandum, or agreement, unless disclosure is prohibited by the terms thereof and, after the Borrower or such Banking Subsidiary has in good faith attempted to obtain the consent of such regulatory agency, such agency will not consent to the disclosure of such plan, memorandum, or agreement to the Bank; and

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

Section 7.6. Indebtedness. The Borrower shall not issue, incur, assume, create, or have outstanding any indebtedness for borrowed money (including as such for all purpose of this Agreement any indebtedness representing the deferred purchase price of property, any liability in respect of banker’s acceptances or letters of credit, any indebtedness, whether or not assumed, secured by liens on property acquired by the Borrower existing at the time of the acquisition thereof, and any liability under any lease which should be capitalized under generally accepted accounting principles); provided, however, that the foregoing shall not restrict nor operate to prevent:

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

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

(c) indebtedness consisting of junior subordinated debentures (which obligations shall be junior and subordinated to the prior payment in full of the Obligations on terms and conditions satisfactory to the Bank) issued in connection with trust preferred securities issued by one or more of the Borrower’s wholly-owned Subsidiaries; and

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

Section 7.7. Liens. The Borrower shall not create, incur or permit to exist any Lien of any kind on any Property owned by the Borrower; provided, however, that the foregoing shall not apply to nor operate to prevent the following:

(a) Liens arising by statute in connection with worker’s compensation, unemployment insurance, old age benefits, social security obligations, taxes, assessments,

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statutory obligations or other similar charges (other than any Liens imposed by the Employee Retirement Income Security Act of 1974, as amended), good faith cash deposits in connection with tenders, contracts or leases to which the Borrower is a party or other cash deposits required to be made in the ordinary course of business, provided in each case that the obligation is not for borrowed money and that the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate proceedings which prevent enforcement of the matter under contest and adequate reserves have been established therefor in accordance with generally accepted accounting principles;

(b) mechanics’, workmen’s, materialmen’s, landlords’, carriers’, or other similar Liens arising in the ordinary course of business with respect to obligations which are not due or which are being contested in good faith by appropriate proceedings which prevent enforcement of the matter under contest;

(c) the pledge of assets for the purpose of securing an appeal, stay or discharge in the course of any legal proceeding, provided that the aggregate amount (but without duplication) of such liabilities of the Borrower secured by a pledge of assets permitted under this subsection, including interest and penalties thereon, if any, shall not be in excess of $500,000 at any one time outstanding; and

(d) the Liens granted in favor of the Bank pursuant to the Collateral Documents.

Section 7.8. Dividends and Certain Other Restricted Payments. The Borrower shall not declare or pay any dividends on or make any other distributions in respect of any class or series of its capital stock or directly or indirectly purchase, redeem or otherwise acquire or retire any of its capital stock (herein, “Restricted Payments”); provided, however, that the Borrower may:

(a) declare and pay Restricted Payments during the fiscal year ending December 31, 2003, so long as at the time of, and after giving effect to, any such Restricted Payment no Default or Event of Default shall exist and the aggregate amount of all such Restricted Payments made during such fiscal year ending December 31, 2003, does not exceed 100% of the Borrower’s year-to-date reported Consolidated Net Income for the then current fiscal year; and

(b) declare and pay Restricted Payments during any fiscal year ending after December 31, 2003, so long as at the time of, and after giving effect to, the payment of any such Restricted Payment no Default or Event of Default exists and the aggregate amount of all such Restricted Payments during any such fiscal year does not exceed 80% of the Borrower’s year-to-date reported Consolidated Net Income for the then current fiscal year.

Section 7.9. Compliance with Laws. The Borrower shall, and shall cause each Subsidiary to, comply in all respects with the requirements of all federal, state and local laws, rules, regulations, ordinances and orders applicable to or pertaining to their Properties or business operations, non-compliance with which could have a material adverse effect on the financial

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condition, Properties, business or operations of such Borrower or any Subsidiary or could result in a Lien upon any of their Property.

Section 7.10. Maintenance of Subsidiaries. The Borrower shall not assign, sell, or transfer, or permit any Subsidiary to issue, assign, sell, or transfer, any shares of capital stock or other equity interest of a Subsidiary; provided that the foregoing shall not prevent (a) the issuance, sale, or transfer to any person of any shares of capital stock or other equity interests of a Subsidiary solely for the purpose of qualifying, and only to the extent legally necessary to qualify, such person as a director of such Subsidiary and (b) the sale of MIC to another Person not affiliated with the Borrower which sale is, in the reasonable business judgment of the Borrower, desirable in the proper conduct of its business.

Section 7.11. Acquisitions . The Borrower shall not, nor shall it permit any of its Subsidiaries to, directly or indirectly, acquire all or any substantial part of the assets or business of any other Person or division thereof without the prior written consent of the Bank (which consent shall not be unreasonably withheld).

