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 June 30, 2006

[   ] 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)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for past 90 days.
                                                            Yes [ X ] No  [    ]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

   Large accelerated filer [ ] Accelerated filer [ X ] Non-accelerated filer [ ]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the 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 August 1, 2006, the
Registrant had outstanding 4,553,741 shares of common stock, $1.00 par value per
share.

                                       1

                       QCR HOLDINGS, INC. AND SUBSIDIARIES


                                      INDEX

                                                                           Page
                                                                          Number

Part I     FINANCIAL INFORMATION

           Item 1     Consolidated Financial Statements (Unaudited)

                      Consolidated  Balance Sheets,
                      June 30, 2006 and December 31, 2005 .................... 3

                      Consolidated Statements of Income,
                      For the Three Months Ended June 30, 2006 and 2005 ...... 4

                      Consolidated Statements of Income,
                      For the Six Months Ended June 30, 2006 and 2005 ........ 5

                      Consolidated Statements of Cash Flows,
                      For the Six Months Ended June 30, 2006 and 2005 ........ 6

                      Notes to Consolidated Financial Statements .......... 7-14

           Item 2     Management's Discussion and Analysis of
                      Financial Condition and Results of Operations ...... 15-31

           Item 3     Quantitative and Qualitative Disclosures
                      About Market Risk ..................................... 32

           Item 4     Controls and Procedures ............................... 33

Part II    OTHER INFORMATION

           Item 1     Legal Proceedings ..................................... 34

           Item 1.A.  Risk Factors .......................................... 34

           Item 2     Unregistered Sales of Equity Securities and
                      Use of Proceeds ....................................... 34

           Item 3     Defaults Upon Senior Securities ....................... 34

           Item 4     Submission of Matters to a Vote of Security
                      Holders ............................................... 34

           Item 5     Other Information ....................................  34

           Item 6     Exhibits .............................................. 34

           Signatures ....................................................... 35

                                       2

                       QCR HOLDINGS, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                       June 30, 2006 and December 31, 2005



                                                                                             June 30,         December 31,
                                                                                               2006               2005
                                                                                         ----------------------------------
                                                                                                      
ASSETS
Cash and due from banks ..............................................................   $    33,182,166    $    38,956,627
Federal funds sold ...................................................................         4,030,000          4,450,000
Interest-bearing deposits at financial institutions ..................................         4,474,033          1,270,666

Securities held to maturity, at amortized cost .......................................           350,000            150,000
Securities available for sale, at fair value .........................................       184,152,993        182,214,719
                                                                                         ----------------------------------
                                                                                             184,502,993        182,364,719
                                                                                         ----------------------------------

Loans receivable held for sale .......................................................         7,442,064          2,632,400
Loans/leases receivable held for investment ..........................................       859,642,566        753,621,630
                                                                                         ----------------------------------
                                                                                             867,084,630        756,254,030
Less: Allowance for estimated losses on loans/leases .................................        (9,744,153)        (8,883,855)
                                                                                         ----------------------------------
                                                                                             857,340,477        747,370,175
                                                                                         ----------------------------------

Premises and equipment, net ..........................................................        26,670,695         25,621,741
Goodwill .............................................................................         3,222,688          3,222,688
Accrued interest receivable ..........................................................         6,139,371          4,849,378
Bank-owned life insurance ............................................................        18,531,095         17,367,660
Other assets .........................................................................        18,478,398         17,139,874
                                                                                         ----------------------------------

        Total assets .................................................................   $ 1,156,571,916    $ 1,042,613,528
                                                                                         ==================================

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
  Noninterest-bearing ................................................................   $   126,017,685    $   114,176,434
  Interest-bearing ...................................................................       678,084,833        584,327,465
                                                                                         ----------------------------------
          Total deposits .............................................................       804,102,518        698,503,899
                                                                                         ----------------------------------

Short-term borrowings ................................................................       104,358,713        107,469,851
Federal Home Loan Bank advances ......................................................       131,886,221        130,000,854
Other borrowings .....................................................................         9,307,911         10,764,914
Junior subordinated debentures .......................................................        36,085,000         25,775,000
Other liabilities ....................................................................        13,904,208         14,981,346
                                                                                         ----------------------------------
          Total liabilities ..........................................................     1,099,644,571        987,495,864
                                                                                         ----------------------------------

Minority interest in consolidated subsidiary .........................................           752,106            650,965

STOCKHOLDERS' EQUITY
Common stock, $1 par value;  shares authorized 10,000,000 ............................         4,548,256          4,531,224
  June 2006 - 4,548,256 shares issued and outstanding,
  December 2005 - 4,531,224 shares issued and outstanding
Additional paid-in capital ...........................................................        21,117,975         20,776,254
Retained earnings ....................................................................        31,581,458         29,726,700
Accumulated other comprehensive loss .................................................        (1,072,450)          (567,479)
                                                                                         ----------------------------------
          Total stockholders' equity .................................................        56,175,239         54,466,699
                                                                                         ----------------------------------
          Total liabilities and stockholders' equity .................................   $ 1,156,571,916    $ 1,042,613,528
                                                                                         ==================================

                                 See Notes to Consolidated Financial Statements

                                       3

                       QCR HOLDINGS, INC. AND SUBSIDIARIES

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




                                                                       2006           2005
                                                                  ----------------------------
                                                                            
Interest and dividend income:
  Loans/leases, including fees ................................   $ 14,173,405    $ 10,084,216
  Securities:
    Taxable ...................................................      1,713,181       1,258,488
    Nontaxable ................................................        187,699         140,006
  Interest-bearing deposits at financial institutions .........         93,531          28,213
  Federal funds sold ..........................................         54,410          27,947
                                                                  ----------------------------
          Total interest and dividend income ..................     16,222,226      11,538,870
                                                                  ----------------------------

Interest expense:
  Deposits ....................................................      5,994,545       2,650,998
  Short-term borrowings .......................................        877,873         647,800
  Federal Home Loan Bank advances .............................      1,309,635       1,010,319
  Other borrowings ............................................        144,875          87,587
  Junior subordinated debentures ..............................        643,200         385,170
                                                                  ----------------------------
          Total interest expense ..............................      8,970,128       4,781,874
                                                                  ----------------------------

          Net interest income .................................      7,252,098       6,756,996

 Provision for loan/lease losses ..............................        351,736        (147,418)
                                                                  ----------------------------
          Net interest income after provision for
          loan/lease losses ...................................      6,900,362       6,904,414
                                                                  ----------------------------
Noninterest income:
  Merchant credit card fees, net of processing costs ..........        491,657         383,758
  Trust department fees .......................................        741,648         719,918
  Deposit service fees ........................................        478,664         396,297
  Gains on sales of loans, net ................................        287,768         351,042
  Securities losses, net ......................................        (71,293)             --
  Gains on sales of foreclosed assets .........................        744,694              --
  Earnings on bank-owned life insurance .......................        163,300         140,235
  Investment advisory and management fees .....................        363,395         199,675
  Other .......................................................        396,933         243,953
                                                                  ----------------------------
          Total noninterest income ............................      3,596,766       2,434,878
                                                                  ----------------------------

Noninterest expenses:
  Salaries and employee benefits ..............................      5,483,476       4,120,478
  Professional and data processing fees .......................        768,415         824,598
  Advertising and marketing ...................................        383,542         307,584
  Occupancy and equipment expense .............................      1,274,648       1,022,246
  Stationery and supplies .....................................        168,000         164,238
  Postage and telephone .......................................        248,111         198,370
  Bank service charges ........................................        142,939         139,026
  Insurance ...................................................        153,413         153,687
  Other .......................................................         59,596         513,114
                                                                  ----------------------------
          Total noninterest expenses ..........................      8,682,140       7,443,341
                                                                  ----------------------------

Minority interest in income of consolidated subsidiary ........         47,757              --

          Income before income taxes ..........................      1,767,231       1,895,951
Federal and state income taxes ................................        563,750         633,428
                                                                  ----------------------------
          Net income ..........................................   $  1,203,481    $  1,262,523
                                                                  ============================
Earnings per common share:
  Basic .......................................................   $       0.26    $       0.28
  Diluted .....................................................   $       0.26    $       0.27
  Weighted average common shares outstanding ..................      4,543,169       4,514,459
  Weighted average common and common equivalent
    shares outstanding ........................................      4,588,384       4,614,256

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

Comprehensive income ..........................................   $    704,085    $  1,434,067
                                                                  ============================


                 See Notes to Consolidated Financial Statements

                                       4


                       QCR HOLDINGS, INC. AND SUBSIDIARIES

                  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                             Six Months Ended June 30




                                                                     2006          2005
                                                                ----------------------------
                                                                          
Interest and dividend income:
  Loans/leases, including fees ..............................   $ 26,987,400    $ 19,404,460
  Securities:
    Taxable .................................................      3,406,183       2,423,510
    Nontaxable ..............................................        357,096         276,249
  Interest-bearing deposits at financial institutions .......        136,010          69,100
  Federal funds sold ........................................        204,386          45,540
                                                                ----------------------------
          Total interest and dividend income ................     31,091,075      22,218,859
                                                                ----------------------------
Interest expense:
  Deposits ..................................................     11,281,050       5,096,157
  Short-term borrowings .....................................      1,440,294       1,113,919
  Federal Home Loan Bank advances ...........................      2,583,115       1,859,928
  Other borrowings ..........................................        254,245         188,872
  Junior subordinated debentures ............................      1,163,452         714,648
                                                                ----------------------------
          Total interest expense ............................     16,722,156       8,973,524
                                                                ----------------------------
          Net interest income ...............................     14,368,919      13,245,335
 Provision for loan/lease losses ............................        895,580         153,788
                                                                ----------------------------
          Net interest income after provision for
          loan/lease losses .................................     13,473,339      13,091,547
                                                                ----------------------------
Noninterest income:
  Merchant credit card fees, net of processing costs ........        987,450         802,717
  Trust department fees .....................................      1,522,941       1,455,061
  Deposit service fees ......................................        944,080         777,563
  Gains on sales of loans, net ..............................        493,003         605,172
  Securities losses, net ....................................       (213,879)             --
  Gains on sales of foreclosed assets .......................        750,134             867
  Earnings on bank-owned life insurance .....................        413,008         318,962
  Investment advisory and management fees, gross ............        663,938         339,854
  Other .....................................................        832,140         651,157
                                                                ----------------------------
          Total noninterest income ..........................      6,392,815       4,951,353
                                                                ----------------------------
Noninterest expenses:
  Salaries and employee benefits ............................     10,531,379       8,016,845
  Professional and data processing fees .....................      1,559,253       1,437,394
  Advertising and marketing .................................        626,849         567,763
  Occupancy and equipment expense ...........................      2,524,661       1,998,199
  Stationery and supplies ...................................        337,369         312,016
  Postage and telephone .....................................        473,241         394,685
  Bank service charges ......................................        278,475         257,499
  Insurance .................................................        286,489         306,842
  Other .....................................................        257,937         904,803
                                                                ----------------------------
          Total noninterest expenses ........................     16,875,653      14,196,046
                                                                ----------------------------

Minority interest in income of consolidated subsidiary ......        101,141              --

          Income before income taxes ........................      2,889,360       3,846,854
Federal and state income taxes ..............................        852,708       1,260,581
                                                                ----------------------------
          Net income ........................................   $  2,036,652    $  2,586,273
                                                                ============================
Earnings per common share:
  Basic .....................................................   $       0.44    $       0.57
  Diluted ...................................................   $       0.44    $       0.56
  Weighted average common shares outstanding ................      4,576,755       4,508,886
  Weighted average common and common equivalent .
    shares outstanding ......................................      4,624,477       4,612,778

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

Comprehensive income ........................................   $  1,531,681    $  2,053,608
                                                                ============================


                 See Notes to Consolidated Financial Statements

                                       5

                             QCR HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                   Six Months Ended June 30


