**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-K**

 
| **ý**                                                                                                   | **ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF  1934**     |   |
|--------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|--------|
|                                                                                                         |                                                                                               |   |
| **For  fiscal year ended December 31, 2005**                                                                 |
|                                                                                                         |                                                                                               |
| **OR**                                                                                                       |
|                                                                                                         |                                                                                               |
| **o**                                                                                                        | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF  1934** |   |
|                                                                                                         |                                                                                               |
| **For  transition period from               to** |
|                                                                                                              |                                                                                                    |        |  |

 

**CommissionFile Number 0-33203**

 

**LANDMARKBANCORP, INC.**

(Exact name ofRegistrant as specified in its charter)

 

| **Delaware**                       | ** ** | **43-1930755**                           |
|------------------------------------|------------|------------------------------------------|
| (State or other  jurisdiction      |       | (I.R.S. Employer  Identification Number) |
| of incorporation  or organization) |       |                                     |

 

**701Poyntz Avenue, Manhattan, Kansas   66505**

(Address ofprincipal executive offices)         (ZipCode)

 

**(785)565-2000**

(Registrant’stelephone number, including area code)

 

Securitiesregistered pursuant to Section 12(b) of the Act:

 

| ** **                             | ** ** | **Name of Each Exchange** |
|----------------------------------------|------------|------------------------------------------|
| **Title of Each Class** | ** ** | **on which Registered**        |
| None                                   |       | None                                     |

 

Securitiesregistered pursuant to Section 12(g) of the Act:

# ** **

# **Common Stock, par value $0.01 per share**

**PreferredShare Purchase Rights**

(Title of Class)

 

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined inRule 405 of the Securities Act.  

Yes o                Noý

 
| Indicate  by check mark if the registrant is not required to file reports pursuant to  Section 13 or Section 15(d) of the Exchange |
|------------------------------------------------------------------------------------------------------------------------------------|
| Act.                                                                                                                               | Yes o                No  ý |

 

Indicate by check mark whether the Registrant (1) hasfiled all reports to be filed by Section 13 or 15(d) of the Securities andExchange Act 0f 1934 during the preceding 12 months (or for such shorter periodthat the Registrant was required to file such reports),
| and (2) has been subject to such filing requirements  for the past 90 days. | Yes ý                No  o |
|-----------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------|

 

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the bestof Registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this 10-K or any amendment to thisform 10-K. ý.

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of theExchange Act.

 
| Large  accelerated filer o |   | Accelerated  filer o |   | Non-accelerated  filer ý |
|----------------------------|--------|----------------------|--------|-------------------------------|

 

Indicateby check mark whether the registrant is a shell company (as defined in ExchangeAct Rule 12b-2).

Yes o                Noý

 

The aggregate marketvalue of the voting and non-voting common equity held by non-affiliates of theregistrant, based on the last sales price quoted on the Nasdaq National MarketSystem on June 30, 2005, the last business day of the registrant’s mostrecently completed second fiscal quarter, was approximately $35.5 million*. AtMarch 23, 2005, the total number of shares of common stock outstanding was 2,228,591.

 

Documents incorporated byReference:

 

Portions of the 2005Annual Report to Stockholders for the fiscal year ended December 31, 2005, areincorporated by reference into Parts I and II hereof, to the extent indicatedherein. Portions of the Proxy Statement for the Annual Meeting of Stockholdersto be held May 17, 2006, are incorporated by reference in Part III hereof, tothe extent indicated herein.

 

----

*              Based on the last reported price of actual transactionsin Registrant’s common stock on June 30, 2005, and reports of beneficialownership prepared by all directors, executive officers and beneficial ownersof more than 5% of the outstanding shares of common stock of Registrant;however, such determination of shares owned by affiliates does not constitutean admission of affiliate status or beneficial interest in shares of commonstock of Registrant.

 

 

----

 

**LANDMARKBANCORP, INC.**

 

2005 Form 10-KAnnual Report

 

Table of Contents

 

**PART I**

 
| ITEM 1.    | BUSINESS                                                                                                           | 1      |
|------------|--------------------------------------------------------------------------------------------------------------------|--------|
|       |                                                                                                               |   |
| ITEM 1A.   | RISK FACTORS                                                                                                       | 25     |
|       |                                                                                                               |   |
| ITEM 1B.   | UNRESOLVED STAFF COMMENTS                                                                                          | 32     |
|       |                                                                                                               |   |
| ITEM 2.    | PROPERTIES                                                                                                         | 32     |
|       |                                                                                                               |   |
| ITEM 3.    | LEGAL PROCEEDINGS                                                                                                  | 32     |
|       |                                                                                                               |   |
| ITEM 4.    | SUBMISSION OF MATTERS TO A VOTE OF  SECURITY HOLDERS                                                               | 32     |
|       |                                                                                                               |   |
| ITEM 5.    | MARKET FOR THE COMPANY’S COMMON STOCK,  RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 32     |
|       |                                                                                                               |   |
| ITEM 6.    | SELECTED FINANCIAL DATA                                                                                            | 34     |
|       |                                                                                                               |   |
| ITEM 7.    | MANAGEMENT’S DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        | 34     |
|       |                                                                                                               |   |
| ITEM 7A.   | QUANTITATIVE AND QUALITATIVE  DISCLOSURES ABOUT MARKET RISK                                                        | 34     |
|       |                                                                                                               |   |
| ITEM 8.    | FINANCIAL STATEMENTS AND SUPPLEMENTAL  DATA                                                                        | 34     |
|       |                                                                                                               |   |
| ITEM 9.    | CHANGES IN AND DISAGREEMENTS WITH  ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                              | 34     |
|       |                                                                                                               |   |
| ITEM 9A.   | CONTROLS AND PROCEDURES                                                                                            | 35     |
|       |                                                                                                               |   |
| ITEM 9B.   | OTHER INFORMATION                                                                                                  | 35     |
|       |                                                                                                               |   |
| ITEM 10.   | DIRECTORS AND EXECUTIVE OFFICERS OF  THE REGISTRANT                                                                | 35     |
|       |                                                                                                               |   |
| ITEM 11.   | EXECUTIVE COMPENSATION                                                                                             | 36     |
|       |                                                                                                               |   |
| ITEM 12.   | SECURITY OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT                                                    | 36     |
|       |                                                                                                               |   |
| ITEM 13.   | CERTAIN RELATIONSHIPS AND RELATED  TRANSACTIONS                                                                    | 38     |
|       |                                                                                                               |   |
| ITEM 14.   | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                             | 38     |
|       |                                                                                                               |   |
| ITEM 15.   | EXHIBITS AND FINANCIAL STATEMENT  SCHEDULES                                                                        | 38     |
|       |                                                                                                               |   |
| SIGNATURES | 40                                                                                                                 |

 

----

 

**PART I.**

 

**ITEM 1.****  BUSINESS**

 

**The Company**

 

Landmark Bancorp, Inc.(the “Company”) is a bank holding company incorporated under the laws of theState of Delaware. Currently, the Company’s business consists solely of theownership of Landmark National Bank (the “Bank”), which is a wholly-ownedsubsidiary of the Company. As of December 31, 2005, the Company had $465.1million in consolidated total assets.

 

The Company isheadquartered in Manhattan, Kansas and has expanded its geographic presencethrough acquisitions in the past several years. In August 2005, the Companyacquired 2 branches in Great Bend, Kansas. Effective January 1, 2006, theCompany completed the acquisition of First Manhattan Bancorporation, Inc., theholding company for First Savings Bank, F.S.B. Effective April 1, 2004, theCompany acquired First Kansas Financial Corporation (“First Kansas”), theholding company for First Kansas Federal Savings Association (“First KansasFederal”). In conjunction with the transaction, First Kansas Federal was mergedinto the Bank (the “2004 Acquisition”). Effective October 9, 2001, LandmarkBancshares, Inc., the holding company for Landmark Federal Savings Bank, andMNB Bancshares, Inc., the holding company for Security National Bank, completedtheir merger into Landmark Merger Company, which immediately changed its nameto Landmark Bancorp, Inc. (the “2001 Merger”). In addition, Landmark FederalSavings Bank merged with Security National Bank and the resulting bank changedits name to Landmark National Bank.

 

As a bank holdingcompany, the Company is subject to regulation by the Board of Governors of theFederal Reserve System (the “Federal Reserve”). The Company is also subject tovarious reporting requirements of the Securities and Exchange Commission (the “SEC”).

 

Pursuant to the 2004 Acquisitionand 2001 Merger, the Bank succeeded to all of the assets and liabilities of FirstKansas, First Kansas Federal, Landmark Federal Savings Bank and SecurityNational Bank. The Bank is principally engaged in the business of attractingdeposits from the general public and using such deposits, together withborrowings and other funds, to originate consumer, commercial, multi-family,and one-to-four family residential mortgage loans in the Bank’s principalmarket areas, as described below. Since the 2001 Merger, the Bank has focusedon originating greater numbers and amounts of consumer, commercial, andagricultural loans. Additionally, greater emphasis has been placed ondiversification of the deposit mix through expansion of core deposit accountssuch as checking, savings, and money market accounts. The Bank has alsodiversified its geographical markets as a result of both the 2004 Acquisitionand the 2001 Merger. The Company’s main office is in Manhattan, Kansas withbranch offices in central, eastern and southwestern Kansas. The Companycontinues to explore opportunities to expand its banking markets throughmergers and acquisitions, as well as branching opportunities.

 

1

----

 

The results of operationsof the Bank are dependent primarily upon net interest income and, to a lesserextent, upon other income derived from loan servicing fees and customer depositservices. Additional expenses of the Bank include general and administrativeexpenses such as salaries, employee benefits, federal deposit insurancepremiums, data processing, occupancy and related expenses.

 

Deposits of the Bank areinsured by both the Savings Association Insurance Fund (the “SAIF”) or the BankInsurance Fund (the “BIF”) of the Federal Deposit Insurance Corporation (the “FDIC”)up to the maximum amount allowable under applicable federal law and regulation.The Bank is regulated by the Office of the Comptroller of the Currency (the “OCC”),as the chartering authority for national banks, and the FDIC, as theadministrator of the SAIF and the BIF. The Bank is also subject to regulationby the Board of Governors of the Federal Reserve System with respect toreserves required to be maintained against deposits and certain other matters. TheBank is a member of the Federal Reserve Bank of Kansas City and the FederalHome Loan Bank (the “FHLB”) of Topeka.

 

The Company’s executiveoffice and the Bank’s main office are located at 701 Poyntz Avenue, Manhattan,Kansas 66502. The telephone number is (785) 565-2000.

 

**Market Area**

 

The Bank’s primarydeposit gathering and lending markets are geographically diversified withlocations in eastern, central, and southwestern Kansas. The primary industrieswithin these respective markets are also diverse and dependent upon a widearray of industry and governmental activity for their economic base. A briefdescription of these three geographic areas and the communities which the Bankserves within these communities is summarized below.

 

Shawnee, Miami, Osage,and Bourbon counties are located in eastern Kansas and encompass the Banklocations in Topeka, Auburn, Paola, Louisburg, Osawatomie, Osage City, and FortScott. Shawnee County’s market, which encompasses the Bank locations in Topekaand Auburn, is strongly influenced by the State of Kansas, City of Topeka, tworegional hospitals and several major private firms and public institutions. Thecommunities of Paola, Louisburg, and Osawatomie, located within Miami County,are influenced by the high growth of the Kansas City market resulting inhousing growth and small private industries and business. Additionally, theOsawatomie State Hospital is a major government employer within the county. Bourbonand Osage Counties are primarily agricultural with small private industries andbusiness firms, while Bourbon County is also influenced by a regional hospitaland Fort Scott Community College.

 

Bank locations withincentral Kansas include the communities of Manhattan within Riley County, Wamegowhich is located within Pottawatomie County, Great Bend and Hoisington withinBarton County, and LaCrosse located in Rush County. The Riley and PottawatomieCounty economies are significantly impacted by employment at Fort RileyMilitary Base and Kansas State University, the second largest university inKansas, which is located in Manhattan. Several private industries andbusinesses are also located within these counties. Agriculture, oil,

 

2

----

 

and gas are the predominant industries in Barton County. Additionallymanufacturing and service industries also play a key role within this centralKansas market. LaCrosse, located within Rush County, is primarily anagricultural community with an emphasis on crop and livestock production.

