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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2004

OR

For the transition period from              to             

Commission file number 0-24630

MIDWESTONE FINANCIAL GROUP, INC.

222 First Avenue East

Oskaloosa, IA 52577

Registrant’s telephone number: 641-673-8448

Indicate by check mark whether the registrant (1) has filed all reports required 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of April 30, 2004, there were 3,826,058 shares of common stock $5 par value outstanding.

PART I — Item 1. Financial Statements

MIDWESTONE FINANCIAL GROUP

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION

See accompanying notes to consolidated financial statements.

PART I — Item 1. Financial Statements, Continued

MIDWESTONE FINANCIAL GROUP

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

See accompanying notes to consolidated financial statements.

PART I — Item 1. Financial Statements, Continued

MIDWESTONE FINANCIAL GROUP

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

See accompanying notes to consolidated financial statements.

PART I — Item 1. Financial Statements, Continued

MIDWESTONE FINANCIAL GROUP

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes to consolidated financial statements.

The accompanying consolidated statements of income, the consolidated statements of comprehensive income and the consolidated statements of cash flows for the three months ended March 31, 2004 and 2003 and the consolidated statements of condition as of March 31, 2004 and December 31, 2003 include the accounts and transactions of MidWestOne Financial Group, Inc. (the “Company”) and its five wholly-owned subsidiaries, MidWestOne Bank & Trust, Central Valley Bank, Pella State Bank, MidWestOne Bank, and MIC Financial, Inc. All material intercompany balances and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. Although management believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with the Company’s most recent audited financial statements and notes thereto. In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 2004, and the results of operations and cash flows for the three months ended March 31, 2004 and 2003.

The results for the three months ended March 31, 2004 may not be indicative of results for the year ending December 31, 2004, or for any other period.

In the consolidated statements of cash flows, cash and cash equivalents include cash and due from banks, interest-bearing deposits in banks, and federal funds sold.

Federal income tax expense for the three months ended March 31, 2004 and 2003 was computed using the consolidated effective federal tax rate. The Company also recognized income tax expense pertaining to state franchise taxes payable individually by the subsidiary banks.

Basic earnings per common share computations are based on the weighted average number of shares of common stock actually outstanding during the period. The weighted average number of shares for the three-month periods ended March 31, 2004 and 2003 was 3,798,866 and 3,914,174, respectively. Diluted earnings per share amounts are computed by dividing net income by the weighted average number of shares and all dilutive potential shares outstanding during the period. The computation of diluted earnings per share used a weighted average number of shares outstanding of 3,920,211 and 4,014,405 for the three months ended March 31, 2004 and 2003, respectively.

In December 2003, the American Institute of Certified Public Accountants (“AICPA”) issued a Statement of Position (“SOP”) 03-3, “Accounting for Certain Loan or Debt Securities Acquired in a Transfer”, that addresses the accounting for differences between contractual and expected future cash flows from an investor’s initial investment in certain loans and debt securities. It includes such loans acquired in a transfer if those differences are attributable, at least in part, to credit quality. The SOP limits the yield that may be accreted (accretable yield) to the excess of the investor’s estimate of undiscounted expected future principal and interest cash flows(expected future cash flows) over the investor’s initial investment in the loan. The implementation of this SOP is effective for fiscal years beginning after December 15, 2004, and may have an effect on the Company’s accounting treatment of its Loan Pool Participations. Management is evaluating the effects that the implementation of this SOP will have on the Company’s financial results but does not believe the effects will be material.

In March 2004, the Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”) No. 105, “Application of Accounting Principles to Loan Commitments”. This SAB summarizes the views of the staff regarding the application of accounting principles generally accepted in the United States of America to loan commitments accounted for as derivative instruments. The provisions of this SAB are effective after March 31, 2004. The Company does not expect that the adoption of this SAB will have a material impact on the consolidated financial statements of the Company.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. A significant estimate that is particularly sensitive to change is the allowance for loan losses.

On February 1, 2003, the Company effectively completed its acquisition of the Belle Plaine Service Corp. and its wholly-owned subsidiary Citizens Bank & Trust Company of Hudson, Iowa. The acquisition was treated as a purchase transaction in accordance with FASB Statements No. 141 and No. 142. The following table summarizes the assets acquired and liabilities assumed as of February 1, 2003:

Citizens Bank & Trust was merged into Mahaska State Bank as of the close of business on June 13, 2003. At the time of the merger, Mahaska State Bank adopted the new name of MidWestOne Bank & Trust.