                                                                                           2006             2005
                                                                                      ------------------------------
                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income ........................................................................ $  2,036,652     $   2,586,273
  Adjustments to reconcile net income to net cash
    (used in) provided by operating activities:
     Depreciation ...................................................................    1,158,217           892,541
     Provision for loan/lease losses ................................................      895,580           153,788
     Amortization of offering costs on subordinated debentures ......................        7,158             7,158
     Stock-based compensation expense ...............................................       24,895                --
     Minority interest in income of consolidated subsidiary .........................      101,141                --
     Gain on sale of foreclosed assets ..............................................     (750,134)             (867)
     Amortization of premiums on securities, net ....................................      156,360           314,922
     Investment securities losses, net ..............................................      213,879                --
     Loans originated for sale ......................................................  (43,483,659)      (45,011,732)
     Proceeds on sales of loans .....................................................   39,160,586        42,904,794
     Net gains on sales of loans ....................................................     (493,003)         (605,172)
     Increase in accrued interest receivable ........................................   (1,289,993)         (165,842)
     Increase in other assets .......................................................   (1,221,763)       (1,908,819)
     (Decrease) increase in other liabilities .......................................     (949,998)        1,278,326
                                                                                      ------------------------------
          Net cash (used in) provided by operating activities                         $ (4,434,082)    $     445,370
                                                                                      ------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Net decrease (increase) in federal funds sold .....................................        420,000     (7,590,000)
  Net (increase) decrease in interest-bearing deposits at financial institutions          (3,203,367)     2,239,797
  Proceeds from sale of foreclosed assets ...........................................      1,013,852        301,804
  Activity in securities portfolio:
    Purchases .......................................................................    (31,182,258)   (34,740,620)
    Calls and maturities ............................................................     22,675,000     28,548,500
    Paydowns ........................................................................        353,508        612,666
    Sales ...........................................................................      4,786,122             --
  Activity in bank-owned life insurance:
    Purchases .......................................................................       (750,765)      (589,812)
    Increase in cash value ..........................................................       (412,670)      (318,982)
  Net loans/leases originated and held for investment ...............................   (106,088,874)   (24,005,590)
  Purchase of premises and equipment ................................................     (2,207,171)    (6,329,546)
                                                                                      ------------------------------
          Net cash used in investing activities ..................................... $ (114,596,623)  $ (41,871,783)
                                                                                      ------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase in deposit accounts ..................................................    105,598,619       7,700,572
  Net (decrease) increase in short-term borrowings ..................................     (3,111,138)      7,585,351
  Activity in Federal Home Loan Bank advances:
    Advances ........................................................................     26,500,000      29,700,000
    Payments ........................................................................    (24,614,633)     (3,609,160)
  Net decrease in other borrowings ..................................................     (1,457,003)             --
  Proceeds from issuance of junior subordinated debentures ..........................     10,310,000       5,155,000
  Tax benefit of nonqualified stock options exercised ...............................         34,168          99,928
  Payment of cash dividends .........................................................       (181,249)        (179,866)
  Proceeds from issuance of common stock, net .......................................        177,480          192,852
                                                                                      ------------------------------
          Net cash provided by financing activities ................................. $  113,256,244   $  46,644,677
                                                                                      ------------------------------

          Net (decrease) increase in cash and due from banks ........................     (5,774,461)      5,218,264
Cash and due from banks, beginning ..................................................     38,956,627      21,372,342
                                                                                      ------------------------------
Cash and due from banks, ending ..................................................... $   33,182,166   $  26,590,606
                                                                                      ==============================
Supplemental disclosure of cash flow information, cash payments for:
  Interest .......................................................................... $   15,134,976   $   8,705,122
                                                                                      ==============================
  Income/franchise taxes ............................................................ $      990,858   $     357,982
                                                                                      ==============================
Supplemental schedule of noncash investing activities:
  Change in accumulated other comprehensive income,
    unrealized losses on securities available for sale, net ......................... $     (504,971)  $    (532,665)
                                                                                      ==============================
  Transfers of loans to other real estate owned ..................................... $       37,000   $          --
                                                                                      ==============================

                       See Notes to Consolidated Financial Statements

                                       6


Part I
Item 1

                               QCR HOLDINGS, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                  JUNE 30, 2006


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. 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. Accordingly, these financial
statements  should be read in  conjunction  with the Company's  Annual Report on
Form 10-K for the year ended December 31, 2005.  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 period ended June 30, 2006 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2006.

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"),
QCR Holdings Statutory Trust IV ("Trust IV"), and QCR Holdings Statutory Trust V
("Trust V").  These four entities were  established  by the Company for the sole
purpose of issuing trust preferred securities. As required by current accounting
rules, the Company's equity  investments in these entities are not consolidated,
but are  included in other  assets on the  consolidated  balance  sheet for $1.1
million in aggregate  at June 30,  2006.  In addition to these nine wholly owned
subsidiaries,  the Company has an aggregate investment of $756 thousand in three
affiliated  companies,  Nobel  Electronic  Transfer,  LLC ("Nobel"),  Nobel Real
Estate  Investors,  LLC ("Nobel  Real  Estate"),  and Velie  Plantation  Holding
Company.  The  Company  owns 20% equity  positions  in both Nobel and Nobel Real
Estate and a 47% equity position in Velie Plantation  Holding  Company.  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's Board of Directors adopted and the
stockholders  approved stock option and incentive  plans in June 1993,  November
1996, and January 2004. These plans are administered by a Committee appointed by
the Board of Directors,  which determines the number and exercise price of stock
options granted at the time of the grant.  Additionally  two of the stock option
and incentive plans allow the granting of stock  appreciation  rights  ("SARs").
The Company's Board of Directors  adopted and the stockholders  also approved an
employee  stock  purchase plan in October  2002.  Please refer to Note 14 of our
consolidated financial statements in our Annual Report on Form 10-K for the year
ended  December  31, 2005,  for  additional  information  related to these stock
option and incentive plans, SARs and stock purchase plan.

                                       7


Prior to  January 1,  2006,  the  Company's  stock-based  employee  compensation
expense  under the stock  option  plans was  accounted  for in  accordance  with
Accounting  Principles Board Opinion (APB) No. 25,  "Accounting for Stock Issued
to Employees,"  and related  interpretations.  Because the exercise price of the
Company's  employee  stock  options  always  equaled  the  market  price  of the
underlying stock on the date of grant, no compensation expense was recognized on
options  granted.  The Company  adopted the provisions of Statement of Financial
Accounting  Standard  123R ("SFAS 123R")  effective as of January 1, 2006.  SFAS
123R eliminates the ability to account for stock-based compensation using APB 25
and  requires  that all  share-based  awards made to  employees  and  directors,
including stock options, SARs and stock purchase plan transactions be recognized
as compensation  cost in the income  statement based on their fair values on the
measurement  date,  which  is  generally  the  date of the  grant.  The  Company
transitioned to fair-value based accounting for stock-based compensation using a
modified   version   of   prospective    application    ("modified   prospective
application").  Under the modified  prospective  application,  compensation cost
included in noninterest expenses for the six months ended June 30, 2006 includes
1) compensation cost of share-based payments granted prior to but not yet vested
as of June 30, 2006,  based on the grant-date fair value estimated in accordance
with the original  provisions of Statement of Financial  Accounting Standard 123
("SFAS 123"),  and 2)  compensation  cost for all share-based  payments  granted
subsequent to January 1, 2006,  based on the grant-date  fair value estimated in
accordance with the provisions of SFAS 123R.  Prior periods were not restated to
reflect the impact of adopting the new standard.

As a result of  applying  the  provisions  of SFAS 123R during the three and six
months  ended June 30,  2006,  the  Company  recognized  additional  stock-based
compensation expense related to stock options, stock purchases,  and SARs of $22
thousand and $25 thousand,  respectively.  As required by SFAS 123R,  management
made an estimate of expected  forfeitures and is recognizing  compensation costs
only for those equity awards expected to vest.

The Company  receives a tax deduction for certain stock option  exercises during
the period the options are  exercised,  generally for the excess of the price at
which the  options are sold over the  exercise  price of the  options.  Prior to
adoption of SFAS 123R, the Company reported all tax benefits  resulting from the
exercise of stock options as operating cash flows in our consolidated statements
of cash flows.  In accordance  with SFAS 123R, for the six months ended June 30,
2006, the Company revised our consolidated statements of cash flows presentation
to report the tax benefits from the exercise of stock options as financing  cash
flows.

The Company uses the  Black-Scholes  option  pricing  model to estimate the fair
value of stock option  grants with the following  assumptions  for the indicated
periods:



                                                  Six Months Ended June 30,
                                                 2006                 2005
                                            ------------------------------------
                                                          
Dividend yield ..........................    0.42% to 0.44%      0.36% to 0.39%
Expected volatility .....................   24.46% to 26.55%    24.65% to 24.81%
Risk-free interest rate .................    4.47% to 5.26%      4.27% to 4.48%
Expected life of option grants ..........       6 years             10 years
Weighted-average grant date fair value ..        $6.50                $9.06



The Company also uses the  Black-Scholes  option  pricing  model to estimate the
fair value of stock  purchase  grants  with the  following  assumptions  for the
indicated periods:



                                                  Six Months Ended June 30,
                                                 2006                 2005
                                            ------------------------------------
                                                           
Dividend yield ..........................        0.41%                0.38%
Expected volatility .....................       10.93%               24.81%
Risk-free interest rate .................   4.17% to 4.40%       2.21% to 2.47%
Expected life of stock purchase grants ..   3 to 6 months        3 to 6 months
Weighted-average grant date fair value ..       $2.56               $3.29


                                       8


The fair value is amortized on a straight-line basis over the vesting periods of
the grants and will be adjusted for subsequent changes in estimated forfeitures.
The  expected  dividend  yield  assumption  is  based on the  Company's  current
expectations about its anticipated dividend policy. Expected volatility is based
on  historical  volatility of the  Company's  common stock price.  The risk-free
interest rate for periods within the contractual  life of the option is based on
the U.S.  Treasury yield curve in effect at the time of the grant.  The expected
life of grants is derived  using the  `simplified"  method as allowed  under the
provisions of the Securities and Exchange Commission's Staff Accounting Bulletin
No.  107 and  represents  the period of time that  options  are  expected  to be
outstanding.  Historical data is used to estimate forfeitures used in the model.
Two separate groups of employees  (employees  subject to broad based grants, and
executive employees and directors) are used.

As of June 30, 2006, there was $488 thousand of unrecognized  compensation  cost
related to share  based  payments,  which is expected  to be  recognized  over a
weighted average period of 3.3 years.

A summary of the stock option  plans as of June 30, 2006 and changes  during the
six months is presented below:



                                             Weighted
                                              Average      Aggregate
                                             Exercise      Intrinsic
                                Shares        Price          Value
                              --------------------------------------
                                                 
Outstanding, beginning ..      252,658     $   13.25
  Granted ...............       52,900     $   18.80
  Exercised .............      (12,702)    $    7.39
  Forfeited .............       (5,977)    $   18.72
Outstanding, ending .....      286,879     $   14.42      $1,135,581

Exercisable, ending .....      165,724     $    8.49      $1,090,648




The  aggregate  intrinsic  value is  calculated  as the  difference  between the
exercise  price of the  underlying  awards and the quoted price of the Company's
common stock for the 145,359  options that were  in-the-money  at June 30, 2006.
During the six months  ended June 30,  2006 and 2005,  the  aggregate  intrinsic
value of options  exercised  under the Company's  stock option plans was $88,582
and $107,209, respectively, determined as of the date of the option exercise.

A further summary of options outstanding as of June 30, 2006 is presented below:



                                           Options Outstanding                       Options Exercisable
                         -------------------------------------------------------------------------------------
                                                Weighted
                                                 Average            Weighted                          Weighted
                                                remaining           Average                            Average
                             Number            contractual          Exercise          Number          Exercise
                           Outstanding             Life               Price        Exercisable         Price
                         -------------------------------------------------------------------------------------
                                                                                         
$5.89 to $6.90                    15,900        5.00 years           $ 6.90           15,900            $6.90
$7.00 to $7.13                    33,650        4.76 years             7.01           33,650             7.01
$7.45 to $9.39                    35,636        2.30 years             8.85           35,186             8.86
$9.87 to $11.64                   34,029        5.27 years            10.33           29,173            10.35
$11.83 to $18.48                  66,744        6.61 years            16.56           31,094            14.74
$18.60 to $19.70                  52,050        8.77 years            18.96           11,280            18.94
$20.63 to $22.00                  48,870        8.55 years            21.10            9,441            21.04
                         ------------------------------------------------------------------------------------
                                 286,879                                             165,724
                         ===============                                      ==============


                                       9


A summary of the status of SARs as of June 30, 2006 and  changes  during the six
months is presented below:



                                                   Weighted
                                                   Average
                               Number Awarded   Exercise Price
                               -------------------------------
                                            
Outstanding, beginning .......     104,775        $   10.29
  Granted ....................          --               --
  Exercised ..................      (6,000)            9.11
  Forfeited ..................          --               --
Outstanding, ending ..........      98,775        $    9.86
                                   ========================

Exercisable, ending ..........      98,775        $    9.86
                                   ========================


The following table  illustrates the effect on net income and earnings per share
if the Company had applied the fair value recognition  provisions of SFAS 123 to
stock-based employee compensation prior to January 1, 2006. For purposes of this
pro forma  disclosure,  the value of the option and  purchase  plan  grants were
estimated  using  a  Black-Scholes  option  pricing  model  and  amortized  on a
straight-line basis over the respective vesting period of the awards.