Section 7.12. Non-Performing Assets. (a) Adjusted Non-Performing Assets. The Borrower shall, as of the last day of each fiscal quarter, maintain on a consolidated basis with its Subsidiaries (excluding, for purposes of this determination only, MIC as a Subsidiary of the Borrower), and shall cause each Banking Subsidiary to maintain as of such day on an individual basis, a ratio of (x) Non-Performing Assets (determined exclusive of amounts related to loan pool participations) of the Borrower on such consolidated basis or such Banking Subsidiary, as the case may be, to (y) the sum of (i) stockholders’ equity for the Borrower or core capital for such Banking Subsidiary, as the case may be, plus loan loss reserves established by the Borrower on such consolidated basis or such Banking Subsidiary, as the case may be, in accordance with regulatory accounting principles applicable to the Borrower or such Banking Subsidiary, in an amount less than 0.15 to 1.0.

(b) Total Non-Performing Assets. The Borrower shall, as of the last day of each fiscal quarter, maintain on a consolidated basis with its Subsidiaries (excluding, for purposes of this determination only, MIC as a Subsidiary of the Borrower), and shall cause each Banking Subsidiary to maintain as of such day on an individual basis, a ratio of (x) Non-Performing Assets (determined inclusive of amounts related to loan pool participations) of the Borrower on such consolidated basis or such Banking Subsidiary, as the case may be, to (y) the sum of (i) stockholders’ equity for the Borrower or core capital for such Banking Subsidiary, as the case may be, plus loan loss reserves established by the Borrower on such consolidated basis or such Banking Subsidiary, as the case may be, in accordance with regulatory accounting principles applicable to the Borrower or such Banking Subsidiary, in an amount less than 0.75 to 1.0.

Section 7.13. Regulatory Capital Requirements.

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

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

(ii) a Total Risk Based Capital Ratio of greater than 10.5% in the case of the Borrower on a consolidated basis and 10% in the case of any Banking Subsidiary or such greater amount as may be required to be considered “well capitalized” by applicable regulatory authorities from time to time; and

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

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

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

Section 7.14. Return on Assets. As of the last day of each June and December in each year, the Borrower shall maintain a ratio of Consolidated Net Income for the 12-month period then ended to Consolidated Total Assets as at the last day of such 12-month period then ended of not less than .0090 to 1.0.

Section 7.15. Return on Loan Pool Participations. As of the last day of each March, June, September, and December in each year, the Borrower shall maintain a ratio of (a) cash receipts received by the Borrower and its Subsidiaries in respect of loan pool participations owned by them for the 12-month period then ended to (b) the quotient of (i) total loan pool participations owned by the Borrower and its Subsidiaries as of the last day of each calendar quarter occurring such 12-month period, divided by (ii) four (4), in an amount greater than or equal to 0.08 to 1.0.

SECTION 8. EVENTS OF DEFAULT AND REMEDIES.

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

(a) default in the payment when due of all or any part of the Obligations payable by the Borrower under any Loan Document, or default in the payment when due

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of any other indebtedness or liability of the Borrower or any of its Subsidiaries owing to the Bank; or

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

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

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

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

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

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

(h) Borrower or any Subsidiary shall fail to pay any of its indebtedness to any other entity or shall default in the performance or observance of the terms of any

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instrument pursuant to which such indebtedness was created or securing such indebtedness, beyond any period of grace applicable thereto, if the effect of such default is to accelerate, or to give to the holder thereof the right to accelerate, the maturity of any such indebtedness; or

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

(j) any conservator or receiver shall be appointed for the Borrower or any Banking Subsidiary under applicable federal or state law applicable to banks, thrifts, or their holding companies, or any Banking Subsidiary shall suspend payment of its obligations, or any Banking Subsidiary shall cease to be a federally insured depositary institution, or any informal or formal administrative agreement or court order, temporary or permanent, is issued against the Borrower or any Subsidiary by any federal or state regulatory agency or court having jurisdiction or control over the Borrower or such Subsidiary involving activities deemed to be unsafe or unsound or a breach of fiduciary duty under applicable law or regulation, such action taking the form of, but not limited to: (i) a memorandum of understanding, (ii) a cease and desist order, (iii) the termination of insurance coverage of customer deposits by the FDIC, (iv) the suspension or removal of any executive officer or director, or the prohibition of participation by any others in the business affairs of the Borrower or such Subsidiary, or (v) a capital maintenance agreement or any agreement limit or prohibiting the payment of dividends to the Borrower by any of its Subsidiaries; or

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

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

Section 8.3. Bankruptcy Defaults. When any Event of Default described in subsection (e) or (f) of Section 8.1 has occurred and is continuing, then the Notes, including both principal and interest, and all other Obligations payable under the Loan Documents, shall immediately become due and payable without presentment, demand, protest or notice of any

-18-

kind, and the obligation of the Bank to extend further credit pursuant to any of the terms hereof shall immediately terminate. In addition, the Bank may exercise any and all remedies available to it under the Loan Documents or applicable law.

SECTION 9. MISCELLANEOUS.