Effective January 1, 2004, the Company’s two thrift subsidiaries, Central Valley Bank and MidWestOne Bank, began operations as commercial banks. The charters of these two institutions were converted to state banks in order to improve operational efficiencies and provide regulatory consistency.

The Company has a stock incentive plan under which up to 750,000 shares of common stock are reserved for issuance pursuant to options or other awards which may be granted to officers, key employees and certain independent directors of the Company. The exercise price of each option equals the market price of the Company’s stock on the date of grant. The option’s maximum term is ten years, with vesting occurring at the rate of thirty-three percent on the one-year anniversary of the date of grant, sixty-six percent vesting on the two-year anniversary, and one hundred percent vesting on the three-year anniversary of the date of the grant. The Company applies APB Opinion No. 25 and related interpretations in accounting for this plan. Accordingly, no compensation cost has been recognized in the financial statements for the stock options.

Had compensation cost for the Company’s stock incentive plan been determined in accordance with FASB Statement No. 123, “Accounting for Stock-Based Compensation,” the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below:

Certain reclassifications have been made to prior year consolidated financial statements in order to conform to current year presentation.

PART I — Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

QUARTER ENDED MARCH 31, 2004

The Company recorded net income of $1,558,000 for the quarter ended March 31, 2004, compared with net income of $1,339,000 for the quarter ended March 31, 2003, an increase of $219,000 or 16 percent. The increase in net income was primarily due to improved net interest margin, which was partially offset by a charge to non-interest expense for the retirement of the president of one of the subsidiary banks. Basic earnings per share for the first quarter of 2004 were $.41 versus $.34 for the first quarter of 2003. Diluted earnings per share for the first quarter of 2004 were $.40 and $.33 for the first quarter of 2003. Actual weighted average shares outstanding were 3,798,866 and 3,914,174 for the first quarter of 2004 and 2003, respectively. The Company’s return on average assets for the quarter ended March 31, 2004 was 1.01 percent compared with a return of .93 percent for the quarter ended March 31, 2003. The Company’s return on average equity was 10.98 percent for the three months ended March 31, 2004 versus 9.60 percent for the three months ended March 31, 2003.

The Company consummated its acquisition of the Belle Plaine Service Corp. (“BPSC”) and its wholly-owned subsidiary Citizens Bank & Trust Company (“CB&T”) effective February 1, 2003. The acquisition was accounted for as a purchase transaction in accordance with Financial Accounting Standards Board (“FASB”) Statement No. 141, with the results of operations from February 1, 2003 forward included in the Company’s consolidated statements of income. On June 13, 2003, Citizens Bank & Trust was merged into Mahaska State Bank (“MSB”) with the resulting entity adopting the new name of MidWestOne Bank & Trust (“MBT”).

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is computed by subtracting total interest expense from total interest income. Fluctuations in net interest income can result from the changes in the volumes of assets and liabilities as well as changes in interest rates. The Company continues to benefit from the historically low market interest rate environment. The Company’s net interest income for the quarter ended March 31, 2004 increased $1,149,000 or 22 percent to $6,418,000 from $5,269,000 for the three months ended March 31, 2003. Total interest income was $531,000 or 6 percent higher in the first quarter of 2004 compared with the same period in 2003 primarily due to an increase in the volume of loans and increased yield on the loan pool participations. The Company’s total interest expense for the first quarter of 2004 decreased $618,000 or 16 percent compared with the same period in 2003 due to the lower interest rate environment. The Company’s net interest margin on a federal tax-equivalent basis for the first quarter of 2004 increased to 4.52 percent from 3.99 percent in the first quarter of 2003. Net interest margin is a measure of the net return on interest-earning assets and is computed by dividing annualized net interest income by the average of total interest-earning assets for the period. The net interest margin rose as the increase in net interest income was proportionately greater than the increase in average earning assets. The Company’s overall yield on earning assets declined to 6.82 percent for the first quarter of 2004 compared with 6.91 percent for the first quarter of 2003. The rate on interest-bearing liabilities decreased in the first quarter of 2004 to 2.56 percent compared to 3.25 percent for the first quarter of 2003.

