Exhibit 99.3

January 2003

To Our Stockholders:

We are  pleased to present  our tenth  annual  report.  As we have  communicated
previously,  we decided to switch from a June  year-end to a calendar  year-end.
Thus,  December 31, 2002 is our first calendar year-end.  This report covers the
transition  period from July 1, 2002 to December 31, 2002. All of our regulatory
reporting is on a calendar year basis and we will create  efficiencies by moving
our external  financial  reporting to a calendar  year basis as well.  This will
also  align our  year-end  with that of the vast  majority  of  publicly  traded
banking organizations.

There are several  exciting  developments to report to you since our last annual
report.

On October 22, we announced the sale of the Independent Sales Organization (ISO)
related  merchant credit card  operations of our subsidiary,  Quad City Bancard,
Inc.  (Bancard),  to iPayment,  Inc. in a transaction that resulted in a gain of
approximately  $1.3 million or $.47 per share.  Historically,  Bancard's largest
source  of  revenue  has  been  derived  from  providing  merchant  credit  card
processing  to merchants of ISOs.  iPayment had recently  acquired the two large
ISOs that provided nearly 75% of Bancard's ISO processing volume. In addition to
negotiating  the  compensation  we were to  receive  for  the  transfer  of this
processing volume, we decided to sell the processing rights of our remaining ISO
business, as well as the merchant credit card processing  relationships owned by
Bancard's ISO subsidiary, Allied Merchant Services, Inc.

Bancard will continue to provide merchant  processing services for Quad City and
Cedar Rapids area merchants and to  approximately  80 agent banks.  We will also
continue to provide  cardholder  services to customers of Quad City Bank & Trust
and Cedar  Rapids  Bank & Trust,  as well as the agent  banks.  John  Schricker,
President of Bancard, has semi-retired,  and will provide consulting  assistance
to Bancard, while former Executive Vice President,  Bill Brockway has formed his
own ISO. Ron Monahan will now direct the Bancard operations.

At our  stockholders'  meeting  in  October,  we  announced  that  the  Board of
Directors declared the first cash dividend to stockholders. The dividend of $.05
per share was paid on January 3, 2003 to  stockholders of record on December 16,
2002.  It is the  Company's  intention to consider the payment of dividends on a
semi-annual  basis.  While we  anticipate  an ongoing need to retain much of the
Company's  operating income to help provide the capital for continued growth, we
believe  that  operating  results  have  reached  a level  where we can  sustain
dividends to our stockholders as well.

This six month period was quite  strong,  both in terms of operating  income and
asset  growth.  In  addition  to the  one-time  gain  at  Bancard,  the  Company
demonstrated a significant  increase in net interest income of $2.4 million over
the same period in 2001.  Gains on sales of  residential  real estate loans also
contributed  dramatically to our earnings results for the period. Gains on sales
of these  loans were $1.9  million  for these past six months  compared  to $1.2
million  for the  same  period  one  year  ago.  Senior  Vice  President,  Julie
Carstensen  and her staff are to be  commended  for their  efforts  during  this
period of incredibly  high  volumes.  These results were enhanced by an extended
period of extremely low interest  rates.  And, while many economists are calling
for higher interest rates, there is still enough uncertainty in our economic and
political  environment  that  rates  may stay low for some  time.  Even if rates
remain low, we expect  volumes to decrease  as many  refinancings  have  already
taken place at these rates.

Earnings for the six-month period ended December 31, 2002 were $3.2 million,  or
basic earnings per share of $1.16 and diluted  earnings per share of $1.13.  For
the same six months in 2001, the Company reported  earnings of $1.3 million,  or
basic earnings per share of $0.51 and diluted earnings per share of $0.50.

The Company  experienced  tremendous growth during this six-month period of more
than $85 million,  to end calendar year 2002 at $604.6  million in total assets.
In addition to continued  rapid growth at our new bank charter in Cedar  Rapids,
Quad City Bank and Trust grew  significantly  during  the last half of  calendar
2002 to reach the $500  million  milestone in total assets at December 31, 2002,
just prior to Quad City Bank's ninth anniversary.