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

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

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

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

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

-19-

telecopy or by other telecommunication device capable of creating a written record of such notice and its receipt. Notices hereunder shall be addressed:

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

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

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

Section 9.7. Binding Nature, Governing Law, Etc. This Agreement may be executed in any number of counterparts, and by different parties hereto on separate counterpart signature pages, and all such counterparts taken together shall be deemed to constitute on and the same instrument. This Agreement shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Bank and the benefit of its successors and assigns, including any subsequent holder of the Obligations. The Borrower may not assign its rights hereunder without the written consent of the Bank. This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and any prior agreements, whether written or oral, with respect thereto are superseded hereby. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

Section 9.8. Submission to Jurisdiction; Waiver of Jury Trial. The Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Northern District of Illinois and of any Illinois State court sitting in the City of Chicago for purposes of all legal proceedings arising out of or relating to the Loan Documents or the transactions contemplated thereby. The Borrower irrevocably waives, to the fullest extent permitted by law,

-20-

any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. THE BORROWER AND THE BANK HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.

[SIGNATURE PAGE TO FOLLOW]

-21-

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

Dated as of this 30th day of November, 2003.

MIDWESTONE FINANCIAL GROUP, INC.
By
	Name	/S/    CHARLES S. HOWARD
	Title	President and CEO

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

HARRIS TRUST AND SAVINGS BANK
By
	Name	/S/    DONALD J. BERKEMA
	Title	Vice President

-22-

EXHIBITA

REVOLVING CREDIT NOTE

	Chicago, Illinois
$9,000,000	November     , 2003

On the Termination Date, for value received, the undersigned, MIDWESTONE FINANCIAL GROUP, INC., an Iowa corporation (the “Borrower”), hereby promises to pay to the order of HARRIS TRUST AND SAVINGS BANK (the “Bank”) at its office at 111 West Monroe Street, Chicago, Illinois, the principal sum of (i) Nine Million Dollars ($9,000,000), or (ii) such lesser amount as may at the time of the maturity hereof, whether by acceleration or otherwise, be the aggregate unpaid principal amount of all Revolving Loans owing from the Borrower to the Bank under the Revolving Credit provided for in the Credit Agreement hereinafter mentioned.

This Note is issued in substitution and replacement for, and evidences the indebtedness currently evidenced by, that certain Revolving Credit Note of the Borrower dated June 30, 2000, in the principal amount of $9,000,000. This Note evidences additional Revolving Loans made or to be made to the Borrower by the Bank under the Revolving Credit provided for under that certain Second Amended and Restated Credit Agreement dated as of November     , 2003, between the Borrower and the Bank (said Credit Agreement, as the same may be amended, modified or restated from time to time, being referred to herein as the “Credit Agreement”), and the Borrower hereby promises to pay interest at the office described above on such Revolving Loans evidenced hereby at the rates and at the times and in the manner specified therefor in the Credit Agreement.

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

The Borrower hereby promises to pay all costs and expenses (including attorneys’ fees) suffered or incurred by the holder hereof in collecting this Note or enforcing any rights in any collateral therefor. The Borrower hereby waives presentment for payment and demand. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

MIDWESTONE FINANCIAL GROUP, INC.
By
	Name
	Title

EXHIBIT B

TERM NOTE

	Chicago, Illinois
$6,000,000.00	November     , 2003

FOR VALUE RECEIVED, the undersigned, MIDWEST ONE FINANCIAL GROUP, INC., an Iowa corporation (the “Borrower”), promises to pay to the order of HARRIS TRUST AND SAVINGS BANK (the “Bank”) at its office at 111 West Monroe Street, Chicago, Illinois, the principal sum of Six Million and no/100 Dollars ($6,000,000.00) in six (6) consecutive semi-annual principal installments in amounts and on dates set forth in Section 1.2 of the Credit Agreement hereinafter referred to, with a final installment in the amount of all principal not sooner paid due on November 30, 2006, the final maturity hereof.

This Note evidences the Term Loan made to the Borrower by the Bank under that certain Second Amended and Restated Credit Agreement dated as of November     , 2003, between the Borrower and the Bank (said Credit Agreement, as the same may be amended, modified or restated from time to time, being referred to herein as the “Credit Agreement”), and the Borrower hereby promises to pay interest at the office described above on such Term Loan evidenced hereby at the rates and at the times and in the manner specified therefor in the Credit Agreement.