Interest income and fees on loans increased $43,000 or 1 percent in the first quarter of 2004 compared to the same period in 2003. Average loans were $39,906,000 or 12 percent higher in the first quarter of 2004 compared with 2003. The increase in loan volume reflects the additional loans acquired from the Belle Plaine Service Corp. as well as new loan originations. The new loan volume originated primarily in the Belle Plaine and Waterloo, Iowa markets. Lower interest rates in the first quarter of 2004 compared with

2003 offset the additional loan volume. The average yield on loans decreased to 6.15 percent for the first quarter of 2004, compared to 6.88 percent in the first quarter of 2003. The yield on the Company’s loan portfolio is affected by the amount of nonaccrual loans (which do not earn interest income), the mix of the portfolio (real estate loans generally have a lower overall yield than commercial and agricultural loans), the effects of competition and the interest rate environment on the amounts and volumes of new loan originations, and the mix of variable rate versus fixed rate loans in the Company’s portfolio. The lower interest rates were not beneficial to the Company as variable rate loans tied to prime were adjusted downward and produced less interest income. Renewing fixed-rate loans have been rewritten at lower rates reflecting the market interest rate environment. Additionally, many of the borrowers have refinanced their real estate mortgages outside the Company to take advantage of long-term fixed-rate loans. The Company has typically not retained this type of loan in its portfolio in order to reduce interest rate risk.

Interest and discount income on loan pool participations increased $576,000 or 27 percent in the first quarter of 2004 compared with 2003, as a result of higher yield on loan pool participations. Interest income and discount collected on the loan pool participations for the three months ended March 31, 2004 was $2,735,000 compared with $2,159,000 collected in the first quarter of 2003. Settlements of loans in litigation and collection of non-performing loans remained higher than historical averages during the first quarter of 2004. The yield on loan pool participations was 13.09 percent for the first quarter of 2004 compared with 10.34 percent for the same period in 2003. The average loan pool participation investment balance was $698,000 or 1 percent lower in the first quarter of 2004 than in 2003. These loan pool participations are pools of performing and distressed and nonperforming loans that the Company has purchased at a discount from the aggregate outstanding principal amount of the underlying loans. Income is derived from this investment in the form of interest collected and the repayment of the principal in excess of the purchase cost which is herein referred to as “discount recovery.” The Company recognizes interest income and discount recovery on its loan pool participations on a cash basis. The loan pool participations have traditionally been a high-yield activity for the Company, but this yield has fluctuated from period to period based on the amount of cash collection, discount recovery, and net collection expenses of the servicer in any given period. The income and yield on loan pool participations may vary in future periods due to the volume and discount rate on loan pools purchased.

Interest income on investment securities decreased $68,000 or 6 percent in the quarter ended March 31, 2004, compared with the quarter ended March 31, 2003 due to decreased yield in the portfolio. Interest income on investment securities totaled $1,149,000 for the first quarter of 2004 compared with $1,217,000 in 2003. The average balance of investments in 2004 was $110,121,000, up from $108,031,000 in the first quarter of 2003. The yield on the Company’s investment portfolio in the first quarter of 2004 decreased to 4.42 percent from 4.83 percent in the comparable period of 2003 reflecting new purchases and reinvestment of maturing securities at lower market interest rates. The decline in the overall investment security yield largely offset the additional revenue produced by the increased volume.

Interest expense on deposits was $677,000 less in the first quarter of 2004 compared with 2003 mainly due to the low national and local market interest rate environment. Average interest-bearing deposits for the first quarter of 2004 were $8,835,000 greater compared with the same period in 2003. The weighted average rate paid on interest-bearing deposits was 2.03 percent in the first quarter of 2004 compared with 2.79 percent in the first quarter of 2003. The full benefit of lower market deposit rates may not be realized if the competitive environment forces the Company to pay above-market rates to attract or retain deposits in future periods.

Interest expense on borrowed funds was $59,000 greater in the first quarter of 2004 compared with 2003, reflecting the Company’s higher average borrowed funds in 2004 compared with 2003. Average borrowed funds for the first quarter of 2004 were $17,262,000 greater compared to the same period in 2003. The weighted average rate paid on borrowed funds declined to 4.68 percent in the first quarter of 2004 compared with 5.38 percent in the first quarter of 2003.

Provision for Loan Losses

The Company recorded a provision for loan losses of $158,000 in the first quarter of 2004 compared with $160,000 in the first quarter of 2003. Management determines an appropriate provision based on its evaluation of the adequacy of the allowance for loan losses in relationship to a continuing review of problem loans, the current economic conditions, actual loss experience and industry trends. Management believes that the allowance for loan losses is adequate based on the inherent risk in the portfolio as of March 31, 2004; however, growth in the loan portfolio and the uncertainty of the general economy require that management continue to evaluate the adequacy of the allowance for loan losses and make additional provisions in future periods as deemed necessary.

