Exhibit 99.1



August 2004

To:  Our Stockholders

The highlight of this quarter was our  announcement,  in June, that we intend to
create  our  third  charter  in  Rockford,  Illinois.  We  identified  a  market
opportunity and were able to recruit  executives from the two largest  financial
institutions  in the  market.  Rockford  Bank and Trust  Company  will  focus on
providing  the  highest  levels of  customer  service to  commercial  and retail
clients  in the  Rockford  market,  and will  share the Quad City Bank and Trust
Company  and  Cedar  Rapids  Bank  and  Trust   Company   strategy  of  creating
personalized banking relationships with a team of outstanding local bankers.

Mr. Thomas Budd  (formerly of Bank One) will be the President and CEO of the new
bank,  while Mr. Shawn Way  (formerly  of Amcore  Bank) will be  Executive  Vice
President.  The Bank expects to operate  initially as a branch of Quad City Bank
and Trust Company,  while an application  for a new bank charter is reviewed and
approved by the regulators.

Tom Budd and Shawn Way are lifelong  residents of Rockford,  and have a combined
30 plus  years of  banking  experience  in the  Rockford  community.  They  will
assemble a team of talented  bankers and a strong local Board of Directors  that
will  uniquely  position  Rockford  Bank and Trust Company to serve the Rockford
community.

"Shawn and I are extremely excited by the prospect of creating a bank focused on
the  Rockford  community,"  noted Tom Budd.  "We want to create a bank that will
focus on this great  community in which we were both born and raised.  Our roots
and those of our families are firmly  embedded in Rockford and our belief in and
support of the city and its citizens will not waiver," said Budd.

As you likely recall, we announced a 3-for-2 stock split effected in the form of
a fifty percent stock dividend payable on May 28, 2004 to stockholders of record
on May 10,  2004.  The board also  declared a cash  dividend  of $0.04 per share
payable on July 2, 2004 to  stockholders  of record on June 18, 2004. We believe
that the increased number of outstanding shares, as a result of the stock split,
will provide greater liquidity of our shares and broader ownership in our common
stock.

On July 1, 2004, we announced  that QCR Capital  Trust I, a trust  subsidiary of
the Company redeemed all of its 9.2% trust preferred  securities at a redemption
price of $10 plus all accrued and unpaid interest. These securities,  which were
issued in 1999, were redeemed on June 30, 2004. In February 2004, we issued $8.0
million in floating  rate and $12.0 million in fixed rate trust  securities.  In
anticipation of the  redemption,  in the first quarter we expensed $747 thousand
of unamortized issuance costs associated with the securities issued in 1999.

We are  pleased to report that during the  quarter  QCRH  welcomed  Bill Tank as
Senior  Vice  President  of Credit  Administration.  Bill is a  25-year  banking
veteran and was previously  responsible for key credit  departments in the Wells
Fargo and Commercial Federal organizations.

While  earnings for the six-months  ended June 30, 2004 were  comparable to June
30, 2003, we were very pleased with these results.  As mentioned above, in March
of 2004 we  wrote  off $747  thousand  of  issuance  costs  associated  with our
trust-preferred  securities issued in 1999. In addition,  we incurred additional
interest  expense  these  past five  months as a result  of having  both  issues
outstanding.  The combination of these factors  resulted in a reduction of basic
earnings per share of $0.17 during the six-month period. Also, as interest rates
have increased,  we have seen a reduction in mortgage  origination  activity and
thus reduced gains on sales of residential mortgage loans.

Earnings for the second  quarter  ended June 30, 2004 were $1.7 million or basic
earnings per share of $0.40.  For the same quarter a year ago, our earnings were
identical  and  earnings  per share were $0.41.  All share and per share data in
this report have been retroactively adjusted to reflect the 3-for-2 common stock
split, which occurred on May 28, 2004, as if it had occurred on January 1, 2003.
For the six months,  basic  earnings per share were $0.60 as compared to $0.61 a
year ago.

Excluding  the  one-time  write off of the  unamortized  issuance  costs and the
additional  interest costs of the new securities,  net income for the six months
ended  June 30,  2004  would have been $0.76  basic  earnings  per share,  a 25%
improvement  over  earnings  for the same period in 2003.  While  excluding  the
impact of this  event is a  non-GAAP  measure,  management  believes  that it is
important to provide such  information due to the  non-recurring  nature of this
expense and to more accurately compare the results of the periods presented.

As we look forward into the  remainder of 2004,  it appears we will be presented
with continuing  declines in the gains on residential real estate loans, and the
coming months will bring  significant  investments in establishing  our new bank
charter in  Rockford,  Illinois  and in  additional  facilities  at our existing
subsidiary banks.


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The company  continues  to  experience  outstanding  growth,  with total  assets
increasing  at an  annualized  rate of 29%  during the first six months of 2004.
Total assets increased from $710 million at December 31, 2003 to $811 million at
June 30, 2004.  Non-performing assets increased to $6.7 million at June 30, 2004
from $5.0  million at  December  31,  2003.  We continue to focus our efforts on
improving the overall quality of our loan portfolio.  Total deposits declined to
$509 million at June 30, 2004 compared to $512 million at December 31, 2003.

Cedar Rapids Bank and Trust continues to be a significant component to our rapid
growth,  reaching  total assets of $188  million,  net loans of $141 million and
deposits of $116 million as of June 30, 2004.  The bank  reported  after tax net
income  of $215 for the  second  quarter,  as  compared  to $114  for the  first
quarter.  Cedar Rapids Bank and Trust is also  growing its physical  presence in
the market with  construction  under way of a new main office in downtown  Cedar
Rapids and construction of a branch office to begin later in 2004.

On June 30th, the Federal Reserve issued an upbeat statement, accompanied by one
of the most widely  anticipated rate actions in history.  To summarize,  the fed
funds rate was  raised to 1.25%,  the Fed  affirmed  its  accommodative  stance,
output is  expanding,  labor  markets  have  improved,  underlying  inflation is
relatively  low,  and  "policy  accommodation  can be  removed at a pace that is
likely to be measured [though] the Committee will respond to changes in economic
prospects as needed..."

Of  particular  concern to some  analysts  is the  increase  in  adjustable-rate
financing, particularly among new homeowners.  Traditionally the province of the
soon-to-move,  adjustable  mortgages now comprise about  one-third of the total.
Even  for  those  not in the  soon-to-move  category,  climbing  rates  will not
instantaneously  raise all  payments and  threaten  liquidity.  There will be an
effect on some  borrowers,  but we think  the  overall  effect  will be muted by
income growth and other positives.

Since 2004 is an  election  year,  we will hear much about tax  policy,  deficit
spending, health care and defense. We hope that politics or terrorism do not get
in the way of a recovering economy.

It was a pleasure seeing so many of you at our May shareholders meeting.  Thanks
to all of you for your continued support.


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