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

The Borrower hereby promises to pay all reasonable costs and expenses (including attorneys’ fees) suffered or incurred by the holder hereof in collecting this Note or enforcing any rights in any collateral therefor. The Borrower hereby waives presentment for payment and demand. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

MIDWESTONE FINANCIAL GROUP, INC.
By
	Name
	Title

SCHEDULE 5.2

SUBSIDIARIES

NAME	JURISDICTION OF INCORPORATION	PERCENTAGE OWNERSHIP
MidWest One Bank & Trust Company (f/k/a Mahaska State Bank)	Iowa	100%
Central Valley Bank	United States of America	100%
MIC Financial, Inc.	Iowa	100%
Pella State Bank	Iowa	100%
Midwest One Bank (successor in interest to Midwest Federal Savings & Loan)	Iowa	100%

EX-11

Exhibit 11

MIDWESTONE FINANCIAL GROUP

AND SUBSIDIARIES

STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS

	2003		2002	2001
Earnings per Share Information:
Weighted average number of shares outstanding during the year		3,852,935	3,890,891	3,951,271
Weighted average number of shares outstanding during the year including all dilutive potential shares		3,962,134	3,974,818	3,986,156
Net earnings	$	5,925,997	5,789,111	4,355,664
Earnings per share - basic	$	1.54	1.49	1.10
Earnings per share - diluted	$	1.50	1.46	1.09

EX-13

Exhibit 13

Financial Highlights

Year Ended December 31 (in thousands, except per share data)	2003			2002		2001		2000		1999
Summary of Income Data
Interest income excluding loan pool participations	$	28,593		27,482		30,510		31,551		21,162
Interest and discount on loan pool participations		8,985		10,058		9,595		7,275		7,668
Total interest income		37,578		37,540		40,105		38,826		28,830
Total interest expense		14,767		17,027		21,427		21,427		13,195
Net interest income		22,811		20,513		18,678		17,399		15,635
Provision for loan losses		589		1,070		1,776		892		3,628
Other income		4,358		3,787		4,287		2,566		1,947
Other operating expenses		17,387		14,426		14,467		13,313		10,462
Income before income tax		9,193		8,804		6,722		5,760		3,492
Income tax expense		3,267		3,015		2,366		1,759		1,270
Net income	$	5,926		5,789		4,356		4,001		2,222
Per Share Data
Net income - basic	$	1.54		1.49		1.10		0.99		0.58
Net income - diluted		1.50		1.46		1.09		0.99		0.56
Cash dividends declared		0.64		0.64		0.60		0.60		0.60
Book value		14.84		14.17		13.12		12.51		11.59
Net tangible book value		11.08		11.53		10.37		9.54		8.62
Selected Financial Ratios
Net income to average assets		0.98	%	1.07	%	0.82	%	0.81	%	0.64	%
Net income to average equity		10.52	%	10.91	%	8.59	%	8.18	%	5.29	%
Dividend payout ratio		41.56	%	42.95	%	54.55	%	60.61	%	103.45	%
Total shareholders’ equity to total assets		9.01	%	10.37	%	9.32	%	9.59	%	10.33	%
Tangible shareholders’ equity to tangible assets		6.88	%	8.60	%	7.51	%	7.48	%	7.90	%
Tier 1 capital ratio		11.20	%	14.67	%	9.95	%	10.58	%	11.42	%
Net interest margin		4.10	%	4.10	%	3.84	%	3.87	%	4.89	%
Gross revenue of loan pools to total gross revenue		21.42	%	24.34	%	21.61	%	17.58	%	24.91	%
Allowance for loan losses to total loans		1.29	%	1.30	%	1.05	%	0.94	%	1.42	%
Non-performing loans to total loans		0.83	%	0.86	%	1.08	%	0.95	%	1.71	%
Net loans charged off to average loans		0.08	%	0.15	%	0.42	%	0.65	%	1.14	%
December 31 (in thousands)	2003			2002		2001		2000		1999
Selected Balance Sheet Data
Total assets	$	623,306		537,026		545,160		513,814		486,368
Total loans net of unearned discount		377,017		306,024		322,681		312,081		282,091
Total loan pool participations		89,059		82,341		110,393		74,755		67,756
Allowance for loan losses		4,857		3,967		3,381		2,933		4,006
Total deposits		453,125		395,546		378,645		370,144		348,672
Total shareholders’ equity		56,144		55,698		50,827		49,295		50,235

Company Information,

Auditor’s Report

MidWestOne Financial Group, Inc. Common Stock

trades on the Nasdaq National Market and the quotations are furnished by the Nasdaq system. There were 442 shareholders of record on December 31, 2003, and an estimated 1,100 additional beneficial holders whose stock was held in street name by brokerage houses.

Nasdaq Symbol OSKY

Market Participants

Howe Barnes Investments, Inc.

RBC Dain Rauscher, Inc.

Knight Equity Markets, L.P.

Schwab Capital Markets

Goldman, Sachs & Co.

National Stock Exchange

Wien Securities Corp.

Archipelago Exchange (The)

THE BRUT ECN, LLC

B-Trade Services, LLC

Corporate Headquarters

222 1st Avenue East

P.O. Box 1104

Oskaloosa, IA 52577

(641) 673-8448

www.midwestonefinancial.com

Annual Shareholders’ Meeting

April 30, 2004, 10:30 a.m.

