U.S. SECURITIES AND EXCHANGE
COMMISSION Washington,
D.C. 20549

FORM 10-Q

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2005

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _____________________ to __________________

Commission file number 0-22208

QCR HOLDINGS, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)

Delaware 42-1397595
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer ID Number)
incorporation or organization)

3551 7th Street, Suite 204, Moline, Illinois 61265
--------------------------------------------------
(Address of principal executive offices)

(309) 736-3580
----------------------------------------------------
(Registrant's telephone number, including area code)

Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [ x ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date: As of November 1, 2005, the
Registrant had outstanding 4,529,786 shares of common stock, $1.00 par value per
share.

QCR HOLDINGS, INC. AND SUBSIDIARIES

INDEX

Page
Number

Part I FINANCIAL INFORMATION

Item 1 Consolidated Financial Statements (Unaudited)

Consolidated Balance Sheets, September 30, 2005
and December 31, 2004 3

Consolidated Statements of Income, For the Three
Months Ended September 30, 2005 and 2004 4

Consolidated Statements of Income, For the Nine
Months Ended September 30, 2005 and 2004 5

Consolidated Statements of Cash Flows, For the
Nine Months Ended September 30, 2005 and 2004 6-7

Notes to Consolidated Financial Statements 8-13

Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 14-31

Item 3 Quantitative and Qualitative Disclosures 32
About Market Risk

Item 4 Controls and Procedures 34

Part II OTHER INFORMATION

Item 1 Legal Proceedings 35

Item 2 Unregistered Sales of Equity Securities and Use of
Proceeds 35

Item 3 Defaults Upon Senior Securities 35

Item 4 Submission of Matters to a Vote of Security Holders 35

Item 5 Other Information 35

Item 6 Exhibits 35

Signatures 36

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30, 2005 and December 31, 2004

September 30, December 31,
2005 2004
------------------------------

ASSETS
Cash and due from banks ................................... $ 26,487,583 $ 21,372,342
Federal funds sold ........................................ 4,170,000 2,890,000
Interest-bearing deposits at financial institutions ....... 1,571,653 3,857,563

Securities held to maturity, at amortized cost ............ 150,000 100,000
Securities available for sale, at fair value .............. 172,806,127 149,460,886
------------------------------
172,956,127 149,560,886
------------------------------

Loans receivable held for sale ............................ 4,985,905 3,498,809
Loans/leases receivable held for investment ............... 717,110,798 644,852,018
Less: Allowance for estimated losses on loans/leases ...... (8,972,060) (9,261,991)
------------------------------
713,124,643 639,088,836
------------------------------

Premises and equipment, net ............................... 25,429,245 18,100,590
Goodwill .................................................. 3,359,963 0
Accrued interest receivable ............................... 5,066,799 4,072,762
Bank-owned life insurance ................................. 17,204,800 15,935,000
Other assets .............................................. 17,147,155 15,205,568
------------------------------

Total assets ...................................... $ 986,517,968 $ 870,083,547
==============================

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing ..................................... $ 111,386,720 $ 109,361,817
Interest-bearing ........................................ 579,700,297 478,653,866
------------------------------
Total deposits .................................... 691,087,017 588,015,683
------------------------------

Short-term borrowings ..................................... 74,591,289 104,771,178
Federal Home Loan Bank advances ........................... 118,057,128 92,021,877
Other borrowings .......................................... 10,282,210 6,000,000
Junior subordinated debentures ............................ 25,775,000 20,620,000
Other liabilities ......................................... 12,430,827 7,881,009
------------------------------
Total liabilities ................................. 932,223,471 819,309,747
------------------------------

Minority interest in consolidated subsidiary .............. 594,078 --

STOCKHOLDERS' EQUITY
Common stock, $1 par value; shares authorized 10,000,000 . 4,526,332 4,496,730
September 2005 - 4,526,332 shares issued and outstanding,
December 2004 - 4,496,730 shares issued and outstanding,
Additional paid-in capital ................................ 20,700,184 20,329,033
Retained earnings ......................................... 28,639,786 25,278,666
Accumulated other comprehensive (loss) income ............. (165,883) 669,371
------------------------------
Total stockholders' equity ........................ 53,700,419 50,773,800
------------------------------
Total liabilities and stockholders' equity ........ $ 986,517,968 $ 870,083,547
==============================

See Notes to Consolidated Financial Statements

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended September 30

2005 2004
-------------------------

Interest and dividend income:
Loans/leases, including fees ....................... $10,903,448 $ 8,560,941
Securities:
Taxable .......................................... 1,352,176 1,040,293
Nontaxable ....................................... 142,434 139,886
Interest-bearing deposits at financial institutions 25,645 43,242
Federal funds sold ................................. 78,809 15,216
-------------------------
Total interest and dividend income ........... 12,502,512 9,799,578
-------------------------

Interest expense:
Deposits ........................................... 3,457,112 1,708,404
Short-term borrowings .............................. 451,615 378,125
Federal Home Loan Bank advances .................... 1,134,213 915,142
Other borrowings ................................... 172,344 50,488
Junior subordinated debentures ..................... 427,066 316,196
-------------------------
Total interest expense ....................... 5,642,350 3,368,355
-------------------------

Net interest income .......................... 6,860,162 6,431,223

Provision for loan/leases losses ..................... 382,752 411,385
-------------------------
Net interest income after provision for
loan/lease losses ............................ 6,477,410 6,019,838
-------------------------

Noninterest income:
Merchant credit card fees, net of processing costs . 516,487 253,107
Trust department fees .............................. 676,444 616,506
Deposit service fees ............................... 387,445 421,223
Gains on sales of loans, net ....................... 274,616 242,896
Securities gains, net .............................. 12 --
Earnings on cash surrender value of life insurance . 174,183 167,977
Investment advisory and management fees ............ 176,254 128,760
Other .............................................. 303,094 189,088
-------------------------
Total noninterest income ..................... 2,508,535 2,019,557
-------------------------

Noninterest expenses:
Salaries and employee benefits ..................... 4,219,355 3,458,437
Professional and data processing fees .............. 618,719 620,242
Advertising and marketing .......................... 330,204 232,654
Occupancy and equipment expense .................... 1,162,997 841,827
Stationery and supplies ............................ 163,448 124,915
Postage and telephone .............................. 222,642 169,626
Bank service charges ............................... 128,671 146,569
Insurance .......................................... 145,838 126,032
Loss on disposal of fixed assets ................... 332,283 0
Other .............................................. 265,590 192,972
-------------------------
Total noninterest expenses ................... 7,589,747 5,913,274
-------------------------

Minority interest in income of consolidated
subsidiary ......................................... 20,651 --

Income before income taxes ................... 1,375,547 2,126,121
Federal and state income taxes ....................... 419,968 703,464
-------------------------
Net income ................................... $ 955,579 $ 1,422,657
=========================

Earnings per common share:
Basic .............................................. $ 0.21 $ 0.33
Diluted ............................................ $ 0.21 $ 0.33
Weighted average common shares outstanding ......... 4,524,543 4,246,741
Weighted average common and common equivalent ...... 4,623,179 4,349,317
shares outstanding

Comprehensive income ................................. $ 652,990 $ 2,147,990
=========================

See Notes to Consolidated Financial Statements

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Nine Months Ended September 30

2005 2004
-------------------------

Interest and dividend income:
Loans/leases, including fees ................................. $30,307,908 $24,053,837
Securities:
Taxable .................................................... 3,775,686 3,018,977
Nontaxable ................................................. 418,683 426,987
Interest-bearing deposits at financial institutions .......... 94,745 181,514
Federal funds sold ........................................... 124,349 22,795
-------------------------
Total interest and dividend income ..................... 34,721,371 27,704,110
-------------------------
Interest expense:
Deposits ..................................................... 8,553,269 4,731,299
Short-term borrowings ........................................ 1,565,534 758,062
Federal Home Loan Bank advances .............................. 2,994,141 2,575,749
Other borrowings ............................................. 361,216 96,538
Junior subordinated debentures ............................... 1,141,714 1,316,489
-------------------------
Total interest expense ................................. 14,615,874 9,478,137
-------------------------

Net interest income .................................... 20,105,497 18,225,973

Provision for loan/lease losses ................................ 536,540 1,735,885
-------------------------
Net interest income after provision for
loan/lease losses ...................................... 19,568,957 16,490,088
-------------------------
Noninterest income:
Merchant credit card fees, net of processing costs 1,319,204 1,094,390
Trust department fees ........................................ 2,131,505 1,905,341
Deposit service fees ......................................... 1,165,008 1,238,331
Gains on sales of loans, net ................................. 879,788 910,749
Securities gains (losses), net ............................... 12 26,188
Earnings on cash surrender value of life insurance ........... 493,145 503,743
Investment advisory and management fees ...................... 516,108 390,391
Other ........................................................ 955,118 688,572
-------------------------
Total noninterest income ............................... 7,459,888 6,757,705
-------------------------
Noninterest expenses:
Salaries and employee benefits ............................... 12,236,200 9,729,540
Professional and data processing fees ........................ 2,056,113 1,616,344
Advertising and marketing .................................... 897,967 733,644
Occupancy and equipment expense .............................. 3,161,196 2,363,577
Stationery and supplies ...................................... 475,464 394,107
Postage and telephone ........................................ 617,327 498,685
Bank service charges ......................................... 386,170 431,812
Insurance .................................................... 452,680 351,599
Loss on disposal of fixed assets ............................. 332,283 --
Loss on redemption of junior subordinated debentures ......... 747,490
Other ........................................................ 1,170,393 573,144
-------------------------
Total noninterest expenses ............................. 21,785,793 17,439,942
-------------------------

Minority interest in income of consolidated subsidiary ......... 20,651 --

Income before income taxes ............................. 5,222,401 5,807,851
Federal and state income taxes ................................. 1,680,549 1,878,065
-------------------------
Net income ............................................. $ 3,541,852 $ 3,929,786
=========================
Earnings per common share:
Basic ........................................................ $ 0.78 $ 0.93
Diluted ...................................................... $ 0.77 $ 0.91
Weighted average common shares outstanding ................... 4,514,105 4,224,670
Weighted average common and common equivalent ................ 4,616,245 4,336,794
shares outstanding

Cash dividends declared per common share ....................... $ 0.04 $ 0.04
=========================

Comprehensive income ........................................... $ 2,706,598 $ 3,255,330
=========================

See Notes to Consolidated Financial Statements
5

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30

2005 2004
------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income ................................................ $ 3,541,852 $ 3,929,786
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ............................................ 1,436,193 1,076,959
Provision for loan/lease losses ......................... 536,540 1,735,885
Amortization of offering costs on subordinated debentures 10,738 14,354
Loss on redemption of junior subordinated debentures .... -- 747,490
Minority interest in income of consolidated subsidiary .. 20,651 --
Amortization of premiums on securities, net ............. 415,157 795,404
Investment securities gains, net ........................ (12) (26,188)
Loans originated for sale ............................... (74,614,426) (65,023,902)
Proceeds on sales of loans .............................. 74,076,481 66,611,487
Net gains on sales of loans ............................. (879,788) (910,749)
Tax benefit of nonqualified stock options exercised ..... 119,118 169,977
Increase in accrued interest receivable ................. (994,037) (365,955)
Increase in other assets ................................ (1,274,347) (4,065,360)
Increase in other liabilities ........................... 478,308 1,257,415
------------------------------
Net cash (used in) provided by operating activities . $ 2,872,428 $ 5,946,603
------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in federal funds sold ............. (1,280,000) 575,000
Net decrease in interest-bearing deposits at
financial institutions .................................. 2,285,910 6,362,297
Activity in securities portfolio:
Purchases ............................................... (62,049,794) (52,514,428)
Calls and maturities .................................... 35,947,500 39,831,001
Paydowns ................................................ 961,574 1,444,332
Activity in bank-owned life insurance:
Purchases ............................................... (776,634) (12,221,428)
Increase in cash value .................................. (493,166) (481,364)
Net loans/leases originated and held for investment ....... (41,602,375) (104,556,733)
Purchase of premises and equipment ........................ (9,014,417) (4,470,826)
Loss on disposal of fixed assets .......................... 332,283 --
Proceeds from sales of premises and equipment ............. -- 8,247
Payment for acquisition of m2 Lease Funds, LLC (Note 6) ... (4,984,372) --
------------------------------
Net cash used in investing activities ............... $(80,673,491) $(126,023,902)
------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposit accounts .......................... 103,071,333 17,721,260
Net (decrease) increase in short-term borrowings .......... (30,179,889) 78,278,821
Activity in Federal Home Loan Bank advances:
Advances ................................................ 33,700,000 32,500,000
Payments ................................................ (7,664,749) (12,156,884)
Net decrease in other borrowings .......................... (21,086,428) (3,000,000)
Proceeds from issuance of junior subordinated debentures .. 5,155,000 20,620,000
Redemption of junior subordinated debentures .............. -- (12,000,000)
Payment of cash dividends ................................. (360,598) (336,816)
Payment of fractional shares on 3:2 stock split ........... -- (2,549)
Proceeds from issuance of common stock, net ............... 281,635 189,847
------------------------------
Net cash provided by financing activities ........... $ 82,916,304 $ 121,813,679
------------------------------

Net increase in cash and due from banks ............. 5,115,241 1,736,380
Cash and due from banks, beginning .......................... 21,372,342 24,427,573
------------------------------
Cash and due from banks, ending ............................. $ 26,487,583 $ 26,163,953
==============================
Supplemental disclosure of cash flow information,
cash payments for:
Interest .................................................. $ 13,886,062 $ 9,508,452
==============================

Income/franchise taxes .................................... $ 864,944 $ 1,763,478
==============================
Supplemental schedule of noncash investing activities:
Change in accumulated other comprehensive income,
unrealized losses on securities available for sale, net . $ (835,254) $ (674,456)
==============================

Transfers of loans to other real estate owned ............. $ 53,800 $ 245,072
==============================

See Notes to Consolidated Financial Statements

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30 (continued)

2005
------------

Acquisition of m2 Lease funds, LLC, (Note 6) cash paid
at settlement .............................................. $ 4,967,300
============

Fair value of assets acquired and liabilities assumed:
Cash and due from banks .................................... $ (17,072)
Leases receivable held for investment, net ................. 31,536,676
Premises and equipment, net ................................ 82,714
Goodwill ................................................... 3,359,963
Other assets ............................................... 47,177
Other borrowings ........................................... (25,368,638)
Other liabilities .......................................... (4,100,093)
Minority interest .......................................... (573,427)
------------
$ 4,967,300
============

Part I
Item 1

QCR HOLDINGS, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2005

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation: The accompanying unaudited consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information and
with the instructions to Form 10-Q. Accordingly, they do not include information
or footnotes necessary for a fair presentation of financial position, results of
operations and changes in financial condition in conformity with accounting
principles generally accepted in the United States of America. However, all
adjustments that are, in the opinion of management, necessary for a fair
presentation have been included. Any differences appearing between numbers
presented in financial statements and management's discussion and analysis are
due to rounding. Results for the periods ended September 30, 2005 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2005.