 

The counties of Ford andFinney were founded on agriculture, which continues to play a major role in theeconomy. Predominant activities involve crop production, feed lot operations,and food processing. Dodge City is known as the “Cowboy Capital of the World”and maintains a significant tourism industry. Both Dodge City and Garden Cityare recognized as regional commercial centers within the state with smallbusiness, manufacturing, retail, and service industries having a significantinfluence upon the local economies. Additionally, each community has acommunity college which also attracts a number of individuals from thesurrounding area to live within the community to participate in educationalprograms and pursue a degree.

 

**Competition**

 

The Company faces strongcompetition both in attracting deposits and making real estate and other loans.Its most direct competition for deposits comes from commercial banks and othersavings institutions located in its principal market areas, including manylarge financial institutions which have greater financial and marketingresources available to them. The ability of the Company to attract and retaindeposits generally depends on its ability to provide a rate of return,liquidity and risk comparable to that offered by competing investmentopportunities. The Company competes for loans principally through the interestrates and loan fees it charges and the efficiency and quality of services itprovides borrowers. Additionally, competition may increase as a result of thecontinuing reduction on restrictions on the interstate operations of financialinstitutions. The financial services industry is also likely to become morecompetitive as further technological advances enable more companies to providefinancial services. These technological advances may diminish the importance ofdepository institutions and other financial intermediaries in the transfer offunds between parties.

 

**Employees**

 

AtDecember 31, 2005, the Bank had a total of 151 employees (141.5 full time equivalentemployees). The Company has no direct employees. Employees are provided with acomprehensive benefits program, including basic and major medical insurance,life and disability insurance, sick leave, and a 401(k) profit sharingplan. Employees are not represented by any union or collective bargaining groupand the Bank considers its employee relations to be good.

 

3

----

 

**Lending Activities**

 

***General*.**The Bank strives to provide each market area it serves a full range offinancial products and services to small and medium sized businesses and toconsumers. The Bank targets owner-operated businesses and utilizes SmallBusiness Administration and Farm Services Administration lending as a part ofits product mix. Each market has an established loan committee which hasauthority to approve credits, within established guidelines. Concentrations inexcess of those guidelines must be approved by either a corporate loancommittee comprised of the Bank’s Chief Executive Officer, the Credit RiskManager, and three other senior commercial lenders or the bank’s board ofdirectors. When lending to an entity, the Bank generally obtains a guarantyfrom the principals of the entity. The loan mix is subject to the discretion ofthe Bank’s board of directors and the demands of the local marketplace.

 

Residential loans arepriced and originated following underwriting standards that are consistent withguidelines established by the major buyers in the secondary market. Commercial andconsumer loans generally are issued at or above the national prime rate. Whilethe origination of one to four family residential loans continue to be a keycomponent of our business, the majority of these loans are sold in thesecondary market. The Bank is focusing on the generation of commercial andconsumer loans to grow and diversify the loan portfolio. The Bank has nopotential negative amortization loans. The following is a brief description ofeach major category of the Bank’s lending activity.

 

***Real Estate Lending***. Commercial, residential,construction and multi-family real estate loans represent the largest class ofloans of the Bank. Generally, residential loans retained in portfolio arevariable rate with adjustment periods of five years or less and amortizationperiods of either 15 or 30 years. Commercial real estate loans, includingagricultural real estate, generally have amortization periods of 15 or 20 years.The Bank has a security interest in the borrower’s real estate. The Bank alsogenerates long term fixed rate residential real estate loans which are sold inthe secondary market. Commercial real estate, construction and multi-familyloans are generally limited, by policy, to 80% of the appraised value of theproperty. Commercial real estate, including agricultural real estate loans,also are supported by an analysis demonstrating the borrower’s ability to repay.Residential loans that exceed 80% of the appraised value of the real estategenerally are required, by policy, to be supported by private mortgageinsurance, although on occasion the Bank will retain non-conforming residentialloans to known customers at premium pricing.

 

***Commercial Lending***. Loans in this categoryinclude loans to service, retail, wholesale and light manufacturing businesses,including agricultural operations. Commercial loans are made based on thefinancial strength and repayment ability of the borrower, as well as thecollateral securing the loans. The Bank targets owner-operated businesses asits customers and makes lending decisions based upon a cash flow analysis ofthe borrower as well as a collateral analysis. Accounts receivable loans andloans for inventory purchases are generally on a one-year renewable term andloans for equipment generally have a term of seven years or less. The Bankgenerally takes a blanket security interest in all assets of the borrower. Equipmentloans are generally limited to 75% of the cost or appraised value of theequipment. Inventory loans are

 

4

----

 

generally limited to 50% of the value of the inventory, and accountsreceivable loans are generally limited to 75% of a predetermined eligible base.

 

The Bank also providesshort-term credit for operating loans and intermediate term loans for farmproduct, livestock and machinery purchases and other agricultural improvements.Farm product loans have generally a one-year term and machinery and equipmentand breeding livestock loans generally have five to seven year terms. Extensionof credit is based upon the borrower’s ability to repay, as well as theexistence of federal guarantees and crop insurance coverage. These loans aregenerally secured by a blanket lien on livestock, equipment, feed, hay, grainand growing crops. Equipment and breeding livestock loans are generally limitedto 75% of appraised value.

 

***Consumer and Other Lending***. Loans classified asconsumer and other loans include automobile, boat, student loans, homeimprovement and home equity loans, the latter two secured principally throughsecond mortgages. With the exception of home improvement loans and home equityloans, the Bank generally takes a purchase money security interest incollateral for which it provides the original financing. The terms of the loanstypically range from one to five years, depending upon the use of the proceeds,and generally range from 75% to 90% of the value of the collateral. Themajority of these loans are installment loans with fixed interest rates. Homeimprovement and home equity loans are generally secured by a second mortgage onthe borrowers personal residence and, when combined with the first mortgage,limited to 80% of the value of the property unless further protected by privatemortgage insurance. The home improvement loans are generally made for terms offive to seven years with fixed interest rates. The home equity loans aregenerally made for terms of ten years on a revolving basis with the interestrates adjusting monthly tied to the national prime interest rate.

 

**Loan Origination and Processing**

 

Loan originations arederived from a number of sources. Residential loan originations result fromreal estate broker referrals, direct solicitation by the Bank’s loan officers,present depositors and borrowers, referrals from builders and attorneys, walkin customers and, in some instances, other lenders. Residential loanapplications are underwritten and closed based upon standards which generallymeet secondary market guidelines. Consumer and commercial real estate loanoriginations emanate from many of the same sources. The average loan is lessthan $500,000.

 

The loan underwritingprocedures followed by the Bank conform to regulatory specifications and aredesigned to assess both the borrower’s ability to make principal and interestpayments and the value of any assets or property serving as collateral for theloan. Generally, as part of the process, a loan officer meets with eachapplicant to obtain the appropriate employment and financial information aswell as any other required loan information. The Bank then obtains reports withrespect to the borrower’s credit record, and orders, on real estate loans, andreviews an appraisal of any collateral for the loan (prepared for the Bankthrough an independent appraiser).

 

5

----

 

Loan applicants arenotified promptly of the decision of the Bank. Prior to closing any long-termloan, the borrower must provide proof of fire and casualty insurance on theproperty serving as collateral, and such insurance must be maintained duringthe full term of the loan. Title insurance is required on loans collateralizedby real property.

 

6

----

 

**SUPERVISION ANDREGULATION**

** **

**General**

 

Financial institutions,their holding companies and their affiliates are extensively regulated underfederal and state law. As a result, the growth and earnings performance of theCompany may be affected not only by management decisions and general economicconditions, but also by the requirements of federal and state statutes and bythe regulations and policies of various bank regulatory authorities, including the OCC, the Board ofGovernors of the Federal Reserve System (the ”Federal Reserve”)and the FDIC. Furthermore, taxation laws administered by the Internal RevenueService and state taxing authorities and securities laws administered by theSEC and state securities authorities have an impact on the business of theCompany. The effect of these statutes, regulations and regulatory policies maybe significant, and cannot be predicted with a high degree of certainty.

 

Federal and state lawsand regulations generally applicable to financial institutions regulate, amongother things, the scopeof business, the kinds and amounts of investments, reserve requirements,capital levels relative to operations, the nature and amount of collateral forloans, the establishment of branches, mergers and consolidations and thepayment of dividends. This system of supervision and regulation establishesa comprehensive framework for the respective operations of the Company and itssubsidiaries and is intended primarily for the protection of the FDIC-insureddeposits and depositors of the Bank, rather than shareholders.

 

Thefollowing is a summary of the material elements of the regulatory frameworkthat applies to the Company and its subsidiaries. It does not describe all ofthe statutes, regulations and regulatory policies that apply, nor does itrestate all of the requirements of those statutes, regulations and regulatorypolicies that are described. As such, the following is qualified in itsentirety by reference to applicable law. Any change in applicable statutes,regulations or regulatory policies may have a material effect on the businessof the Company and its subsidiaries.

 

**The Company**

 

***General.***The Company, as the sole shareholder of the Bank, is abank holding company. As a bank holding company, the Company is registeredwith, and is subject to regulation by, the Federal Reserve under the BankHolding Company Act of 1956, as amended (the “BHCA”). In accordance withFederal Reserve policy, the Company is expected to act as a source of financialstrength to the Bank and to commit resources to support the Bank incircumstances where the Company might not otherwise do so. Under the BHCA, theCompany is subject to periodic examination by the Federal Reserve. The Companyis also required to file with the Federal Reserve periodic reports of theCompany’s operations and such additional information regarding the Company andits subsidiaries as the Federal Reserve may require.

 

7

----

 

***Acquisitions, Activities and Change in Control.***Theprimary purpose of a bank holding company is to control and manage banks.****The BHCA generally requires the prior approval of theFederal Reserve for any merger involving a bank holding company or anyacquisition by a bank holding company of another bank or bank holding company. Subjectto certain conditions (including deposit concentration limits established bythe BHCA), the Federal Reserve may allow a bank holding company to acquirebanks located in any state of the United States. In approving interstateacquisitions, the Federal Reserve is required to give effect to applicablestate law limitations on the aggregate amount of deposits that may be held bythe acquiring bank holding company and its insured depository institutionaffiliates in the state in which the target bank is located (provided thatthose limits do not discriminate against out-of-state depository institutionsor their holding companies) and state laws that require that the target bankhave been in existence for a minimum period of time (not to exceed five years)before being acquired by an out-of-state bank holding company.

 

TheBHCA generally prohibits the Company from acquiring direct or indirectownership or control of more than 5% of the voting shares of any company thatis not a bank and from engaging in any business other than that of banking,managing and controlling banks or furnishing services to banks and theirsubsidiaries. This general prohibition is subject to a number of exceptions.The principal exception allows bank holding companies to engage in, and to ownshares of companies engaged in, certain businesses found by the Federal Reserveto be “so closely related to banking ... as to be a proper incident thereto.”  This authority would permit the Company toengage in a variety of banking-related businesses, including the operation of athrift, consumer finance, equipment leasing, the operation of a computerservice bureau (including software development), and mortgage banking andbrokerage. The BHCA generally does not place territorial restrictions on thedomestic activities of non-bank subsidiaries of bank holding companies.

 

Additionally,bank holding companies that meet certain eligibility requirements prescribed bythe BHCA and elect to operate as financial holding companies may engage in, orown shares in companies engaged in, a wider range of nonbanking activities,including securities and insurance underwriting and sales, merchant banking andany other activity that the Federal Reserve, in consultation with the Secretaryof the Treasury, determines by regulation or order is financial in nature,incidental to any such financial activity or complementary to any suchfinancial activity and does not pose a substantial risk to the safety orsoundness of depository institutions or the financial system generally. As ofthe date of this filing, the Company has not applied for approval to operate asa financial holding company.

 

Federal law alsoprohibits any person or company from acquiring “control” of an FDIC-insureddepository institution or its holding company without prior notice to theappropriate federal bank regulator. “Control” is conclusively presumed to existupon the acquisition of 25% or more of the outstanding voting securities of abank or bank holding company, but may arise under certain circumstances at 10%ownership.