Other Income

Other income results from the charges and fees collected by the Company from its customers for various services performed, data processing income received from nonaffiliated banks, miscellaneous other income and gains (or losses) from the sale of investment securities held in the available for sale category. Total other income was $2,000 lower in the first quarter of 2004 compared with 2003. Reduced secondary market loan origination fees were offset by increased deposit service charges and other service fees.

Other Expense

Total other noninterest expense for the quarter ended March 31, 2004 was $999,000 or 26 percent greater compared to noninterest expense for the first quarter of 2003. Other expense includes all the costs incurred to operate the Company except for interest expense, the loan loss provision and income taxes. Salaries and benefits expense for the first quarter of 2004 was $684,000 or 32 percent greater compared with 2003, with approximately $411,000 of the increase attributable to the charges associated with the retirement of the president of a bank subsidiary. The President of MidWestOne Bank in Burlington was covered by an employment agreement that provided benefits to the individual in the event of early retirement. The agreement was originally entered into by Midwest Bancshares, Inc., which was acquired by the Company in 1999. The remainder of the increase was a result of increased salary levels and health insurance costs. Occupancy and equipment expense increased by $122,000 in the first quarter of 2004 compared with the three months ended March 31, 2003 due to the higher depreciation expense on data processing equipment and increased maintenance agreement expense on check handling equipment.

Income Tax Expense

The Company incurred income tax expense of $818,000 for the three months ended March 31, 2004 compared with $887,000 for the three months ended March 31, 2003. The effective income tax rate as a percent of income before taxes for the three months ended March 31, 2004 and 2003 was 34.4 percent and 39.8 percent, respectively. The effective tax rate in the first quarter of 2003 was higher due to factors associated with the acquisition of Belle Plaine Service Corp.

FINANCIAL CONDITION

Total assets as of March 31, 2004 were $622,019,000 compared with $623,306,000 as of December 31, 2003, a decrease of $1,287,000. As of March 31, 2004, the Company had $3,585,000 federal funds sold and $495,000 federal funds purchased compared with $10,450,000 purchased as of December 31, 2003. Federal funds are purchased on a short-term basis to meet liquidity needs.

Investment Securities

Investment securities available for sale totaled $99,623,000 as of March 31, 2004. This is a decrease of $1,225,000 from December 31, 2003. Investment securities classified as held to maturity declined to $9,617,000 as of March 31, 2004, compared with $10,596,000 on December 31, 2003.

Loans

Total loans were $387,136,000 as of March 31, 2004, compared with $377,017,000 as of December 31, 2003, an increase of $10,119,000 or 3 percent. As of March 31, 2004, the Company’s loan to deposit ratio was 84.6 percent compared with a year-end 2003 loan to deposit ratio of 83.2 percent. As of March 31, 2004, loans secured by real estate (including 1 to 4 family, multi-family, commercial and agricultural) comprised the largest category in the portfolio at approximately 66 percent of total loans. Commercial loans were the next largest category at 17 percent. Agricultural loans were approximately 14 percent of the total loan portfolio and loans to individuals constituted approximately 3 percent.

Loan Pool Participations

As of March 31, 2004, the Company had loan pool participations of $80,155,000, a decrease of $8,904,000 or 10 percent from the December 31, 2003 balance of $89,059,000. The decrease in the loan pool participations is the result of collections of loan pool participations during the first three months of 2004, which was not offset by any new loan pool participation purchases during the period. The loan pool investment balance shown as an asset on the Company’s Statement of Condition represents the discounted purchase cost of the loan pool participations. The average loan pool participation balance of $84,007,000 for the first three months of 2004 was $698,000 or 1 percent lower than the average balance of $84,705,000 for the first three months of 2003.

Goodwill and Other Intangible Assets

Goodwill totaled $12,976,000 as of March 31, 2004 and December 31, 2003. Goodwill is subject to testing for impairment in accordance with the provisions of Financial Accounting Standards Board Statement No. 142. No impairment write-down of goodwill has been recorded.

Other intangible assets decreased to $1,170,000 as of March 31, 2004 from the December 31, 2003 total of $1,244,000. The gross carrying amount of other intangible assets and the associated accumulated amortization at March 31, 2004 is presented in the table below. Amortization expense for intangible assets was $74,000 and $79,000 for the three months ended March 31, 2004 and 2003, respectively.

Amortization of intangible assets is recorded using an accelerated method based on the estimated life of the core deposit intangible. Projections of amortization expense are based on existing asset balances and the remaining useful lives. The following table shows the estimated future amortization expense.