                                           Three Months Ended   Six Months Ended
                                               June 30,              June 30,
                                                2005                   2005
                                           ------------------------------------
                                                           
Net income, as reported ................   $   1,262,523         $   2,586,273
  Deduct total stock-based employee
    compensation expense determined
    under fair value based method for
  All awards, net of related tax effects         (44,486)              (88,730)
                                           -----------------------------------
          Net income ...................   $   1,218,037         $   2,497,543
                                           ===================================

Earnings per share:
  Basic:
    As reported ........................   $        0.28         $       0.57
    Pro forma ..........................   $        0.27         $       0.55
  Diluted:
    As reported ........................   $        0.27         $       0.56
    Pro forma ..........................   $        0.26         $       0.54




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          Six months ended,
                                                           June 30,                   June 30,
                                                    -------------------------------------------------
                                                        2006       2005          2006         2005
                                                    -------------------------------------------------
                                                                               
Net income, basic and diluted
  earnings ......................................   $1,203,481   $1,262,523   $2,036,652   $2,586,273
                                                    =================================================

Weighted average common shares
  outstanding ...................................    4,543,169    4,514,459    4,576,755    4,508,886

Weighted average common shares
  issuable upon exercise of stock
  options and under the
  employee stock purchase plan ..................       45,215       99,797       47,722      103,892
                                                    -------------------------------------------------
Weighted average common and
  common equivalent shares
  outstanding ...................................    4,588,384    4,614,256    4,624,477    4,612,778
                                                    =================================================

                                       10



NOTE 3 - BUSINESS SEGMENT INFORMATION

The  Company's   business   segments  operate   utilizing  strong   intercompany
relationships,  primarily with Quad City Bank & Trust. Cedar Rapids Bank & Trust
and Rockford  Bank & Trust both look to Quad City Bank & Trust as their  primary
upstream correspondent bank. These relationships produce Federal funds activity,
both purchases and sales, which result in intercompany interest  income/expense,
that is  eliminated  in segment  reporting.  At June 30, 2006,  the negative net
effects of this  elimination  to Quad City Bank & Trust's  net income  were $145
thousand  for three  months and $237  thousand  for six months.  The  reciprocal
positive net effects of this  elimination to net income,  at June 30, 2006, were
$70 thousand and $137 thousand to Cedar Rapids Bank & Trust and $75 thousand and
$100  thousand  to  Rockford  Bank & Trust  for  three  months  and six  months,
respectively.  At June 30, 2005, the negative net effects of this elimination to
Quad City Bank & Trust's net income were $25  thousand  for three months and $27
thousand for six months.  The reciprocal net effects to net income,  at June 30,
2005,  were  positive $52 thousand and $90 thousand to Cedar Rapids Bank & Trust
for three and six  months,  respectively.  The  reciprocal  net  effects  to net
income,  at June 30,  2005,  were  negative  $27  thousand  and $63  thousand to
Rockford Bank & Trust for three and six months, respectively.

M2 Lease Funds also  utilizes  the services of Quad City Bank & Trust to provide
the funding for its $43.7 million lease  portfolio.  The  intercompany  interest
income/expense,  which results from this funding relationship,  is eliminated in
segment  reporting.  At June 30, 2006, the negative net effect to net income for
Quad City Bank & Trust and the  positive  net  effect to net income for M2 Lease
Funds  were each  $445  thousand  and $818  thousand  for three and six  months,
respectively. At June 30, 2005, M2 Lease Funds was not a segment of the Company.

Selected  financial  information on the Company's  business  segments,  with all
intercompany accounts and transactions  eliminated,  is presented as follows for
the   three-month   and  six-month   periods  ended  June  30,  2006  and  2005,
respectively.



                                     Three months ended              Six months ended
                                          June 30,                        June 30,
                                -------------------------------------------------------------
                                     2006           2005            2006            2005
                                -------------------------------------------------------------
                                                                    
Revenue:
  Commercial banking:
    Quad City Bank & Trust ..   $ 11,616,345    $  9,122,038    $ 21,757,806    $ 17,571,482
    Cedar Rapids Bank & Trust      4,985,629       3,462,067       9,573,818       6,671,090
    Rockford Bank & Trust ...        993,869         161,973       1,653,927         218,960
  Credit card processing ....        596,574         445,135       1,186,897         918,115
  Trust management ..........        741,649         719,918       1,522,942       1,455,061
  Leasing services ..........        798,690              --       1,582,788              --
  All other .................         86,236          62,617         205,712         335,504
                                -------------------------------------------------------------
          Total revenue .....   $ 19,818,992    $ 13,973,748    $ 37,483,890    $ 27,170,212
                                ============================================================
Net income (loss):
  Commercial banking:
    Quad City Bank & Trust ..   $  1,000,956    $  1,425,682    $  1,373,589    $  2,788,696
    Cedar Rapids Bank & Trust        431,547         465,465         894,932         843,164
    Rockford Bank & Trust ...       (482,628)       (353,754)       (778,336)       (732,478)
  Credit card processing ....        185,587         119,466         377,548         237,022
  Trust management ..........        160,627         135,069         360,347         333,257
  Leasing services ..........        666,761              --       1,308,935              --
  All other .................       (759,369)       (529,405)     (1,500,363)       (883,388)
                                -------------------------------------------------------------
          Total net income ..   $  1,203,481    $  1,262,523    $  2,036,652    $  2,586,273
                                ============================================================


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.

                                       11


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 June 30, 2006 and
December  31,  2005,  no amounts  were  recorded as  liabilities  for the banks'
potential obligations under these guarantees.

As of June 30,  2006  and  December  31,  2005,  commitments  to  extend  credit
aggregated were $426.2 million and $385.8 million, respectively. As of both June
30, 2006 and December  31,  2005,  standby,  commercial  and similar  letters of
credit  aggregated  were $15.2 million.  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 $7.4 million and $2.6  million,  at June 30,
2006 and December  31, 2005  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 $50.8 million and $43.4 million
of sold residential  mortgage loans with recourse  provisions still in effect at
June 30, 2006 and December 31, 2005, respectively.  The subsidiary banks did not
repurchase any loans from secondary  market  investors  under the terms of loans
sales  agreements  during the six months  ended June 30,  2006 or the year ended
December 31,  2005.  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 June 30, 2006,  Quad City Bank & Trust had funded  $13.8  million of
mortgages  through the FHLB's MPF Program  with an attached  credit  exposure of
$279 thousand.  In conjunction with its  participation in this program,  at June
30, 2006, Quad City Bank & Trust had both a credit enhancement  receivable and a
credit enhancement  obligation of $40 thousand.  At December 31, 2005, Quad City
Bank & Trust had  funded  $13.8  million  of  mortgages  through  the FHLB's MPF
Program with an attached credit exposure of $279 thousand.  In conjunction  with
its participation in this program,  at December 31, 2005, Quad City Bank & Trust
had both a credit enhancement  receivable and a credit enhancement obligation of
$48 thousand.

                                       12


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 local merchant.  Until 2004, Bancard had
not  experienced  any noteable  chargeback  activity in which the local or agent
bank  merchant's  cash  reserves  on deposit  were not  sufficient  to cover the
chargeback  volumes.   However,  in  2004,  two  of  Bancard's  local  merchants
experienced  cases of fraud and  subsequent  chargeback  volumes that  surpassed
their cash reserves.  As a result,  Bancard incurred $196 thousand of chargeback
loss  expense  due to the  fraudulent  activity on these two  merchants  and the
establishment in August 2004 of an allowance for chargeback  losses.  Throughout
2005 monthly  provisions were made to the allowance for chargeback  losses based
on the dollar  volumes of  merchant  credit  card  activity.  For the year ended
December 31, 2005,  monthly  provisions  were made  totaling  $48  thousand.  An
aggregate of $135  thousand of reversals of specific  merchant  reserves  during
2005 more than offset these provisions.  At June 30, 2006 and December 31, 2005,
Bancard had a merchant  chargeback  reserve of $75  thousand  and $77  thousand,
respectively.  For the six months ended June 30, 2006,  reserve  reversals  were
made totaling $2 thousand.  Management will continually  monitor merchant credit
card volumes,  related chargeback 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 June 30, 2006 and December 31, 2005, there were no
significant pending liabilities.

In an  arrangement  with Goldman,  Sachs and Company,  Cedar Rapids Bank & Trust
offers  a  cash  management  program  for  select  customers.  Using  this  cash
management  tool,  the  customer's  demand  deposit  account  performs  like  an
investment  account.  Based on a predetermined  minimum  balance,  which must be
maintained  in the  account,  excess funds are  automatically  swept daily to an
institutional  money  market  fund  distributed  by  Goldman  Sachs.  As  with a
traditional demand deposit account,  customers retain complete check-writing and
withdrawal  privileges.  If the demand deposit  account  balance drops below the
predetermined  threshold,  funds  are  automatically  swept  back from the money
market  fund at Goldman  Sachs to the  account at Cedar  Rapids  Bank & Trust to
maintain  the required  minimum  balance.  Balances  swept into the money market
funds are not bank deposits,  are not insured by any U.S. government agency, and
do not require cash  reserves to be set against the  balances.  At June 30, 2006
and  December  31,  2005,  the  Company  had $6.5  million  and  $36.1  million,
respectively, of customer funds invested in this cash management program.

NOTE 5 - JUNIOR SUBORDINATED DEBENTURES

Junior  subordinated  debentures are summarized as of June 30, 2006 and December
31, 2005 as follows:



                                             2006          2005
                                         -------------------------
                                                 
Note Payable to Trust II ........        $12,372,000   $12,372,000
Note Payable to Trust III .......          8,248,000     8,248,000
Note Payable to Trust IV ........          5,155,000     5,155,000
Note Payable to Trust V .........         10,310,000            --
                                         -------------------------
                                         $36,085,000   $25,775,000
                                         =========================


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 8.35%. 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 June 30, 2006. On June 30, 2004,  the Company
redeemed $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.

                                       13


In May 2005, the Company issued $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  7.31%.  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.

On February 24, 2006,  the Company  announced  the issuance of $10.0  million of
fixed/floating  rate capital  securities of QCR Holdings  Statutory Trust V. The
securities  represent  the undivided  beneficial  interest in Trust V, which was
established  by the Company for the sole purpose of issuing the Trust  Preferred
Securities.  The Trust Preferred  Securities were sold in a private  transaction
exempt from  registration  under the Securities Act of 1933, as amended and were
not registered under the Act.

The securities issued by Trust V mature in thirty years, but are callable at par
after five years.  The Trust  Preferred  Securities  have a fixed rate of 6.22%,
payable quarterly, for five years, at which time they have a variable rate based
on the three-month LIBOR plus 1.55%, reset and payable  quarterly.  Trust V used
the $10.0 million of proceeds from the sale of the Trust  Preferred  Securities,
in  combination  with $310  thousand of proceeds from its own equity to purchase
$10.3  million of junior  subordinated  debentures  of the Company.  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 - RECENT ACCOUNTING DEVELOPMENTS

In February 2006, FASB issued SFAS 155, "Accounting for Certain Hybrid Financial
Instruments", which permits, but does not require, fair value accounting for any
hybrid  financial  instrument  that contains an embedded  derivative  that would
otherwise  require  bifurcation  in accordance  with SFAS 133,  "Accounting  for
Derivative  Instruments  and Hedging  Activities".  The statement  also subjects
beneficial interests in securitized financial assets to the requirements of SFAS
133. For the Company,  this statement is effective for all financial instruments
acquired,  issued,  or  subject to  remeasurement  after  January 1, 2007,  with
earlier adoption permitted. The Company does not anticipate a material impact to
the consolidated financial statements when SFAS 155 is adopted.