 

***CapitalRequirements.***Bank holding companies are required tomaintain minimum levels of capital in accordance with Federal Reserve capitaladequacy guidelines. If capital levels

 

8

----

 

fall below the minimum required levels, a bank holding company, amongother things, may be denied approval to acquire or establish additional banksor non-bank businesses.

 

TheFederal Reserve’s capital guidelines establish the following minimum regulatorycapital requirements for bank holding companies: (i) a risk-based requirementexpressed as a percentage of total assets weighted according to risk; and (ii)a leverage requirement expressed as a percentage of total assets. Therisk-based requirement consists of a minimum ratio of total capital to totalrisk-weighted assets of 8% and a minimum ratio of Tier 1 capital to totalrisk-weighted assets of 4%. The leverage requirement consists of a minimumratio of Tier 1 capital to total assets of 3% for the most highly ratedcompanies, with a minimum requirement of 4% for all others. For purposes ofthese capital standards, Tier 1 capital consists primarily of permanentstockholders’ equity less intangible assets (other than certain loan servicingrights and purchased credit card relationships). Total capital consistsprimarily of Tier 1 capital plus certain other debt and equity instruments thatdo not qualify as Tier 1 capital and a portion of the company’s allowance forloan and lease losses.

 

The risk-based andleverage standards described above are minimum requirements. Higher capitallevels will be required if warranted by the particular circumstances or riskprofiles of individual banking organizations. For example, the Federal Reserve’scapital guidelines contemplate that additional capital may be required to takeadequate account of, among other things, interest rate risk, or the risks posedby concentrations of credit, nontraditional activities or securities tradingactivities. Further, any banking organization experiencing or anticipatingsignificant growth would be expected to maintain capital ratios, includingtangible capital positions (*i.e.*, Tier 1capital less all intangible assets), well above the minimum levels. As ofDecember 31, 2005, the Company had regulatory capital in excess of the FederalReserve’s minimum requirements.

 

***DividendPayments.***The Company’s ability to pay dividends to itsshareholders may be affected by both general corporate law considerations andpolicies of the Federal Reserve applicable to bank holding companies*.* As a Delaware corporation, the Company is subject to thelimitations of the Delaware General Corporation Law (the ”DGCL”). The DGCLallows the Company to pay dividends only out of its surplus (as defined andcomputed in accordance with the provisions of the DGCL) or if the Company hasno such surplus, out of its net profits for the fiscal year in which thedividend is declared and/or the preceding fiscal year. Additionally, policiesof the Federal Reserve caution that a bank holding company should not pay cashdividends that exceed its net income or that can only be funded in ways thatweaken the bank holding company’s financial health, such as by borrowing. TheFederal Reserve also possesses enforcement powers over bank holding companiesand their non-bank subsidiaries to prevent or remedy actions that representunsafe or unsound practices or violations of applicable statutes andregulations. Among these powers is the ability to proscribe the payment ofdividends by banks and bank holding companies.

 

***FederalSecurities Regulation.***The Company’s common stock isregistered with the SEC under the Securities Act of 1933, as amended, and theSecurities Exchange Act of 1934, as amended (the ”Exchange Act”). Consequently,the Company is subject to the information, proxy

 

9

----

 

solicitation, insider trading and other restrictions and requirementsof the SEC under the Exchange Act.

 

**The Bank**

 

***General.***The Bank is a national bank, charteredby the OCC under the National Bank Act. The deposit accounts of the Bankare insured by the FDIC’s BIF and its SAIF. The Bank is a member of the FederalReserve System and the Federal Home Loan Bank System. As a national bank, theBank is subject to the examination, supervision, reporting and enforcementrequirements of the OCC, the chartering authority for national banks. The FDIC,as administrator of the BIF and the SAIF, also has regulatory authority overthe Bank.

 

***Deposit Insurance.***As an FDIC-insuredinstitution, the Bank is required to pay deposit insurance premium assessmentsto the FDIC. The FDIC has adopted a risk-based assessment system under whichall insured depository institutions are placed into one of nine categories andassessed insurance premiums based upon their respective levels of capital andresults of supervisory evaluations. Institutions classified as well-capitalized(as defined by the FDIC) and considered healthy pay the lowest premium whileinstitutions that are less than adequately capitalized (as defined by the FDIC)and considered of substantial supervisory concern pay the highest premium. Riskclassification of all insured institutions is made by the FDIC for eachsemi-annual assessment period.

 

Duringthe year ended December 31, 2005, both BIF and SAIF assessments ranged from 0%of deposits to 0.27% of deposits. For the semi-annual assessment periodbeginning January 1, 2006, both BIF and SAIF assessment rates willcontinue to range from 0% of deposits to 0.27% of deposits.

 

***FICO Assessments.***  Since1987, a portion of the deposit insurance assessments paid by SAIF members hasbeen used to cover interest payments due on the outstanding obligations of theFinancing Corporation (“FICO”). FICO was created in 1987 to finance therecapitalization of the Federal Savings and Loan Insurance Corporation, the SAIF’spredecessor insurance fund. As a result of federal legislation enacted in 1996,beginning as of January 1, 1997, both SAIF members and BIF members becamesubject to assessments to cover the interest payments on outstanding FICOobligations until the final maturity of such obligations in 2019. These FICOassessments are in addition to amounts assessed by the FDIC for depositinsurance. During the year ended December 31, 2005, the FICO assessmentrate for BIF and SAIF members was approximately 0.01% of deposits.

 

***Supervisory Assessments.***National banks arerequired to pay supervisory assessments to the OCC to fund the operations ofthe OCC. The amount of the assessment is calculated using a formula that takesinto account the bank’s size and its supervisory condition (as determined bythe composite rating assigned to the bank as a result of its most recent OCCexamination). During the year ended December 31, 2005, the Bank paidsupervisory assessments to the OCC totaling $115,000.

 

10

----

 

***Capital Requirements.***Banks are generallyrequired to maintain capital levels in excess of other businesses. The OCC hasestablished the following minimum capital standards for national banks, such asthe Bank: (i) a leverage requirement consisting of a minimum ratio of Tier 1capital to total assets of 3% for the most highly-rated banks with a minimumrequirement of at least 4% for all others; and (ii) a risk-based capitalrequirement consisting of a minimum ratio of total capital to totalrisk-weighted assets of 8% and a minimum ratio of Tier 1 capital to totalrisk-weighted assets of 4%. In general, the components of Tier 1 capital andtotal capital are the same as those for bank holding companies discussed above.

 

Thecapital requirements described above are minimum requirements. Higher capitallevels will be required if warranted by the particular circumstances or riskprofiles of individual institutions. For example, regulations of the OCCprovide that additional capital may be required to take adequate account of,among other things, interest rate risk or the risks posed by concentrations ofcredit, nontraditional activities or securities trading activities.

 

Further,federal law and regulations provide various incentives for financialinstitutions to maintain regulatory capital at levels in excess of minimumregulatory requirements. For example, a financial institution that is “well-capitalized”may qualify for exemptions from prior notice or application requirementsotherwise applicable to certain types of activities and may qualify forexpedited processing of other required notices or applications. Additionally,one of the criteria that determines a bank holding company’s eligibility tooperate as a financial holding company is a requirement that all of itsfinancial institution subsidiaries be “well-capitalized.”  Under the regulations of the OCC, in order tobe “well-capitalized” a financial institution must maintain a ratio of totalcapital to total risk-weighted assets of 10% or greater, a ratio of Tier 1capital to total risk-weighted assets of 6% or greater and a ratio of Tier 1capital to total assets of 5% or greater.

 

Federal law also provides the federal bankingregulators with broad power to take prompt corrective action to resolve theproblems of undercapitalized institutions. The extent of the regulators’ powersdepends on whether the institution in question is “adequately capitalized,” “undercapitalized,”“significantly undercapitalized” or “critically undercapitalized,” in each caseas defined by regulation. Depending upon the capital category to which aninstitution is assigned, the regulators’ corrective powers include: (i)requiring the institution to submit a capital restoration plan; (ii) limitingthe institution’s asset growth and restricting its activities; (iii) requiringthe institution to issue additional capital stock (including additional votingstock) or to be acquired; (iv) restricting transactions between the institutionand its affiliates; (v) restricting the interest rate the institution may payon deposits; (vi) ordering a new election of directors of the institution;(vii) requiring that senior executive officers or directors be dismissed;(viii) prohibiting the institution from accepting deposits from correspondentbanks; (ix) requiring the institution to divest certain subsidiaries; (x)prohibiting the payment of principal or interest on subordinated debt; and (xi)ultimately, appointing a receiver for the institution.

 

As ofDecember 31, 2005: (i) the Bank was not subject to a directive from the OCC toincrease its capital to an amount in excess of the minimum regulatory capitalrequirements;

 

11

----

 

(ii) the Bank exceeded its minimum regulatory capital requirementsunder OCC capital adequacy guidelines; and (iii) the Bank was “well-capitalized,”as defined by OCC regulations.

 

 ***Dividends.***Theprimary source of funds for the Company is dividends from the Bank. Under theNational Bank Act, a national bank may pay dividends out of its undividedprofits in such amounts and at such times as the bank’s board of directorsdeems prudent. Without prior OCC approval, however, a national bank may not paydividends in any calendar year that, in the aggregate, exceed the bank’syear-to-date net income plus the bank’s retained net income for the twopreceding years.

 

Thepayment of dividends by any financial institution is affected by therequirement to maintain adequate capital pursuant to applicable capital adequacyguidelines and regulations, and a financial institution generally is prohibitedfrom paying any dividends if, following payment thereof, the institution wouldbe undercapitalized. As described above, the Bank exceeded its minimum capitalrequirements under applicable guidelines as of December 31, 2005. As ofDecember 31, 2005, approximately $478,000 was available to be paid as dividendsby the Bank. Notwithstanding the availability of funds for dividends, however,the OCC may prohibit the payment of any dividends by the Bank if the OCCdetermines such payment would constitute an unsafe or unsound practice.

 

***Insider Transactions.***The Bank is subject tocertain restrictions imposed by federal law on extensions of credit to theCompany, on investments in the stock or other securities of the Company and theacceptance of the stock or other securities of the Company as collateral forloans made by the Bank. Certain limitations and reporting requirements are alsoplaced on extensions of credit by the Bank to its directors and officers, tothe directors and officers of the Company, to principal stockholders of theCompany, and to “related interests” of such directors, officers and principalstockholders. In addition, federal law and regulations may affect the termsupon which any person who is a director or officer of the Company or the Bankor a principal stockholder of the Company may obtain credit from banks withwhich the Bank maintains correspondent relationships.

 

***Safety and Soundness Standards.***The federal bankingagencies have adopted guidelines that establish operational and managerialstandards to promote the safety and soundness of federally insured depositoryinstitutions. The guidelines set forth standards for internal controls,information systems, internal audit systems, loan documentation, creditunderwriting, interest rate exposure, asset growth, compensation, fees andbenefits, asset quality and earnings.

 

Ingeneral, the safety and soundness guidelines prescribe the goals to be achievedin each area, and each institution is responsible for establishing its ownprocedures to achieve those goals. If an institution fails to comply with anyof the standards set forth in the guidelines, the institution’s primary federalregulator may require the institution to submit a plan for achieving andmaintaining compliance. If an institution fails to submit an acceptablecompliance plan, or fails in any material respect to implement a complianceplan that has been accepted by its primary federal regulator, the regulator isrequired to issue an order directing the institution to cure the deficiency.Until the deficiency cited in the regulator’s order is cured, the regulator mayrestrict the institution’s rate of growth, require the institution to increaseits capital, restrict the rates the institution pays on deposits

 

12

----

 

or require the institution to take any action the regulator deemsappropriate under the circumstances. Noncompliance with the standardsestablished by the safety and soundness guidelines may also constitute groundsfor other enforcement action by the federal banking regulators, including ceaseand desist orders and civil money penalty assessments.

 

***Branching Authority.***National banks headquarteredin Kansas, such as the Bank, have the same branching rights in Kansas as bankschartered under Kansas law, subject to OCC approval. Kansas law grantsKansas-chartered banks the authority to establish branches anywhere in theState of Kansas, subject to receipt of all required regulatory approvals.