Elmhurst Country Club

2214 South 11th Street

Oskaloosa, IA 52577

Wall Street Journal and Other Newspapers

MdWstOneFnl or MdWsOnFn

Transfer Agent/Dividend Disbursing Agent

Illinois Stock Transfer Company

209 West Jackson Boulevard

Suite 903

Chicago, IL 60606

(312) 427-2953

(800) 757-5755

Independent Auditor

KPMG LLP

2500 Ruan Center

Des Moines, IA 50309

Annual Report Design

J.W. Morton & Associates

Cedar Rapids, IA

The following table sets forth the quarterly high and low sales per share for the Company’s stock during 2003 and 2002.

’03 Quarter Ended	High		Low
March 31	$	16.59	$	15.47
June 30		16.40		14.95
September 30		18.09		15.97
December 31		19.00		17.95

[GRAPHIC APPEARS HERE]

’02 Quarter Ended	High		Low
March 31	$	13.64	$	11.10
June 30		14.52		13.15
September 30		14.30		11.70
December 31		16.23		13.36

As of December 31, 2003, the Company had 3,782,708 shares of Common Stock outstanding. On December 31, 2002, there were 3,930,508 shares outstanding. The Company has declared per share cash dividends with respect to its Common Stock as follows:

Quarter	1st		2nd		3rd		4th
2003	$	.16	$	.16	$	.16	$	.16
2002	$	.16	$	.16	$	.16	$	.16

Independent Auditor’s Report

To the Board of Directors of MidWestOne Financial Group, Inc.:

We have audited, in accordance with the auditing standards generally accepted in the United States of America, the consolidated balance sheets of MidWestOne Financial Group, Inc. as of December 31, 2003 and 2002, and the related consolidated statements of income, changes in stockholders equity and comprehensive income and cash flows for each of the years in the three year period ended December 31, 2003 (not presented herein); and in our report dated February 13, 2004, we expressed an unqualified opinion on those consolidated financial statements.

In our opinion, the information set forth in the condensed consolidated financial information appearing on pages 9 through 11 is fairly presented, in all material respects, in relation to the consolidated financial statements from which it has been derived.

KPMG LLP

KPMG LLP

Des Moines, Iowa

February 13, 2004

Copies of the MidWestOne Financial Group Inc. Annual Report to the Securities and Exchange Commission Form 10-K will be mailed when available [ILLEGIBLE] to shareholders upon [ILLEGIBLE] request to [ILLEGIBLE], Secretary/Treasurer at the corporate headquarters. It is also available on the Securities and Exchange Commission’s Internet web site at [ILLEGIBLE]

EX-14

Exhibit 14

[GRAPHIC APPEARS HERE]

Code of Ethics and Business Conduct for

Directors, Officers and Employees

of

MidWestOne Financial Group, Inc.

and

Subsidiaries

Page 1 of 9

Ethics Quick Test

MidWestOne Financial Group, Inc. (the “Company” or “MidWestOne”) values integrity and wants to maintain its reputation for doing the right thing. If you are ever in a situation where the right thing is unclear, ask for clarification or examine your options with the Ethics Quick Test:

• Could it harm MidWestOne’s reputation?

• Is it legal and is it the right thing to do?

• How would it look in the newspaper or on the news?

• How would my friends, family, the community or shareholders view it?

• Is it consistent with the Company’s mission statement, policies and Personnel Policy Handbook?

• Should I check?

MidWestOne’s reputation, and your conscience and good name, are far too valuable for you to do anything that would not pass the Ethics Quick Test. In a nutshell, this means that all of us must tell the truth and fulfill our promises. And we must treat all stakeholders - fellow employees, customers, suppliers, shareholders and our communities - with honesty and respect.

General Policy Statement

MidWestOne Financial Group, Inc. has established this Code of Ethics and Business Conduct (the “Code”). This Code applies to all employees, officers, and directors of the Company and its subsidiaries and is intended to provide such persons with general guidance in fulfilling their ethical responsibilities to the Company. The four main principles that are expressed throughout this Code, and that are the major tenets of all ethical conduct for employees, officers and directors of the Company are:

• Uncompromising Integrity: doing the “right thing” without compromise for our customers, suppliers, and shareholders - even when circumstances make it difficult. We are clear, truthful and accurate in what we say and do.

• Respect: treating one another with respect and dignity; appreciating the diversity of our workforce, our customers and our communities.

• Responsibility: taking accountability for ethical decisions and actions; asking for clarification when necessary and reporting concerns or violations in the workplace.

• Good Citizenship: complying with the spirit and intent of the laws that govern our business; contributing to the strength and wellbeing of our communities and shareholders.

These principles require that employees, officers and directors of the Company act in a manner that will ensure:

• Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

Page 2 of 9

• Avoidance of conflicts of interest, including disclosure to an appropriate person or persons identified in this Code of any material transaction or relationship that reasonably could be expected to give rise to such a conflict;

• Full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission and in other public communications made by the Company;

• Compliance with applicable governmental laws, rules and regulations; and

• Prompt internal reporting of violations of this Code to an appropriate person or persons.