In March 2006,  FASB issued SFAS 156,  "Accounting  for  Servicing  of Financial
Assets - an amendment of FASB Statement No. 140". SFAS 156 requires an entity to
recognize a servicing  asset or servicing  liability  each time it undertakes an
obligation to service a financial asset by entering into a servicing contract as
defined in the SFAS. It requires all separately  recognized servicing assets and
servicing  liabilities to be initially  measured at fair value,  if practicable,
and allows an entity to choose between  amortization  or fair value  measurement
methods for each class of separately  recognized  servicing assets and servicing
liabilities.  It also permits a one-time  reclassification of available-for-sale
securities to trading without  tainting the investment  portfolio,  provided the
available-for-sale  securities  are  identified in some manner as offsetting the
entity's  exposure  to changes in fair value of  servicing  assets or  servicing
liabilities.  SFAS 156 is  effective  for the  Company on  January 1, 2007.  The
Company does not  anticipate  a material  impact to the  consolidated  financial
statements when SFAS 156 is adopted.

In  July  2006,  FASB  issued  FASB   Interpretation  No.  48,  "Accounting  for
Uncertainty  in Income  Taxes" (FIN 48). FIN 48  clarifies  the  accounting  and
reporting for income taxes  recognized in accordance with SFAS 109,  "Accounting
for Income Taxes." This Interpretation  prescribes a comprehensive model for the
financial  statement  recognition,  measurement,  presentation and disclosure of
uncertain tax positions taken or expected to be taken in income tax returns. The
Company is  currently  evaluating  the impact of FIN 48. The Company  will adopt
this Interpretation in the first quarter of 2007.

                                       14


Item 2

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

QCR Holdings, Inc. is the parent company of Quad City Bank & Trust, Cedar Rapids
Bank & Trust, Rockford Bank & Trust and Quad City Bancard, Inc.

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 services to Cedar Rapids and adjacent  communities  through its
main office  located on First  Avenue in  downtown  Cedar  Rapids,  Iowa and its
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  services to Rockford and adjacent  communities
through its  original  office  located in downtown  Rockford,  and its  recently
opened branch facility  located on Guilford Road at Alpine Road in Rockford.  In
March 2006,  the Company  hired a team of bankers in the  Milwaukee  market.  In
April,  Rockford  Bank & Trust  received  permission  to open a loan  production
office/deposit production office (LPO/DPO) in Milwaukee, Wisconsin, and in June,
received  approval from both the Federal Reserve and the Illinois  Department of
Financial and Professional Regulation (IDFPR) of their branch application.

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 and agent
banks.


OVERVIEW

SIX MONTHS ENDED JUNE 30, 2006

Despite the solid growth in revenue  experienced  during the first six months of
2006,  net income for the period  fell short of net income  from the  comparable
period one year ago, due primarily to an increase in noninterest  expenses.  Net
income for the first six  months of 2006 was $2.0  million  as  compared  to net
income of $2.6 million for the same period in 2005, a decrease of $550 thousand,
or 21%.  Both basic and diluted  earnings  per share for the first six months of
2006 were $0.44,  compared to $0.57 basic and $0.56  diluted  earnings per share
for the like  period in 2005.  For the six  months  ended June 30,  2006,  total
revenue  experienced  an  improvement of $10.3 million when compared to the same
period in 2005.  Contributing to this 38% improvement in revenue for the Company
were  increases in interest  income of $8.9 million,  or 40%, and in noninterest
income of $1.4 million,  or 29%. The gain on sale of a foreclosed  asset at Quad
City  Bank &  Trust  contributed  $745  thousand,  or 52%,  of the  year-to-year
increase in noninterest  income. For the first six months of 2006, the Company's
net interest spread narrowed 42 basis points when compared to the same period in
2005, and as a result,  in the same  comparison the net interest margin declined
35 basis  points.  For the first six months of 2006,  the Company  increased its
provision for loan/lease losses by $742 thousand,  or 482%, when compared to the
same  period in 2005.  During the first six  months of 2005,  the  Company  made
significant  provision  reversals,  which were attributed to upgrades within the
loan  portfolio.  The recognition in 2006 of $214 thousand in pretax losses on a
mortgage-backed  mutual fund investment also  contributed  substantially  to the
decrease in net  income.  The first six months of 2006  reflected a  significant
increase in noninterest  expenses of $2.7 million,  or 19%, when compared to the
same period in 2005. The increase in noninterest  expenses was predominately due
to increases in both personnel and  facilities  costs,  as the subsidiary  banks
opened five new banking  locations during 2005 and the Company made preparations
during the first two quarters of 2006 to branch into Wisconsin.

                                       15


THREE MONTHS ENDED JUNE 30, 2006

Despite  continued  solid growth in revenue for the second  quarter of 2006, net
income for the quarter fell slightly short of second quarter net income from one
year ago, due primarily to an increase in noninterest  expenses.  Net income for
the second  quarter of 2006 was $1.2  million as  compared to net income of $1.3
million for the same period in 2005,  a decrease  of $59  thousand,  or 5%. Both
basic and diluted  earnings per share for the second quarter of 2006 were $0.26,
compared  to $0.28  basic  and  $0.27  diluted  earnings  per share for the like
quarter  in 2005.  For the three  months  ended  June 30,  2006,  total  revenue
experienced  an  improvement of $5.8 million when compared to the same period in
2005. Contributing to this 42% improvement in revenue were increases in interest
income of $4.7 million,  or 41%, and in noninterest  income of $1.1 million,  or
48%.  The  gain  on  sale  of a  foreclosed  asset  at  Quad  City  Bank & Trust
contributed  $745  thousand,  or 64%,  of the  year-to-year  increase  in second
quarter  noninterest  income.  In the second  quarter of 2006, the Company's net
interest spread narrowed for the fourth  consecutive  quarter,  and as a result,
the net  interest  margin  declined 43 basis  points from the second  quarter of
2005. For the second  quarter of 2006,  the Company  increased its provision for
loan/lease losses by $499 thousand, or 339%, when compared to the same period in
2005. During the second quarter of 2005, the Company made significant  provision
reversals,  which were  attributed to upgrades  within the loan  portfolio.  The
recognition  in  April  2006 of a $71  thousand  pretax  loss  on the  sale of a
mortgage-backed  mutual fund investment also  contributed to the decrease in net
income.  The  second  quarter  of  2006  reflected  a  significant  increase  in
noninterest expense of $1.2 million, or 17%, when compared to the same period in
2005. The increase in noninterest  expense was predominately due to increases in
both personnel and  facilities  costs,  as the subsidiary  banks opened five new
banking locations during 2005 and the Company made  preparations  during 2006 to
branch into Wisconsin.

The Company's net income for the second quarter of 2006 was $1.2 million,  which
was an  improvement  of  44%,  or  $370  thousand  from  the  previous  quarter.
Quarter-to-quarter  total revenue increased by $2.2 million, or 12%, while total
expense increased by $1.5 million,  or 9%. In a comparison of the second quarter
of 2006 to the first quarter of 2006,  the  combination  of a 2% increase in net
interest income, or $136 thousand,  an increase in noninterest income of 29%, or
$800  thousand,  and a 35% decrease in the provision for loan/lease  losses,  or
$192 thousand,  was partially  offset by an increase in noninterest  expenses of
6%, or $489  thousand.  Despite a narrowing of the net  interest  spread for the
fourth  consecutive  quarter,  net interest  income grew slightly from the first
quarter.  The negative effects of increased  average rates on the liability side
of the  balance  sheet  were more than  offset by the  positive  effects of very
strong  loan/lease  growth  at the  subsidiary  banks.  The  gain  on  sale of a
foreclosed asset at Quad City Bank & Trust contributed $745 thousand, or 93%, of
the  quarter-to-quarter  increase in noninterest  income. Also during the second
quarter,  the improved credit  positions on a few large commercial loans at Quad
City Bank & Trust  resulted in reserve  reversals  which  produced an  aggregate
positive  effect to second  quarter net income of $290  thousand.  A 9%, or $436
thousand,  increase in salaries  and employee  benefits  expense was the primary
contributor to the increase in noninterest expenses during the second quarter.

NET INTEREST INCOME

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.

Net interest  income  increased  $495  thousand,  or 7%, to $7.3 million for the
quarter ended June 30, 2006,  from $6.8 million for the second  quarter of 2005.
For the  second  quarter  of 2006,  average  earning  assets  increased  by $192
million,  or 23%,  and average  interest-bearing  liabilities  increased by $186
million,  or 25%, when compared with average  balances for the second quarter of
2005. A comparison of yields,  spread and margin from the second quarter of 2006
to the second quarter of 2005 are as follows:

     o    The  average  yield  on  interest-earning  assets  increased  78 basis
          points.

     o    The average cost of interest-bearing  liabilities  increased 130 basis
          points.

     o    The net interest spread declined 52 basis points from 3.06% to 2.54%.

     o    The net interest margin declined 43 basis points from 3.33% to 2.90%.

                                       16

Net interest income increased $1.2 million,  or 8%, to $14.4 million for the six
months ended June 30, 2006, from $13.2 million for the first six months of 2005.
For the first six  months of 2006,  average  earning  assets  increased  by $176
million,  or 22%,  and average  interest-bearing  liabilities  increased by $173
million, or 24%, when compared with average balances for the first six months of
2005.  A  comparison  of yields,  spread and margin from the first six months of
2006 to the comparable period of 2005 shows the following:

     o    The  average  yield  on  interest-earning  assets  increased  82 basis
          points.

     o    The average cost of interest-bearing  liabilities  increased 124 basis
          points.

     o    The net interest spread declined 42 basis points from 3.02% to 2.60%.

     o    The net interest margin declined 35 basis points from 3.29% to 2.94%.

The Company's average balances,  interest income/expense,  and rates earned/paid
on major balance sheet  categories,  as well as, the components of change in net
interest income are presented in the following tables:


    Consolidated Average Balance Sheets and Analysis of Net Interest Earnings

                                                                            For the three months ended June 30,
                                                                     2006                                  2005
                                                     -------------------------------------------------------------------------------
                                                                    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 .............................   $     5,614   $        54    3.85%    $     4,359   $        28        2.57%
  Interest-bearing deposits at
    financial institutions .......................         7,753            94    4.85%          2,686            28        4.17%
  Investment securities (1) ......................       182,132         1,998    4.39%        153,116         1,471        3.84%
  Gross loans receivable (2)......................       817,612        14,174    6.93%        660,877        10,084        6.10%
                                                     -------------------------------------------------------------------------------
         Total interest earning assets ...........   $ 1,013,111        16,320    6.44%    $   821,038        11,611        5.66%

Noninterest-earning assets:
  Cash and due from banks ........................   $    33,250                           $    28,590
  Premises and equipment .........................        26,110                                22,314
  Less allowance for estimated losses on loans            (9,531)                               (8,905)
  Other ..........................................        42,684                                38,572
                                                     -----------                           -----------
         Total assets ............................   $ 1,105,624                           $   901,609
                                                     ===========                           ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
  Interest-bearing demand deposits ...............   $   254,713         2,005    3.15%    $   170,206           508        1.19%
  Savings deposits ...............................        34,519           196    2.27%         17,509            17        0.39%
  Time deposits ..................................       351,201         3,793    4.32%        296,889         2,126        2.86%
  Short-term borrowings ..........................       105,207           878    3.34%        113,525           648        2.28%
  Federal Home Loan Bank advances ................       129,676         1,310    4.04%        105,048         1,010        3.85%
  Junior subordinated debentures .................        36,085           643    7.13%         23,198           385        6.64%
  Other borrowings ...............................         9,351           145    6.20%          8,500            88        4.14%
                                                     -------------------------             -------------------------
          Total interest-bearing liabilities .....   $   920,752         8,970    3.90%    $   734,875         4,782        2.60%