 

Federallaw permits state and national banks to merge with banks in other statessubject to: (i) regulatory approval; (ii) federal and state depositconcentration limits; and (iii) state law limitations requiring the mergingbank to have been in existence for a minimum period of time (not to exceed fiveyears) prior to the merger. The establishment of new interstate branches or theacquisition of individual branches of a bank in another state (rather than theacquisition of an out-of-state bank in its entirety) is permitted only in thosestates the laws of which expressly authorize such expansion.

 

***Financial Subsidiaries.***Under Federal law and OCC regulations,national banks are authorized to engage, through “financial subsidiaries,” inany activity that is permissible for a financial holding company and anyactivity that the Secretary of the Treasury, in consultation with the FederalReserve, determines is financial in nature or incidental to any such financialactivity, except: (i) insurance underwriting, (ii) real estate development orreal estate investment activities (unless otherwise permitted by law), (iii)insurance company portfolio investments and (iv) merchant banking. Theauthority of a national bank to invest in a financial subsidiary is subject toa number of conditions, including, among other things, requirements that thebank must be well-managed and well-capitalized (after deducting from capitalthe bank’s outstanding investments in financial subsidiaries). The Bank has notapplied for approval to establish any financial subsidiaries.

 

***Federal Reserve System.***Federal Reserveregulations, as presently in effect, require depository institutions tomaintain non-interest earning reserves against their transaction accounts(primarily NOW and regular checking accounts), as follows: for transactionaccounts aggregating $48.3 million or less, the reserve requirement is 3% oftotal transaction accounts; and for transaction accounts aggregating in excessof $48.3 million, the reserve requirement is $1.215 million plus 10% of theaggregate amount of total transaction accounts in excess of $48.3 million.The first $7.8 million of otherwise reservable balances are exempted from thereserve requirements. These reserve requirements are subject to annualadjustment by the Federal Reserve. The Bank is in compliance with the foregoingrequirements.

 

**Recent Regulatory Developments**

 

On February 8, 2006, President Bush signed the Federal Deposit Insurance Reform Act of 2005 (“FDIRA”) intolaw as part of the Deficit Reduction Act of 2005. On February 15, 2006,President Bush signed into law the technical and conforming amendments designedto implement

 

13

----

 

FDIRA. FDIRA provides for legislative reforms tomodernize the federal deposit insurance system.

 

Amongother things, FDIRA: (i) merges the BIF and the SAIF of the FDIC into a newDeposit Insurance Fund (the ”DIF”); (ii) allows the FDIC, afterMarch 31, 2010, to increase deposit insurance coverage by anadjustment for inflation and requires the FDIC’s Board of Directors, not laterthan April 1, 2010 and every five years thereafter, to consider whether such anincrease is warranted; (iii) increases the deposit insurance limit for certainemployee benefit plan deposits from $100,000 to $250,000, subject toadjustments for inflation after March 31, 2010, and provides for pass-throughinsurance coverage for such deposits; (iv) increases the deposit insurancelimit for certain retirement account deposits from $100,000 to $250,000,subject to adjustments for inflation after March 31, 2010; (v) allows the FDIC’sBoard of Directors to set deposit insurance premium assessments in any amountthe Board of Directors deems necessary or appropriate, after taking intoaccount various factors specified in FDIRA; (vi) replaces the fixed designatedreserve ratio of 1.25% with a reserve ratio range of 1.15%-1.50%, with thespecific reserve ratio to be determined annually by the FDIC by regulation;(vii) permits the FDIC to revise the risk-based assessment system byregulation; (viii) requires the FDIC, at the end of any year in which thereserve ratio of the DIF exceeds 1.50% of estimated insured deposits, todeclare a dividend payable to insured depository institutions in an amountequal to 100% of the amount held by the DIF in excess of the amount necessaryto maintain the DIF’s reserve ratio at 1.50% of estimated insured deposits orto declare a dividend equal to 50% of the amount in excess of the amount necessaryto maintain the reserve ratio at 1.35% if the reserve ratio is between1.35%-1.50% of estimated insured deposits; and (ix) provides a one-timecredit based upon the assessment base of the institution on December 31,1996 to each insured depository institution that was in existence as ofDecember 31, 1996 and paid a deposit insurance assessment prior to thatdate (or a successor to any such institution).

 

Themerger of the BIF and the SAIF will take effect no later than July 1, 2006,while the remaining provisions are not effective until the FDIC issues finalregulations. FDIRA requires the FDIC to issue final regulations no later than270 days after enactment: (i) designating a reserve ratio;(ii) implementing increases in deposit insurance coverage; (iii)implementing the dividend requirement; (iv) implementing the one-timeassessment credit; and (v) providing for assessments in accordance with FDIRA.

 

14

----

 

**Company Website**

 

The Company maintains a corporate website atwww.landmarkbancorpinc.com. The Company makes available free of charge on orthrough its website the annual report on Form 10K, quarterly reports on Form10-Q, current reports on Form 8-K and amendments to those reports filed orfurnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon asreasonably practicable after the Company electronically files such materialwith, or furnish it to, the Securities and Exchange Commission. Many of theCompany’s policies, including its code of ethics, committee charters and otherinvestor information are available on the web site. The Company will alsoprovide copies of its filings free of charge upon written request to ourCorporate Secretary at the address listed on the front of this Form 10-K.

 

**STATISTICAL DATA**

 

TheCompany is the accounting successor to the prior Landmark Bancshares, Inc. andtherefore, all financial information presented for periods prior to October 9,2001 reflects only the operations of Landmark Bancshares, Inc. LandmarkBancshares, Inc. filed an Annual Report on Form 10-K for its fiscal year endedSeptember 30, 2001. The Company has a fiscal year ending on December 31. Therefore,the Company elected to file a Form 10-K for the transition period from October1, 2001 to December 31, 2001, which included audited consolidated financialinformation. The results for the three month transition period ended December31, 2001 included MNB Bancshares, Inc.’s results commencing October 9, 2001. Theinformation presented in this Form 10-K presents information on behalf of theCompany as of and for the year ended December 31, 2005.

 

Thestatistical data required by Guide 3 of the Guides for Preparation and Filingof Reports and Registration Statements under the Securities Exchange Act of1934 is set forth in the following pages. This data should be read inconjunction with the consolidated financial statements, related notes and “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” asset forth in the Company’s 2005 Annual Report to Stockholders (attached heretoas Exhibit 13.1). All dollars in the tables are expressed in thousands.

 

15

----

 

**I.****              Distributionof Assets, Liabilities, and Stockholders’ Equity; Interest Rates and InterestDifferentials**

 

The average balancesheets are incorporated by reference from the Company’s 2005 Annual Report toStockholders (attached as Exhibit 13.1). The following table describes theextent to which changes in interest income and interest expense for majorcomponents of interest-earning assets and interest-bearing liabilities affectedthe Company’s interest income and expense during the periods indicated. Thetable distinguishes between (i) changes attributable to rate (changes in ratemultiplied by prior volume), (ii) changes attributable to volume (changes involume multiplied by prior rate), and (iii) net change (the sum of the previouscolumns). The net changes attributable to the combined effect of volume andrate, which cannot be segregated, have been allocated proportionately to thechange due to volume and the change due to rate.

 
| ** **            | ** ** | **Years Ended**                                   | ** ** | **Years Ended**                                   | ** ** |
|-----------------------|------------|--------------------------------------------------------|------------|--------------------------------------------------------|------------|
| ** **            | ** ** | **December 2005 vs December 2004** | ** ** | **December 2004 vs December 2003** | ** ** |
| ** **            | ** ** | **Increase/(Decrease) Attributable to**      | ** ** | **Increase/(Decrease) Attributable to**      | ** ** |
| ** **            | ** ** | **Volume**                                             | ** ** | **Rate**                                               | ** ** | **Net** | ** ** | **Volume** | ** ** | **Rate** | ** ** | **Net** | ** ** |
| ** **            | ** ** | **(Dollars in thousands)**                   | ** ** | **(Dollars in thousands)**                   | ** ** |
| Interest income:      |       |                                                   |       |                                                   |       |   |   |   |   |   |   |   |   |
| Investment securities |       | $                                                      | 87         |                                                   | $          | 467 |   | $ | 554 |   | $ | 1,322 |   | $ | (19 | ) | $ | 1,303 |   |
| Loans                 |       | 497                                                    |       | 1,124                                                  |       | 1,621 |   | 2,598 |   | (1,228 | ) | 1,370 |   |
| Total                 |       | 584                                                    |       | 1,591                                                  |       | 2,175 |   | 3,920 |   | (1,247 | ) | 2,673 |   |
| Interest expense:     |       |                                                   |       |                                                   |       |   |   |   |   |   |   |   |   |
| Deposits              |       | $                                                      | 115        |                                                   | $          | 1,511 |   | $ | 1,626 |   | $ | 385 |   | $ | (886 | ) | $ | (501 | ) |
| Other borrowings      |       | 323                                                    |       | 8                                                      |       | 331 |   | 1,974 |   | (128 | ) | 1,846 |   |
| Total                 |       | 438                                                    |       | 1,519                                                  |       | 1,957 |   | 2,359 |   | (1,014 | ) | 1,345 |   |
| Net interest income   |       | $                                                      | 146        |                                                   | $          | 72 |   | $ | 218 |   | $ | 1,561 |   | $ | (233 | ) | $ | 1,328 |   |

 

16

----

 

**II.            Investment Portfolio**

 

***InvestmentSecurities****.*The followingtable sets forth the carrying value of the Company’s investment securities atthe dates indicated. None of the investment securities held as of December 31,2005 was issued by an individual issuer in excess of 10% of the Company’sstockholders’ equity, excluding the securitiesof U.S. government and federal agency obligations.

 
| ** **                                | ** ** | **At  December 31,**            | ** ** |
|-------------------------------------------|------------|--------------------------------------|------------|
| ** **                                | ** ** | **2005**                             | ** ** | **2004** | ** ** | **2003** | ** ** |
| ** **                                | ** ** | **(Dollars in thousands)** | ** ** |
|                                      |       |                                 |       |   |   |   |   |
| Investment Securities Available-for-Sale: |       |                                 |       |   |   |   |   |
| U.S. Agency  Securities                   |       | $                                    | 43,628     |   | $ | 33,465 |   | $ | 32,616 |   |
| Municipal  Obligations                    |       | 32,380                               |       | 14,015 |   | 14,020 |   |
| Mortgage-backed  securities               |       | 52,893                               |       | 74,504 |   | 46,563 |   |
| FHLB Stock                                |       | 5,655                                |       | 5,413 |   | 2,544 |   |
| Common Stock                              |       | 775                                  |       | 710 |   | 662 |   |
| FRB Stock                                 |       | 1,348                                |       | 1,341 |   | 805 |   |
| Corporate Bonds                           |       | 3,035                                |       | 1,763 |   | 52 |   |
| Other investments                         |       | 417                                  |       | 2,393 |   | 2,483 |   |
| Total  Investments Available for-Sale     |       | $                                    | 140,131    |   | $ | 133,604 |   | $ | 99,746 |   |

 

17

----

 

Thefollowing table sets forth certain information regarding the carrying values,weighted average yields, and maturities of the Company’s investment securitiesportfolio as of December 31, 2005. Yields on tax-exempt obligations have notbeen computed on a tax equivalent basis. The table includes scheduled principalpayments and estimated prepayments.