Certain amounts in the prior period financial statements have been reclassified,
with no effect on net income or stockholders' equity, to conform with the
current period presentation.

Principles of consolidation: The accompanying consolidated financial statements
include the accounts of QCR Holdings, Inc. (the "Company"), a Delaware
corporation, and its wholly owned subsidiaries, Quad City Bank and Trust Company
("Quad City Bank & Trust"), Cedar Rapids Bank and Trust Company ("Cedar Rapids
Bank & Trust"), Rockford Bank and Trust Company ("Rockford Bank & Trust"), Quad
City Bancard, Inc. ("Bancard"), and Quad City Liquidation Corporation ("QCLC").
Quad City Bank & Trust owns 80% of the equity interests of m2 Lease Funds, LLC
("m2 Lease Funds"). All significant intercompany accounts and transactions have
been eliminated in consolidation. The Company also wholly owns QCR Holdings
Statutory Trust II ("Trust II"), QCR Holdings Statutory Trust III ("Trust III"),
and QCR Holdings Statutory Trust IV ("Trust IV"). These three entities were
established by the Company for the sole purpose of issuing trust preferred
securities. As required by a ruling of the Securities and Exchange Commission in
December 2003, the Company's equity investments in these entities are not
consolidated, but are included in other assets on the consolidated balance sheet
for $777 thousand in aggregate at September 30, 2005. In addition to these eight
wholly owned subsidiaries, the Company has an aggregate investment of $305
thousand in three affiliated companies, Nobel Electronic Transfer, LLC, Nobel
Real Estate Investors, LLC, and Velie Plantation Holding Company. The Company
owns 20% equity positions in each of these affiliated companies. In June 2005,
Cedar Rapids Bank & Trust entered into a joint venture as a 50% owner of Cedar
Rapids Mortgage Company, LLC ("Cedar Rapids Mortgage Company").

Stock-based compensation plans: The Company accounts for its stock-based
employee compensation plans under the recognition and measurement principles of
APB Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations. No stock-based employee compensation cost is reflected in net
income, as all options granted under those plans had an exercise price equal to
the market value of the underlying common stock on the date of grant. The
following table illustrates the effect on net income and earnings per share if
the Company had applied the fair value recognition provisions of FASB Statement
No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation.

Three Months Ended Nine Months Ended
September 30, September 30,
-----------------------------------------------------
2005 2004 2005 2004
-----------------------------------------------------

Net income, as reported ............... $ 955,579 $1,422,657 $3,541,852 $3,929,786
Deduct total stock-based employee
compensation expense determined
under fair value based method for all
awards, net of related tax effects .. (42,977) (32,584) (131,707) (97,147)
-----------------------------------------------------
Net income .................... $ 912,602 $1,390,073 $3,410,145 $3,832,639
=====================================================

Earnings per share:
Basic:
As reported ....................... $ 0.21 $ 0.33 $ 0.78 $ 0.93
Pro forma ......................... $ 0.20 $ 0.33 $ 0.76 $ 0.91
Diluted:
As reported ....................... $ 0.21 $ 0.33 $ 0.77 $ 0.91
Pro forma ......................... $ 0.20 $ 0.32 $ 0.74 $ 0.89

In determining compensation cost using the fair value method prescribed in
Statement No. 123, the value of each grant is estimated at the grant date with
the following weighted-average assumptions for grants during the nine months
ended September 30, 2005 and 2004: dividend rate of 0.36% to 0.44%; expected
price volatility of 15.85% to 24.88%; risk-free interest rate based upon current
rates at the date of grants (4.10% to 4.72% for stock options and 0.95% to 2.98%
for the employee stock purchase plan); and expected lives of 10 years for stock
options and 3 months to 6 months for the employee stock purchase plan.

NOTE 2 - EARNINGS PER SHARE

The following information was used in the computation of earnings per share on a
basic and diluted basis.

Three months ended Nine months ended,
September 30, September 30,
-------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------

Net income, basic and diluted
Earnings .................................. $ 955,579 $1,422,657 $3,541,852 $3,929,786
=================================================

Weighted average common shares
Outstanding ............................... 4,524,543 4,246,741 4,514,105 4,224,670

Weighted average common shares
issuable upon exercise of stock
options and under the
employee stock purchase plan .............. 98,636 102,576 102,140 112,124
-------------------------------------------------
Weighted average common and
common equivalent shares
outstanding ............................... 4,623,179 4,349,317 4,616,245 4,336,794
=================================================

NOTE 3 - BUSINESS SEGMENT INFORMATION

Selected financial information on the Company's business segments is presented
as follows for the three-month and nine-month periods ended September 30, 2005
and 2004, respectively.

Three months ended Nine months ended
September 30, September 30,
------------------------------------------------------------
2005 2004 2005 2004
------------------------------------------------------------

Revenue:
Commercial banking:
Quad City Bank & Trust .. $ 9,390,577 $ 8,249,805 $ 26,962,059 $ 24,062,719
Cedar Rapids Bank & Trust 3,713,301 2,574,642 10,384,391 6,911,314
Rockford Bank & Trust ... 331,920 -- 550,881 --
Credit card processing .... 589,243 304,111 1,507,358 1,236,846
Trust management .......... 676,444 616,505 2,131,505 1,905,341
Leasing services .......... 245,479 -- 245,479 --
All other ................. 64,083 74,072 399,586 345,595
------------------------------------------------------------
Total revenue ....... $ 15,011,047 $ 11,819,135 $ 42,181,259 $ 34,461,815
============================================================

Net income (loss):
Commercial banking:
Quad City Bank & Trust .. $ 1,353,352 $ 1,535,346 $ 4,142,049 $ 4,346,227
Cedar Rapids Bank & Trust 28,881 276,826 872,045 682,539
Rockford Bank & Trust ... (287,241) (133,879) (1,019,719) (183,700)
Credit card processing .... 216,666 25,098 453,688 370,497
Trust management .......... 127,109 147,023 460,366 481,924
Leasing services .......... 91,776 -- 91,776 --
All other ................. (574,964) (427,757) (1,458,353) (1,767,701)
------------------------------------------------------------
Total net income .... $ 955,579 $ 1,422,657 $ 3,541,852 $ 3,929,786
============================================================

NOTE 4 - COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company's subsidiary banks make various
commitments and incur certain contingent liabilities that are not presented in
the accompanying consolidated financial statements. The commitments and
contingent liabilities include various guarantees, commitments to extend credit,
and standby letters of credit.

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 subsidiary banks evaluate each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the banks upon extension of credit, is based
upon management's credit evaluation of the counter-party. Collateral held varies
but may include accounts receivable, marketable securities, inventory, property,
plant and equipment, and income-producing commercial properties.

Standby letters of credit are conditional commitments issued by the banks to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements and,
generally, have terms of one year, or less. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending loan
facilities to customers. The subsidiary banks hold collateral, as described
above, supporting those commitments if deemed necessary. In the event the
customer does not perform in accordance with the terms of the agreement with the
third party, the banks would be required to fund the commitments. The maximum
potential amount of future payments the banks could be required to make is
represented by the contractual amount. If the commitment is funded, the banks
would be entitled to seek recovery from the customer. At September 30, 2005 and
December 31, 2004, no amounts were recorded as liabilities for the banks'
potential obligations under these guarantees.

As of September 30, 2005 and December 31, 2004, commitments to extend credit
aggregated were $286.8 million and $257.6 million, respectively. As of September
30, 2005 and December 31, 2004, standby, commercial and similar letters of
credit aggregated were $15.3 million and $12.7 million, respectively. Management
does not expect that all of these commitments will be funded.

The Company has also executed contracts for the sale of mortgage loans in the
secondary market in the amounts of $5.0 million and $3.5 million, at September
30, 2005 and December 31, 2004, respectively. These amounts are included in
loans held for sale at the respective balance sheet dates.

Residential mortgage loans sold to investors in the secondary market are sold
with varying recourse provisions. Essentially, all loan sales agreements require
the repurchase of a mortgage loan by the seller in situations such as breach of
representation, warranty, or covenant, untimely document delivery, false or
misleading statements, failure to obtain certain certificates or insurance,
unmarketability, etc. Certain loan sales agreements also contain repurchase
requirements based on payment-related defects that are defined in terms of the
number of days/months since the purchase, the sequence number of the payment,
and/or the number of days of payment delinquency. Based on the specific terms
stated in the agreements of investors purchasing residential mortgage loans from
the Company's subsidiary banks, the Company had $45.7 million and $35.6 million
of sold residential mortgage loans with recourse provisions still in effect at
September 30, 2005 and December 31, 2004, respectively. The subsidiary banks did
not repurchase any loans from secondary market investors under the terms of
loans sales agreements during the nine months ended September 30, 2005 or the
year ended December 31, 2004. In the opinion of management, the risk of recourse
to the subsidiary banks is not significant, and accordingly no liabilities have
been established related to such.

During 2004, Quad City Bank & Trust joined the Federal Home Loan Bank's (FHLB)
Mortgage Partnership Finance (MPF) Program, which offers a "risk-sharing"
alternative to selling residential mortgage loans to investors in the secondary
market. Lenders funding mortgages through the MPF Program manage the credit risk
of the loans they originate. The loans are subsequently funded by the FHLB and
held within their portfolio, thereby managing the liquidity, interest rate, and
prepayment risks of the loans. Lenders participating in the MPF Program receive
monthly credit enhancement fees for managing the credit risk of the loans they
originate. Any credit losses incurred on those loans will be absorbed first by
private mortgage insurance, second by an allowance established by the FHLB, and
third by withholding monthly credit enhancements due to the participating
lender. At September 30, 2005, Quad City Bank & Trust had funded $13.5 million
of mortgages through the FHLB's MPF Program with an attached credit exposure of
$271 thousand. At December 31, 2004, Quad City Bank & Trust had funded $11.7
million of mortgages through the FHLB's MPF Program with an attached credit
exposure of $240 thousand. In conjunction with its participation in this
program, Quad City Bank & Trust had an allowance for credit losses on these
off-balance sheet exposures of $47 thousand and $11 thousand at September 30,
2005 and December 31, 2004, respectively.

Bancard is subject to the risk of cardholder chargebacks and its merchants being
incapable of refunding the amount charged back. Management attempts to mitigate
such risk by regular monitoring of merchant activity and in appropriate cases,
holding cash reserves deposited by the merchant. In August of 2004, Bancard
began making monthly provisions to an allowance for chargeback losses based on
the month's dollar volume of merchant credit card activity. For the nine months
ended September 30, 2005, monthly provisions were made totaling $43 thousand. An
aggregate of $110 thousand from two reversals to a specific merchant reserve
more than offset these provisions. At September 30, 2005 and December 31, 2004,
Bancard had a merchant chargeback reserve of $97 thousand and $164 thousand,
respectively. Management will continually monitor merchant credit card activity
and Bancard's level of the allowance for chargeback losses.

The Company also has a limited guarantee to MasterCard International,
Incorporated, which is backed by a $750 thousand letter of credit from The
Northern Trust Company. As of September 30, 2005 and December 31, 2004, there
were no significant pending liabilities.