Noninterest-bearing demand .......................   $   119,395                           $   105,247
Other noninterest-bearing
  liabilities ....................................         9,506                                 9,280
Total liabilities ................................     1,049,653                               849,402
Stockholders' equity .............................        55,971                                52,207
                                                     -----------                           -----------
          Total liabilities and
          stockholders' equity ...................   $ 1,105,624                           $   901,609
                                                     ===========                           ===========
Net interest income ..............................                 $     7,350                           $     6,829
                                                                   ===========                           ===========
Net interest spread ..............................                                2.54%                                     3.06%
                                                                               ========                                   =======
Net interest margin ..............................                                2.90%                                     3.33%
                                                                               ========                                   =======
Ratio of average interest earning assets to average
  interest-bearing liabilities ...................       110.03%                               111.72%
                                                     ===========                           ===========
<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 fees are not material  and are  included in interest  income from
          loans receivable.
</FN>

                                       17




             Analysis of Changes of Interest Income/Interest Expense

                    For the three months ended June 30, 2006

                                                                                Components
                                                             Inc./(Dec.)       of Change (1)
                                                                 from     ----------------------
                                                            Prior Period   Rate          Volume
                                                            ------------------------------------
                                                                      2006 vs. 2005
                                                            ------------------------------------
                                                                   (Dollars in Thousands)
                                                                                
INTEREST INCOME
Federal funds sold ......................................   $    26       $    17        $     9
Interest-bearing deposits at financial institutions ......       66             5             61
Investment securities (2) ...............................       527           226            301
Gross loans receivable (3) ..............................     4,090         1,492          2,598
                                                            ------------------------------------
          Total change in interest income ...............   $ 4,709       $ 1,740        $ 2,969
                                                            ------------------------------------
INTEREST EXPENSE
Interest-bearing demand deposits ........................   $ 1,497       $ 1,149        $   348
Savings deposits ........................................       179           149             30
Time deposits ...........................................     1,667         1,226            441
Short-term borrowings ...................................       230           526           (296)
Federal Home Loan Bank advances .........................       300            53            247
Junior subordinated debentures ..........................       258            30            228
Other borrowings ........................................        57            48              9
                                                            ------------------------------------
          Total change in interest expense ..............   $ 4,188       $ 3,181        $ 1,007
                                                            ------------------------------------
Total change in net interest income .....................   $   521       $(1,441)       $ 1,962
                                                            ====================================
<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 fees are not material  and are  included in interest  income from
          loans receivable.
</FN>

                                       18



    Consolidated Average Balance Sheets and Analysis of Net Interest Earnings

                                                                            For the six months ended June 30,
                                                                   2006                                  2005
                                                   -------------------------------------------------------------------------------
                                                                  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 ............................   $    10,061         204      4.06%   $     3,885            46      2.37%
Interest-bearing deposits at
  financial institutions ......................         5,859         136      4.64%         4,109            69      3.36%
Investment securities (1) .....................       182,509       3,948      4.33%       151,060         2,842      3.76%
Gross loans receivable (2).....................       790,824      26,988      6.83%       654,400        19,404      5.93%
                                                  -----------------------              -------------------------
          Total interest earning assets .......   $   989,253      31,276      6.32%   $   813,454        22,361      5.50%
Noninterest-earning assets:
Cash and due from banks .......................   $    34,133                          $    28,522
Premises and equipment ........................        25,913                               20,954
Less allowance for estimated losses on loans           (9,280)                              (9,164)
Other .........................................        41,098                               36,333
                                                  -----------                          -----------
          Total assets ........................   $ 1,081,117                          $   890,099
                                                  ===========                          ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits ..............   $   255,062       3,810      2.99%   $   170,741           944      1.11%
Savings deposits ..............................        33,441         362      2.17%        16,887            30      0.36%
Time deposits .................................       344,387       7,109      4.13%       297,803         4,122      2.77%
Short-term borrowings..........................        93,811       1,440      3.07%       109,724         1,114      2.03%
Federal Home Loan Bank advances ...............       129,493       2,584      3.99%        98,526         1,860      3.78%
Junior subordinated debentures ................        33,508       1,162      6.94%        21,909           714      6.52%
Other borrowings ..............................         8,631         254      5.89%         9,125           189      4.14%
                                                  -----------------------              -------------------------
         Total interest-bearing
         liabilities ..........................   $   898,333      16,721      3.72%   $   724,715         8,973      2.48%
                                                  ===========                          ===========

Noninterest-bearing demand ....................   $   116,406                          $   106,115
Other noninterest-bearing
  liabilities .................................        10,929                                7,585
Total liabilities .............................     1,025,668                              838,415
Stockholders' equity ..........................        55,449                               51,684
                                                  -----------                          -----------
          Total liabilities and
          stockholders' equity ................   $ 1,081,117                          $   890,099
                                                 ============                          ============
Net interest income ...........................                    14,555                              $ 13,388
                                                                 ========                              ========
Net interest spread ...........................                                2.60%                                3.02%
                                                                             =======                              =======
Net interest margin ...........................                                2.94%                                3.29%
                                                                             =======                              =======
Ratio of average interest earning
  assets to average interest-
  bearing liabilities .........................       110.12%                               112.24%
                                                 ============                          ============

<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 fees are not material  and are  included in interest  income from
          loans receivable.
</FN>

                                       19




            Analysis of Changes of Interest Income/Interest Expense

                     For the six months ended June 30, 2006

                                                                                Components
                                                             Inc./(Dec.)       of Change (1)
                                                                 from     ----------------------
                                                            Prior Period   Rate          Volume
                                                            ------------------------------------
                                                                      2006 vs. 2005
                                                            ------------------------------------
                                                                   (Dollars in Thousands)
                                                                                
INTEREST INCOME
Federal funds sold ......................................   $   158       $    49        $   109
Interest-bearing deposits at financial institutions .....        67            32             35
Investment securities (2) ...............................     1,106           463            643
Gross loans receivable (3) ..............................     7,584         3,185          4,399
                                                            ------------------------------------
          Total change in interest income ...............   $ 8,915       $ 3,729        $ 5,186
                                                            ------------------------------------
INTEREST EXPENSE
Interest-bearing demand deposits ........................   $ 2,866       $ 2,222        $   644
Savings deposits ........................................       332           278             54
Time deposits ...........................................     2,987         2,266            721
Short-term borrowings ...................................       326           758           (432)
Federal Home Loan Bank advances .........................       724           111            613
Junior subordinated debentures ..........................       448            49            399
Other borrowings.........................................        65            93            (28)
                                                            ------------------------------------
          Total change in interest expense ..............   $ 7,748       $ 5,777        $ 1,971
                                                            ------------------------------------
Total change in net interest income .....................   $ 1,167       $(2,048)       $ 3,215
                                                            ====================================
<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 fees are not material  and are  included in interest  income from
          loans receivable.
</FN>



                                       20


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/lease
losses. The Company's  allowance for loan/lease loss methodology  incorporates a
variety  of  risk   considerations,   both   quantitative   and  qualitative  in
establishing  an  allowance  for  loan/lease  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/lease,  and other factors.  Quantitative
factors  also  incorporate  known  information  about  individual  loans/leases,
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/lease structure,  existing loan/lease 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/lease losses
in the statement of operations to change the allowance for loan/lease  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/lease  losses  in the  section  entitled  "Financial  Condition."  Although
management  believes  the levels of the  allowance  as of both June 30, 2006 and
December  31, 2005 were  adequate to absorb  losses  inherent in the  loan/lease
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 JUNE 30, 2006 AND 2005

Interest  income  increased by $4.7 million to $16.2 million for the three-month
period ended June 30, 2006 when  compared to $11.5 million for the quarter ended
June 30,  2005.  The  increase of 41% in  interest  income was  attributable  to
greater average,  outstanding  balances in interest earning assets,  principally
with  respect  to  loans/leases  receivable,  in  combinatio.  with an  improved
aggregate asset yield.  The Company's  average yield on interest  earning assets
was 6.44%,  an increase of 78 basis  points for the three  months ended June 30,
2006 when compared to the same period in 2005.

Interest expense increased by $4.2 million from $4.8 million for the three-month
period ended June 30, 2005,  to $9.0  million for the  three-month  period ended
June 30,  2006.  The 88%  increase in  interest  expense  was  primarily  due to
aggregate  increased  interest  rates,  principally  with respect to  customers'
interest-bearing  dema.d deposits and time deposits in the subsidiary banks. The
Company's  average cost of interest bearing  liabilities was 3.90% for the three
months  ended June 30,  2006,  which was an  increase  of 130 basis  points when
compared to the second quarter of 2005.

At June 30,  2006 and  December  31,  2005,  the Company  had an  allowance  for
estimated losses on loans/leases of 1.12% and 1.17%, respectively. The provision
for loan/lease  losses  increased by $499 thousand from a provision  reversal of
$147  thousand for the  three-month  period ended June 30, 2005 to $352 thousand
for the  three-month  period ended June 30, 2006.  During the second  quarter of
2006,  management  determined the appropriate  monthly  provision for loan/lease
losses based upon a number of factors,  including  the increase in  loans/leases
and a detailed analysis of the loan/lease  portfolio.  During the second quarter
of 2006,  net growth in the  loan/lease  portfolio of $81.3 million  warranted a
$914  thousand  provision to the  allowance  for  loan/lease  losses,  which was
partially offset by provision reversals of $562 thousand resulting from upgrades
within the portfolio.  During the second quarter of 2005, net growth in the loan
portfolio of $21.6 million warranted a $278 thousand  provision to the allowance
for loan losses,  however  this amount was more than offset by $425  thousand of
provision  reversals  attributed  to upgrades  within the  portfolio  during the
quarter. For the three months ended June 30, 2006, there were no commercial loan
charge-offs,  and there were commercial recoveries of $8 thousand. Consumer loan
charge-offs and recoveries totaled $32 thousand and $10 thousand,  respectively,
during the quarter.  Credit card loans  accounted for 57% of the second  quarter
consumer  gross  charge-offs.  Residential  real estate loans had no charge-offs
with $44 thousand of recoveries for the three months ended June 30, 2006.

                                       21


The following table sets forth the various  categories of noninterest income for
the three months ended June 30, 2006 and 2005.



                               Noninterest Income

                                                         Three months ended
                                                              June 30,
                                                     -------------------------
                                                         2006           2005     % change
                                                     ------------------------------------
                                                                           
Merchant credit card fees, net of processing costs   $   491,657    $   383,758     28.1%
Trust department fees ............................       741,648        719,918      3.0%
Deposit service fees .............................       478,664        396,297     20.8%
Gains on sales of loans, net .....................       287,768        351,042    (18.0)%
Securities losses, net ...........................       (71,293)            --        NA
Gains on sales of foreclosed assets ..............       744,694             --        NA
Earnings on bank-owned life insurance ............       163,300        140,235     16.5%
Investment advisory and management fees ..........       363,395        199,675     82.0%
Other ............................................       396,933        243,953     62.7%
                                                     ------------------------------------
          Total noninterest income ...............   $ 3,596,766    $ 2,434,878     47.7%
                                                     ====================================


Analysis  concerning  changes in  noninterest  income for the second  quarter of
2006, when compared to the second quarter of 2005, is as follows:

     o    Bancard's  merchant credit card fees, net of processing costs improved
          $108  thousand.  Increases  in both  merchant  processing  volumes and
          cardholder activity contributed equally to the 28% increase.

     o    Trust  department fees increased $22 thousand.  This was the result of
          the continued  development  of existing  trust  relationships  and the
          addition of new trust customers throughout the past twelve months.

     o    Deposit  service  fees  increased  $82  thousand.  This  increase  was
          primarily  a result of an increase in service  fees  collected  on the
          demand  deposit  accounts in a unique  program at Cedar  Rapids Bank &
          Trust.  The quarterly  average  balance of the Company's  consolidated
          demand deposits at June 30, 2006 increased $98.7 million from June 30,
          2005.  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.

     o    Gains on sales of loans, net, decreased $63 thousand. Loans originated
          for sale  during the second  quarter  of 2006 were $25.6  million  and
          during the second quarter of 2005 were $24.2 million.  Proceeds on the
          sales of loans during the second  quarters of 2006 and 2005 were $23.1
          million and $22.2 million, respectively.

     o    In April 2006,  the Company  recognized  a loss of $71 thousand on the
          sale of a  mortgage-backed  mutual fund  investment  held in Quad City
          Bank & Trust's securities  portfolio.  There were no securities losses
          in the first quarter of 2005.

     o    During the second  quarter of 2006,  Quad City Bank & Trust  completed
          the  sale of a  foreclosed  asset,  which  resulted  in a gain of $745
          thousand.  After  several  months of litigation  concerning  ownership
          rights, the foreclosed asset was determined to be the property of Quad
          City Bank & Trust and was subsequently sold at auction.

     o    Earnings on the cash surrender  value of life insurance  increased $23
          thousand. At June 30, 2006, levels of bank-owned life insurance (BOLI)
          on key  executives at the  subsidiary  banks was $13.6 million at Quad
          City Bank & Trust, $4.1 million at Cedar Rapids Bank & Trust, and $810
          thousand at Rockford Bank & Trust.

     o    Investment  advisory and  management  fees  increased  $164  thousand.
          Beginning January 1, 2006, the investment representatives at Quad City
          Bank & Trust,  who had  previously  been  employees  of LPL  Financial
          Services,  were  brought on as staff of the bank.  As a result of this
          organizational  change, fees are now reported gross rather than net of
          representative commissions, as in previous quarters. Approximately one
          half of the year-to-year  increase was due to this change. The balance
          of the increase 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.

     o    Other  noninterest  income increased $153 thousand.  Other noninterest
          income in each quarter  consisted  primarily of income from affiliated
          companies,  earnings on other  assets,  Visa check card fees,  and ATM
          fees.