Deposits

Total deposits as of March 31, 2004 were $457,635,000 compared with $453,125,000 as of December 31, 2003, an increase of $4,510,000. Certificates of deposit remain the largest category of deposits at March 31, 2004 representing approximately 51 percent of total deposits.

Borrowed Funds/Notes Payable

The Company had $495,000 in Federal Funds purchased on March 31, 2004. There was $10,450,000 in Federal Funds purchased on December 31, 2003. During the first three months of 2004, the Company had an average balance of Federal Funds purchased of $4,380,000. Advances from the Federal Home Loan Bank totaled $81,398,000 as of March 31, 2004 compared with $78,944,000 as of December 31, 2003. Notes payable increased to $9,400,000 on March 31, 2004 compared to $9,000,000 as of December 31, 2003. Long-term debt was $10,310,000 as of March 31, 2004 and December 31, 2003.

Nonperforming Assets

The Company’s nonperforming assets totaled $3,293,000 (.85 percent of total loans) as of March 31, 2004, compared to $3,292,000 (.87 percent of total loans) as of December 31, 2003. All nonperforming asset totals and related ratios exclude the loan pool participations. The following table presents the categories of nonperforming assets as of March 31, 2004 compared with December 31, 2003:

From December 31, 2003 to March 31, 2004, the Company’s nonaccrual loans decreased $143,000. Loans ninety days past due increased $195,000. Troubled debt restructurings decreased $57,000 and other real estate owned increased by $6,000. The Company’s allowance for loan losses as of March 31, 2004 was $4,835,000, which was 1.25 percent of total loans as of that date. This compares with an allowance for loan losses of $4,857,000 as of December 31, 2003, which was 1.29 percent of total loans. The allowance for loan losses decreased $22,000 during the first three months of 2004 as a result of net charge-offs taken during the quarter being slightly greater than the provision for loan loss taken. As of March 31, 2004, the allowance for loan losses was 146.81 percent of nonperforming assets compared with 147.57 percent as of December 31, 2003. Based on the inherent risk in the loan portfolio, management believes that as of March 31, 2004, the allowance for loan losses is adequate. For the three months ended March 31, 2004, the Company’s net loan charge-offs were $180,000 compared with net charge-offs of $91,000 during the quarter ended March 31, 2003.

Changes in the allowance for loan losses for the three months ended March 31, 2004 and 2003 were as follows:

Capital Resources

Total shareholders’ equity was 9.3 percent of total assets as of March 31, 2004 and 9.0 percent as of December 31, 2003. The Company’s Tier 1 Capital Ratio was 11.5 percent of risk-weighted assets as of March 31, 2004 and was 11.2 percent as of December 31, 2003, compared to a 4.0 percent regulatory requirement. Risk-based capital guidelines require the classification of assets and some off-balance-sheet items in terms of credit-risk exposure and the measuring of capital as a percentage of the risk-adjusted asset totals. Tier 1 Capital is the Company’s total common shareholders’ equity plus the trust preferred security reduced by goodwill. Management believes that, as of March 31, 2004,

the Company and its subsidiary banks meet all capital adequacy requirements to which they are subject. As of that date, all the bank subsidiaries were “well capitalized” under regulatory prompt corrective action provisions. The Company repurchased no shares of common stock on the open market during the first quarter of 2004. A total of 32,326 shares were issued during the first quarter for options exercised under previously awarded grants. Cash dividends of $.17 per share were paid to shareholders on March 15, 2004.

Liquidity

Liquidity management involves meeting the cash flow requirements of depositors and borrowers. The Company conducts liquidity management on both a daily and long-term basis; and it adjusts its investments in liquid assets based on expected loan demand, projected loan maturities and payments, estimated cash flows from the loan pool participations, expected deposit flows, yields available on interest-bearing deposits, and the objectives of its asset/liability management program. The Company had liquid assets (cash and cash equivalents) of $14,700,000 as of March 31, 2004, compared with $14,540,000 as of December 31, 2003. Investment securities classified as available for sale could be sold to meet liquidity needs if necessary. Additionally, the bank subsidiaries maintain lines of credit with correspondent banks and the Federal Home Loan Bank that would allow them to borrow federal funds on a short-term basis if necessary. The Company also maintains a line of credit with a major commercial bank that provides liquidity for the purchase of loan pool participations and other corporate needs. Management believes that the Company has sufficient liquidity as of March 31, 2004 to meet the needs of borrowers and depositors.