NOTE 5 - JUNIOR SUBORDINATED DEBENTURES

In June 1999, the Company issued 1,200,000 shares of 9.2% cumulative trust
preferred securities through a newly formed subsidiary, Trust I, which used the
proceeds from the sale of the trust preferred securities to purchase junior
subordinated debentures of the Company. These securities were $12.0 million at
December 31, 2003. In February 2004, the Company issued, in a private
transaction, $12.0 million of fixed/floating rate capital securities and $8.0
million of floating rate capital securities through two newly formed
subsidiaries, Trust II and Trust III, respectively. The securities issued by
Trust II and Trust III mature in thirty years. The fixed/floating rate capital
securities are callable at par after seven years, and the floating rate capital
securities are callable at par after five years. The fixed/floating rate capital
securities have a fixed rate of 6.93%, payable quarterly, for seven years, at
which time they have a variable rate based on the three-month LIBOR, reset
quarterly, and the floating rate capital securities have a variable rate based
on the three-month LIBOR, reset quarterly, with the rate currently set at 6.34%.
Trust II and Trust III used the proceeds from the sale of the trust preferred
securities, along with the funds from their equity, to purchase junior
subordinated debentures of the Company in the amounts of $12.4 million and $8.2
million, respectively. These securities were $20.0 million in aggregate at
September 30, 2005. On June 30, 2004, the Company redeemed the $12.0 million of
9.2% cumulative trust preferred securities issued by Trust I in 1999. During
2004, the Company recognized a loss of $747 thousand on the redemption of these
trust preferred securities at their earliest call date, which resulted from the
one-time write-off of unamortized costs related to the original issuance of the
securities in 1999.

The securities issued by Trust IV mature in thirty years, but are callable at
par after five years. The Trust Preferred Securities have a variable rate based
on the three-month LIBOR, reset quarterly, with the current rate set at 5.95%.
Interest is payable quarterly. Trust IV used the $5.0 million of proceeds from
the sale of the Trust Preferred Securities, in combination with $155 thousand of
proceeds from its own equity, to purchase $5.2 million of junior subordinated
debentures of the Company. The Company treats these issuances as Tier 1 capital
for regulatory capital purposes, subject to current established limitations. The
Company incurred no issuance costs as a result of the transaction. The Company
used the net proceeds for general corporate purposes, including the paydown of
its other borrowings.

NOTE 6 - ACQUISITION

On August 26, 2005, the Quad City Bank & Trust acquired 80% of the membership
units of m2 Lease Funds, LLC ("m2 Lease Funds"). John Engelbrecht, the President
and Chief Executive Officer of m2 Lease Funds, retained 20% of the membership
units. Quad City Bank & Trust acquired assets and assumed liabilities totaling
$31.6 million and $29.5 million, respectively, for a purchase price of $5.0
million, which resulted in goodwill of $3.4 million and minority interest of
$573 thousand. The Company is in the process of finalizing the valuation of
certain assets acquired; thus, the allocation of the purchase price is subject
to adjustment. In accordance with the provisions of FAS Statement 142, goodwill
is not being amortized, but will be evaluated annually for impairment. m2 Lease
Funds, which is based in the Milwaukee, Wisconsin area, is engaged in the
business of leasing machinery and equipment to commercial and industrial
businesses under direct financing lease contracts. m2's operating results are
included in the Company's Consolidated Statements of Income from August 26, 2005
through September 30, 2005.

The following table summarizes the estimated fair values of assets acquired and
liabilities assumed at the date of acquisition:

Cash and due from banks ....................................... $ (17,072)
Leases receivable held for investment, net .................... 31,536,676
Premises and equipment, net ................................... 82,714
Goodwill ...................................................... 3,359,963
Other assets .................................................. 47,177
Total assets acquired ................................. 35,009,458
Other borrowings .............................................. (25,368,638)
Other liabilities ............................................. (4,100,093)
Minority interest ............................................. (573,427)
------------
Total liabilities assumed ............................. (30,042,158)
------------
Net assets acquired ................................... $ 4,967,300
============

NOTE 7 - RECENT ACCOUNTING DEVELOPMENTS

In November 2003, the Emerging Issues Task Force (EITF) reached a consensus on
certain disclosure requirements under EITF Issue No. 03-1, "The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments". The
new disclosure requirements apply to investment in debt and marketable equity
securities that are accounted for under Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". Effective for fiscal years ending after December 15, 2003,
companies were required to disclose information about debt or marketable equity
securities with market values below carrying values. The Company previously
implemented the disclosure requirements of EITF Issue No. 03-1. In March 2004,
the EITF came to a consensus regarding EITF 03-1. Securities in scope are those
subject to SFAS 115. The EITF adopted a three-step model that requires
management to determine if impairment exists, decide whether it is
other-than-temporary, and record other-than-temporary losses in earnings. In
November 2005, the Financial Accounting Standards Board (FASB) issued FASB Staff
Position (FSP) Nos. FAS 115-1 and FAS 124-1, "The Meaning of
Other-Than-Temporary Impairment and its Application to Certain Investments,"
which will apply to reporting periods beginning after December 15, 2005. The
FSPs provide guidance on determining when investments in certain debt and equity
securities are considered impaired, whether that impairment is
other-than-temporary, and on measuring such impairment loss. The FSPs also
include accounting considerations subsequent to the recognition of
other-than-temporary impairment and requirements for certain disclosures about
unrealized losses that have not been recognized as other-than-temporary
impairments.

In December 2004, FASB published Statement No. 123 (revised 2004), Share-Based
Payment ("FAS 123(R)") FAS 123(R) requires that the compensation cost relating
to share-based payment transactions, including grants of employee stock options
and shares under employee stock purchase plans, be recognized in financial
statements. That cost will be measured based on the fair value of the equity or
liability instruments issued. FAS 123(R) permits entities to use any
option-pricing model that meets the fair value objective in the Statement. The
Statement was originally effective at the beginning of the Company's third
quarter in 2005, however, in April 2005 the adoption of a new rule, by the
Securities and Exchange Commission, changed the dates for compliance with this
standard. The Company will now be required to implement Statement No. 123(R)
beginning January 1, 2006.

As of the effective date, the Company will have the option of applying the
Statement using a modified prospective application or a modified retrospective
application. Under the prospective method compensation cost would be recognized
for (1) all awards granted after the required effective date and for awards
modified, cancelled, or repurchased after that date and (2) the portion of prior
awards for which the requisite service has not yet been rendered, based on the
grant-date fair value of those awards calculated for pro forma disclosures under
SFAS 123. Under the retrospective application method compensation cost would be
recognized as in (1) above and (2) for prior periods would be restated
consistent with the pro forma disclosures required for those periods by SFAS
123. The Company has not yet made a decision on which method of application it
will elect.

The impact of this Statement on the Company after the effective date and beyond
will depend upon various factors, among them being the future compensation
strategy. The SFAS 123 pro forma compensation costs presented in the footnotes
to the financial statements have been calculated using a Black-Scholes
option-pricing model and may not be indicative of amounts, which should be
expected in future periods.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Quad City Bank & Trust and Cedar Rapids Bank & Trust are Iowa-chartered
commercial banks, and Rockford Bank & Trust is an Illinois-chartered commercial
bank. All are members of the Federal Reserve System with depository accounts
insured to the maximum amount permitted by law by the Federal Deposit Insurance
Corporation. Quad City Bank & Trust commenced operations in 1994 and provides
full-service commercial and consumer banking, and trust and asset management
services to the Quad City area and adjacent communities through its five offices
that are located in Bettendorf and Davenport, Iowa and Moline, Illinois. Quad
City Bank & Trust also provides leasing services through its 80%-owned
subsidiary, m2 Lease Funds, located in Milwaukee, Wisconsin. Cedar Rapids Bank &
Trust commenced operations in 2001 and provides full-service commercial and
consumer banking service to Cedar Rapids and adjacent communities through its
new main office located on First Avenue in downtown Cedar Rapids, Iowa and its
recently opened branch facility located on Council Street in northern Cedar
Rapids. Cedar Rapids Bank & Trust also provides residential real estate mortgage
lending services through its 50%-owned joint venture, Cedar Rapids Mortgage
Company. Rockford Bank & Trust commenced operations in January 2005 and provides
full-service commercial and consumer banking service to Rockford and adjacent
communities through its office located in downtown Rockford.

Bancard provides merchant and cardholder credit card processing services.
Bancard currently provides credit card processing for its local merchants and
agent banks and for cardholders of the Company's subsidiary banks.

OVERVIEW

Net income for the first nine months of 2005 was $3.5 million as compared to net
income of $3.9 million for the same period in 2004, a decrease of $367 thousand,
or 9%. Basic and diluted earnings per share for the first nine months of 2005
were $0.78 and $0.77, respectively, compared to $0.93 basic and $0.91 diluted
earnings per share for the first nine months of 2004. For the nine months ended
September 30, 2005, total gross revenue experienced an improvement of $7.7
million when compared to the same period in 2004. Contributing to this 22%
improvement in total gross revenue for the Company were increases in total gross
interest income of $7.0 million, or 25%, and in noninterest income of $702
thousand, or 10%. Also positively impacting earnings was a decline in the
provision for loan losses of $1.2 million, or 69%. The first nine months of 2005
reflected a significant increase in noninterest expense of $4.3 million, or 25%,
when compared to the same period in 2004, which included a first quarter loss of
$747 thousand on the redemption of junior subordinated debentures. The increase
in noninterest expense was predominately due to anticipated increases in both
personnel and facilities costs, as the subsidiary banks opened four new banking
locations during 2005 and to a related write-off of tenant improvements at a
previously occupied facility. In summary, the solid growth in revenue
experienced during the first nine months of 2005, in combination with the
reduced provision for loan losses, did not offset the year-to-year increase in
noninterest expense, which resulted primarily from four new banking locations,
the one-time write-off of tenant improvements at a previously occupied facility,
and the start-up of a new charter in the Rockford, Illinois market, causing net
income through the first three quarters of 2005 to fall short of that in the
comparable period of 2004. The Company continues to balance its focus on
increasing long-term profitability and stockholder value through current
expenditures investing in new facilities with a view towards growth.

Net income for the third quarter of 2005 was $956 thousand as compared to net
income of $1.4 million for the same period in 2004, a decrease of $467 thousand,
or 33%. Basic and diluted earnings per share for the third quarter of 2005 were
$0.21 and $0.21, respectively, compared to $0.33 basic and $0.33 diluted
earnings per share for the third quarter of 2004. For the three months ended
September 30, 2005, total revenue experienced an improvement of $3.2 million
when compared to the same period in 2004. Contributing to this 27% improvement
in revenue for the Company were increases in net interest income of $429
thousand, or 7%, and in noninterest income of $489 thousand, or 24%. Also
positively impacting earnings was a slight decline in the provision for loan
losses of $29 thousand, or 7%. The third quarter of 2005 reflected a significant
increase in noninterest expense of $1.7 million, or 28%, when compared to the
same period in 2004. The increase in noninterest expense was predominately due
to anticipated increases in both personnel and facilities costs, as the
subsidiary banks opened four new banking locations during 2005, along with a
related write-off of tenant improvements at a previously occupied facility. In
summary, despite the solid growth in revenue experienced during the third
quarter of 2005, net income for the quarter fell significantly short of third
quarter net income from one year ago. The $470 thousand of pretax start-up
losses incurred by Rockford Bank & Trust during the quarter, in combination with
the Company's overall year-to-year increase in noninterest expenses did not
allow the Company to maintain third quarter net earnings from one year ago.

Net income for the third quarter of 2005 was down 24%, or $307 thousand from the
previous quarter. Quarter-to-quarter total revenue increased by $1.0 million, or
7%, however, total expense increased by $1.5 million, or 13%. In the third
quarter, there was a narrowing of the net interest spread and an $860 thousand
increase in the Company's cost of funds from the second quarter. There was also
a significant upward swing of $530 thousand from the second quarter to the third
quarter in the level of provision for loan/lease losses. The provision for
loan/lease losses for the third quarter was $383 thousand compared to a negative
provision of $147 thousand for the second quarter of 2005. During the second
quarter, the successful resolution of some large credits within Quad City Bank &
Trust's loan portfolio resulted in reductions to both the provision expense and
the level of allowance for loan losses. Both net interest income and noninterest
income showed slight improvement from quarter-to-quarter. Net interest income
increased by $103 thousand, or 2%, and noninterest income increased by 3%, or
$74 thousand. The quarter-to-quarter aggregate increase in total net interest
income and noninterest income of $177 thousand was more than offset by a
combination of the increase in provision for loan/lease losses, and a $332
thousand write-off of Cedar Rapids Bank & Trust tenant improvements made to the
GreatAmerica Building, which had previously served as that subsidiary's main
office. Helping to mitigate this one-time increase in noninterest expense was
the favorable settlement of a troubled loan at Quad City Bank & Trust, which
resulted in the reimbursement of $234 thousand of legal expense incurred earlier
in the year.

The Company's operating results are derived largely from net interest income.
Net interest income is the difference between interest income, principally from
loans and investment securities, and interest expense, principally on borrowings
and customer deposits. Changes in net interest income result from changes in
volume, net interest spread and net interest margin. Volume refers to the
average dollar levels of interest-earning assets and interest-bearing
liabilities. Net interest spread refers to the difference between the average
yield on interest-earning assets and the average cost of interest-bearing
liabilities. Net interest margin refers to the net interest income divided by
average interest-earning assets and is influenced by the level and relative mix
of interest-earning assets and interest-bearing liabilities.