 
| ** **                              | ** ** | **As of  December 31, 2005** | ** ** |
|-----------------------------------------|------------|------------------------------|------------|
| ** **                              | ** ** | **One Year  or Less**        | ** ** | **One to  Five Years** | ** ** | **Five to  Ten Years** | ** ** | **More  than Ten Years** | ** ** | **Total  Investment  Securities** | ** ** |
| ** **                              | ** ** | **Carrying  Value**          | ** ** | **Average  Yield** | ** ** | **Carrying  Value** | ** ** | **Average  Yield** | ** ** | **Carrying  Value** | ** ** | **Average  Yield** | ** ** | **Carrying  Value** | ** ** | **Average  Yield** | ** ** | **Carrying  Value** | ** ** | **Average  Yield** | ** ** |
| ** **                              | ** ** | **(Dollars  in thousands)**  | ** ** |
|                                    |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment  Securities:                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. government  and agency obligations |       | $                            | 14,125     |   | 2.38 | % | $ | 29,365 |   | 3.97 | % | $ | 138 |   | 7.34 | % | $ | — |   | — | % | $ | 43,628 |   | 3.47 | % |
| Municipal  obligations                  |       | 19,029                       |       | 4.96 |   | 21,495 |   | 4.24 |   | 9,155 |   | 3.74 |   | 3,214 |   | 4.10 |   | 52,893 |   | 4.45 |   |
| Mortgage-backed  securities             |       | 3,613                        |       | 4.95 |   | 5,120 |   | 4.71 |   | 14,880 |   | 3.82 |   | 8,767 |   | 3.98 |   | 32,380 |   | 4.13 |   |
| Corporate bonds                         |       | 517                          |       | 6.44 |   | 2,518 |   | 6.93 |   | — |   | — |   | — |   | — |   | 3,035 |   | 6.85 |   |
| Total                                   |       | $                            | 37,284     |   | 4.01 | % | $ | 58,498 |   | 4.24 | % | $ | 24,173 |   | 3.81 | % | $ | 11,981 |   | 4.10 | % | $ | 131,936 |   | 4.11 | % |

 

18

----

 

**II.****                                     LoanPortfolio**

 

***LoanPortfolio Composition****.*The followingtable sets forth the composition of the loan portfolio by type of loan at thedates indicated.
|                                  |       |                                 |       |                       |       |       |       |                       |       |       |       |                       |       |       |       |                       |       |       |       |                       |       |       |       |                       |       |   |   |    |   |   |   |
|---------------------------------------|------------|--------------------------------------|------------|----------------------------|------------|------------|------------|----------------------------|------------|------------|------------|----------------------------|------------|------------|------------|----------------------------|------------|------------|------------|----------------------------|------------|------------|------------|----------------------------|------------|--------|--------|---------|--------|--------|--------|
| ** **                            | ** ** | **December 31,**                | ** ** | **September 30,**     | ** ** |
| ** **                            | ** ** | **2005**                             | ** ** | **2004**                   | ** ** | **2003**   | ** ** | **2002**                   | ** ** | **2001**   | ** ** | **2001**                   | ** ** |
| ** **                            | ** ** | **Amount**                           | ** ** | **Percent  of Total** | ** ** | **Amount** | ** ** | **Percent  of Total** | ** ** | **Amount** | ** ** | **Percent  of Total** | ** ** | **Amount** | ** ** | **Percent  of Total** | ** ** | **Amount** | ** ** | **Percent  of Total** | ** ** | **Amount** | ** ** | **Percent  of Total** | ** ** |
| ** **                            | ** ** | **(Dollars in thousands)** | ** ** |
| Real estate  loans:                   |       |                                 |       |                       |       |       |       |                       |       |       |       |                       |       |       |       |                       |       |       |       |                       |       |       |       |                       |       |
| Residential one-to-four  family (1)   |       | $                                    | 116,098    |                       | 42.1       | %          | $          | 131,923                    |       | 47.4       | %          | $                          | 82,828     |       | 38.5       | %                          | $          | 106,341    |       | 46.4                       | %          | $          | 135,179    |                       | 56.1       | %      | $      | 118,087 |   | 81.7   | %      |
| Commercial                            |       | 78,085                               |       | 28.3                       |       | 77,208     |       | 27.7                       |       | 65,729     |       | 30.6                       |       | 62,207     |       | 27.2                       |       | 48,818     |       | 20.3                       |       | 10,084     |       | 7.0                        |       |
| Construction                          |       | 12,356                               |       | 4.5                        |       | 11,234     |       | 4.0                        |       | 9,171      |       | 4.3                        |       | 8,969      |       | 3.9                        |       | 10,799     |       | 4.5                        |       | 3,248      |       | 2.2                        |       |
| Commercial loans                      |       | 63,494                               |       | 23.0                       |       | 51,826     |       | 18.6                       |       | 50,054     |       | 23.3                       |       | 41,809     |       | 18.2                       |       | 33,077     |       | 13.7                       |       | 7,604      |       | 5.3                        |       |
| Consumer loans                        |       | 8,842                                |       | 3.2                        |       | 9,015      |       | 3.2                        |       | 9,567      |       | 4.4                        |       | 12,810     |       | 5.6                        |       | 15,979     |       | 6.6                        |       | 6,926      |       | 4.8                        |       |
| Gross loans                           |       | 278,875                              |       | 101.1                      |       | 281,206    |       | 101.1                      |       | 217,349    |       | 101.1                      |       | 232,136    |       | 101.3                      |       | 145,949    |       | 101.2                      |       | 145,949    |       | 101.0                      |       |
|                                  |       |                                 |       |                       |       |       |       |                       |       |       |       |                       |       |       |       |                       |       |       |       |                       |       |       |       |                       |       |
| Less:                                 |       |                                 |       |                       |       |       |       |                       |       |       |       |                       |       |       |       |                       |       |       |       |                       |       |       |       |                       |       |
| Deferred fees &  loans in process |       | (5                                   | )          | 0.0                        |       | 52         |       | 0.0                        |       | 3          |       | 0.0                        |       | 459        |       | 0.1                        |       | 52         |       | 0.0                        |       | 52         |       | 0.0                        |       |
| Allowance for loan  losses            |       | 3,151                                |       | 1.1                        |       | 2,894      |       | 1.0                        |       | 2,316      |       | 1.1                        |       | 2,565      |       | 1.1                        |       | 1,424      |       | 1.0                        |       | 1,424      |       | 1.0                        |       |
| Total loans                           |       | $                                    | 275,729    |                       | 100.0      | %          | $          | 278,260                    |       | 100.0      | %          | $                          | 215,030    |       | 100.0      | %                          | $          | 229,112    |       | 100.0                      | %          | $          | 144,473    |                       | 100.0      | %      | $      | 144,473 |   | 100.0  | %      |

 

----

(1)                                  Includes loans held for sale.

 

19

----

 

The following table sets forth the contractualmaturities of loans at December 31, 2005.

 

The table does notinclude unscheduled prepayments.

 
| ** **                              | ** ** | **Less than**              | ** ** | ** **    | ** ** | **Over**    | ** ** | ** ** | ** ** |
|-----------------------------------------|------------|----------------------------|------------|---------------|------------|-------------|------------|------------|------------|
| ** **                              | ** ** | **1 year**                 | ** ** | **2-5 years** | ** ** | **5 years** | ** ** | **Total**  | ** ** |
| ** **                              | ** ** | **(Dollars in thousands)** | ** ** |
| Real estate loans:                      |       |                       |       |          |       |        |       |       |       |
| Residential one-to-four family          |       | $                          | 13,833     |          | $          | 41,485      |       | $          | 60,780     |   | 116,098 |   |
| Commercial                              |       | 19,461                     |       | 31,087        |       | 27,537      |       | 78,085     |       |
| Construction                            |       | 9,744                      |       | 2,612         |       | —      |       | 12,356     |       |
| Commercial                              |       | 45,806                     |       | 14,746        |       | 2,942       |       | 63,494     |       |
| Consumer                                |       | 3,712                      |       | 4,948         |       | 182         |       | 8,842      |       |
| Gross loans                             |       | $                          | 92,556     |          | $          | 94,878      |       | $          | 91,441     |   | $ | 278,875 |   |
| Deferred loan fees and loans in process |       |                       |       |          |       |        |       | (5         | )          |
| Allowance for loan losses               |       |                       |       |          |       |        |       | 3,151      |       |
| Loans, net                              |       |                       |       |          |       |        |       | $          | 275,729    |   |

 

The following table setsforth, at December 31, 2005, the dollar amount of all loans due after December31, 2006 and whether such loans had fixed interest rates or adjustable interestrates:

 
| ** **                     | ** ** | **Fixed**                  | ** ** | **Adjustable** | ** ** | **Total** | ** ** |
|--------------------------------|------------|----------------------------|------------|----------------|------------|-----------|------------|
| ** **                     | ** ** | **(Dollars in thousands)** | ** ** |
| Real estate loans:             |       |                       |       |           |       |      |       |
| Residential one-to-four family |       | $                          | 31,941     |           | $          | 70,324    |       | $ | 102,265 |   |
| Commercial                     |       | 10,751                     |       | 47,873         |       | 58,624    |       |
| Construction                   |       | 665                        |       | 1,947          |       | 2,612     |       |
| Commercial                     |       | 11,041                     |       | 6,647          |       | 17,688    |       |
| Consumer                       |       | 4,701                      |       | 429            |       | 5,130     |       |
| Gross loans                    |       | $                          | 59,099     |           | $          | 127,220   |       | $ | 186,319 |   |

 

20

----

 

***NonperformingAssets****.* The followingtable sets forth information with respect to nonperforming assets, includingnon-accrual loans and real estate acquired through foreclosure or by deed inlieu of foreclosure (“real estate owned”). Under the original terms of theCompany’s non-accrual loans at December 31, 2005, interest earned on such loansfor the year period ended December 31, 2005 would not have been significantlydifferent than reported.

 
|                                              |   | **At December 31,**        |       | **At September 30,** |       |
|---------------------------------------------------|--------|----------------------------|------------|----------------------|------------|
|                                              |   | **2005**                   | ** ** | **2004**             | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** |   | **2001** |   |
|                                              |   | **(Dollars in thousands)** |       |                 |       |
| Total non-accrual loans                           |   | $                          | 3,332      |                 | $          | 1,145 |   | $ | 1,205 |   | $ | 925 |   | $ | 1,033 |   | $ | 641 |   |
| Accruing loans over 90 days past due              |   | —                     |       | —               |       | — |   | — |   | 148 |   | 145 |   |
| Real estate owned (“REO”)               |   | 749                        |       | 479                  |       | 281 |   | 402 |   | 257 |   | 233 |   |
| Total nonperforming assets                        |   | $                          | 4,081      |                 | $          | 1,624 |   | $ | 1,486 |   | $ | 1,327 |   | $ | 1,438 |   | $ | 1,019 |   |
| Total nonperforming loans to total loans, net     |   | 1.2                        | %          | 0.4                  | %          | 0.6 | % | 0.4 | % | 0.4 | % | 0.5 | % |
| Total nonperforming assets to total assets        |   | 0.9                        | %          | 0.4                  | %          | 0.5 | % | 0.4 | % | 0.4 | % | 0.5 | % |
| Allowance for loan losses to non-performing loans |   | 94.6                       | %          | 252.8                | %          | 192.2 | % | 277.3 | % | 233.2 | % | 181.2 | % |

 

21

----

 

**IV.****           Summaryof Loan Loss Experience**

 