Commitments and Contingencies

In the ordinary course of business, the Company is engaged in various issues involving litigation. Management believes that none of this litigation is material to the Company’s results of operations.

Critical Accounting Policies

The Company has identified two critical accounting policies and practices relative to the financial condition and results of operation. These two accounting policies relate to the allowance for loan losses and to loan pool accounting.

The allowance for loan losses is based on management’s opinion. Management believes the allowance for loan losses is adequate to absorb losses in the existing portfolio. In evaluating the portfolio, management takes into consideration numerous factors, including current economic conditions, prior loan loss experience, the composition of the loan portfolio, and management’s estimate of probable credit losses. The allowance for loan loss is established through a provision for loss based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the portfolio, specific impaired loans, and current economic conditions. Such evaluation, which includes a review of all loans on which full collectibility may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, historical loss experience, and other factors that warrant recognition in providing for an adequate allowance for loan loss.

The loan pool accounting practice relates to management’s opinion that the investment amount reflected on the Company’s financial statements does not exceed the estimated net realizable value or the fair value of the underlying collateral securing the purchased loans. In evaluating the purchased loan portfolio, management takes into consideration many factors, including the borrowers’ current financial situation, the underlying collateral, current economic conditions, historical collection experience, and other factors relative to the collection process.

In the event that management’s evaluation of the level of the allowance for loan losses is inadequate, the Company would need to increase its provision for loan losses. If the estimated realizable value of the loan pool participations is understated, the Company’s yield on the loan pools would be reduced.

Part I – Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Market risk is the risk of earnings volatility that results from adverse changes in interest rates and market prices. The Company’s market risk is primarily comprised of interest rate risk arising from its core banking activities of lending and deposit taking. Interest rate risk is the risk that changes in market interest rates may adversely affect the Company’s net interest income. Management continually develops and applies strategies to mitigate this risk. The Company has not experienced any material changes to its market risk position since December 31, 2003, from that disclosed in the Company’s 2003 Form 10-K Annual Report. Management does not believe that the Company’s primary market risk exposures and how those exposures were managed in the first three months of 2004 changed when compared to 2003.

The Company uses a third-party computer software simulation modeling program to measure its exposure to potential interest rate changes. For various assumed hypothetical changes in market interest rates, numerous other assumptions are made such as prepayment speeds on loans and securities backed by mortgages, the slope of the Treasury yield curve, the rates and volumes of the Company’s deposits and the rates and volumes of the Company’s loans. This analysis measures the estimated change in net interest income in the event of hypothetical changes in interest rates. This analysis of the Company’s interest rate risk was presented in the Form 10-K filed by the Company for the year ended December 31, 2003.

Part I – Item 4. Controls and Procedures.

“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT

With the exception of the historical information contained in this report, the matters described herein contain forward-looking statements that involve risk and uncertainties that individually or mutually impact the matters herein described, including but not limited to financial projections, product demand and market acceptance, the effect of economic conditions, the impact of competitive products and pricing, governmental regulations, results of litigation, technological difficulties and/or other factors outside the control of the Company, which are detailed from time to time in the Company’s SEC reports. The Company disclaims any intent or obligation to update these forward-looking statements.

Part II – Item 4. Submission of Matters to a vote of Security Holders.

The Company’s annual meeting of shareholders was held on April 30, 2004. The record date for determination of shareholders entitled to vote at the meeting was February 27, 2004. There were 3,815,034 shares outstanding as of that date, each such share being entitled to one vote. At the shareholders’ meeting the holders of 3,379,256 or 88.58 percent of the outstanding shares were represented in person or by proxy, which constituted a quorum. The following proposals were voted on at the meeting:

Proposal I – Election of Directors:

Three directors were to be elected to serve for the specified term or until their successors shall have been elected and qualified. At the shareholders’ meeting, the individuals received the number of votes set opposite their names:

Proposal II – Ratification of Auditors’ Appointment:

A vote was also taken on the ratification of the appointment of KPMG LLP as independent auditors of the Company for the fiscal year ending December 31, 2004. The results of the vote were as follows:

Part II – Item 6. Exhibits and Reports on Form 8-K.

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

A report on Form 8-K was filed on January 29, 2004 reporting the earnings of the Company for the quarter and the year ended December 31, 2003.

A report on Form 8-K was filed on March 30, 2004 announcing the retirement of William D. Hassel as president and CEO of MidWestOne Bank in Burlington effective March 31, 2004.

SIGNATURES

Pursuant to the requirements 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.