The Company realized a 0.31% decrease in its net interest spread, declining from
3.22% for the three months ended September 30, 2004 to 2.91% for the three
months ended September 30, 2005. The average yield on interest-earning assets
increased 0.58% for the three months ended September 30, 2005 when compared to
the same period ended September 30, 2004. At the same time, the average cost of
interest-bearing liabilities increased 0.89%. The narrowing of the net interest
spread resulted in a 0.24% reduction in the Company's net interest margin. For
the three months ended September 30, 2005, the net interest margin was 3.22%
compared to 3.46% for the same period in 2004. The net interest margin of 3.22%
for the third quarter of 2005 was a decrease from that experienced in the second
quarter of 2005, during which the net interest margin was 3.33%.

The Company realized a 0.16% decrease in its net interest spread, declining from
3.14% for the nine months ended September 30, 2004 to 2.98% for the nine months
ended September 30, 2005. The average yield on interest-earning assets increased
0.41% for the nine months ended September 30, 2005 when compared to the same
period ended September 30, 2004. At the same time, the average cost of
interest-bearing liabilities increased 0.57%. The narrowing of the net interest
spread resulted in a 0.17% reduction in the Company's net interest margin. For
the nine months ended September 30, 2005, the net interest margin was 3.27%
compared to 3.44% for the same period in 2004. Management constantly monitors
and manages net interest margin. From a profitability standpoint, an important
challenge for the subsidiary banks is the maintenance of their net interest
margins. Management continually addresses this issue with the use of alternative
funding sources and pricing strategies.

Consolidated Average Balance Sheets and Analysis of Net Interest Earnings

For 3 Months Ended September 30,
---------------------------------------------------------------------------
2005 2004
------------------------------------- ----------------------------------
Interest Average Interest Average
Average Earned Yield or Average Earned Yield or
Balance or Paid Cost Balance or Paid Cost
--------------------------------------------------------------------------

ASSETS
Interest earnings assets:
Federal funds sold .................. $ 8,981 $ 79 3.52% $ 7,521 $ 15 0.80%
Interest-bearing deposits at
financial institutions ............ 2,793 26 3.72% 7,606 43 2.26%
Investment securities (1) ........... 157,555 1,565 3.97% 133,026 1,252 3.76%
Gross loans/leases receivable (2) ... 692,539 10,903 6.30% 602,739 8,561 5.68%
----------------------- ---------------------
Total interest earning assets 861,868 12,573 5.84% 750,892 9,871 5.26%

Noninterest-earning assets:
Cash and due from banks ............. 27,931 31,073
Premises and equipment .............. 24,680 14,748
Less allowance for estimated losses
on loans/leases ................... (8,977) (9,813)
Other ............................... 41,366 31,884
--------- ---------
Total assets ................ $ 946,868 $ 818,784
========= =========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits .... $ 206,974 936 1.81% $ 174,157 344 0.79%
Savings deposits .................... 26,299 91 1.38% 16,264 13 0.32%
Time deposits ....................... 300,859 2,430 3.23% 225,214 1,351 2.40%
Short-term borrowings ............... 79,263 452 2.28% 117,438 378 1.29%
Federal Home Loan Bank advances ..... 116,000 1,134 3.91% 98,223 915 3.73%
Junior subordinated debentures ...... 25,775 427 6.63% 20,620 316 6.13%
Other borrowings .................... 15,922 172 4.32% 7,000 51 2.91%
----------------------- ---------------------
Total interest-bearing
liabilities ................. 771,092 5,642 2.93% 658,916 3,368 2.04%

Noninterest-bearing demand .......... 107,509 111,102
Other noninterest-bearing
liabilities ....................... 14,959 4,529
Total liabilities ................... 893,560 774,547
Stockholders' equity ................ 53,308 44,237
--------- ---------
Total liabilities and
stockholders' equity ........ $ 946,868 $ 818,784
========= =========
Net interest income ................. $ 6,931 $ 6,503
========= =========
Net interest spread ................. 2.91% 3.22%
====== ======

Net interest margin ................. 3.22% 3.46%
====== ======
Ratio of average interest earning
assets to average interest-
bearing liabilities ............... 111.77% 113.96%
========= =========
<FN>
(1) Interest earned and yields on nontaxable investment securities are
determined on a tax equivalent basis using a 34% tax rate for each period
presented.

(2) Loan/lease fees are not material and are included in interest income from
loans/leases receivable.
</FN>

Analysis of Changes of Interest Income/Interest Expense

For the three months ended September 30, 2005

Inc./(Dec.) Components from
of Change (1) -------------------
Prior Period Rate Volume
-----------------------------------
2005 vs. 2004
-----------------------------------
(Dollars in Thousands)

INTEREST INCOME
Federal funds sold ................................ $ 64 $ 60 $ 4
Interest-bearing deposits at financial institutions (17) 101 (118)
Investment securities (2) ......................... 313 72 241
Gross loans/leases receivable (3) ................. 2,342 986 1,356
---------------------------------
Total change in interest income ........... $ 2,702 $ 1,219 $ 1,483
---------------------------------

INTEREST EXPENSE
Interest-bearing demand deposits .................. $ 592 $ 517 $ 75
Savings deposits .................................. 78 66 12
Time deposits ..................................... 1,079 548 531
Short-term borrowings ............................. 74 743 (669)
Federal Home Loan Bank advances ................... 219 47 172
Junior subordinated debentures .................... 111 27 84
Other borrowings .................................. 121 33 88
--------------------------------
Total change in interest expense .......... $ 2,274 $ 1,981 $ 293
--------------------------------

Total change in net interest income ............... $ 428 $ (762) $ 1,190
=================================
<FN>

(1) The column "increase/decrease from prior period" is segmented into the
changes attributable to variations in volume and the changes attributable
to changes in interest rates. The variations attributable to simultaneous
volume and rate changes have been proportionately allocated to rate and
volume.

(2) Interest earned and yields on nontaxable investment securities are
determined on a tax equivalent basis using a 34% tax rate for each period
presented.

(3) Loan/lease fees are not material and are included in interest income from
loans/leases receivable.
</FN>

Consolidated Average Balance Sheets and Analysis of Net Interest Earnings

For 9 Months Ended September 30,
----------------------------------------------------------------------------------
2005 2004
--------------------------------------- ----------------------------------
Interest Average Interest Average
Average Earned Yield or Average Earned Yield or
Balance or Paid Cost Balance or Paid Cost
----------------------------------------------------------------------------------

ASSETS
Interest earnings assets:
Federal funds sold .................. $ 5,584 124 2.96% $ 5,823 23 0.53%
Interest-bearing deposits at
financial institutions ............ 3,670 95 3.45% 10,114 181 2.39%
Investment securities (1) ........... 153,225 4,407 3.83% 128,450 3,666 3.81%
Gross loans/leases receivable (2) ... 667,113 30,308 6.06% 571,095 24,054 5.62%
----------------------- ---------------------
Total interest earning assets 829,592 34,934 5.61% 715,482 27,924 5.20%

Noninterest-earning assets:
Cash and due from banks ............. 28,325 30,792
Premises and equipment .............. 22,196 13,566
Less allowance for estimated losses
on loans/leases ................... (9,102) (9,487)
Other ............................... 38,011 30,606
--------- ---------
Total assets ................ $ 909,022 $ 780,959
========= =========

LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits .... $ 182,818 1,880 1.37% $ 172,091 985 0.76%
Savings deposits .................... 20,024 121 0.81% 15,299 37 0.32%
Time deposits ....................... 298,823 6,552 2.92% 213,048 3,709 2.32%
Short-term borrowings ............... 99,570 1,566 2.10% 94,182 758 1.07%
Federal Home Loan Bank advances ..... 104,350 2,994 3.83% 91,374 2,575 3.76%
Junior subordinated debentures ...... 23,198 1,142 6.56% 24,183 1,317 7.26%
Other borrowings .................... 11,391 361 4.23% 4,583 97 2.82%
----------------------- ---------------------
Total interest-bearing
liabilities ................. 740,174 14,616 2.63% 614,760 9,478 2.06%

Noninterest-bearing demand .......... 106,580 113,953
Other noninterest-bearing
liabilities ....................... 10,043 9,362
Total liabilities ................... 856,797 738,075
Stockholders' equity ................ 52,225 42,884
--------- ---------
Total liabilities and
stockholders' equity ........ $ 909,022 $ 780,959
========= =========
Net interest income ................. $ 20,318 $ 18,446
========= =========
Net interest spread ................. 2.98% 3.14%
====== ======

Net interest margin ................. 3.27% 3.44%
====== ======
Ratio of average interest earning
assets to average interest-
bearing liabilities ............... 112.08% 116.38%
========= =========
<FN>

(1) Interest earned and yields on nontaxable investment securities are
determined on a tax equivalent basis using a 34% tax rate in each year
presented.

(2) Loan/lease fees are not material and are included in interest income from
loans/leases receivable.
</FN>

Analysis of Changes of Interest Income/Interest Expense

For the nine months ended September 30, 2005

Components
Inc./(Dec.) of Change (1)
from ---------------------
Prior Period Rate Volume
-------------------------------------
2005 vs. 2004
-------------------------------------
(Dollars in Thousands)

INTEREST INCOME
Federal funds sold ................................ $ 101 $ 102 $ (1)
Interest-bearing deposits at financial institutions (86) 92 (178)
Investment securities (2) ......................... 741 29 712
Gross loans/leases receivable (3) ................. 6,254 1,993 4,261
-----------------------------------
Total change in interest income ........... $ 7,010 $ 2,216 $ 4,794
-----------------------------------

INTEREST EXPENSE
Interest-bearing demand deposits .................. $ 895 $ 830 $ 65
Savings deposits .................................. 84 70 14
Time deposits ..................................... 2,843 1,114 1,729
Short-term borrowings ............................. 808 762 46
Federal Home Loan Bank advances ................... 419 47 372
Junior subordinated debentures .................... (175) (123) (52)
Other borrowings .................................. 264 66 198
-----------------------------------
Total change in interest expense .......... $ 5,138 $ 2,766 $ 2,372
-----------------------------------

Total change in net interest income ............... $ 1,872 $ (550) $ 2,422
===================================
<FN>

(2) Interest earned and yields on nontaxable investment securities are
determined on a tax equivalent basis using a 34% tax rate for each period
presented.

(3) Loan/lease fees are not material and are included in interest income from
loans/leases receivable.
</FN>

CRITICAL ACCOUNTING POLICY

The Company's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America. The financial
information contained within these statements is, to a significant extent,
financial information that is based on approximate measures of the financial
effects of transactions and events that have already occurred. Based on its
consideration of accounting policies that involve the most complex and
subjective decisions and assessments, management has identified its most
critical accounting policy to be that related to the allowance for loan losses.
The Company's allowance for loan loss methodology incorporates a variety of risk
considerations, both quantitative and qualitative in establishing an allowance
for loan loss that management believes is appropriate at each reporting date.
Quantitative factors include the Company's historical loss experience,
delinquency and charge-off trends, collateral values, changes in nonperforming
loans, and other factors. Quantitative factors also incorporate known
information about individual loans, including borrowers' sensitivity to interest
rate movements. Qualitative factors include the general economic environment in
the Company's markets, including economic conditions throughout the Midwest and
in particular, the state of certain industries. Size and complexity of
individual credits in relation to loan structure, existing loan policies and
pace of portfolio growth are other qualitative factors that are considered in
the methodology. Management may report a materially different amount for the
provision for loan losses in the statement of operations to change the allowance
for loan losses if its assessment of the above factors were different. This
discussion and analysis should be read in conjunction with the Company's
financial statements and the accompanying notes presented elsewhere herein, as
well as the portion of this Management's Discussion and Analysis, which
discusses the allowance for loan losses in the section entitled "Financial
Condition." Although management believes the levels of the allowance as of both
September 30, 2005 and December 31, 2004 were adequate to absorb losses inherent
in the loan portfolio, a decline in local economic conditions, or other factors,
could result in increasing losses that cannot be reasonably predicted at this
time.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

Interest income increased by $2.7 million to $12.5 million for the three-month
period ended September 30, 2005 when compared to $9.8 million for the quarter
ended September 30, 2004. The increase of 28% in interest income was
attributable to greater average, outstanding balances in interest earning
assets, principally with respect to loans/leases receivable, in combination with
an improved aggregate asset yield. The Company's average yield on interest
earning assets was 5.84%, an increase of 0.58% for the three months ended
September 30, 2005 when compared to the three months ended September 30, 2004.

Interest expense increased by $2.3 million from $3.3 million for the three-month
period ended September 30, 2004, to $5.6 million for the three-month period
ended September 30, 2005. The 68% increase in interest expense was the result of
a combination of greater average, outstanding balances in interest bearing
liabilities, principally with respect to customers' time deposits in subsidiary
banks, in combination with aggregate increased interest rates, principally with
respect to customers' time deposits in subsidiary banks and short-term
borrowings. The Company's average cost of interest bearing liabilities was 2.93%
for the three months ended September 30, 2005, which was an increase of 0.89%
when compared to the three months ended September 30, 2004.