Thefollowing table sets forth information with respect to the Company’s allowancefor loan losses at the dates indicated:

 
| ** **                                                           | ** ** | **At December 31,**        | ** ** | **At September 30,** | ** ** |
|----------------------------------------------------------------------|------------|----------------------------|------------|----------------------|------------|
| ** **                                                           | ** ** | **2005**                   | ** ** | **2004**             | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** | **2001** | ** ** |
| ** **                                                           | ** ** | **(Dollars in thousands)** | ** ** |
|                                                                 |       |                       |       |                 |       |   |   |   |   |   |   |   |   |
| Total loans  outstanding                                             |       | $                          | 275,729    |                 | $          | 278,260 |   | $ | 215,030 |   | $ | 229,112 |   | $ | 240,979 |   | $ | 144,473 |   |
|                                                                 |       |                       |       |                 |       |   |   |   |   |   |   |   |   |
| Average loans  outstanding                                           |       | $                          | 275,308    |                 | $          | 266,938 |   | $ | 217,327 |   | $ | 233,311 |   | $ | 245,669 |   | $ | 164,165 |   |
|                                                                 |       |                       |       |                 |       |   |   |   |   |   |   |   |   |
| Allowance  balances (at beginning of period)                         |       | 2,894                      |       | 2,316                |       | 2,565 |   | 2,640 |   | 1,424 |   | 1,377 |   |
| Provision  (credit):                                                 |       |                       |       |                 |       |   |   |   |   |   |   |   |   |
| Real estate                                                          |       | —                     |       | —               |       | — |   | — |   | — |   | — |   |
| Commercial and  consumer                                             |       | 385                        |       | 460                  |       | 240 |   | 182 |   | 33 |   | 120 |   |
|                                                                 |       | 385                        |       | 460                  |       | 240 |   | 182 |   | 33 |   | 120 |   |
| Allowance of  merged bank:                                           |       |                       |       |                 |       |   |   |   |   |   |   |   |   |
| Real estate                                                          |       | —                     |       | 320                  |       | — |   | — |   | 483 |   | — |   |
| Commercial and  consumer                                             |       | —                     |       | 32                   |       | — |   | — |   | 755 |   | — |   |
|                                                                 |       |                       |       |                 |       |   |   |   |   |   |   |   |   |
|                                                                 |       | —                     |       | 352                  |       | — |   | — |   | 1,238 |   | — |   |
| Charge-offs:                                                         |       |                       |       |                 |       |   |   |   |   |   |   |   |   |
| Real estate                                                          |       | (25                        | )          | (63                  | )          | (30 | ) | (17 | ) | (15 | ) | (11 | ) |
| Commercial and  consumer                                             |       | (198                       | )          | (232                 | )          | (524 | ) | (302 | ) | (49 | ) | (149 | ) |
|                                                                 |       | (223                       | )          | (295                 | )          | (554 | ) | (319 | ) | (64 | ) | (160 | ) |
| Recoveries:                                                          |       |                       |       |                 |       |   |   |   |   |   |   |   |   |
| Real estate                                                          |       | 5                          |       | 16                   |       | — |   | 30 |   | — |   | 9 |   |
| Commercial and  consumer                                             |       | 90                         |       | 44                   |       | 65 |   | 32 |   | 9 |   | 78 |   |
|                                                                 |       | 95                         |       | 60                   |       | 65 |   | 62 |   | 9 |   | 87 |   |
| Net charge-offs                                                      |       | (128                       | )          | (235                 | )          | (489 | ) | (257 | ) | (55 | ) | (73 | ) |
|                                                                 |       |                       |       |                 |       |   |   |   |   |   |   |   |   |
| Allowance  balance  (at end of period)                               |       | $                          | 3,151      |                 | $          | 2,894 |   | $ | 2,316 |   | $ | 2,565 |   | $ | 2,640 |   | $ | 1,424 |   |
|                                                                 |       |                       |       |                 |       |   |   |   |   |   |   |   |   |
| Allowance for  loan losses as a percent of total loans outstanding   |       | 1.14                       | %          | 1.04                 | %          | 1.07 | % | 1.12 | % | 1.10 | % | 0.99 | % |
| Net loans  charged off as a percent of average loans outstanding (1) |       | 0.05                       | %          | 0.09                 | %          | 0.23 | % | 0.11 | % | 0.09 | % | 0.04 | % |

 

----

(1)   Information for the three months endedDecember 31, 2001 is annualized.

 

22

----

 

Thedistribution of the Company’s allowance for losses on loans at the datesindicated and the percent of loans in each category to total loans issummarized in the following table. This allocation reflects management’sjudgment as to risks inherent in the types of loans indicated, but the general allowanceincluded in the table are not restricted and are available to absorb all loanlosses. The amount allocated in the following table to any category should notbe interpreted as an indication of expected actual charge-offs in thatcategory.

 
| ** **               | ** ** | **At  December 31,**        | ** ** | **At  September 30,** | ** ** |
|--------------------------|------------|-----------------------------|------------|-----------------------|------------|
| ** **               | ** ** | **2005**                    | ** ** | **2004**              | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** | **2001** | ** ** |
| ** **               | ** ** | **(Dollars  in thousands)** | ** ** |
| ** **               | ** ** | **Amount**                  | ** ** | **%**                 | ** ** | **Amount** | ** ** | **%** | ** ** | **Amount** | ** ** | **%** | ** ** | **Amount** | ** ** | **%** | ** ** | **Amount** | ** ** | **%** | ** ** | **Amount** | ** ** | **%** | ** ** |
| Real estate              |       | $                           | 1,260      |                  | 74.0       | % | $ | 1,158 |   | 78.4 | % | $ | 910 |   | 72.6 | % | $ | 1,026 |   | 76.5 | % | $ | 1,188 |   | 79.9 | % | $ | 789 |   | 90.1 | % |
| Commercial and  consumer |       | 1,891                       |       | 26.0                  |       | 1,736 |   | 21.6 |   | 1,406 |   | 27.4 |   | 1,539 |   | 23.5 |   | 1,452 |   | 20.1 |   | 635 |   | 9.9 |   |
| Total                    |       | $                           | 3,151      |                  | 100.0      | % | $ | 2,894 |   | 100.0 | % | $ | 2,316 |   | 100.0 | % | $ | 2,565 |   | 100.0 | % | $ | 2,640 |   | 100.0 | % | $ | 1,424 |   | 100.0 | % |

 

23

----

 

**V.****            Deposits**

 

As of December 31, 2005,the aggregate amount outstanding of jumbo certificates of deposit (amounts of$100,000 or more) was $42.5 million. The following table presents thematurities of these time certificates of deposit at December 31, 2005:

 

(Dollars in thousands)

 

| 3 months or less                 |   | $      | 20,069 |   |
|----------------------------------|--------|--------|--------|--------|
| Over 3 months through 6 months   |   | 12,550 |   |
| Over 6 months through 12  months |   | 5,682  |   |
| Over 12 months                   |   | 240    |   |
| Total                            |   | $      | 42,541 |   |

 

**VI.****           Return onEquity and Assets**

 
| ** **                   | ** ** | **At or for the years ended  December 31,** | ** ** | **At or for the  three months  ended  December  31,** | ** ** | **At or for  the year  ended  September  30,** | ** ** |
|------------------------------|------------|---------------------------------------------|------------|-------------------------------------------------------|------------|------------------------------------------------|------------|
| ** **                   | ** ** | **2005**                                    | ** ** | **2004**                                              | ** ** | **2003**                                       | ** ** | **2002** | ** ** | **2001** | ** ** | **2001** | ** ** |
|                         |       |                                        |       |                                                  |       |                                           |       |   |   |   |   |   |   |
| Return on average assets (1) |       | 0.87                                        | %          | 0.98                                                  | %          | 1.46                                           | %          | 1.35 | % | (0.72 | )% | 1.13 | % |
| Return on average equity (1) |       | 9.04                                        |       | 9.98                                                  |       | 11.53                                          |       | 11.31 |   | (6.29 | ) | 10.17 |   |
| Equity to total assets       |       | 9.48                                        |       | 9.54                                                  |       | 12.74                                          |       | 12.03 |   | 11.50 |   | 13.03 |   |
| Dividend payout ratio        |       | 37.14                                       |       | 33.33                                                 |       | 27.63                                          |       | 27.57 |   | NM |   | 25.38 |   |

 

----

NM– not meaningful

(1) Information for thethree months ended December 31, 2001 is annualized.

 

24

----

 
| **ITEM 1A.** | **RISK FACTORS** |
|--------------|------------------|

 

In addition to the otherinformation in this Annual Report on Form 10-K, stockholders or prospectiveinvestors should carefully consider the following risk factors:

 

**Ourbusiness is concentrated in and dependent upon the continued growth and welfareof the markets in which we operate, including eastern, central and southwesternKansas.**

 

Weoperate primarily in eastern, central and southwestern Kansas, and as a result,our financial condition, results of operations and cash flows are subject tochanges in the economic conditions in those areas. Although each market weoperate in is geographically and economically diverse, our successdepends upon the business activity, population, income levels, deposits andreal estate activity in each of these markets. Although our customers’ businessand financial interests may extend well beyond our market area, adverseeconomic conditions that affect our specific market area could reduce ourgrowth rate, affect the ability of our customers to repay their loans to us andgenerally affect our financial condition and results of operations. Because ofour geographic concentration, we are less able than other regional or nationalfinancial institutions to diversify our credit risks across multiple markets.

 

**We may experience difficulties inmanaging our growth and our growth strategy involves risks that may negativelyimpact our net income.**

 

Aspart of our general strategy, we may acquire banks and related businesses thatwe believe provide a strategic fit with our business. We have recently acquireda number of local banks and, to the extent that we continue to grow throughfuture acquisitions, we cannot assure you that we will be able to adequatelyand profitably manage this growth. Acquiring other banks and businesses willinvolve risks commonly associated with acquisitions, including:

 

•              potential exposure to unknown or contingentliabilities of banks and businesses we acquire;

•              exposure to potential asset quality issues ofthe acquired bank or related business;

•              difficulty and expense of integrating theoperations and personnel of banks and businesses we acquire;

•              potential disruption to our business;

•              potential diversion of our management’s timeand attention; and

•              the possible loss of key employees andcustomers of the banks and businesses we acquire.

 

Inaddition to acquisitions, we may expand into additional communities or attemptto strengthen our position in our current markets by undertaking additionalbranch openings. We believe that it generally takes several years for newbanking facilities to first achieve operational profitability, due to theimpact of organization and overhead expenses and the start-up phase ofgenerating loans and deposits. To the extent that we undertake additionalbranch openings, we are likely to continue to experience the effects of higheroperating expenses relative to operating income from the new operations, whichmay have an adverse effect on our levels of reported net income, return onaverage equity and return on average assets.

 

25

----

 

**We faceintense competition in all phases of our business from other banks andfinancial institutions.**

 

The banking and financialservices business in our market is highly competitive. Our competitors includelarge regional banks, local community banks, savings and loan associations,securities and brokerage companies, mortgage companies, insurance companies,finance companies, money market mutual funds, credit unions and other non-bankfinancial service providers, many of which have greater financial, marketingand technological resources than us. Increased competition in our market mayresult in a decrease in the amounts of our loans and deposits, reduced spreadsbetween loan rates and deposit rates or loan terms that are more favorable tothe borrower. Any of these results could have a material adverse effect on ourability to grow and remain profitable. If increased competition causes us tosignificantly discount the interest rates we offer on loans or increase theamount we pay on deposits, our net interest income could be adversely impacted.If increased competition causes us to relax****ourunderwriting standards, we could be exposed to higher losses from lendingactivities. Additionally, many of our competitors are much larger in totalassets and capitalization, have greater access to capital markets and offer abroader range of financial services than we can offer.

 

**Interest rates and otherconditions impact our results of operations.**

 

Ourprofitability is in part a function of the spread between the interest ratesearned on investments and loans and the interest rates paid on deposits andother interest-bearing liabilities. Like most banking institutions, our netinterest spread and margin will be affected by general economic conditions andother factors, including fiscal and monetary policies of the federalgovernment, that influence market interest rates and our ability to respond tochanges in such rates. At any given time, our assets and liabilities will besuch that they are affected differently by a given change in interest rates. Asa result, an increase or decrease in rates, the length of loan terms or the mixof adjustable and fixed rate loans in our portfolio could have a positive ornegative effect on our net income, capital and liquidity. We measureinterest rate risk under various rate scenarios and using specific criteria andassumptions. A summary of this process, along with the results of our netinterest income simulations is presented in the section entitled “Management’sDiscussion and Analysis of Financial Conditions and Results of Operations”included in our 2005 Annual Report to Stockholders. Although we believe ourcurrent level of interest rate sensitivity is reasonable and effectivelymanaged, significant fluctuations in interest rates may have an adverse effecton our business, financial condition and results of operations.

 

**We must effectively manage our credit risk.**

 

There are risks inherent in making any loan,including risks inherent in dealing with individual borrowers, risks ofnonpayment, risks resulting from uncertainties as to the future value ofcollateral and risks resulting from changes in economic and industry conditions.We attempt to minimize our credit risk through prudent loan applicationapproval procedures, careful monitoring of the concentration of our loanswithin specific industries and periodic independent reviews of outstandingloans by our credit review department. However, we cannot assure you that suchapproval and monitoring procedures will reduce these credit risks. Most of ourloans are real estate, commercial or consumer loans, each of which is subjectto distinct types of risk. To reduce the lending risks we face, we generallytake a security interest in borrowers’ property for all three types of loans. Inaddition, we sell certain residential

 

26

----

 

real estate loans to third parties. Nevertheless,the risk of non-payment is inherent in all three types of loans and if we areunable to collect amounts owed, it may materially affect our operations andfinancial performance.