                                       22


The following  table sets forth the various  categories of noninterest  expenses
for the three months ended June 30, 2006 and 2005.



                              Noninterest Expenses

                                         Three months ended
                                               June 30,
                                        -----------------------
                                           2006          2005    % change
                                        ---------------------------------
                                                           
Salaries and employee benefits ......   $5,483,476   $4,120,478     33.1%
Professional and data processing fees      768,415      824,598     (6.8)%
Advertising and marketing ...........      383,542      307,584     24.7%
Occupancy and equipment expense .....    1,274,648    1,022,246     24.7%
Stationery and supplies .............      168,000      164,238      2.3%
Postage and telephone ...............      248,111      198,370     25.1%
Bank service charges ................      142,939      139,026      2.8%
Insurance ...........................      153,413      153,687     (0.2)%
Other ...............................       59,596      513,114    (88.4)%
                                        ---------------------------------
          Total noninterest expenses    $8,682,140   $7,443,341     16.6%
                                        =================================



Analysis  concerning  changes in noninterest  expenses for the second quarter of
2006, when compared to the second quarter of 2005, is as follows:

     o    Total  salaries  and  benefits,  which  is the  largest  component  of
          noninterest  expenses,   increased  $1.4  million.  The  increase  was
          primarily  due  to  an  increase  in  employees  from  286  full  time
          equivalents  (FTEs)  to 333  from  year-to-year,  as a  result  of the
          Company's continued expansion. Also, the Company experienced increases
          in the expense for several employee compensation programs, such as the
          SERPs, the deferred compensation program and stock-based  compensation
          programs  during  2006,  primarily  related  to a  combination  of the
          application  of the  provisions  of SFAS  123R and a senior  officer's
          planned  retirement in 2009.  As the result of a previously  described
          organizational  change  at Quad  City  Bank & Trust,  commissions  for
          investment representatives, previously net from fees, are now included
          as  a  portion  of  salaries  and  benefits  expense.   The  Company's
          application  of the  provisions of SFAS 123R is described in detail in
          Note 1, Summary of Significant Accounting Policies.

     o    Professional  and data  processing  fees  decreased $56 thousand.  The
          primary  contributors  to the  year-to-year  decrease  were  legal and
          consulting fees incurred at the holding company level.

     o    Advertising   and   marketing    expense   increased   $76   thousand.
          Approximately  36% of the  increase  was in  the  form  of  donations,
          special events and/or sponsorships.

     o    Occupancy and equipment expense increased $252 thousand.  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. The
          subsidiary banks opened five new banking locations during 2005.

     o    Stationary and supplies increased $4 thousand.

     o    Postage and telephone increased $50 thousand.

     o    Bank service charges incr%ased $4 thousand.

     o    Insurance expense remained stable varying only $274.

     o    Other noninterest expense decreased $454 thousand.  The second quarter
          of 2006 included the deferral of $307 thousand of initial direct costs
          related to lease  originations  at M2 Lease Funds.  M2 Lease Funds was
          acquired during the third quarter of 2005. Also, in the second quarter
          of 2005, Quad City Bank & Trust incurred a $238 thousand write-down on
          the property value of other real estate owned (OREO).

                                       23


The  provision  for income taxes was $564  thousand for the  three-month  period
ended June 30, 2006 compared to $633 thousand for the  three-month  period ended
June 30, 2005 for a decrease  of $69  thousand,  or 11%.  The  decrease  was the
result of a decrease in income before  income taxes of $81 thousand,  or 4%, for
the 2006 quarter when compared to the 2005 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 33.4%
for the first quarter of 2005 to 31.9% for the first quarter of 2006.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2006 AND 2005

Interest  income  increased by $8.9 million to $31.1  million for the  six-month
period  ended June 30, 2006 when  compared  to $22.2  million for the six months
ended June 30, 2005. The increase of 40% 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 6.32%, an increase of 82 basis points for the six months ended June 30, 2006
when compared to the same period in 2005.

Interest  expense  increased by $7.7 million from $9.0 million for the six-month
period ended June 30, 2005, to $16.7 million for the six-month period ended June
30, 2006.  The 86% increase in interest  expense was  primarily due to aggregate
increased    interest   rates,    principally   with   respect   to   customers'
interest-bearing  demand deposits and time deposits in the subsidiary banks. The
Company's  average cost of interest  bearing  liabilities  was 3.72% for the six
months  ended June 30,  2006,  which was an  increase  of 124 basis  points when
compared to the first six months of 2005.

At June 30,  2006 and  December  31,  2005,  the Company  had an  allowance  for
estimated losses on loans/leases of 1.12% and 1.17%, respectively. The provision
for  loan/lease  losses  increased by $742  thousand  from $154 thousand for the
six-month  period ended June 30, 2005 to $896 thousand for the six-month  period
ended June 30, 2006. During the first six months of 2006,  management determined
the appropriate  monthly  provision for loan/lease losses based upon a number of
factors,  including the increase in loans/leases and a detailed  analysis of the
loan/lease  portfolio.  During the first six  months of 2006,  net growth in the
loan/lease portfolio of $110.8 million warranted a $1.2 million provision to the
allowance  for  loan/lease  losses,  which was  partially  offset  by  provision
reversals of $350 thousand resulting from upgrades within the portfolio.  During
the first six months of 2005,  net growth in the loan portfolio of $25.9 million
warranted a $333 thousand  provision to the  allowance for loan losses,  however
this  amount  was  partially  offset by $179  thousand  of  provision  reversals
attributed to upgrades within the portfolio during the period.  In both periods,
the successful  resolution of some  significant  credits in the loan  portfolio,
through payoff,  credit upgrade,  refinancing,  or the acquisition of additional
collateral  or  guarantees,  resulted  in  reductions  to both the  growth-based
provision  expense and the expected level of allowance for loan losses.  For the
six months ended June 30, 2006,  there were commercial  loan  charge-offs of $63
thousand,  and there were commercial recoveries of $108 thousand.  Consumer loan
charge-offs and recoveries totaled $136 thousand and $21 thousand, respectively,
during the period.  Credit card loans accounted for 34% of the period's consumer
gross charge-offs. Residential real estate loans had $17 thousand of charge-offs
with $52 thousand of recoveries for the six months ended June 30, 2006.

The following table sets forth the various  categories of noninterest income for
the six months ended June 30, 2006 and 2005.



                               Noninterest Income

                                                           Six months ended
                                                               June 30,
                                                     --------------------------
                                                          2006           2005    % change
                                                     ------------------------------------
                                                                           
Merchant credit card fees, net of processing costs   $   987,450    $   802,717     23.0%
Trust department fees ............................     1,522,941      1,455,061      4.7%
Deposit service fees .............................       944,080        777,563     21.4%
Gains on sales of loans, net .....................       493,003        605,172    (18.5)%
Securities losses, net ...........................      (213,879)            --        NA
Gains on sales of foreclosed assets ..............       750,134            867        NA
Earnings on bank-owned life insurance ............       413,008        318,962     29.5%
Investment advisory and management fees ..........       663,938        339,854     95.4%
Other ............................................       832,140        651,157     27.8%
                                                     ------------------------------------
          Total noninterest income ...............   $ 6,392,815    $ 4,951,353     29.1%
                                                     ====================================

                                       24


Analysis  concerning  changes in noninterest  income for the first six months of
2006, when compared to the comparable period in 2005, is as follows:

     o    Bancard's  merchant credit card fees, net of processing costs improved
          $185   thousand.   The  recovery  of  the  remaining   balance  of  an
          ISO-conversion reserve of $64 thousand in March 2006 accounted for 35%
          of the increase, and the significant decline in cardholder charge-offs
          from  year-to-year  accounted for an  additional  23% of the increase.
          Increases in both merchant  processing volumes and cardholder activity
          contributed to the balance of the improvement in fees.

     o    Trust  department fees increased $68 thousand.  This was the result of
          the continued  development  of existing  trust  relationships  and the
          addition of new trust customers throughout the past twelve months.

     o    Deposit  service  fees  increased  $167  thousand.  This  increase was
          primarily  a result of an increase in service  fees  collected  on the
          demand  deposit  accounts in a unique  program at Cedar  Rapids Bank &
          Trust.  The six-month  average  balance of the Company's  consolidated
          demand deposits at June 30, 2006 increased $94.6 million from June 30,
          2005.  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.

     o    Gains  on  sales  of  loans,  net,  decreased  $112  thousand.   Loans
          originated  for sale  during  the first six  months of 2006 were $43.5
          million and during the  comparable  period of 2005 were $45.0 million.
          Proceeds on the sales of loans  during the first two  quarters of 2006
          and 2005 were $39.2 million and $42.9 million, respectively.

     o    In March  2006,  the Company  recognized  an  impairment  loss of $143
          thousand on a mortgage-backed mutual fund investment held in Quad City
          Bank &  Trust's  securities  portfolio,  and  in  April,  incurred  an
          additional  loss  of $71  thousand  on the  subsequent  sale  of  that
          security.  There were no securities  losses in the first six months of
          2005.

     o    During the second  quarter of 2006,  Quad City Bank & Trust  completed
          the  sale of a  foreclosed  asset,  which  resulted  in a gain of $745
          thousand.  After  several  months of litigation  concerning  ownership
          rights, the foreclosed asset was determined to be the property of Quad
          City Bank & Trust and was subsequently sold at auction.

     o    Earnings on the cash surrender  value of life insurance  increased $94
          thousand. At June 30, 2006, levels of bank-owned life insurance (BOLI)
          on key  executives at the  subsidiary  banks was $13.6 million at Quad
          City Bank & Trust, $4.1 million at Cedar Rapids Bank & Trust, and $810
          thousand at Rockford Bank & Trust.

     o    Investment  advisory and  management  fees  increased  $324  thousand.
          Beginning January 1, 2006, the investment representatives at Quad City
          Bank & Trust,  who had  previously  been  employees  of LPL  Financial
          Services,  were  brought on as staff of the bank.  As a result of this
          organizational  change, fees are now reported gross rather than net of
          representative commissions, as in previous quarters. Approximately 60%
          of the  year-to-year  increase was due to this change.  The balance of
          the increase 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.

     o    Other noninterest income increased $181 thousand. During the first two
          quarters  of 2006,  M2 Lease  Funds had $68  thousand  in gains on the
          disposal of leased  assets,  which  contributed  to other  noninterest
          income.  M2 Lease Funds was acquired during the third quarter of 2005.
          Other noninterest income in each period consisted  primarily of income
          from affiliated  companies,  earnings on other assets, Visa check card
          fees, and ATM fees.

                                       25


The following  table sets forth the various  categories of noninterest  expenses
for the six months ended June 30, 2006 and 2005.



