This report may contain certain forward-looking statements, including without limitation, statements regarding results of operations, the adequacy of the allowance for loan losses, the amounts of charge-offs and recoveries, capital to assets ratios, capacity for paying dividends and liquidity. These forward-looking statements are inherently uncertain and actual results may differ from Company expectations. The following factors which, among others, could impact current and future performance include but are not limited to: (i) adverse changes in asset quality and resulting credit risk-related losses and expenses; (ii) adverse changes in the local economy; (iii) fluctuations in market rates and prices which can negatively affect net interest margin, asset valuations and expense expectations; and (iv) changes in regulatory requirements of federal and state agencies applicable to banks and bank holding companies, which could have materially adverse effects on the Company's f uture operating results. When relying on forward-looking statements to make decisions with respect to the Company, investors and others are cautioned to consider these and other risks and uncertainties. All forward-looking statements contained in this report are based upon information presently available and the Company assumes no obligation to update any forward-looking statements.

8

The following table sets forth major types of loans (excluding loans held for sale) by primary collateral and the percentage of total loans for each type:

Loans secured by residential properties declined by $8.3 million during the first six months as borrowers continue to choose fixed rate loans for fifteen or thirty years during this historically low interest rate environment. The Bank sells substantially all of these fixed rate mortgage loans to the secondary mortgage market. Loans secured by commercial properties decreased by $3.9 million during the first six months of 2003. A commercial borrower refinanced $2.9 million with another financial institution during the first quarter. During the first six months, several agricultural borrowers secured their loans with real estate in order to lengthen the amortization period and reduce the payment amount. This resulted in an increase in agricultural loans secured by real estate and a decrease in other agricultural loans.

The allowance for credit losses increased by $321,042 during the six-month period ended June 30, 2003. The allowance equals 2.25% of total loans at June 30, 2003, compared to 2.06% at December 31, 2002. Nonaccrual loans totaled $6,313,733 at June 30, 2003, an increase of $223,241 compared to December 31, 2002. The Company's ratio of loans more than 30 days past due (including nonaccrual loans) to total loans was 3.93% at June 30, 2003 compared to 3.87% at December 31, 2002. As of June 30, 2003, management has identified $15.4 million of potential problem loans compared to $13.9 million at year-end. Potential problem loans are loans that are performing but have a greater risk of nonperformance.

Demand deposits increased $16,048,300 or 51.4% during the first six months of 2003. The increase in demand deposits is attributable to a large commercial depositor whose balance as of June 30, 2003, was $15.6 million higher than at December 31, 2002. Interest bearing deposits increased by $859,038 or 0.4% between December 31, 2002, and June 30, 2003.

Stockholders' equity increased by $1,786,098 to $37,935,682 as of June 30, 2003. As of June 30, 2003, the Company's leverage ratio was 10.4%, the risk-based core capital ratio was 13.8% and the risk-based total capital ratio was 15.1%. The Company and the Bank continue to maintain capital levels well above the regulatory minimum levels.

10

Liquidity refers to the ability of the Company to generate adequate amounts of cash to meet the Company's needs for cash. Cash and cash equivalents increased by $4,642,814 during the first six months of 2003. The major sources and uses of cash are detailed in the accompanying Consolidated Statements of Cash Flows. The federal funds sold totaling $27.0 million and the available-for-sale investment portfolio amounting to $15.7 million as of June 30, 2003, are readily convertible to cash if needed for liquidity purposes.

In addition to on-balance sheet sources of funds the Company also has off-balance sheet sources available to meet liquidity needs. The Company has unused lines of credit of $36.4 million as of June 30, 2003. Management believes the Company's liquidity position as of June 30, 2003, is adequate under current economic conditions.

The Company and its subsidiaries are parties to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the statement of financial condition. The contract or notional amounts of those instruments reflect the extent of involvement the Company and its subsidiaries have in particular classes of financial instruments.

The exposure of the Company and its subsidiaries to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of these instruments. The Company and its subsidiaries use the same credit policies in making commitments and conditional obligations as for on-balance sheet instruments. The Company and its subsidiaries require collateral or other security to support financial instruments with credit risk.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company and its subsidiaries evaluate each customer's creditworthiness on a case-by-case basis. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

Standby letters of credit are conditional commitments issued by the bank to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support commercial business transactions. When a customer fails to perform according to the terms of the agreement, the bank honors drafts drawn by the third party in amounts up to the contract amount. A majority of the letters of credit expire within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties and residential properties. All letters of credit are fully collateralized.

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On July 9, 2003, the Bank filed an application with the FDIC and the Wisconsin Division of Banking to establish a full service branch office at 400 High Street, Wrightstown, Wisconsin. Pending approval from the regulators, management anticipates opening the branch for service during the third quarter of 2003.

The Company's primary market risk position has not materially changed from that disclosed in the Company's 2002 Form 10-K Annual Report.

There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of management's evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.