 

For a more complete discussion of our lendingactivities see Part 1 of Item 1 of this Annual Report on Form 10-K.

 

**Ourloan portfolio has a large concentration of commercial real estate loans, whichinvolve risks specific to real estate value.**

 

Realestate lending (including commercial, construction, and residential) is a largeportion of our loan portfolio. These categories were $205.4 million, orapproximately 74.0% of our total loan portfolio as of December 31, 2005. Themarket value of real estate can fluctuate significantly in a short period oftime as a result of market conditions in the geographic area in which the realestate is located. Although asignificant portion of such loans are secured by real estate as a secondaryform of collateral, adverse developments affecting real estate values in one ormore of our markets could increase the credit risk associated with our loanportfolio. Additionally, real estate lending typically involves higher loanprincipal amounts and the repayment ofthe loans generally is dependent, in large part, on sufficient income from the properties securing the loansto cover operating expenses anddebt service. Economic events or governmental regulations outside of the control of the borrower orlender could negatively impact the futurecash flow and market values of the affected properties.

 

Ifthe loans that are collateralized by real estate become troubled during a timewhen market conditions are declining or have declined, then we may not be ableto realize the amount of security that we anticipated at the time oforiginating the loan, which could cause us to increase our provision for loanlosses and adversely affect our operating results and financial condition.

 

**Ourconcentration of one- to four-family residential mortgage loans may result inlower yields and profitability.**

 

One-to-four familyresidential mortgage loans comprised $114.9 million, or 41.4%, of our loan andlease portfolio at December 31, 2005, and are secured primarily by propertieslocated in the state of Kansas. Our concentration of these loans results inlower yields relative to other loan categories within our loan portfolio. Whilethese loans generally possess higher yields than investment securities, theirrepayment characteristics are not as well defined and they generally possess ahigher degree of interest rate risk versus other loans and investmentsecurities within our portfolio. This increased interest rate risk is due tothe repayment and prepayment options inherent in residential mortgage loanswhich are exercised by borrowers based upon the overall level of interest rates.These residential mortgage loans are generally made on the basis of theborrower’s ability to make repayments from his or her employment and the valueof the property securing the loan. Thus, as a result, repayment of these loansis also subject to general economic and employment conditions within thecommunities and surrounding areas where the property is located.

 

27

----

 

**Commercialand industrial loans make up a significant portion of our loan portfolio.**

 

Commercialand industrial loans were $63.5 million, or approximately 22.9% of our totalloan portfolio as of December 31, 2005. Our commercial loans are primarily madebased on the identified cash flow of the borrower and secondarily on theunderlying collateral provided by the borrower. Most often, this collateral isaccounts receivable, inventory, or machinery. Credit support provided by theborrower for most of these loans and the probability of repayment is based onthe liquidation of the pledged collateral and enforcement of a personalguarantee, if any exists. As a result, in the case of loans secured by accountsreceivable, the availability of funds for the repayment of these loans may besubstantially dependent on the ability of the borrower to collect amounts duefrom its customers. The collateral securing other loans may depreciate overtime, may be difficult to appraise and may fluctuate in value based on thesuccess of the business.

 

**Ouragricultural loans involve a greater degree of risk than other loans, and theability of the borrower to repay may be affected by many factors outside of theborrower’s control.**

 

At December 31, 2005, agricultural real estate loans totaled $7.1 million, or 2.6%, of ourtotal loan and lease portfolio. Agricultural real estate lending involves agreater degree of risk and typically involves larger loans to single borrowers than lending on single-familyresidences. Payments on agriculturalreal estate loans are dependent on the profitable operation or management of the farm property securing theloan. The success of the farmmay be affected by many factors outside the control of the farm borrower, including adverse weatherconditions that prevent the planting of a crop or limit crop yields (such as hail, drought and floods), loss oflivestock due to disease or otherfactors, declines in market prices for agricultural products (both domestically and internationally) and theimpact of government regulations(including changes in price supports, subsidies and environmental regulations). In addition, manyfarms are dependent on a limited numberof key individuals whose injury or death may significantly affect the successful operation of the farm. If the cashflow from a farming operation is diminished,the borrower’s ability to repaythe loan may be impaired. The primarycrops in our market areas are wheat, corn and soybean. Accordingly, adversecircumstances affecting wheat, corn andsoybean crops could have an adverse effect on our agricultural real estate loan portfolio.

 

Wealso originate agricultural operating loans. At December 31, 2005, these loans totaled $20.2 million, or 7.3%, of our total loan and leaseportfolio. As with agriculturalreal estate loans, the repayment of operating loans is dependent on the successful operation ormanagement of the farm property.

 

Likewise,agricultural operating loans involves a greater degree of risk thanlending on residential properties,particularly in the case of loans that are unsecured or secured by rapidly depreciating assets such as farmequipment or assets such aslivestock or crops. We generally secure agricultural operating loans with ablanket lien on livestock, equipment, food, hay, grain and crops. Nevertheless,any repossessed collateral for adefaulted loan may not provide an adequate source of repayment of the outstanding loan balance as a resultof the greater likelihood of damage, loss or depreciation.

 

28

----

 

**Ourallowance for loan losses may prove to be insufficient to absorb potentiallosses in our loan portfolio.**

 

Weestablished our allowance for loan losses and maintain it at a level consideredadequate by management to absorb loan losses that are inherent in the portfolio.Additionally, our Board of Directors regularly monitors the adequacy of ourallowance for loan loses. The amount of future loan losses is susceptible tochanges in economic, operating and other conditions, including changes ininterest rates, which may be beyond our control, and such losses may exceedcurrent estimates. At December 31, 2005, our allowance for loan losses asa percentage of total loans was 1.1% and as a percentage of total non-performingloans was approximately 94.6%. Although management believes that the allowancefor loan losses is adequate to absorb losses on any existing loans that maybecome uncollectible, we cannot predict loan losses with certainty nor can weassure you that our allowance for loan losses will prove sufficient to coveractual loan losses in the future. Loan losses in excess of our reserves mayadversely affect our business, financial condition and results of operations.

 

**Ourcontinued pace of growth may require us to raise additional capital in thefuture, but that capital may not be available when it is needed.**

 

Weare required by federal and state regulatory authorities to maintain adequatelevels of capital to support our operations. We anticipate that our existingcapital resources will satisfy our capital requirements for the foreseeablefuture. However, we may at some point need to raise additional capital tosupport continuing growth. Our ability to raise additional capital isparticularly important to our strategy of continual growth through acquisitions.Our ability to raise additional capital, if needed, will depend on conditionsin the capital markets at that time, which are outside our control, and on ourfinancial performance. Accordingly, we cannot assure you of our ability toraise additional capital if needed on terms acceptable to us. If we cannotraise additional capital when needed, our ability to further expand ouroperations through internal growth and acquisitions could be materially impaired.

 

**Ourcommunity banking strategy relies heavily on our management team, and theunexpected loss of key managers may adversely affect our operations.**

 

Muchof our success to date has been influenced strongly by our ability to attractand to retain senior management experienced in banking and financial servicesand familiar with the communities in our market area. Our ability to retainexecutive officers, the current management teams, branch managers and loanofficers of our operating subsidiaries will continue to be important to thesuccessful implementation of our strategy. It is also critical, as we grow, tobe able to attract and retain qualified additional management and loan officerswith the appropriate level of experience and knowledge about our market area toimplement our community-based operating strategy. The unexpected loss ofservices of any key management personnel, or the inability to recruit andretain qualified personnel in the future, could have an adverse effect on ourbusiness, financial condition and results of operations.

 

**Government regulation can resultin limitations on our operations.**

 

Weoperate in a highly regulated environment and are subject to supervision andregulation by a number of governmental regulatory agencies, including the Boardof Governors of the Federal Reserve System,

 

29

----

 

theFederal Deposit Insurance Corporation, and the Office of the Comptroller of theCurrency. Regulations adopted by these agencies, which are generally intendedto provide protection for depositors and customers rather than for the benefitof shareholders, govern a comprehensive range of matters relating to ownershipand control of our shares, our acquisition of other companies and businesses, permissibleactivities for us to engage in, maintenance of adequate capital levels andother aspects of our operations. These bank regulators possess broad authorityto prevent or remedy unsafe or unsound practices or violations of law. The lawsand regulations applicable to the banking industry could change at any time andwe cannot predict the effects of these changes on our business andprofitability. Increased regulation could increase our cost of compliance andadversely affect profitability. For example, new legislation or regulation maylimit the manner in which we may conduct our business, including our ability tooffer new products, obtain financing, attract deposits, make loans and achievesatisfactory interest spreads.

 

**We have a continuing need for technological change and we maynot have the resources to effectively implement new technology.**

 

Thefinancial services industry is undergoing rapid technological changes withfrequent introductions of new technology-driven products and services. In additionto better serving customers, the effective use of technology increasesefficiency and enables financial institutions to reduce costs. Our futuresuccess will depend in part upon our ability to address the needs of ourcustomers by using technology to provide products and services that willsatisfy customer demands for convenience as well as to create additionalefficiencies in our operations as we continue to grow and expand our marketarea. Many of our larger competitors have substantially greater resources toinvest in technological improvements. As a result, they may be able to offeradditional or superior products to those that we will be able to offer, whichwould put us at a competitive disadvantage. Accordingly, we cannot provide youwith assurance that we will be able to effectively implement new technology-drivenproducts and services or be successful in marketing such products and servicesto our customers.

 

**There is a limited trading market for our common shares, and you maynot be able to resell your shares at or above the price you paid for them.**

 

Although our common shares are listed for trading on theNational Market of the Nasdaq Stock Market, the trading in our common shareshas substantially less liquidity than many other publicly traded companies. Apublic trading market having the desired characteristics of depth, liquidityand orderliness depends on the presence in the market of willing buyers andsellers of our common shares at any given time. This presence depends on theindividual decisions of investors and general economic and market conditionsover which we have no control. We cannot assure you that volume of trading inour common shares will increase in the future.

 

**System failure or breaches of our network security could subject us toincreased operating costs as well as litigation and other liabilities.**

 

The computer systems and networkinfrastructure we use could be vulnerable to unforeseen problems. Ouroperations are dependent upon our ability to protect our computer equipmentagainst damage from physical theft, fire, power loss, telecommunicationsfailure or a similar catastrophic event, as well as

 

30

----

 

from security breaches, denial of serviceattacks, viruses, worms and other disruptive problems caused by hackers. Anydamage or failure that causes an interruption in our operations could have amaterial adverse effect on our financial condition and results of operations. Computerbreak-ins, phishing and other disruptions could also jeopardize the security ofinformation stored in and transmitted through our computer systems and networkinfrastructure, which may result in significant liability to us and may causeexisting and potential customers to refrain from doing business with us. Althoughwe, with the help of third-party service providers, intend to continue toimplement security technology and establish operational procedures to preventsuch damage, there can be no assurance that these security measures will besuccessful. In addition, advances in computer capabilities, new discoveries inthe field of cryptography or other developments could result in a compromise orbreach of the algorithms we and our third-party service providers use toencrypt and protect customer transaction data. A failure of such securitymeasures could have a material adverse effect on our financial condition andresults of operations.

 

**We are subject to certainoperational risks, including, but not limited to, customer or employee fraudand data processing system failures and errors.**

 

Employee errors andmisconduct could subject us to financial losses or regulatory sanctions andseriously harm our reputation. Misconduct by our employees could include hidingunauthorized activities from us, improper or unauthorized activities on behalfof our customers or improper use of confidential information. It is not alwayspossible to prevent employee errors and misconduct, and the precautions we taketo prevent and detect this activity may not be effective in all cases. Employeeerrors could also subject us to financial claims for negligence.

 

We maintain a system of internal controls and insurance coverage tomitigate against operational risks, including data processing system failuresand errors and customer or employee fraud. Should our internal controls fail toprevent or detect an occurrence, or if any resulting loss is not insured orexceeds applicable insurance limits, it could have a material adverse effect onour business, financial condition and results of operations.

 

**Failure to pay interest on our debt may adversely impact ourability to pay dividends.**

 

16million of subordinated debentures are held by two business trusts that wecontrol. Interest payments on the debentures must be paid before we pay dividendson our capital stock, including our Common Stock. We have the right to deferinterest payments on the debentures for up to 20 consecutive quarters. However,if we elect to defer interest payments, all deferred interest must be paidbefore we may pay dividends on our capital stock. Deferral of interest paymentscould also cause a decline in the market price of our Common Stock.