This Code does not summarize or address all ethical questions or specific situations that might arise. Rather, it is designed to provide employees, officers and directors with general guidance on their ethical obligations in the performance of their duties to the Company. Employees, officers and directors should consult with the President or Executive Vice President of MidWestOne Financial Group for more information on issues not addressed in this Code. Please note that all references to the “Company” or “MidWestOne” include MidWestOne Financial Group, Inc. and the Company’s wholly owned subsidiaries.

Policy Compliance and Maintenance

All MidWestOne employees and directors are responsible for reviewing the Code periodically and adhering to the guidelines of the Code. A signed acknowledgement of receiving a copy of this Code will be placed in their employee file.

New hires will review the Code during the New Employee Orientation, and they will sign an acknowledgement that will be placed in their employee file.

Copies of the Code will be in the Personnel Policy Handbook. The Code will also be available at each office location and on the Company’s web site, www.MidWestOneFinancial.com.

Real and Apparent Conflicts Of Interest

All employees, officers, and directors of the Company should be scrupulous in avoiding a conflict of interest with regard to the Company’s interests and maintain their independent judgment in the conduct of the Company’s business. A “conflict of interest” exists whenever an individual’s private interests interfere or conflict in any way (or even appear to interfere or conflict) with the interests of the Company. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her duties objectively and effectively. Conflicts of interest may also arise when an employee, officer or director, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company, whether received from the Company or a third party. Loans to, or guarantees of obligations of, employees, officers and directors and their respective family members and companies or other organizations in which they have an interest, either financial or otherwise, may create conflicts of interest, unless, however, such arrangements are made in

Page 3 of 9

compliance with the rules and regulations of the relevant banking regulatory agencies covering insider loans.

Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by the Audit Committee of the Board of Directors. Employees and officers who become aware of a conflict or the appearance of a conflict should immediately present the situation to his or her immediate supervisor or follow the Company’s Whistleblower Procedures, as the situation merits. Directors who become aware of a conflict or the appearance of a conflict should immediately present the situation to the Audit Committee of the Board of Directors.

Some examples of a conflict of interest include:

• Depriving MidWestOne of a business opportunity for personal gain;

• Using MidWestOne’s name and influence improperly for personal gain or benefit;

• Use of Company equipment, supplies or facilities for personal benefit or unauthorized activities;

• Individually and knowingly processing or authorizing approval of one’s own banking transactions;

• Receiving personal income or benefits from a customer or vendor for services rendered in connection with duties at MidWestOne;

• Knowingly advising customers on investments in businesses which are customers of MidWestOne;

• Acting in a co-fiduciary (trust) capacity or relationship with MidWestOne;

• Purchasing or selling securities of a business, which is a MidWestOne customer, supplier or competitor at more favorable terms than are generally available to the public;

• Making investments in MidWestOne stock on information obtained in the course of one’s employment and not otherwise known to the public;

• Actions which may create an impression of impropriety;

• Misappropriation of money or other properties;

• Deliberate misrouting of checks to delay payment;

• Misposting of an account to favor one’s self or some other party;

• False or misleading entries, records or reports;

• Becoming garnishees in any indebtedness;

• Check kiting (making use of fictitious balances by drawing against uncollected funds);

• Writing checks against insufficient funds;

• Any other similar abuses of personal financial responsibility; or

• Withholding information regarding the commission of such acts by other MidWestOne employees.

Employees, officers, and directors should not seek or accept for their own benefit, or for the benefit of any immediate family member, any favors, preferential treatment, special benefits, special documents, gifts or other consideration as a result of their association with the Company or any company that does business with the Company, except those usual and normal benefits directly provided by the Company or any such entities. Employees, officers and directors must comply with the Company’s Bank Bribery Act and Conflicts of Interest Policy, a copy of which

Page 4 of 9

is available at each office location. Please contact your bank’s Compliance officer if you would like an additional copy of the policy.

Corporate Opportunities

Employees, officers and directors are prohibited from:

• Taking for themselves personally opportunities that properly belong to the Company or that are discovered through the use of corporate property, information or position;

• Using corporate property, information or position for personal gain; and

• Competing with the Company.

Confidentiality

Employees, officers, and directors of the Company must not disclose any confidential information entrusted to them by the Company, a customer of the Company or any other party that the Company does business with, to any third party, except when disclosure is authorized by the Company’s Privacy Policy, a copy of which is available at each bank office location, the President or Executive Vice President of MidWestOne, or in compliance with laws, regulations or legal proceedings. Such information includes, among other things, customer information, information relating to proposed, ongoing or completed transactions of the Company, trade secrets, confidential financial information of the Company and business plans. Whenever feasible, employees, officers and directors should consult with the Company’s President or Executive Vice President if they believe they have a legal obligation to disclose confidential information. Confidential information includes all non-public information that might be of use to competitors of the Company, or harmful to the Company or its customers if disclosed.

Insider Trading

Securities laws and regulations prohibit the misuse by anyone of material non-public information when purchasing, selling or recommending securities. Additionally, designated employees, officers and directors must comply with the practices and procedures set forth in the Company’s Insider Trading Policy, a copy of which is available in the Personnel Policy Handbook. Please contact the Company’s Executive Vice President & CFO if you would like an additional copy of the policy.