At September 30, 2005 and December 31, 2004, the Company had an allowance for
estimated losses on loans of 1.24% and 1.43%, respectively. The provision for
loan losses decreased by $28 thousand from $411 thousand for the three-month
period ended September 30, 2004 to $383 thousand for the three-month period
ended September 30, 2005. During the third quarter of 2005, management
determined whether monthly provisions for loan losses were warranted based upon
a number of factors, including the increase in loans and a detailed analysis of
the loan portfolio. During the third quarter of 2005, net growth in the loan
portfolio of $15.6 million warranted a $193 thousand provision to the allowance
for loan losses, while downgrades within the portfolio contributed additional
provisions of $190 thousand. During the third quarter of 2004, net growth in the
loan portfolio was $33.9 million, which accounted for the entire provision for
loan losses for that period. For the three months ended September 30, 2005,
there were commercial loan charge-offs of $295 thousand, and there were
commercial recoveries of $49 thousand. Consumer loan charge-offs and recoveries
totaled $144 thousand and $23 thousand, respectively, during the quarter. Credit
card loans accounted for 7% of the third quarter consumer gross charge-offs.
Residential real estate loans had $139 thousand of charge-offs with no
recoveries for the three months ended September 30, 2005.

Noninterest income of $2.5 million for the three-month period ended September
30, 2005 was a $489 thousand, or 24%, increase from the three-month period ended
September 30, 2004. Noninterest income during the quarters in comparison
consisted primarily of income from the merchant credit card operation, fees from
the trust department, depository service fees, gains on the sale of residential
real estate mortgage loans and other miscellaneous income. The quarter ended
September 30, 2005, when compared to the same quarter in 2004, posted a $263
thousand increase in fees earned by the merchant credit card operations of
Bancard. Trust department fees improved $60 thousand from the third quarter of
2004 to the third quarter of 2005. Deposit service fees were down $34 thousand
from quarter to quarter. Gains on the sale of residential real estate mortgage
loans, net, increased by $32 thousand for the quarter ended September 30, 2005
when compared to the same quarter in 2004. Additional variations in noninterest
income consisted of a $47 thousand increase in investment advisory and
management fees, a $6 thousand increase in earnings on cash surrender value of
life insurance, and a $114 thousand increase in other noninterest income. Other
noninterest income in each quarter consisted primarily of income from affiliated
companies, earnings on other assets and Visa check card fees.

Merchant credit card fees, net of processing costs, for the three months ended
September 30, 2005 increased by 104% to $516 thousand from $253 thousand for the
third quarter of 2004. In October 2002, the Company sold Bancard's ISO related
merchant credit card operations to iPayment, Inc., and Bancard's core business
focus was shifted to processing for its agent banks, cardholders, and local
merchants. Through September 2003, Bancard continued to process ISO-related
transactions for iPayment, Inc. for a fixed monthly service fee, which increased
as the temporary processing period was extended. In September 2003, the transfer
of the ISO-related Visa/Mastercard processing activity to iPayment, Inc. was
completed and significantly reduced Bancard's exposure to risk of credit card
loss that the ISO activity carried with it. Bancard had established and carried
ISO-specific reserves, which provided coverage for this exposure. In March 2004,
the Company recognized a recovery of $144 thousand from a reduction in these
ISO-specific reserves. In September 2004, the Company recognized a recovery of
$133 thousand from the elimination of the remaining balance in the ISO-specific
reserves. For the third quarter of 2004, Bancard's ISO-related income was $134
thousand, and Bancard's core merchant credit card fees, net of processing costs
were $119 thousand, which included specific provisions of $198 thousand that
were made for local merchant chargeback losses. For the third quarter of 2005,
Bancard's core merchant credit card fees, net of processing costs were $516
thousand, which was an improvement of $397 thousand, when compared to the third
quarter of 2004. Making significant contributions to the 104% increase from
quarter to quarter were a reversal during the third quarter of 2005 of $37
thousand from specific allocations within the allowance for local merchant
chargeback losses and a $68 thousand recovery during the third quarter of 2005
of prior period expense.

For the quarter ended September 30, 2005, trust department fees increased $60
thousand, or 10%, to $676 thousand from $616 thousand for the same quarter in
2004. There was continued development of existing trust relationships and the
addition of new trust customers throughout the past twelve months, as well as an
improvement in market values of securities held in trust accounts, when compared
to one year ago. Each of these factors had a resulting impact on the calculation
of trust department fees.

Deposit service fees decreased $34 thousand, or 8%, to $387 thousand from $421
thousand for the three-month periods ended September 30, 2005 and June 30, 2004,
respectively. This decrease was primarily a result of the reduction in service
fees collected on the noninterest bearing demand deposit accounts at Quad City
Bank & Trust. The balance of Quad City Bank & Trust's noninterest bearing demand
deposits at September 30, 2005 decreased $11.6 million from September 30, 2004.
The quarterly average balance of the Company's consolidated noninterest bearing
demand deposits at September 30, 2005 decreased $3.6 million from September 30,
2004. Service charges and NSF (non-sufficient funds or overdraft) charges
related to the Company's demand deposit accounts were the main components of
deposit service fees.

Gains on sales of loans, net, were $275 thousand for the three months ended
September 30, 2005, which was an increase of $32 thousand, when compared to $243
thousand for the three months ended September 30, 2004. Loans originated for
sale during the third quarter of 2005 were $29.6 million and during the third
quarter of 2004 were $19.1 million. Proceeds on the sales of loans during the
third quarters of 2005 and 2004 were $31.2 million and $20.6 million,
respectively.

During the third quarter of 2005, earnings on the cash surrender value of life
insurance increased $6 thousand, or 4%, to $174 thousand from $168 thousand for
the third quarter of 2004. In February 2004, the Company made significant
investments in bank-owned life insurance (BOLI) on key executives at the two
then existing subsidiary banks. Quad City Bank & Trust purchased $8.3 million of
BOLI, and Cedar Rapids Bank & Trust made a purchase of $3.6 million of BOLI.
During 2005, Rockford Bank & Trust purchased $777 thousand of BOLI.

Investment advisory and management fees increased $47 thousand from $129
thousand for the three months ended September 30, 2004 to $176 thousand for the
three months ended September 30, 2005. The 37% increase from year to year was
due to the increased volume of investment services provided by representatives
of LPL Financial Services at the subsidiary banks, primarily at Quad City Bank &
Trust.

For the quarter ended September 30, 2005, other noninterest income increased
$114 thousand, or 60%, to $289 thousand from $189 thousand for the same quarter
in 2004. The increase was primarily due to the gain on a sale of other real
estate owned (OREO) at Quad City Bank & Trust, in combination with an increase
in income from affiliated companies. Visa check card fees, earnings on other
assets, and ATM fees were also primary contributors to other noninterest income
during the third quarter of 2005.

Noninterest expenses for the three months ended September 30, 2005, were $7.6
million and for the three months ended September 30, 2004, were $5.9 million.
For the third quarter of 2005, noninterest expenses for the new charter at
Rockford Bank and Trust were $587 thousand. The significant components of
noninterest expenses were salaries and benefits, occupancy and equipment
expenses, and professional and data processing fees, for both quarters.

The following table sets forth the various categories of noninterest expenses
for the three months ended September 30, 2005 and 2004.

Noninterest Expenses

Three months ended
September 30,
------------------------
2005 2004 % change
------------------------------------

Salaries and employee benefits ........... $4,219,355 $3,458,437 22.0%
Professional and data processing fees .... 618,719 620,242 (0.3)%
Advertising and marketing ................ 330,204 232,654 41.9%
Occupancy and equipment expense .......... 1,162,997 841,827 38.2%
Stationery and supplies .................. 163,448 124,915 30.9%
Postage and telephone .................... 222,642 169,626 31.3%
Bank service charges ..................... 128,671 146,569 (12.2)%
Insurance ................................ 145,838 126,032 15.7%
Loss on disposal of fixed assets ......... 332,283 -- --
Other .................................... 265,590 192,972 37.6%
------------------------
Total noninterest expenses ....... $7,589,747 5,913,274 28.4%
========================

For the quarter ended September 30, 2005, total salaries and benefits increased
to $4.2 million, which was up $761 thousand from the previous year's third
quarter total of $3.5 million. The increase of 22% was primarily due to an
increase in employees from 238 full time equivalents (FTEs) to 294 from
year-to-year. The staffing of Rockford Bank & Trust created 14 FTEs and 23% of
the increase in total salaries and benefits. In conjunction with Cedar Rapids
Bank & Trust's move into their new main office facility, the Company took a
one-time $332 thousand write-off of tenant improvements which had been made to
the GreatAmerica Building, which had initially served as that subsidiary's main
office. Occupancy and equipment expense increased $321 thousand, or 38%, from
quarter to quarter. The increase was a proportionate reflection of the Company's
investment in new facilities at the subsidiary banks, in combination with the
related costs associated with additional furniture, fixtures and equipment, such
as depreciation, maintenance, utilities, and property taxes. Other noninterest
expense increased $73 thousand to $266 thousand for the third quarter of 2005
from $193 thousand for the third quarter of 2004. The increase was primarily the
result of a combination of other loan expense at the subsidiary banks and
cardholder program expense at Bancard. Advertising and marketing expense
increased to $330 thousand for the third quarter of 2005 from $233 thousand for
the third quarter in 2004. The 42% increase was predominately due to marketing
coverage as Cedar Rapids Bank & Trust shifted operations to its two new
facilities. For the quarter ended September 30, 2005, postage and telephone
expense increased to $223 thousand, which was up $53 thousand from the previous
year's quarter total of $170 thousand. The increase of 31% was primarily due to
the Company's additional business resulting from its investment in four new
facilities from September 30, 2004 to September 30, 2005.

The provision for income taxes was $420 thousand for the three-month period
ended September 30, 2005 compared to $703 thousand for the three-month period
ended September 30, 2004 for a decrease of $283 thousand, or 40%. The decrease
was the result of a decrease in income before income taxes of $730 thousand, or
34%, for the 2005 quarter when compared to the 2004 quarter. Primarily due to an
increase in the proportionate share of tax-exempt income to total income from
year to year, the Company experienced a decrease in the effective tax rate from
33.1% for the third quarter of 2004 to 30.1% for the third quarter of 2005.

NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

Interest income increased by $7.0 million to $34.7 million for the nine-month
period ended September 30, 2005 when compared to $27.7 million for the nine
months ended September 30, 2004. The increase of 25% in interest income was
attributable to greater average, outstanding balances in interest earning
assets, principally with respect to loans/leases receivable, in combination with
an improved aggregate asset yield. The Company's average yield on interest
earning assets was 5.61%, an increase of 0.41% for the nine months ended
September 30, 2005 when compared to the nine months ended September 30, 2004.

Interest expense increased by $5.1 million from $9.5 million for the nine-month
period ended September 30, 2004, to $14.6 million for the nine-month period
ended September 30, 2005. The 54% increase in interest expense was the result of
a combination of greater average, outstanding balances in interest bearing
liabilities, principally with respect to customers' time deposits in subsidiary
banks, in combination with aggregate increased interest rates, principally with
respect to customers' time deposits and interest-bearing demand deposits in
subsidiary banks. The Company's average cost of interest bearing liabilities was
2.63% for the nine months ended September 30, 2005, which was an increase of
0.57% when compared to the nine months ended September 30, 2004.

At September 30, 2005 and December 31, 2004, the Company had an allowance for
estimated losses on loans of 1.24% and 1.43%, respectively. The successful
resolution of some large credits in Quad City Bank & Trust's loan portfolio,
through payoff, credit upgrade, refinancing, or the acquisition of additional
collateral or guarantees, contributed to a reduction to the level of allowance
for loan losses required at that subsidiary bank. The provision for loan losses
decreased by $1.2 million from $1.7 million for the nine-month period ended
September 30, 2004 to $536 thousand for the nine-month period ended September
30, 2005. During the first nine months of 2005, management determined whether
monthly provisions for loan losses were warranted based upon a number of
factors, including the increase in loans and a detailed analysis of the loan
portfolio. During the first nine months of 2005, net growth in the loan
portfolio of $41.5 million warranted a $515 thousand provision to the allowance
for loan losses. The net effect during the period, of provision reversals
attributed to upgrades within the portfolio, and additional provisions resulting
from downgrades within the portfolio, contributed an additional $21 thousand to
the allowance. During the first nine months of 2004, net growth in the loan
portfolio was $104.6 million. The $1.7 million provision to the allowance for
loan losses was attributed 97%, or $1.6 million, to net growth in the loan
portfolio, and 3%, or $58 thousand, to net downgrades within the portfolio. For
the nine months ended September 30, 2005, there were commercial loan charge-offs
of $1.1 million, and there were commercial recoveries of $205 thousand. The
charge-off of a single, nonperforming loan at Quad City Bank & Trust for $727
thousand accounted for 66% of the gross commercial charge-offs. Consumer loan
charge-offs and recoveries totaled $284 thousand and $76 thousand, respectively,
during the period. Credit card loans accounted for 45% of the consumer net
charge-offs for the first nine months of 2005. Residential real estate loans had
charge-offs of $154 thousand and no recoveries for the nine months ended
September 30, 2005.

Noninterest income of $7.5 million for the nine-month period ended September 30,
2005 was a $702 thousand, or 10%, increase from $6.8 million for the nine-month
period ended September 30, 2004. Noninterest income during each of the periods
in comparison consisted primarily of income from the merchant credit card
operation, fees from the trust department, depository service fees, gains on the
sale of residential real estate mortgage loans, and other miscellaneous income.
The nine months ended September 30, 2005, when compared to the same period in
2004, posted a $225 thousand increase in fees earned by the merchant credit card
operations of Bancard. Trust department fees improved $226 thousand from the
first nine months of 2004 to the comparable period in 2005. Deposit service fees
were down $73 thousand from period to period. Gains on the sale of residential
real estate mortgage loans, net, decreased by $31 thousand for the nine months
ended September 30, 2005 when compared to the same period in 2004. Additional
variations in noninterest income consisted of a $126 thousand increase in
investment advisory and management fees, a $266 thousand increase in other
noninterest income, and an $11 thousand decrease in earnings on cash surrender
value of life insurance. Other noninterest income in each period consisted
primarily of income from affiliated companies, earnings on other assets, and
Visa check card fees.