                              Noninterest Expenses

                                                 Six months ended
                                                      June 30,
                                            -------------------------
                                                2006          2005      % change
                                            ------------------------------------
                                                                
Salaries and employee benefits ..........   $10,531,379   $ 8,016,845     31.4%
Professional and data processing fees ...     1,559,253     1,437,394      8.5%
Advertising and marketing ...............       626,849       567,763     10.4%
Occupancy and equipment expense .........     2,524,661     1,998,199     26.4%
Stationery and supplies .................       337,369       312,016      8.1%
Postage and telephone ...................       473,241       394,685     19.9%
Bank service charges ....................       278,475       257,499      8.2%
Insurance ...............................       286,489       306,842     (6.6)%
Other ...................................       257,937       904,803    (71.5)%
                                            ------------------------------------
               Total noninterest expenses   $16,875,653   $14,196,046     18.9%
                                            ===================================


Analysis concerning changes in noninterest  expenses for the first six months of
2006, when compared to the first six months of 2005, is as follows:

     o    Total salaries and benefits  increased $2.5 million.  The increase was
          primarily  due  to  an  increase  in  employees  from  286  full  time
          equivalents  (FTEs)  to 333  from  year-to-year,  as a  result  of the
          Company's continued expansion. Also, the Company experienced increases
          in the expense for several employee compensation programs, such as the
          SERPs, the deferred compensation program and stock-based  compensation
          programs  during  2006,  primarily  related  to a  combination  of the
          application  of the  provisions  of SFAS  123R and a senior  officer's
          planned  retirement in 2009.  As the result of a previously  described
          organizational  change  at Quad  City  Bank & Trust,  commissions  for
          investment representatives, previously net from fees, are now included
          as  a  portion  of  salaries  and  benefits  expense.   The  Company's
          application  of the  provisions of SFAS 123R is described in detail in
          Note 1, Summary of Significant Accounting Policies.

     o    Professional  and data  processing  fees increased $122 thousand.  The
          primary   contributors  to  the  year-to-year   increase  were  legal,
          consulting, and data processing fees incurred at the subsidiary banks.

     o    Advertising and marketing expense increased $59 thousand. Cedar Rapids
          Bank & Trust,  as the primary  contributor,  accounted  for 41% of the
          increase.

     o    Occupancy and equipment expense increased $526 thousand.  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. The
          subsidiary banks opened five new banking locations during 2005.

     o    Stationary and supplies increased $25 thousand.

     o    Postage and telephone increased $79 thousand.

     o    Bank service charges increased $21 thousand.

     o    Insurance  expense  decreased  $20  thousand,  as in February 2006 the
          Company received several premium  reimbursements on canceled insurance
          policies.

     o    Other noninterest  expense  decreased $647 thousand.  During the first
          six months of 2005,  Quad City Bank & Trust  incurred $288 thousand of
          write-downs  on the  property  value of other real estate owned (OREO)
          and $93 thousand of other expense  incurred on OREO  property.  During
          the first six months of 2006, M2 Lease Funds recorded $470 thousand in
          deferred initial direct costs of lease originations, which contributed
          significantly  to the decrease  other  noninterest  expense.  M2 Lease
          Funds was acquired during the third quarter of 2005.

                                       26


The provision for income taxes was $853 thousand for the six-month  period ended
June 30, 2006 compared to $1.3 million for the  six-month  period ended June 30,
2005 for a decrease of $408  thousand,  or 33%. The decrease was the result of a
decrease in income  before income taxes of $856  thousand,  or 22%, for the 2006
period when  compared to the 2005  period.  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 32.8% for the
first two quarters of 2005 to 29.5% for the comparable period in 2006.

FINANCIAL CONDITION

Total  assets of the  Company  increased  by $114.0  million,  or 11%,  to $1.16
billion at June 30, 2006 from $1.04  billion at December  31,  2005.  The growth
resulted primarily from the net increase in the loan/lease portfolio,  funded by
interest-bearing deposits and the issuance of junior-subordinated debentures.

Cash and due from banks  decreased by $5.8 million,  or 15%, to $33.2 million at
June 30, 2006 from $39.0  million at December 31, 2005.  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 June 30, 2006,
the  subsidiary  banks had $4.0  million  invested  in such  funds.  This amount
decreased by $420  thousand,  or 9%, from $4.5 million at December 31, 2005. The
decrease  was  primarily  a result  of a  decreased  demand  for  Federal  funds
purchases by Quad City Bank & Trust's downstream correspondent banks.

Interest bearing deposits at financial  institutions  increased by $3.2 million,
or 252%,  to $4.5  million at June 30, 2006 from $1.3  million at  December  31,
2005. Included in interest bearing deposits at financial institutions are demand
accounts,  money market accounts,  and certificates of deposit. The increase was
the result of increases  in money market  accounts of $3.4 million and in demand
account balances of $17 thousand, in combination with maturities of certificates
of deposit totaling $172 thousand.

Securities  increased by $2.1 million, or 1%, to $184.5 million at June 30, 2006
from $182.4  million at December  31,  2005.  The  increase  was the result of a
number of  transactions in the securities  portfolio.  Paydowns of $354 thousand
were received on mortgage-backed  securities,  and the amortization of premiums,
net of the accretion of discounts,  was $156  thousand.  Maturities and calls of
securities  occurred  in  the  amount  of  $22.7  million,   and  the  portfolio
experienced a decrease in the fair value of securities,  classified as available
for  sale,  of $859  thousand.  These  portfolio  decreases  were  offset by the
purchase of an additional  $31.2 million of securities,  classified as available
for sale.

Total gross  loans/leases  receivable  increased by $110.8  million,  or 15%, to
$867.1  million at June 30, 2006 from $756.3  million at December 31, 2005.  The
increase was the result of originations,  renewals,  additional disbursements or
purchases of $225.9  million of  commercial  business,  consumer and real estate
loans,  less loan  charge-offs,  net of  recoveries,  of $35 thousand,  and loan
repayments or sales of loans of $115.0 million. During the six months ended June
30, 2006,  Quad City Bank & Trust  contributed  $115.6  million,  or 51%,  Cedar
Rapids Bank & Trust contributed $47.1 million, or 21%, and Rockford Bank & Trust
contributed $47.2 million, or 21%, of the Company's loan originations, renewals,
additional  disbursements or purchases. M2 Lease Funds contributed $16.0 million
in lease originations during the first six months of 2006. The mix of loan/lease
types within the Company's  loan/lease  portfolio at June 30, 2006 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 $9.7 million at June 30,
2006  compared  to $8.9  million at  December  31,  2005,  an  increase  of $860
thousand,  or 10%.  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.

                                       27


Although  management  believes  that  the  allowance  for  estimated  losses  on
loans/leases  at June 30,  2006 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 six months ended June 30 were $35 thousand in 2006 and
$754  thousand  in 2005.  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 1.12% at June 30, 2006, 1.17% at December
31, 2005 and 1.28% at June 30, 2005.

At June 30, 2006, total nonperforming  assets were $7.8 million compared to $3.7
million at December 31, 2005. The $4.1 million increase was the result of a $4.7
million  increase in nonaccrual  loans,  and decreases of $227 thousand in other
real estate owned and $454 thousand in accruing loans past due 90 days or more.

Nonaccrual  loans  were $7.3  million  at June 30,  2006,  and $2.6  million  at
December 31, 2005. The $4.7 million  increase in nonaccrual  loans was comprised
of an  increase  in  commercial  loans of $4.9  million  and  decreases  in both
consumer loans of $28 thousand and in real estate loans of $154  thousand.  Five
large  commercial  lending  relationships  at Quad  City  Bank & Trust,  with an
aggregate  outstanding balance of $5.9 million,  comprised 80% of the nonaccrual
loans at June 30, 2006 with one  relationship  accounting for $4.3 million.  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.  Nonaccrual loans represented less than
one percent of the Company's  held for investment  loan/lease  portfolio at June
30, 2006.

From December 31, 2005 to June 30, 2006, accruing loans past due 90 days or more
decreased from $604 thousand to $150 thousand.  Credit card loans  comprised $58
thousand, or 38%, of this balance at June 30, 2006.

Premises and  equipment  increased by $1.1  million,  or 4%, to $26.7 million at
June 30, 2006 from $25.6  million at  December  31,  2005.  During the first six
months  there  were  purchases  of  additional  land,  furniture,  fixtures  and
equipment  and leasehold  improvements  of $2.2  million,  which were  partially
offset by  depreciation  expense of $1.2 million.  In the third quarter of 2005,
Rockford Bank & Trust moved forward with plans for a second banking  location on
Guilford Road at Alpine Road in Rockford. A temporary modular facility opened in
December  2005.  The  Company is  constructing  a 20,000  square  foot  building
projected for completion in October 2006 at a cost of $4.4 million. During 2005,
capitalized  costs  associated  with this project were $1.5 million.  During the
first six months of 2006, $1.4 million of costs were incurred on this project.

On August 26, 2005, Quad City Bank & Trust acquired 80% of the membership  units
of M2 Lease Funds.  The purchase price of $5.0 million  resulted in $3.2 million
in goodwill.

Accrued interest receivable on loans,  securities and interest-bearing  deposits
with financial  institutions  increased by $1.3 million, or 27%, to $6.1 million
at June 30, 2006 from $4.8 million at December 31, 2005.

                                       28


Bank-owned life insurance  ("BOLI") increased by $1.1 million from $17.4 million
at December 31, 2005 to $18.5 million at June 30, 2006.  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
BOLI to finance the expenses  associated with the establishment of SERPs for the
executive  officers.  Additionally in 2004, the subsidiary  banks purchased BOLI
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 2005,  Rockford Bank & Trust purchased
$777 thousand of BOLI. These purchases combined with existing BOLI,  resulted in
each  subsidiary  bank holding  investments in BOLI policies near the regulatory
maximum of 25% of capital.  As the owners and  beneficiaries  of these holdings,
the   banks   monitor   the   associated   risks,   including   diversification,
lending-limit,  concentration,  interest rate risk,  credit risk, and liquidity.
Quarterly  financial  information  on the insurance  carriers is provided to the
Company by its  compensation  consulting firm.  Benefit expense  associated with
both the SERPs and deferred compensation arrangements was $268 thousand and $154
thousand,  respectively, for the first six months of 2006. Earnings on BOLI, for
the first six months of 2006, totaled $413 thousand.  Benefit expense associated
with the SERPs and deferred  compensation  arrangements was $88 thousand and $83
thousand,  respectively, for the first six months of 2005. Earnings on BOLI, for
the first six months of 2005, totaled $319 thousand.

Other assets increased by $1.4 million, or 8%, to $18.5 million at June 30, 2006
from $17.1 million at December 31, 2005.  Other assets  included $9.4 million of
equity in Federal Reserve Bank and Federal Home Loan Bank stock, $3.6 million of
deferred tax assets,  $318 thousand in net other real estate owned (OREO),  $1.8
million in investments  in  unconsolidated  companies,  $660 thousand of accrued
trust  department  fees,  $395 thousand of unamortized  prepaid trust  preferred
securities   offering  expenses,   $582  thousand  of  prepaid   Visa/Mastercard
processing  charges,  other  miscellaneous  receivables,   and  various  prepaid
expenses.

Deposits increased by $105.6 million, or 15%, to $804.1 million at June 30, 2006
from $698.5  million at December 31, 2005.  The increase  resulted  from a $42.2
million aggregate net increase in money market,  savings,  and total transaction
accounts,  in combination with a $63.4 million net increase in  interest-bearing
certificates  of deposit.  The  subsidiary  banks  experienced a net increase in
brokered certificates of deposit of $18.1 million during the first six months of
2006. At June 30, 2006,  Quad City Bank & Trust had committed to the issuance of
an additional $15.2 million in brokered  certificates of deposit at an aggregate
effective  interest rate of 5.40%.  These certificates were issued in early July
2006.

Short-term  borrowings  decreased  $3.1 million,  or 3%, from $107.5  million at
December 31, 2005 to $104.4 million at June 30, 2006. 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.
Short-term  borrowings were comprised of customer repurchase agreements of $65.9
million and $54.7 million at June 30, 2006 and December 31, 2005,  respectively,
as well as federal  funds  purchased of $38.5 million at June 30, 2006 and $52.8
million at December 31, 2005.