Fair Dealing

Each employee, officer, and director should endeavor to deal fairly with the Company’s customers, suppliers, competitors, officers and employees. Employees, officers and directors should not take unfair advantage of any other party through fraud, manipulation, concealment,

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abuse of privileged information, misrepresentation or omission of material facts or any other unfair practices.

Protection And Proper Use Of Company Assets

All employees, officers, and directors should protect and safeguard from harm the Company’s assets. Theft, misappropriation or destruction of the Company’s assets is in direct violation of the Company’s obligations to the Company’s stockholders. Employees, officers and directors of the Company should only use the Company’s assets for legitimate business purposes. This includes the use of the Company’s telephones, fax machines, copiers, vehicles, and facilities. For use of Company personal computers, e-mail, and software refer to the MidWestOne Micro Computer/Network Policy a copy is available at each bank office location. Please contact the Company’s Sr. Vice President, Data Processing if you would like an additional copy of the policy. Company resources assigned to you during the course of your employment must be returned upon termination and/or at the request of MidWestOne.

Financial Reporting and Compliance with Laws, Rules, and Regulations

Employees, officers, and directors must comply with all financial reporting and other laws, rules, and regulations applicable to the Company. All business transactions must be reported and disclosed in a manner consistent with generally accepted accounting principles of the United States. All employees, officers and directors must cooperate with and assist the Company’s internal and independent auditors in the performance of their duties to the Company and must comply with all internal control procedures established by the Company for the safeguarding of assets and proper reporting and disclosure of financial information.

It is of critical importance that the Company complies with all of its regulatory disclosure obligations. Filings by the Company with the Securities and Exchange Commission (SEC) and other regulatory bodies must be accurate and timely. Depending on their position with the Company, an employee, officer or director may be called upon to provide necessary information to ensure that the Company’s public reports are complete, fair and understandable. The Company expects employees, officers, and directors to take this responsibility very seriously and to provide prompt and accurate answers to inquiries related to the Company’s public disclosure requirements.

Reporting Accounting Errors or Improprieties

Employees, officers, and directors must comply with all applicable financial reporting and accounting regulations applicable to the Company. If any employee, officer, or director of the Company has concerns or complaints regarding questionable accounting or auditing matters of the Company, including a failure to comply with internal controls of the Company or to cooperate with the Company’s internal or independent auditors, then he or she should submit those concerns or complaints to the Audit Committee of the Board of Directors. Methods for

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anonymous reporting of any such questionable practices are described in the Company’s Whistleblower Procedures. The procedures are available on the Company’s Personnel Policy Handbook. Please contact the Executive Vice President if you would like an additional copy of the procedures.

Reporting Illegal Or Unethical Behavior

Employees are encouraged to talk to supervisors, managers or other appropriate personnel about observed illegal or unethical behavior and about the appropriate ethical conduct in a particular situation. Employees, officers or directors who are concerned that violations of this Code or that other illegal or unethical conduct by employees, officers, or directors of the Company have occurred or may occur must contact their supervisor, superiors or the Audit Committee of the Board of Directors. If employees or officers do not believe it appropriate, or are not comfortable approaching their supervisors or superiors about their concerns or complaints, then they must contact the Executive Vice President or the Audit Committee of the Board of Directors of the Company as outlined in the Company’s Whistleblower Procedures. If an employee’s, officer’s, or director’s concerns or complaints require confidentiality, then this confidentiality will be protected, subject to applicable law, regulation or legal proceedings.

Contact Information

• Immediate supervisor or supervisor’s manager

• Human Resources – Marcie Jones (641) 673-1587 or mjones@mwofg.com

• Internal Auditor – Bryce Abbas (641) 673-1535 or babbas@mwofg.com

• Audit Committee Chairperson – Richard Donohue (641) 672-2523 or dickd@tdtpc.com

• Corporate Counsel – John Hintze (515) 246-0309 or jhintze@ahlerslaw.com

• President & CEO – Charles Howard (641) 673-1538 or choward@mwofg.com

• Executive Vice President & CFO – David Meinert (641) 673-1522 or dmeinert@mwofg.com

• MidWestOne Ethics Hotline – (To be determined)

General Conduct Prejudicial to the Company

Directors, officers, and employees shall not engage in criminal, infamous, dishonest or notoriously disgraceful conduct, or other conduct prejudicial to the Company.

Discipline

Violations of MidWestOne’s Code of Ethics and Business Conduct compromise our reputation in the marketplace and may affect our success. Violations of this Code will be subject to such disciplinary action as appropriate following an investigation of all relevant facts and circumstances surrounding the violation.

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• Any director, officer, or employee of a Company subsidiary or non-officer employee of MidWestOne Financial Group who violates the Code will be subject to such disciplinary action as the Company’s President and CEO determines appropriate. Disciplinary actions taken by the President will be reported, in writing, to the Audit Committee and noted in the minutes of its next meeting.