Merchant credit card fees, net of processing costs for the nine months ended
September 30, 2005 increased by 21% to $1.3 million from $1.1 million for the
first nine months of 2004. In October 2002, the Company sold Bancard's ISO
related merchant credit card operations to iPayment, Inc., and Bancard's core
business focus was shifted to processing for its agent banks, cardholders, and
local merchants. Through September 2003, Bancard continued to process
ISO-related transactions for iPayment, Inc. for a fixed monthly service fee,
which increased as the temporary processing period was extended. In September
2003, the transfer of the ISO-related Visa/Mastercard processing activity to
iPayment, Inc. was completed and significantly reduced Bancard's exposure to
risk of credit card loss that the ISO activity carried with it. Bancard had
established and carried ISO-specific reserves, which provided coverage for this
exposure. In the first and third quarters of 2004, the Company recognized
aggregate recoveries of $277 thousand from a reduction in these ISO-specific
reserves. For the first nine months of 2004, Bancard's ISO-related income was
$327 thousand, and Bancard's core merchant credit card fees, net of processing
costs were $767 thousand, which included specific provisions of $198 thousand
that were made for local merchant chargeback losses. For the first nine months
of 2005, Bancard's core merchant credit card fees, net of processing costs were
$1.3 million, which was an improvement of $555 thousand when compared to the
first nine months of 2004. Significantly contributing to the 72% increase from
year to year were aggregate reversals during 2005 of $110 thousand from specific
allocations within the allowance for local merchant chargeback losses, and $118
thousand in recoveries during 2005 of prior period expenses.

For the nine months ended September 30, 2005, trust department fees increased
$226 thousand, or 12%, to $2.1 million from $1.9 million for the same period in
2004. There was continued development of existing trust relationships and the
addition of new trust customers throughout the past twelve months, as well as an
improvement in market values of securities held in trust accounts, when compared
to one year ago. Each of these factors had a resulting impact on the calculation
of trust department fees.

Deposit service fees decreased $73 thousand, or 6%, remaining at $1.2 million
for the nine-month period ended September 30, 2005, as for the comparable period
in 2004. This decrease was primarily a result of the reduction in service fees
collected on the noninterest bearing demand deposit accounts at Quad City Bank &
Trust. The year-to-date average balance of consolidated noninterest bearing
demand deposits at September 30, 2005 decreased $7.4 million from September 30,
2004. Service charges and NSF (non-sufficient funds or overdraft) charges
related to demand deposit accounts were the main components of deposit service
fees.

Gains on sales of loans, net, were $880 thousand for the nine months ended
September 30, 2005, which was a decrease of $31 thousand, or 3%, when compared
to $911 thousand for the nine months ended September 30, 2004. Loans originated
for sale during the first nine months of 2005 were $74.6 million and during the
first nine months of 2004 were $65.0 million. Proceeds on the sales of loans
during the first three quarters of 2005 and 2004 were $74.1 million and $66.6
million, respectively.

During the first nine months of 2005, earnings on the cash surrender value of
life insurance decreased $11 thousand, or 2%, to $493 thousand from $504
thousand for the first nine months of 2004. In February 2004, the Company made
significant investments in bank-owned life insurance (BOLI) on key executives at
the two then existing subsidiary banks. Quad City Bank & Trust purchased $8.3
million of BOLI, and Cedar Rapids Bank & Trust made a purchase of $3.6 million
of BOLI. During 2005, Rockford Bank & Trust purchased $777 thousand of BOLI.

Investment advisory and management fees increased $126 thousand from $390
thousand for the nine months ended September 30, 2004 to $516 thousand for the
nine months ended September 30, 2005. The 32% increase from year to year was due
to the increased volume of investment services provided by representatives of
LPL Financial Services at the subsidiary banks, primarily at Quad City Bank &
Trust.

For the nine months ended September 30, 2005, other noninterest income increased
$266 thousand, or 39%, to $955 thousand from $689 thousand for the same period
in 2004. The increase was primarily due to income from affiliated companies.
During the first quarter of 2005, one of the Company's affiliated companies,
Nobel Electronic Transfer, LLC, completed a large, one-time sales transaction,
which contributed $219 thousand to other noninterest income. Income from
affiliated companies, earnings on other assets, Visa check card fees, and ATM
fees were primary contributors to other noninterest income during the first nine
months of 2005.

Noninterest expenses for the nine months ended September 30, 2005, were $21.8
million and for the nine months ended September 30, 2004, were $17.4 million.
For the first nine months of 2005, noninterest expenses for the new charter at
Rockford Bank and Trust were $1.7 million. The significant components of
noninterest expenses were salaries and benefits, occupancy and equipment
expenses, and professional and data processing fees, for both periods. During
the first quarter of 2004, there was also a loss of $747 thousand associated
with the redemption of junior subordinated debentures at their earliest call
date of June 30, 2004.

The following table sets forth the various categories of noninterest expenses
for the nine months ended September 30, 2005 and 2004.

Noninterest Expenses

Nine months ended
September 30,
-------------------------
2005 2004 % change
------------------------------------------

Salaries and employee benefits ..................... $12,236,200 $ 9,729,540 25.8%
Professional and data processing fees .............. 2,056,113 1,616,344 27.2%
Advertising and marketing .......................... 897,967 733,644 22.4%
Occupancy and equipment expense .................... 3,161,196 2,363,577 33.8%
Stationery and supplies ............................ 475,464 394,107 20.6%
Postage and telephone .............................. 617,327 498,685 23.8%
Bank service charges ............................... 386,170 431,812 (10.6)%
Insurance .......................................... 452,680 351,599 28.8%
Loss on disposal of fixed assets ................... 332,283 -- --
Loss on redemption of junior subordinated debentures -- 747,490 (100.0%)
Other .............................................. 1,170,393 573,144 104.2%
-------------------------
Total noninterest expenses ................. $21,785,793 17,439,942 24.9%
=========================

For the nine months ended September 30, 2005, total salaries and benefits
increased to $12.2 million, which was up $2.5 million from the previous year's
period total of $9.7 million. The increase of 26% was primarily due to the
Company's increase in compensation and benefits related to an increase in
employees from 238 full time equivalents (FTEs) to 294 from year-to-year. The
staffing of Rockford Bank & Trust created 14 FTEs and 34% of the increase in
total salaries and benefits. Occupancy and equipment expense increased $798
thousand, or 34%, from year to year. The increase was a proportionate reflection
of the Company's investment in new facilities at the subsidiary banks, in
combination with the related costs associated with additional furniture,
fixtures and equipment, such as depreciation, maintenance, utilities, and
property taxes. In conjunction with Cedar Rapids Bank & Trust's move into their
new main office facility, the Company took a one-time $332 thousand write-off of
tenant improvements which had been made to the GreatAmerica Building, which had
initially served as that subsidiary's main office. Other noninterest expense
increased $597 thousand to $1.2 million for the first nine months of 2005 from
$573 thousand for the first nine months of 2004. The increase was primarily the
result of $303 thousand of write-downs on property values of other real estate
owned (OREO) at Quad City Bank & Trust, $114 thousand of other expense incurred
on OREO property, $92 thousand of cardholder program expense at Bancard and
other loan expense at the subsidiary banks. Professional and data processing
fees experienced a 27% increase from $1.6 million for the first nine months of
2004 to $2.0 million for the comparable period in 2005. The $440 thousand
increase was primarily the result of legal and other professional fees related
to the organization of Rockford Bank & Trust, consulting fees incurred in
conjunction with Sarbanes-Oxley compliance work, and increased legal fees
incurred at the subsidiary banks. For the nine months ended September 30, 2005,
advertising and marketing expense increased to $898 thousand from $734 thousand
for the first nine months of 2004. The $164 thousand increase was predominately
due to the addition of Rockford Bank & Trust, in combination with special
promotional events at Cedar Rapids Bank & Trust revolving around the openings of
the two new facilities.

The provision for income taxes was $1.7 million for the nine-month period ended
September 30, 2005 compared to $1.9 million for the nine-month period ended
September 30, 2004 for a decrease of $198 thousand, or 11%. The decrease was the
result of a decrease in income before income taxes of $565 thousand, or 10%, for
the 2005 period when compared to the 2004 period.

FINANCIAL CONDITION

Total assets of the Company increased by $116.4 million, or 13%, to $986.5
million at September 30, 2005 from $870.1 million at December 31, 2004. The
growth resulted primarily from the Company's acquisition of m2 Lease Funds, the
net increase in the loan/lease portfolio and the net increase in the securities
portfolio, funded by interest-bearing deposits and Federal Home Loan Bank
advances.

Cash and due from banks increased by $5.1 million, or 24%, to $26.5 million at
September 30, 2005 from $21.4 million at December 31, 2004. Cash and due from
banks represented both cash maintained at its subsidiary banks, as well as funds
that the Company and its banks had deposited in other banks in the form of
non-interest bearing demand deposits.

Federal funds sold are inter-bank funds with daily liquidity. At September 30,
2005, the subsidiary banks had $4.2 million invested in such funds. This amount
increased by $1.3 million, or 44%, from $2.9 million at December 31, 2004. The
increase was primarily a result of an increased demand for Federal funds
purchases by Quad City Bank & Trust's downstream correspondent banks.

Interest bearing deposits at financial institutions decreased by $2.3 million,
or 59%, to $1.6 million at September 30, 2005 from $3.9 million at December 31,
2004. Included in interest bearing deposits at financial institutions are demand
accounts, money market accounts, and certificates of deposit. The decrease was
the result of decreases in money market accounts of $1.3 million and maturities
of certificates of deposit totaling $727 thousand, in combination with a
decrease in demand account balances of $286 thousand.

Securities increased by $23.4 million, or 16%, to $173.0 million at September
30, 2005 from $149.6 million at December 31, 2004. The increase was the result
of a number of transactions in the securities portfolio. Paydowns of $962
thousand were received on mortgage-backed securities, and the amortization of
premiums, net of the accretion of discounts, was $415 thousand. Maturities and
calls of securities occurred in the amount of $35.9 million, and the portfolio
experienced a decrease in the fair value of securities, classified as available
for sale, of $1.3 million. These portfolio decreases were offset by the purchase
of an additional $62.0 million of securities, classified as available for sale.

Total gross loans/leases receivable increased by $73.7 million, or 11%, to
$722.1 million at September 30, 2005 from $648.4 million at December 31, 2004.
The increase was the result of originations, renewals, additional disbursements
or purchases of $415.5 million of commercial business, consumer and real estate
loans, less loan charge-offs, net of recoveries, of $1.3 million, and loan
repayments or sales of loans of $373.9 million. The 11% increase in total gross
loans/leases receivable was also a result of Quad City Bank & Trust's
acquisition of m2 Lease Funds on August 26, 2005. At the acquisition date, m2
Lease Funds brought $32.0 million in leases into the Company's portfolio, and
subsequently contributed $1.4 million of lease originations since acquisition.
During the nine months ended September 30, 2005, Quad City Bank & Trust
contributed $259.0 million, or 62%, Cedar Rapids Bank & Trust contributed $132.7
million, or 32%, and Rockford Bank & Trust contributed $23.8 million, or 6%, of
the Company's loan originations, renewals, additional disbursements or
purchases. The mix of loan/lease types within the Company's loan/lease portfolio
at September 30, 2005 reflected 83% commercial, 8% real estate and 9% consumer
loans. The majority of residential real estate loans originated by the Company
were sold on the secondary market to avoid the interest rate risk associated
with long term fixed rate loans. Loans originated for this purpose were
classified as held for sale.

The allowance for estimated losses on loans/leases was $9.0 million at September
30, 2005 compared to $9.3 million at December 31, 2004, a decrease of $290
thousand, or 3%. The allowance for estimated losses on loans/leases was
determined based on factors that included the overall composition of the
loan/lease portfolio, types of loans/leases, past loss experience, loan/lease
delinquencies, potential substandard and doubtful credits, economic conditions,
collateral positions, governmental guarantees and other factors that, in
management's judgement, deserved evaluation. To ensure that an adequate
allowance was maintained, provisions were made based on a number of factors,
including the increase in loans/leases and a detailed analysis of the loan/lease
portfolio. The loan/lease portfolio was reviewed and analyzed monthly utilizing
the percentage allocation method. In addition, specific reviews were completed
each month on all loans risk-rated as "criticized" credits. The adequacy of the
allowance for estimated losses on loans/leases was monitored by the loan review
staff, and reported to management and the board of directors. The acquisition of
m2 Lease Funds during the third quarter of 2005 brought an additional $433
thousand to the allowance for estimated losses on loans/leases.