Federal  Home Loan Bank  advances  increased by $1.9  million,  or 1%, to $131.9
million at June 30, 2006 from $130.0  million at December 31, 2005.  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  decreased $1.5 million, or 14%, from $10.8 million at December
31, 2005 to $9.3 million at June 30, 2006. In February 2006,  with proceeds from
the issuance of the trust  preferred  securities  of Trust V, the Company made a
payment to reduce the balance on a line of credit at an  upstream  correspondent
bank by $10.0  million.  In March  2006,  the  Company  drew an  advance of $8.5
million,  primarily to provide $3.0 million of  additional  capital to Quad City
Bank & Trust and $4.5 million of additional capital to Cedar Rapids Bank & Trust
for capital maintenance purposes at each of these subsidiaries.

Junior subordinated debentures increased $10.3 million, or 40%, to $36.1 million
at June 30, 2006 from $25.8  million at December 31, 2005.  On February 4, 2006,
the Company  announced  the  issuance of $10.0  million of  fixed/floating  rate
capital  securities  of QCR Holdings  Statutory  Trust V. Trust V used the $10.0
million  of  proceeds  from  the  sale of the  Trust  Preferred  Securities,  in
combination  with $310 thousand of proceeds from its equity,  to purchase  $10.3
million of junior subordinated debentures of the Company.

                                       29


Other liabilities were $13.9 million at June 30, 2006, down $1.1 million, or 7%,
from $15.0 million at December 31, 2005.  Other  liabilities  were  comprised of
unpaid  amounts  for  various  products  and  services,  and  accrued but unpaid
interest on deposits. At June 30, 2006, the most significant components of other
liabilities  were $4.2  million of accrued  expenses,  $2.3  million of accounts
payable for leases,  $2.2 million of miscellaneous  accounts  payable,  and $4.0
million of interest payable.

Common stock, at both June 30, 2006 and December 31, 2005, was $4.5 million. The
slight  increase  of $17  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  $21.1  million at June 30, 2006,  up $342
thousand,  or 2%, from $20.8 million at December 31, 2005. The increase resulted
from the  proceeds  received  in excess of the $1.00 per share par value for the
17,032  shares of common stock issued as the result of the net exercise of stock
options  and  stock  purchased  under  the  employee  stock  purchase  plan,  in
combination with the recognition of stock-based  compensation expense due to the
application of the provisions of SFAS 123R.

Retained earnings increased by $1.9 million, or 6%, to $31.6 million at June 30,
2006 from $29.7 million at December 31, 2005. The increase  reflected net income
for the  six-month  period net of $182 thousand  representing  the four-cent per
share dividend, which was declared in April and paid in July 2006.

Unrealized losses on securities available for sale, net of related income taxes,
totaled $1.1 million at June 30, 2006 as compared to  unrealized  losses of $567
thousand at December 31, 2005. The decrease of $505 thousand was attributable to
decreases  during  the  period in fair  value of the  securities  identified  as
available for sale, primarily due to the increase 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 $3.6 million for the six months
ended June 30, 2006  compared to $747  thousand  net cash  provided by operating
activities, consisting primarily of proceeds on the sales of loans, for the same
period in 2005. Net cash used in investing activities, consisting principally of
loan  originations  to be held for  investment,  was $115.6  million for the six
months ended June 30, 2006 and $42.2 million,  consisting primarily of purchases
of available for sale  securities,  for the six months ended June 30, 2005.  Net
cash provided by financing activities, consisting primarily of increased deposit
accounts at the  subsidiary  banks,  for the six months  ended June 30, 2006 was
$113.4  million,  and for the same period in 2005 was $46.6 million,  consisting
principally of advances from the Federal Home Loan Bank.

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 June 30, 2006,  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 June 30, 2006,  Quad City Bank & Trust had drawn $8.0 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, 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 December 31,
2005, Quad City Bank & Trust had drawn $19.5 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. As of December 31, 2005, the Company had two
unsecured  revolving  credit notes  totaling  $15.0  million in  aggregate.  The
Company had a 364-day revolving note, which matures December 21, 2006, for $10.0
million and had a balance  outstanding of $5.5 million at December 31, 2005. The
Company also had a 3-year  revolving note,  which matures December 30, 2007, for
$5.0  million and carried a balance of $5.0  million at December  31,  2005.  On
January 3, 2005,  the 3-year  note was fully  drawn as partial  funding  for the
capitalization  of Rockford Bank & Trust.  In February  2006,  proceeds from the
issuance of the securities of Trust V were utilized to fully pay down this note.
In April  2006,  the  company  combined  the two  notes  into a  single  364-day
revolving  credit note for $15.0 million.  At June 30, 2006, this note carried a
balance outstanding of $9.0 million.  For all of the notes,  interest is payable
monthly at the  Federal  Funds rate plus 1% per annum,  as defined in the credit
agreements.  As of June 30,  2006,  the  interest  rate on the 364-day  note was
6.02%. At December 31, 2005, the interest rate on both notes was 5.19%.

                                       30


On February 24, 2006,  the Company  announced  the issuance of $10.0  million of
fixed/floating  rate capital  securities of QCR Holdings  Statutory Trust V. The
securities  represent  the undivided  beneficial  interest in Trust V, which was
established  by the Company for the sole purpose of issuing the Trust  Preferred
Securities.  The  securities  issued by Trust V mature in thirty years,  but are
callable at par after five years.  The Trust  Preferred  Securities have a fixed
rate of 6.22%,  payable  quarterly,  for five  years,  at which time they have a
variable  rate based on the  three-month  LIBOR plus  1.55%,  reset and  payable
quarterly. Trust V used the $10.0 million of proceeds from the sale of the Trust
Preferred Securities, in combination with $310 thousand of proceeds from its own
equity to  purchase  $10.3  million  of junior  subordinated  debentures  of the
Company.  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.  The Company will treat these new issuances as
Tier 1 capital for regulatory capital purposes,  subject to current  established
limitations.

On April 27, 2006, the Company  declared a cash dividend of $0.04 per share,  or
$182 thousand, which was paid on July 7, 2006, to stockholders of record on June
23, 2006. 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 was 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.

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

Safe Harbor  Statement  Under the Private  Securities  Litigation  Reform Act of
1995. This document (including information  incorporated by reference) 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.  The factors,  which could have a material
adverse effect on the Company's  operations and future prospects are detailed in
the "Risk  Factors"  section  included under Item 1a. of Part I of the Company's
Form 10-K. In addition to the risk factors described in that section,  there are
other factors that may impact any public company,  including the Company,  which
could have a material  adverse effect on our  operations  and future  prospects.
These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements.



                                       31



Part I
Item 3

           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company,  like  other  financial  institutions,  is  subject  to direct and
indirect market risk.  Direct market risk exists from changes in interest rates.
The Company's net income is dependent on its net interest  income.  Net interest
income is susceptible to interest rate risk to the degree that  interest-bearing
liabilities mature or reprice on a different basis than interest-earning assets.
When   interest-bearing   liabilities   mature  or  reprice  more  quickly  than
interest-earning  assets in a given  period,  a  significant  increase in market
rates of interest could adversely  affect net interest income.  Similarly,  when
interest-earning  assets  mature or reprice more  quickly than  interest-bearing
liabilities, falling interest rates could result in a decrease in net income.

In an attempt to manage its  exposure to changes in interest  rates,  management
monitors  the  Company's  interest  rate  risk.  Each  subsidiary  bank  has  an
asset/liability  management  committee  of the  board of  directors  that  meets
quarterly to review the bank's  interest rate risk  position and  profitability,
and to make or recommend adjustments for consideration by the full board of each
bank.  Management  also reviews the  subsidiary  banks'  securities  portfolios,
formulates investment strategies,  and oversees the timing and implementation of
transactions  to  assure  attainment  of the  board's  objectives  in  the  most
effective manner.  Notwithstanding  the Company's  interest rate risk management
activities, the potential for changing interest rates is an uncertainty that can
have an adverse effect on net income.

In adjusting the Company's  asset/liability  position,  the board and management
attempt  to manage  the  Company's  interest  rate  risk  while  maintaining  or
enhancing  net  interest  margins.  At times,  depending on the level of general
interest  rates,  the  relationship  between  long-term and short-term  interest
rates, market conditions and competitive  factors,  the board and management may
decide to increase the Company's  interest rate risk position  somewhat in order
to increase its net interest margin. The Company's results of operations and net
portfolio  values  remain  vulnerable  to  increases  in  interest  rates and to
fluctuations in the difference between long-term and short-term 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 200 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 March 31,
2006  demonstrated a 3.9% decrease in net interest income with a 200 basis point
increase in interest  rates,  and a 1.7% increase in net interest  income with a
200 basis point  decrease in interest  rates.  Both  simulations  are within the
board-established policy limits of a 10% decline in value.

Interest rate risk is the most  significant  market risk  affecting the Company.
For that reason,  the Company  engages the  assistance of a national  consulting
firm and their risk  management  system to monitor  and  control  the  Company's
interest  rate risk  exposure.  Other  types of  market  risk,  such as  foreign
currency exchange rate risk and commodity price risk, do not arise in the normal
course of the Company's business activities.

                                       32


Part I
Item 4

                             CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. As required by Rules 13a-15(b)
and  15d-15(b)  under  the  Securities  Exchange  Act of  1934,  management  has
evaluated,  with the  participation of the Company's Chief Executive Officer and
Chief Financial Officer,  the effectiveness of the Company's disclosure controls
and procedures as of the end of the period covered by this report. Based on this
evaluation,   management   concluded  the  Company's   disclosure  controls  and
procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e))
were  effective  as of June 30, 2006 to ensure that  information  required to be
disclosed  by the  Company  in  reports  that it  files  or  submits  under  the
Securities Exchange Act is recorded,  processed,  summarized and reported within
the time periods specified in Securities and Exchange Commission rules and forms
and were effective as of June 30, 2006. These disclosure controls and procedures
include controls and procedures designed to ensure that information  required to
be disclosed  by the Company in the reports  that it files or submits  under the
Securities Exchange Act is accumulated and communicated to management, including
the Company's Chief Executive  Officer and Chief Financial  Officer,  or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.  During the six months ended June 30, 2006, there have been
no  significant  changes  to  the  Company's  internal  control  over  financial
reporting that have materially affected, or are reasonably likely to affect, the
Company's internal control over financial reporting.



                                       33


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 1.A.       Risk Factors

                There  have  been  no  material  changes  in  the  risk  factors
                applicable  to the Company from those  disclosed in Part I, Item
                1.A. "Risk Factors," in the Company's 2005 Annual Report on Form
                10-K.  Please refer to that section of the  Company's  Form 10-K
                for disclosures regarding the risks and uncertainties related to
                the Company's business.

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

                The annual meeting of  stockholders  was held at The Mark of the
                Quad Cities  located at 1201 River  Drive,  Moline,  Illinois on
                Wednesday,  May 3, 2006 at 10:00 a.m. At the meeting, Michael A.
                Bauer and James J. Brownson were  re-elected to serve as Class I
                directors,  with terms  expiring in 2009.  John A. Rife was also
                elected to serve as a Class I director,  with a term expiring in
                2009.  Continuing as Class II directors,  with terms expiring in
                2007,  are Larry J.  Helling,  Douglas  M.  Hultquist,  and Mark
                Kilmer.  Continuing as Class III directors,  with terms expiring
                in 2008,  are Patrick S. Baird,  John K.  Lawson,  and Ronald G.
                Peterson.

                There were  4,537,711  issued and  outstanding  shares of common
                stock entitled to vote at the annual  meeting.  Either in person
                or by proxy,  there were 3,858,171 common shares  represented at
                the meeting, constituting approximately 85.0% of the outstanding
                shares. The voting was as follows:



                                                     Votes               Votes
                                                      For               Withheld
                                                   -----------------------------
                                                                  

                Michael A. Bauer                   3,833,926             24,245
                James J. Brownson                  3,800,708             57,463
                John A. Rife                       3,807,067             51,104


Item 5          Other Information

                None

Item 6          Exhibits

                (a)   Exhibits

                      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.

                                       34




                                   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    August 9, 2006                  /s/ Michael A. Bauer
      ----------------------------      ----------------------------------
                                        Michael A. Bauer, Chairman




Date    August 9, 2006                  /s/ Douglas M. Hultquist
      ---------------------------       ----------------------------------
                                        Douglas M. Hultquist, President
                                        Chief Executive Officer



Date    August 9, 2006                  /s/ Todd A. Gipple
      --------------------------        ----------------------------------
                                        Todd A. Gipple, Executive Vice President
                                        Chief Financial Officer

                                       35