• Officers of MidWestOne Financial Group, except the President and CEO, and Executive Vice President and CFO, who violate the Code will be subject to disciplinary action as determined appropriate by the Company’s Audit Committee.

• Violations of the Code by the Company’s President and CEO, or the Executive Vice President and CFO will be subject to such disciplinary action as determined by the Board of Directors of MidWestOne.

You are expected to cooperate fully with all inquiries and investigations. Such disciplinary action may include suspension, suspension without pay, censure, or any other action that the President, Audit Committee, or Board of Directors deems appropriate, including termination from the Company.

Waivers of the Code

Waivers of MidWestOne’s Code of Ethics and Business Conduct, whether implicit or explicit, are generally prohibited.

• Waivers of the Code for any director, officer, or employee of a Company subsidiary or non-officer employee of MidWestOne Financial Group may be granted by Company’s President and CEO. Waivers approved by the President will be reported, in writing, to the Audit Committee and noted in the minutes of its next meeting.

• Waivers of the Code for any Officer of MidWestOne Financial Group, except the President and CEO, and Executive Vice President and CFO, may be granted by the Company’s Audit Committee.

• The Board of Directors of MidWestOne may grant waivers of the Code for the Company’s President and CEO or Executive Vice President and CFO.

No Retaliation

Confidentiality will be maintained to the fullest extent possible, regardless of the method used to report such conduct. Our demands for excellence and the preservation of our integrity and objectivity are distinguishing characteristics of MidWestOne. We rely on employees and directors to report the discovery of any questionable, fraudulent or illegal activities that violate Company guidelines. Violations should be reported to a member of management within the employee’s division, department or office, to Human Resources or to the MidWestOne Ethics Hotline. If an instance involving a senior officer or director is identified, the report should be made to the Chief Executive Officer or the Chairman of the Audit Committee of the Board of Directors as appropriate. If an instance involving the Company’s auditing practices, securities fraud or public disclosure obligations is identified, the report should be made through the

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MidWestOne Ethics Hotline or directly to the Chairman of the Audit Committee of the Board of Directors. Any retaliation against an employee for reporting a violation or suspected violation of these standards is strictly forbidden. You should contact Human Resources Department if you believe an instance of retaliation has occurred.

Any retaliation against an employee who reports a violation or suspected violation is not tolerated. Allegations of retaliation will be investigated promptly and appropriate disciplinary action, up to and including termination, will be taken in the event of retaliatory acts.

Administration of the Policy

This policy is subject to review and approval by the Audit Committee of the MidWestOne Financial Group, Inc. Board of Directors. Any future amendments or modifications will be reviewed and approved by the Audit Committee for recommendation to the full board for approval.

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EX-21

Exhibit 21

Subsidiaries of MidWestOne Financial Group, Inc.

Subsidiary Name	Name Under Which Doing Business	State or Other Jurisdiction in which Incorporated
MidWestOne Bank & Trust (f/ka Mahaska State Bank)	—	Iowa
Central Valley Bank	—	Iowa*
MIC Financial, Inc.	—	Iowa
Pella State Bank	—	Iowa
MidwestOne Bank (f/k/a Midwest Federal Savings)	—	Iowa*

* Central Valley Bank and MidWestOne Bank converted from federally-chartered thrifts to Iowa-chartered commercial banks effective January 1, 2004.

EX-23

Exhibit 23

[KPMG Logo]

KPMG LLP

2500 Ruan Center

666 Grand Avenue

Des Moines, IA 50309

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors

MidWestOne Financial Group, Inc.:

We consent to incorporation by reference in the Registration Statement (No. 333-59510) Form S-8 and Form 10-K of MidWestOne Financial Group, Inc. and subsidiaries, our report dated February 13, 2004, relating to the consolidated balance sheets of MidWestOne Financial Group, Inc. and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of income, changes in shareholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2003 which report appears in the Proxy dated March 26, 2004.

/S/    KPMG LLP

March 29, 2004

Des Moines, Iowa

[Logo]

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934.

I, Charles S. Howard, President and Chief Executive Officer, certify that:

1. I have reviewed this annual report on Form 10-K of MidWestOne Financial Group, Inc.;

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

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

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

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

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 26, 2004	/s/    CHARLES S. HOWARD
	Charles S. Howard
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of the Chief Financial Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934.

I, David A. Meinert, Executive Vice President and Chief Financial Officer, certify that:

1. I have reviewed this annual report on Form 10-K of MidWestOne Financial Group, Inc.;

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

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

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

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

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 26, 2004	/s/    DAVID A. MEINERT
	David A. Meinert
	Executive Vice President and
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934 and 18 U.S.C., Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

I hereby certify that the accompanying Report of MidWestOne Financial Group, Inc. on Form 10-K for the year ended December 31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of MidWestOne Financial Group, Inc.

/s/    CHARLES S. HOWARD

Charles S. Howard

Chairman, President &

Chief Executive Officer

/s/    DAVID A. MEINERT

David A. Meinert

Executive Vice President &

Chief Financial Officer