May 2002

To:  Our Stockholders

The  highlight  of this past  quarter was the pace of growth we  experienced  at
Cedar Rapids Bank and Trust Company  (CRBT),  our newly  chartered bank in Cedar
Rapids,  Iowa.  CRBT  finished the quarter with $55.0  million in assets,  $36.9
million in net loans,  and $36.4  million in deposits.  We believe the market is
reacting  very  positively  to our high touch style of banking.  You will recall
that CRBT was granted its Iowa state banking charter in September 2001.

The  arbitration  dispute at Quad City Bancard,  Inc. was settled in February of
2002.  The after  tax cost of the  settlement  this  quarter  was  approximately
$175,000,  or $.06 per share.  While  management  continued  to believe that the
claims were without  merit, a  determination  was made that a settlement at that
time was the most cost effective option for the company.

Despite  the  anticipated  continuing  start up losses  at CRBT and the  Bancard
settlement costs,  basic earnings per share for the quarter ended March 31, 2002
were $.22 as compared to $.28 for the March 31, 2001  quarter.  Our net interest
income grew to $4.0 million for the current  quarter as compared to $3.0 million
a year ago. While interest income decreased  slightly from a year ago,  interest
expense  decreased by $1.2 million or 27% despite greater  average,  outstanding
balances  in  interest  bearing   liabilities.   Earnings  were  strong  in  our
residential  real  estate  department  as gains on sales  of  loans,  net,  were
$418,000 for the quarter as compared to $314,000  for the prior year's  quarter.
It should also be noted that our provision for loan loss expense was $498,000 as
compared  to  $148,000 a year ago,  reflecting  an increase in loan totals and a
continuing soft economy.

Earnings  per  share  for the nine  months  ended  March  30,  2002 were $.73 as
compared to $.72 in fiscal  2001.  While  non-interest  income and net  interest
income increased,  these  improvements were somewhat offset by the CRBT start up
losses of $900,000, plus the legal fees and settlement costs at Bancard.

We are optimistic  regarding future earnings as CRBT is quickly growing into its
overhead  structure and the arbitration  costs at Bancard are over.  While it is
difficult to predict that  residential  real estate  activity will remain at the
past year's levels,  interest rates are still near historic lows suggesting that
purchase and refinancing volumes may remain strong.

Consolidated  assets grew by $94.6 million or 24% to $495.5 million at March 31,
2002 from $400.9  million at the end of our prior  fiscal  year,  June 30, 2001.
Total  assets at March 31, 2001 were  $406.7  million.  Total  loans  receivable
increased  by $72.3  million  or 25% to $360.2  million  at March 31,  2002 from
$287.9 million at June 30, 2001.  Deposits  increased by $61.9 million or 20% to
$364.0 million at March 31, 2002 from $302.1 million at June 30, 2001.

While the  Nasdaq  and S & P 500 have  returned  to their  lowest  points  since
October 2001,  our stock has steadily  risen to above $13 at this  writing.  Our
private  placement  shareholders,  who invested at $11 in September  2001,  have
experienced approximately a 20% return over the eight-month period.

Certain  economic  signals  suggest we are pulling out of the  recession.  Gross
domestic  product (GDP)  increased by 5.8% for the March 2002 quarter.  Consumer
spending and income grew by .4% during the month of March 2002. It appears to us
that  business  investment  spending  will  need to  increase  to  complete  the
recovery.  Business  inventories  have been  replenished from the bottom levels,
however we are not sure this reflects a return in demand for those products.

While we expect corporate profits to be modest throughout 2002, reported profits
may be less than expected due to increased scrutiny by external auditors.  After
the  Enron/Arthur  Andersen  debacle,  it  appears  that the  public  accounting
profession will take a much closer look at the accounting  methods and estimates
used by publicly traded companies.  Arthur Andersen, once the crown jewel of the
public accounting profession,  appears on the verge of crumbling in light of its
problems with its audits of Enron,  Waste Management,  Sunbeam,  and the Baptist
Foundation of Arizona.  Unfortunately,  many hard working and talented employees
and retirees will suffer although they had no part in the wrongdoing.  We should
expect much needed reform in this profession soon.

For the first time in over a year,  we  experienced  no rate cuts by the Federal
Reserve this quarter.  Many  economists  are  predicting  higher  rates,  but it
appears  Chairman  Greenspan will require  continuing  strong  economic  signals
before calling for rate increases.

Thanks again to our customers,  stockholders, and employees for your loyalty and
support. We remain optimistic about our future.


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