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The one-time  gain of $1.3 million  from the sale of the  Company's  ISO related
merchant credit card operations  added $.47 to fully diluted  earnings per share
for the quarter and six-month  transition  period ended December 31, 2002. Fully
diluted  earnings  per  share  for  the  six-month  transition  period,  without
considering the one-time gain, were $.66. This  represented a 32% improvement in
earnings per share over the $.50 in fully  diluted  earnings per share  reported
for the same six-month period in 2001. In addition to continued strong operating
results  at Quad  City  Bank & Trust  and  Bancard,  Cedar  Rapids  Bank & Trust
continues to make  outstanding  progress  toward  profitability  after its first
anniversary in September 2002. The new bank's  after-tax  operating  losses were
only $275 thousand for the six months ended December 31, 2002, which continue to
run slightly  better than  anticipated,  while asset growth  continues to exceed
expectations.

Thanks to Cedar Rapids Bank & Trust CEO,  Larry  Helling,  and his staff,  Cedar
Rapids Bank & Trust  continues to be a significant  contributor to the Company's
growth in assets, loans, and deposits since opening in September of 2001. It has
experienced rapid growth in our first fifteen months of operations, and the bank
has reached  total  assets of $92.3  million,  net loans of $72.6  million,  and
deposits  of $64.0  million as of  December  31,  2002.  We  continue to add new
commercial  and retail banking  relationships  at a steady pace in Cedar Rapids,
and we are pleased with the market's  reaction to our strategy of providing  the
highest levels of service and a personalized banking relationship.

The Company's total assets  increased 17% to $604.6 million at December 31, 2002
from  $518.8  million  at June 30,  2002.  During  the same  period,  net  loans
increased by $58.4 million or 15% to $442.9  million from $384.5 million at June
30, 2002.  Nonperforming  assets  increased to $5.0 million at December 31, 2002
from $2.3  million at June 30,  2002.  Total  deposits  increased  16% to $434.7
million at December 31, 2002 from $376.3 million at June 30, 2002. Stockholders'
equity rose to $36.6  million at December 31, 2002 as compared to $32.6  million
at June 30, 2002.

The $2.7 million increase in nonperforming assets from June 30, 2002 to December
31, 2002 was primarily due to two commercial lending  relationships at Quad City
Bank & Trust. The bank is working closely with these customers.  Like many other
financial institutions, some of our customers are experiencing difficulty in the
lagging economy,  which could lead to further increases in nonperforming  assets
and the need for an increased  allowance  for loan losses.  Given the  continued
soft economy,  management is closely monitoring the Company's loan portfolio and
the need for increased provisions for possible loan losses.

Our stock continues to perform well and has traded above $18 per share recently.
It had traded as low as $11 per share in early calendar 2002.  Shortly after the
payment of our initial dividend,  we announced a dividend reinvestment plan that
will allow you to reinvest the dividends paid on our stock if you so elect.  The
purpose of the plan is to provide  you with a simple  and  convenient  method of
investing cash dividends paid by us into additional shares of common stock.

As you have likely read, the  president's  tax plan calls for the elimination of
the double tax on  corporate  dividends.  While this will no doubt  create  much
political  debate,  we do agree that it should be an economic  stimulus to cease
the dual taxation of corporate earnings.

Events on the  international  front raise the tension  level for our leaders and
our  citizens.  North  Korea and Iraq have  electrified  a  political  community
already on edge in the aftermath of September 11, 2001 and its subsequent  focus
on rooting out terrorists. In particular,  events surrounding Iraq echo those of
twelve years ago;  moving closer to military  action  intensifies a debate quite
similar to the earlier era. North Korea remains a different kind of story.

After having been stung by the high-profile  accounting scandals that drove some
of the nation's largest companies into bankruptcy,  Congress  responded with the
Sarbanes-Oxley  Act of 2002,  which President Bush signed into law in July 2002.
This legislation  proposes new corporate governance standards to require tighter
controls and heightened integrity in financial  reporting.  While we are pleased
that our  Company  already had many of these  proposals  in place and has always
conducted  business  with an  emphasis on honesty  and  integrity,  our Board of
Directors  has studied the new  regulations  and has taken steps to meet the new
standards.

The public  accounting  profession also took much of the blame for the corporate
misdeeds and as a result  essentially  lost one of its most  respected  firms in
Arthur  Andersen.  The incoming  chairman of the American  Institute of CPAs has
asked the profession to refocus on core values and have a total  intolerance for
wrongdoing.

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As we look toward our tenth year of operations,  we want to thank our employees,
customers and  stockholders for their long-term  support and loyalty.  We remain
confident  that  community  banks that focus on the  highest  levels of customer
service will continue to enjoy success. Best wishes to all of you in 2003.



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