Although management believes that the allowance for estimated losses on
loans/leases at September 30, 2005 was at a level adequate to absorb losses on
existing loans/leases, there can be no assurance that such losses will not
exceed the estimated amounts or that the Company will not be required to make
additional provisions for loan/lease losses in the future. Unpredictable future
events could adversely affect cash flows for both commercial and individual
borrowers, as a result of which, the Company could experience increases in
problem assets, delinquencies and losses on loans/leases, and require further
increases in the provision. Asset quality is a priority for the Company and its
subsidiaries. The ability to grow profitably is in part dependent upon the
ability to maintain that quality. The Company continually focuses efforts at its
subsidiary banks with the intention to improve the overall quality of the
Company's loan/lease portfolio.

Net charge-offs for the nine months ended September 30 were $1.3 million in 2005
and $245 thousand in 2004. One measure of the adequacy of the allowance for
estimated losses on loans/leases is the ratio of the allowance to the gross
loan/lease portfolio. The allowance for estimated losses on loans/leases as a
percentage of gross loans/leases was 1.24% at September 30, 2005, 1.43% at
December 31, 2004 and 1.62% at September 30, 2004.

At September 30, 2005, total nonperforming assets were $6.8 million compared to
$10.7 million at December 31, 2004. The $3.9 million decrease was the result of
a $2.3 million decrease in nonaccrual loans, a decrease of $949 thousand in
other real estate owned, and a decrease of $551 thousand in accruing loans past
due 90 days or more.

Nonaccrual loans were $5.3 million at September 30, 2005 compared to $7.6
million at December 31, 2004, a decrease of $2.3 million. The decrease in
nonaccrual loans was comprised of a decrease in commercial loans of $2.0 million
and real estate loans of $350 thousand, and an increase in consumer loans of $17
thousand. Five large commercial lending relationships at Quad City Bank & Trust
and Cedar Rapids Bank & Trust, with an aggregate outstanding balance of $4.1
million, comprised 77% of the nonaccrual loans at September 30, 2005. The
existence of either a strong collateral position, a governmental guarantee, or
an improved payment status on several of the nonperformers significantly reduces
the Company's exposure to loss. The subsidiary banks continue to work for
resolutions with all of these customers. Management is continually monitoring
the Company's loan/lease portfolio and the level of the allowance for loan/lease
losses. The allowance for loan/lease losses to total loans/leases was 1.24% at
September 30, 2005. Management's efforts are ongoing to improve the overall
quality of the loan/lease portfolio. Nonaccrual loans represented less than one
percent of the Company's held for investment loan/lease portfolio at September
30, 2005.

From December 31, 2004 to September 30, 2005, accruing loans past due 90 days or
more decreased from $1.1 million to $582 thousand. Four significant lending
relationships at Quad City Bank & Trust and Cedar Rapids Bank & Trust comprised
$419 thousand, or 72%, of this balance at September 30, 2005.

Premises and equipment increased by $7.3 million, or 40%, to $25.4 million at
September 30, 2005 from $18.1 million at December 31, 2004. During the
nine-month period there were purchases of additional land, furniture, fixtures
and equipment and leasehold improvements of $9.0 million, which were partially
offset by both depreciation expense of $1.4 million and a one-time $332 thousand
write-off of Cedar Rapids Bank & Trust tenant improvements made to the
GreatAmerica Building, which had initially served as that subsidiary's main
office.

In September 2003, the Company announced plans for a fifth Quad City Bank &
Trust banking facility, to be located in west Davenport at Five Points. Total
costs were approximately $3.6 million, when the facility was completed and began
operations in March 2005. In February 2004, Cedar Rapids Bank & Trust announced
plans to build a facility in downtown Cedar Rapids. The Bank's main office was
relocated to this site on July 5, 2005. Costs for this facility during the first
nine months of 2005 were $3.8 million, and total costs for this project to date
are $6.5 million. Total costs for this facility were projected to be $6.9
million. Cedar Rapids Bank & Trust also completed construction of a branch
office located on Council Street, which opened for business on June 2, 2005. The
Company has incurred costs for this project of $1.7 million during the first
nine months of 2005 and $2.4 million to date. Total costs for this facility were
projected to be $2.3 million. During the first nine months of 2005, costs
associated with the establishment of the full-service banking facility in leased
space in downtown Rockford, which opened as the Company's third bank charter on
January 3rd, were $246 thousand, and total costs were $459 thousand. Rockford
Bank & Trust is moving forward with plans for a second banking facility, which
will initially be located in a leased, modular building, subject to zoning and
regulatory approval. During the first nine months of 2005, this project's costs
totalled $1.2 million. On August 26, 2005, Quad City Bank & Trust acquired 80%
of the membership units of m2 Lease Funds, LLC ("m2 Lease Funds"). The purchase
price of $5.0 million resulted in $3.4 million in goodwill.

Accrued interest receivable on loans, securities and interest-bearing deposits
with financial institutions increased by $994 thousand, or 24%, to $5.1 million
at September 30, 2005 from $4.1 million at December 31, 2004.

Bank-owned life insurance (BOLI) increased by $1.3 million from $15.9 million at
December 31, 2004 to $17.2 million at September 30, 2005. Banks may generally
buy BOLI as a financing or cost recovery vehicle for pre-and post-retirement
employee benefits. During 2004, the subsidiary banks purchased $8.0 million of
insurance to finance the expenses associated with the establishment of
supplemental retirement benefits plans for the executive officers. In addition,
the subsidiary banks purchased life insurance totaling $4.2 million on the lives
of a number of senior management personnel for the purpose of funding the
expenses of new deferred compensation arrangements for senior officers. During
the first quarter of 2005, Rockford Bank & Trust purchased $777 thousand of
BOLI. These purchases in 2004, combined with the previously purchased bank-owned
life insurance, resulted in Quad City Bank & Trust holding investments in
bank-owned life insurance policies near the regulatory maximum of 25% of
capital. Benefit expense associated with both the supplemental retirement
benefits and deferred compensation arrangements was $132 thousand and $125
thousand, respectively, for the nine months ended September 30, 2005. The banks
monitor the risks associated with these holdings, including diversification,
lending-limit, concentration, interest rate risk, credit risk, and liquidity.
Earnings on BOLI totaled $493 thousand for the first nine months of 2005.

Other assets increased by $1.9 million, or 13%, to $17.1 million at September
30, 2005 from $15.2 million at December 31, 2004. Other assets included $8.3
million of equity in Federal Reserve Bank and Federal Home Loan Bank stock, $3.1
million of deferred tax assets, $976 thousand in net other real estate owned
(OREO), $1.1 million in investments in unconsolidated companies, $612 thousand
of accrued trust department fees, $406 thousand of unamortized prepaid trust
preferred securities offering expenses, $492 thousand of prepaid Visa/Mastercard
processing charges, other miscellaneous receivables, and various prepaid
expenses. During the second half of 2004, the Company accumulated OREO from four
credit relationships at the subsidiary banks, which totaled $1.9 million at
December 31, 2004. During the first quarter of 2005, one of these OREO
properties was sold for $301 thousand at a minimal gain. During the third
quarter of 2005, a second OREO property was sold for $521 thousand, which
resulted in a gain of $41 thousand. During the first nine months of 2005, three
of the remaining property values were written down $303 thousand in the
aggregate.

Deposits increased by $103.1 million, or 18%, to $691.1 million at September 30,
2005 from $588.0 million at December 31, 2004. The increase resulted from a
$92.1 million aggregate net increase in money market, savings, and total
transaction accounts, in combination with an $11.0 million net increase in
interest-bearing certificates of deposit. The subsidiary banks experienced a net
increase in brokered certificates of deposit of $6.1 million during the first
nine months of 2005.

Short-term borrowings decreased $30.2 million, or 29%, from $104.8 million at
December 31, 2004 to $74.6 million at September 30, 2005. The subsidiary banks
offer short-term repurchase agreements to some of their major customers. Also,
on occasion, the subsidiary banks purchase Federal funds for short-term funding
needs from the Federal Reserve Bank, or from their correspondent banks. As a
result of the $95.4 million increase in deposits during the third quarter of
2005, there was a reduction in the subsidiary banks' dependence on short-term
borrowings to fund asset growth. Short-term borrowings were comprised of
customer repurchase agreements of $54.4 million and $47.6 million at September
30, 2005 and December 31, 2004, respectively, as well as federal funds purchased
of $20.2 million at September 30, 2005 and $57.2 million at December 31, 2004.

Federal Home Loan Bank advances increased by $26.1 million, or 28%, to $118.1
million at September 30, 2005 from $92.0 million at December 31, 2004. As a
result of their memberships in either the FHLB of Des Moines or Chicago, the
subsidiary banks have the ability to borrow funds for short or long-term
purposes under a variety of programs. FHLB advances are utilized for loan
matching as a hedge against the possibility of rising interest rates, and when
these advances provide a less costly or more readily available source of funds
than customer deposits.

Other borrowings increased $4.3 million, or 71%, from $6.0 million at December
31, 2004 to $10.3 million at September 30, 2005. In June 2004, the Company drew
an advance of $7.0 million on a line of credit at an upstream correspondent bank
as partial funding for the early redemption of $12.0 million in trust preferred
securities, which had been issued in 1999. In December 2004, the Company made a
payment to reduce the balance by $1.0 million. In January 2005, the Company drew
an additional $5.0 million advance as partial funding for the initial
capitalization of Rockford Bank & Trust. In May 2005, with proceeds from the
issuance of the trust preferred securities of Trust IV, the Company made a
payment to reduce the balance on the line of credit by $5.0 million. In
September 2005, the Company drew an advance of $4.0 million to provide $2.5
million of additional capital to Quad City Bank & Trust and $1.5 million of
additional capital to Cedar Rapids Bank & Trust for capital maintenance purposes
at each of the subsidiaries.

Junior subordinated debentures increased $5.2 million, or 25%, to $25.8 million
at September 30, 2005 from $20.6 million at December 31, 2004. In June 1999, the
Company issued $12.0 million of trust preferred securities through a newly
formed subsidiary, Trust I. The Company redeemed these securities on June 30,
2004. In February 2004, the Company formed two new subsidiaries and issued, in a
private transaction, $12.0 million of fixed rate trust preferred securities and
$8.0 million of floating rate trust preferred securities of Trust II and Trust
III, respectively. Trust II and Trust III used the proceeds from the sale of the
trust preferred securities, along with the funds from their equity, to purchase
junior subordinated debentures of the Company in the amounts of $12.4 million
and $8.2 million, respectively. On May 5, 2005, the Company announced the
issuance of $5.0 million of floating rate capital securities of QCR Holdings
Statutory Trust IV. Trust IV used the $5.0 million of proceeds from the sale of
the Trust Preferred Securities, in combination with $155 thousand of proceeds
from its equity, to purchase $5.2 million of junior subordinated debentures of
the Company.

Other liabilities were $12.4 million at September 30, 2005, up $4.5 million, or
58%, from $7.9 million at December 31, 2004. Other liabilities were comprised of
unpaid amounts for various products and services, and accrued but unpaid
interest on deposits. At September 30, 2005, the most significant components of
other liabilities were $3.4 million of accrued expenses, $3.1 million of
accounts payable for leases, $2.4 million of miscellaneous accounts payable, and
$2.3 million of interest payable.

Common stock, at both September 30, 2005 and December 31, 2004, was $4.5
million. The slight increase of $30 thousand was the result of stock issued from
the net exercise of stock options and stock purchased under the employee stock
purchase plan.

Additional paid-in capital totaled $20.7 million at September 30, 2005, up $371
thousand, or 2%, from $20.3 million at December 31, 2004. The increase resulted
from the proceeds received in excess of the $1.00 per share par value for the
29,602 shares of common stock issued as the result of the net exercise of stock
options and stock purchased under the employee stock purchase plan.

Retained earnings increased by $3.3 million, or 13%, to $28.6 million at
September 30, 2005 from $25.3 million at December 31, 2004. The increase
reflected net income for the nine-month period net of $180 thousand,
representing the four-cent per share dividend, which was declared in May and
paid in July 2005.

Unrealized losses on securities available for sale, net of related income taxes,
totaled $166 thousand at September 30, 2005 as compared to unrealized gains of
$669 thousand at December 31, 2004. The negative turnaround of $835 thousand was
attributable to decreases during the period in fair value of the securities
identified as available for sale, primarily due to the rise in interest rates.

LIQUIDITY

Liquidity measures the ability of the Company to meet maturing obligations and
its existing commitments, to withstand fluctuations in deposit levels, to fund
its operations, and to provide for customers' credit needs. The liquidity of the
Company primarily depends upon cash flows from operating, investing, and
financing activities. Net cash used in operating activities, consisting
primarily of originations of loans for sale, was $2.9 million for the nine
months ended September 30, 2005 compared to $5.9 million net cash provided by
operating activities, consisting primarily of proceeds on the sales of loans,
for the same period in 2004. Net cash used in investing activities, consisting
principally of purchases of available for sale securities, was $80.7 million for
the nine months ended September 30, 2005 and $126.0 million, consisting
primarily of loan originations to be held for investment, for the nine months
ended September 30, 2004. Net cash provided by financing activities, consisting
primarily of increased deposit accounts at the subsidiary banks, for the nine
months ended September 30, 2005 was $82.9 million, and for the same period in
2004 was $121.8 million, consisting principally of funds from short-term
borrowings.

The Company has a variety of sources of short-term liquidity available to it,
including federal funds purchased from correspondent banks, sales of securities
available for sale, FHLB advances, lines of credit and loan participations or
sales. At September 30, 2005, the subsidiary banks had fourteen lines of credit
totaling $104.5 million, of which $13.0 million was secured and $91.5 million
was unsecured. At September 30, 2005, Quad City Bank & Trust had drawn $20.2
million of their available balance of $83.0 million, and Cedar Rapids Bank &
Trust had drawn none of their available balance of $21.5 million. At December
31, 2004, the subsidiary banks had fourteen lines of credit totaling $99.5
million, of which $13.0 million was secured and $86.5 million was unsecured. At
December 31, 2004, Quad City Bank & Trust had drawn $21.1 million of their
available balance of $83.0 million, and Cedar Rapids Bank & Trust had drawn none
of their available balance of $16.5 million. As of both September 30, 2005 and
December 31, 2004, the Company had two unsecured revolving credit notes totaling
$15.0 million in aggregate, replacing a single note of $15.0 million previously
held. The Company had a 364-day revolving note, which matures December 29, 2005,
for $10.0 million and had a balance outstanding of $5.0 million at September 30,
2005 and $6.0 million at December 31, 2004. The Company also had a 3-year
revolving note, which matures December 30, 2007, for $5.0 million and carried no
balance as of December 31, 2004. On January 3, 2005, the 3-year note was fully
drawn as partial funding for the capitalization of Rockford Bank & Trust. For
both notes, interest is payable monthly at the Federal Funds rate plus 1% per
annum, as defined in the credit agreements. As of December 31, 2004, the
interest rate on the 364-day note was 3.23%. At September 30, 2005, the interest
rate on both notes was 4.73%.

On February 18, 2004, the Company issued $12.0 million of fixed/floating rate
capital securities and $8.0 million of floating rate capital securities. The
securities represent undivided beneficial interests in Trust II and Trust III,
which were established by the Company for the purpose of issuing the trust
preferred securities. The securities issued by Trust II and Trust III mature in
thirty years. The fixed/floating rate capital securities are callable at par
after seven years, and the floating rate capital securities are callable at par
after five years. The fixed/floating rate capital securities have a fixed rate
of 6.93%, payable quarterly, for seven years, at which time they have a variable
rate based on the three-month LIBOR, reset quarterly, and the floating rate
capital securities have a variable rate based on the three-month LIBOR, reset
quarterly, with the rate currently set at 6.34%. Trust II and Trust III used the
proceeds from the sale of the trust preferred securities, along with the funds
from their equity, to purchase junior subordinated debentures of the Company in
the amounts of $8.2 million and $12.4 million, respectively. The Company
incurred issuance costs of $429 thousand, which are being amortized over the
lives of the securities.

The Company used the net proceeds for general corporate purposes, which included
a net paydown of $3.0 million on the balance of the Company's unsecured
revolving credit note, an infusion of $3.0 million to Cedar Rapids Bank & Trust
for capital maintenance purposes, and an infusion of $1.0 million to Quad City
Bank & Trust for capital maintenance purposes. Management's primary use for the
balance of the proceeds was the redemption, in June 2004, of the $12.0 million
of 9.2% cumulative trust preferred securities issued by Trust I in 1999. Based
on this intended redemption, $747 thousand of unamortized issuance costs related
to the trust preferred securities of Trust I were expensed in March 2004.

On May 5, 2005, the Company announced the issuance of $5.0 million of floating
rate capital securities of QCR Holdings Statutory Trust IV. The securities
represent the undivided beneficial interest in Trust IV, which was established
by the Company for the sole purpose of issuing the Trust Preferred Securities.
The securities issued by Trust IV mature in thirty years, but are callable at
par after five years. The Trust Preferred Securities have a variable rate based
on the three-month LIBOR, reset quarterly, with the current rate set at 5.95%.
Interest is payable quarterly. Trust IV used the $5.0 million of proceeds from
the sale of the Trust Preferred Securities, in combination with $155 thousand of
proceeds from its own equity, to purchase $5.2 million of junior subordinated
debentures of the Company. The Company will treat these new issuances as Tier 1
capital for regulatory capital purposes, subject to current established
limitations. The Company incurred no issuance costs as a result of the
transaction. The Company used its net proceeds for general corporate purposes,
including the paydown of its other borrowings.

On April 28, 2005, the Company declared a cash dividend of $0.04 per share, or
$180 thousand, which was paid on July 6, 2005, to stockholders of record on June
15, 2005. On October 27, 2005, the Company declared a cash dividend of $0.04 per
share, or $181 thousand, which will be paid on January 6, 2006, to stockholders
of record on December 23, 2005. It is the Company's intention to consider the
payment of dividends on a semi-annual basis. The Company anticipates an ongoing
need to retain much of its operating income to help provide the capital for
continued growth, however it believes that operating results have reached a
level that can sustain dividends to stockholders as well.

RECENT REGULATORY DEVELOPMENTS

Effective April 11, 2005, the Board of Governors of the Federal Reserve System
amended the risk-based capital standards for bank holding companies to allow the
continued inclusion of outstanding and prospective issuances of trust preferred
securities in the Tier 1 capital of bank holding companies, subject to stricter
standards. The new regulations limit the amount of trust preferred securities
(combined with all other restricted core capital elements) that a bank holding
company may include as Tier 1 capital to 25% of the sum of all core capital
elements, net of goodwill less any associated deferred tax liability. Amounts in
excess of the limits described above generally may be included in Tier 2
capital. The regulations also provide a transition period for bank holding
companies to conform their capital structures to the revised quantitative
limits. These limits will first become applicable to bank holding companies
beginning on March 31, 2009. With the addition of goodwill to the Company's
balance sheet, in conjunction with the acquisition of m2 Lease Funds, these new
regulatory limits have had a slight impact on the Company's tier 1 leverage
ratio for the third quarter of 2005. At September 30, 2005, the Company's tier 1
leverage ratio was 7.14%. At December 31, 2004, the Company's tier 1 leverage
ratio was 7.81%.

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995. This document contains, and future oral and written statements of the
Company and its management may contain, forward-looking statements, within the
meaning of such term in the Private Securities Litigation Reform Act of 1995,
with respect to the financial condition, results of operations, plans,
objectives, future performance and business of the Company. Forward-looking
statements, which may be based upon beliefs, expectations and assumptions of the
Company's management and on information currently available to management, are
generally identifiable by the use of words such as "believe," "expect,"
"anticipate," "bode," "predict," "suggest," "project," "appear," "plan,"
"intend," "estimate," "may," "will," "would," "could," "should," "likely" or
other similar expressions. Additionally, all statements in this document,
including forward-looking statements, speak only as of the date they are made,
and the Company undertakes no obligation to update any statement in light of new
information or future events.

The Company's ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors which could have a material adverse
effect on the operations and future prospects of the Company and its
subsidiaries include, but are not limited to, the following:

o The strength of the United States economy in general and the strength of
the local economies in which the Company conducts its operations which may
be less favorable than expected and may result in, among other things, a
deterioration in the credit quality and value of the Company's assets.

o The economic impact of past and any future terrorist attacks, acts of war
or threats thereof, and the response of the United States to any such
threats and attacks.

o The effects of, and changes in, federal, state and local laws, regulations
and policies affecting banking, securities, insurance and monetary and
financial matters.

o The effects of changes in interest rates (including the effects of changes
in the rate of prepayments of the Company's assets) and the policies of the
Board of Governors of the Federal Reserve System.

o The ability of the Company to compete with other financial institutions as
effectively as the Company currently intends due to increases in
competitive pressures in the financial services sector.

o The inability of the Company to obtain new customers and to retain existing
customers.

o The timely development and acceptance of products and services, including
products and services offered through alternative delivery channels such as
the Internet.

o Technological changes implemented by the Company and by other parties,
including third party vendors, which may be more difficult or more
expensive than anticipated or which may have unforeseen consequences to the
Company and its customers.

o The ability of the Company to develop and maintain secure and reliable
electronic systems.

o The ability of the Company to retain key executives and employees and the
difficulty that the Company may experience in replacing key executives and
employees in an effective manner.

o Consumer spending and saving habits which may change in a manner that
affects the Company's business adversely.

o Business combinations and the integration of acquired businesses which may
be more difficult or expensive than expected.

o The costs, effects and outcomes of existing or future litigation.

o Changes in accounting policies and practices, as may be adopted by state
and federal regulatory agencies and the Financial Accounting Standards
Board.

o The ability of the Company to manage the risks associated with the
foregoing as well as anticipated.

These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements.
Additional information concerning the Company and its business, including other
factors that could materially affect the Company's financial results, is
included in the Company's filings with the Securities and Exchange Commission.

Part I
Item 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company realizes income principally from the spread between the interest
earned on loans, investments and other interest-earning assets and the interest
paid on deposits and borrowings. Loan volumes and yields, as well as the volume
of and rates on investments, deposits and borrowings, are affected by market
interest rates. Additionally, because of the terms and conditions on many of the
investments and the loan and deposit accounts, a change in interest rates could
also affect the projected maturities in the securities and loan portfolios
and/or the deposit base, which could alter the Company's sensitivity to future
changes in interest rates. Accordingly, management considers interest rate risk
to be a significant market risk.

Interest rate risk management focuses on maintaining consistent growth in net
interest income within policy limits approved by the board of directors, while
taking into consideration, among other factors, the Company's overall credit,
operating income, operating cost, and capital profile. The subsidiary banks'
ALM/Investment Committees, which includes senior management representatives and
members of the board of directors, monitor and manage interest rate risk to
maintain an acceptable level of change to net interest income as a result of
changes in interest rates.

One method used to quantify interest rate risk is a short-term earnings at risk
summary, which is a detailed and dynamic simulation model used to quantify the
estimated exposure of net interest income to sustained interest rate changes.
This simulation model captures the impact of changing interest rates on the
interest income received and interest expense paid on all interest sensitive
assets and liabilities reflected on the Company's consolidated balance sheet.
This sensitivity analysis demonstrates net interest income exposure over a one
year horizon, assuming no balance sheet growth and a 200 basis point upward and
a 100 basis point downward shift in interest rates, where interest-bearing
assets and liabilities reprice at their earliest possible repricing date. The
model assumes a parallel and pro rata shift in interest rates over a
twelve-month period. Application of the simulation model analysis at June 30,
2005 demonstrated a 3.23% decrease in interest income with a 200 basis point
increase in interest rates, and a 3.67% decrease in interest income with a 100
basis point decrease in interest rates. Both simulations are within the
board-established policy limits of a 10% decline in value.

Part I
Item 4

CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. An evaluation was performed
under the supervision and with the participation of the Company's management,
including the Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures (as defined in Rule 13a-15(e) promulgated under the Securities
and Exchange Act of 1934, as amended) as of June 30, 2005. Based on that
evaluation, the Company's management, including the Chief Executive Officer and
Chief Financial Officer, concluded that the Company's disclosure controls and
procedures were effective to ensure that information required to be disclosed in
the reports filed and submitted under the Securities Exchange Act of 1934 was
recorded, processed, summarized and reported as and when required.

Limitations on the Effectiveness of Controls. It should be noted that any system
of controls and procedures, however well designed and operated, can provide only
reasonable, and not absolute, assurance that the objectives of the system are
met. There are inherent limitations to the effectiveness of all control systems,
including the possibility of human error and the circumvention or overriding of
the controls and procedures. Therefore, even effective systems of controls and
procedures can provide only reasonable assurances of achieving their control
objectives. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting. The Company is currently
undergoing a comprehensive effort to ensure compliance with the requirements
under Section 404 of the Sarbanes-Oxley Act of 2002. As a result, enhancements
to the Company's internal controls over financial reporting are being or have
been implemented. During the second quarter of 2005, the Company implemented a
comprehensive Reconciliation and Account Certification Policy, which guides a
semi-centralized process up through the Company ending with a consolidated
reporting package for the Chief Financial Officer. At September 30, 2005, the
Company had not fully completed its evaluation nor had all control enhancements
been completed. Other than changes as described above, there have been no
changes to the Company's internal control over financial reporting during the
period covered by this report that have materially effected, or are reasonably
likely to affect the Company's internal control over financial reporting.

Part II

QCR HOLDINGS, INC.
AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 1 Legal Proceedings

There are no material pending legal proceedings to which the Company or its
subsidiaries is a party other than ordinary routine litigation incidental to
their respective businesses.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3 Defaults Upon Senior Securities

None

Item 4 Submission of Matters to a Vote of Security Holders

None

Item 5 Other Information

None

Item 6 Exhibits

(a) Exhibits

10.1 Second Amended and Restated Operating Agreement between Quad
City Bank and Trust Company and John Engelbrecht dated
August 26, 2005

31.1 Certification of Chief Executive Officer Pursuant to Rule
13a-14(a)/15d-14(a)

31.2 Certification of Chief Financial Officer Pursuant to Rule
13a-14(a)/15d-14(a)

32.1 Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.

32.2 Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

QCR HOLDINGS, INC.
(Registrant)

Date November 11, 2005 /s/ Michael A. Bauer
------------------------------
Michael A. Bauer, Chairman

Date November 11, 2005 /s/ Douglas M. Hultquist
------------------------------
Douglas M. Hultquist,
President, Chief Executive
Officer

Date November 11, 2005 /s/ Todd A. Gipple
------------------------------
Todd A. Gipple, Executive Vice
President, Chief Financial
Officer