 

31

----

 
| **ITEM 1B.** | **UNRESOLVED STAFF COMMENTS** |
|--------------|-------------------------------|

 

None

 
| **ITEM 2.** | **PROPERTIES** |
|-------------|----------------|

 

The Company, includingthe acquisition of FMB on January 1, 2006, owns its main office in Manhattanand fourteen branch offices and leases 4 branch offices. The Company alsoleases additional office space in Manhattan and a parking lot for one of thebranch offices owned.

 
| **ITEM 3.** | **LEGAL PROCEEDINGS** |
|-------------|-----------------------|

 

There are no pendinglegal proceedings to which the Company or the Bank is a party, other thanordinary routine litigation incidental to the Bank’s business. While theultimate outcome of current legal proceedings cannot be predicted withcertainty, it is the opinion of management that the resolution of these legalactions should not have a material effect on the Company’s consolidatedfinancial position or results of operations.

 
| **ITEM 4.** | **SUBMISSION OF MATTERS TO A VOTE  OF SECUR****ITY HOLDERS** |
|-------------|--------------------------------------------------------------|

 

No matter was submittedto a vote of security holders during the quarter ended December 31, 2005.

 

**PART II.**

 
| **ITEM 5.** | **MARKET FOR THE COMPANY’S COMMON  STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES** |
|-------------|------------------------------------------------------------------------------------------------------------------------|

 

The Company incorporatesby reference the information called for by Item 5 of this Form 10-K from thesection captioned “Stock Price Information” of the Company’s 2005 Annual Reportto Stockholders for the year ended December 31, 2005 (attached as Exhibit13.1).

 

The following tableprovides information about purchases by the Company and its affiliatedpurchasers during the quarter ended December 31, 2005, of equity securitiesthat are registered by the Company pursuant to Section 12 of the Exchange Act:

 

32

----

 
| **Period**          | ** ** | **Total  Number  Of Shares  Purchased** | ** ** | **Average  Price Paid  per Share** | ** ** | **Total Number of  Shares Purchased  as Part of a  Publicly  Announced Plan (1)** | ** ** | **Maximum Number  (or Approximate  Dollar Value) of  Shares that May  Yet Be Purchased  Under the Plans (1)** | ** ** |
|---------------------|------------|-----------------------------------------|------------|------------------------------------|------------|-----------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------|------------|
|                |       |                                    |       |                               |       |                                                                              |       |                                                                                                          |       |
| October 1-31, 2005  |       | —                                  |       | —                             |       | —                                                                            |       | 77,036                                                                                                        |       |
| November 1-30, 2005 |       | —                                  |       | —                             |       | —                                                                            |       | 77,036                                                                                                        |       |
| December 1-31, 2005 |       | —                                  |       | —                             |       | —                                                                            |       | 77,036                                                                                                        |       |
| Total               |       | —                                  |       | —                             |       | —                                                                            |       | 77,036                                                                                                        |       |

 

----

(1)           InNovember 2003, our Board of Directors approved the repurchase by us up to anaggregate of 100,800 shares of our common stock pursuant to a publiclyannounced repurchase program (the “2003 Repurchase Program”). In November 2004,our Board of Directors approved the repurchase by us up to an additional 5%, or101,700 shares, of our common stock (the “2004 Repurchase Program”) followingthe completion of the 2003 Repurchase Program. In December 2004, we exhaustedthe shares available to repurchase under the 2003 Repurchase Program and beganrepurchasing shares pursuant to the 2004 Repurchase Program. Unless terminatedearlier by resolution of the Board of Directors, the current repurchase programwill expire when we have repurchased all shares authorized for repurchasethereunder.

 

33

----

 
| **ITEM 6.** | **SELECTED FINANCIAL DATA** |
|-------------|-----------------------------|

 

The Company incorporatesby reference the information called for by Item 6 of this Form 10-K from thesections entitled “Selected Financial and Other Data” and “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” ofthe Company’s 2005 Annual Report to Stockholders for the year ended December31, 2005 (attached as Exhibit 13.1).

 
| **ITEM 7.** | **MANAGEMENT’S DISCUSSION AND  ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |
|-------------|-------------------------------------------------------------------------------------------------|

 

The Company incorporatesby reference the information called for by Item 7 of this Form 10-K from thesection entitled “Management’s Discussion and Analysis of Financial Conditionand Results of Operations” of the Company’s 2005 Annual Report to Stockholdersfor the year ended December 31, 2005 (attached as Exhibit 13.1).

 
| **ITEM 7A.** | **QUANTITATIVE AND QUALITATIVE  DISCLOSURES ABOUT MARKET RISK** |
|--------------|-----------------------------------------------------------------|

 

The Company incorporatesby reference the information called for by Item 7A of this Form 10-K from thesection entitled “Quantitative Disclosures About Market Risk” of the Company’s2005 Annual Report to stockholders for the year ended December 31, 2005(attached as Exhibit 13.1).

 
| **ITEM 8.** | **FINANCIAL STATEMENTS AND  SUPPLEMENTAL DATA** |
|-------------|-------------------------------------------------|

 

The Company incorporatesby reference the information called for by Item 8 of this Form 10-K from theFinancial Statements set forth in the Company’s 2005 Annual Report toStockholders for the year ended December 31, 2005 (attached as Exhibit 13.1).

 
| **ITEM 9.** | **CHANGES IN AND DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE** |
|-------------|-------------------------------------------------------------------------------------------|

 

None.

 

34

----

 
| **ITEM 9A.** | **CONTROLS AND PROCEDURES** |
|--------------|-----------------------------|

 

An evaluation wasperformed under the supervision and with the participation of the Company’smanagement, including the Chief Executive Officer and Chief Financial Officer,of the effectiveness of the design and operation of the Company’s disclosurecontrols and procedures (as defined in Rule 13a-15(e) promulgated underthe Securities and Exchange Act of 1934, as amended) as of December 31,2005. Based on that evaluation, the Company’s management, including the ChiefExecutive Officer and Chief Financial Officer, concluded that the Company’sdisclosure controls and procedures were effective. There have been nosignificant changes in the Company’s internal controls or in other factors thatcould significantly affect internal controls.

 
| **ITEM 9B.** | **OTHER  INFORMATION** |
|--------------|------------------------|

 

None.

 

**PART III.**

 
| **ITEM 10.** | **DIRECTORS AND EXECUTIVE  OFFICERS OF THE REGISTRANT** |
|--------------|---------------------------------------------------------|

 

**Directors**

 

The Company incorporates by reference the information called for byItem 10 of this Form 10-K regarding directors of the Company from the sectionsentitled “Election of Directors” and “Corporate Governance and the Board ofDirectors” of the Company’s Proxy Statement for the annual meeting ofstockholders to be held May 17, 2006 (the “2006 Proxy Statement”).

 

Section 16(a) of theExchange Act requires that the Company’s executive officers, directors andpersons who own more than 10% of their Company’s Common Stock file reports ofownership and changes in ownership with the Securities and Exchange Commissionand with the exchange on which the Company’s shares of Common Stock are traded.Such persons are also required to furnish the Company with copies of allSection 16(a) forms they file. Based solely on the Company’s review of thecopies of such forms, the Company is not aware that any of its directors andexecutive officers or 10% stockholders failed to comply with the filingrequirements of Section 16(a) during 2005.

 

35

----

 

**Executive Officers**

 

The executive officers ofthe Company, each of whom is also currently an executive officer of the Bankand both of whom serve at the discretion of the Board of Directors, areidentified below:

 
| **Name**             | ** ** | **Age** | ** ** | **Positions with the Company**                     |
|----------------------|------------|---------|------------|-------------------------------------------------------------------|
|                 |       |    |       |                                                              |
| Patrick L. Alexander |       | 53      |       | President and Chief  Executive Officer                            |
|                 |       |    |       |                                                              |
| Mark A. Herpich      |       | 38      |       | Vice President,  Secretary, Chief Financial Officer and Treasurer |

 

The executive officers ofthe Bank are identified below:

 
| **Name**             | ** ** | **Age** | ** ** | **Positions with the Bank**            |
|----------------------|------------|---------|------------|-------------------------------------------------------|
|                 |       |    |       |                                                  |
| Patrick L. Alexander |       | 53      |       | President and Chief  Executive Officer                |
|                 |       |    |       |                                                  |
| Mark A. Herpich      |       | 38      |       | Executive Vice  President and Chief Financial Officer |
|                 |       |    |       |                                                  |
| Michael E. Scheopner |       | 44      |       | Executive Vice  President, Credit Risk Manager        |
|                 |       |    |       |                                                  |
| Dean R. Thibault     |       | 54      |       | Executive Vice  President, Commercial Banking         |
|                 |       |    |       |                                                  |
| Larry R. Heyka       |       | 59      |       | Market President – Manhattan                     |
|                 |       |    |       |                                                  |
| Mark J. Oliphant     |       | 53      |       | Market President –  Dodge City                   |

 
| **ITEM 11.** | **EXECUTIVE COMPENSATION** |
|--------------|----------------------------|

 

The Company incorporatesby reference the information called for by Item 11 of this Form 10-K from thesections entitled “Corporate Governance and the Board of Directors” and “ExecutiveCompensation” of the 2006 Proxy Statement.

 
| **ITEM 12.** | **SECURITY OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT** |
|--------------|---------------------------------------------------------------------|

 

The Company incorporatesby reference the information called for by Item 12 of this Form 10-K from thesection entitled “Security Ownership of Certain Beneficial Owners” of the 2006Proxy Statement.

 

36

----

 

**Equity Compensation PlanInformation**

 

The table below sets forth the followinginformation as of December 31, 2005 for (i) all compensation plans previouslyapproved by the Company’s shareholders and (ii) all compensation plans notpreviously approved by the Company’s shareholders:

 
|   |   | (a)    |   | the number of  securities to be issued upon the exercise of outstanding options, warrants  and rights;                                                                                      |
|--------|--------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |   |                                                                                                                                                                                        |
|   |   | (b)    |   | the weighted-average  exercise price of such outstanding options, warrants and rights;                                                                                                      |
|   |   |   |   |                                                                                                                                                                                        |
|   |   | (c)    |   | other than securities  to be issued upon the exercise of such outstanding options, warrants and  rights, the number of securities remaining available for future issuance  under the plans. |

 

**EQUITYCOMPENSATION PLAN INFORMATION**

 
| **Plan category**                                           | ** ** | **Number of securities to be  issued upon exercise of  outstanding options (1)** | ** ** | **Weighted-average  exercise  price of outstanding  options** | ** ** | **Number of securities  remaining available for  future issuance (1)** | ** ** |
|-------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|---------------------------------------------------------------|------------|------------------------------------------------------------------------|------------|
|                                                        |       |                                                                             |       |                                                          |       |                                                                   |       |
| Equity compensation  plans approved by security holders     |       | 102,406                                                                          |       |                                                          |       | $  26.14                                                     |       |   | 274,645 |   |   |
|                                                        |       |                                                                             |       |                                                          |       |                                                                   |       |   |   |   |   |
| Equity  compensation plans not approved by security holders |       | - 0 -                                                                            |       |                                                          |       | - 0 -                                                                  |       |   | - 0 - |   |   |
|                                                        |       |                                                                             |       |                                                          |       |                                                                   |       |   |   |   |   |
| **Total**                                                   |       | 102,406                                                                          |       |                                                          |       | $  26.14                                                     |       |   | 274,645 |   |   |

 

----

(1) Does not includeoptions assumed by the Company in 2001 in connection with the merger ofLandmark Bancshares, Inc. and MNB Bancshares, Inc. with and into the Company. Atthe time of the merger, there were options issued under the previous companies’plans, each of which was approved by stockholders of the respective company atthe time of their adoption. All of the options granted under these plans fullyvested at the time of the merger and no additional options were available forgrant after the merger. As of December 31, 2005, there were optionsoutstanding for an aggregate of 24,934 shares of the Company’s common stockunder the prior plans with a weighted average exercise price of $13.79.

 

37

----

 
| **ITEM 13.** | **CERTAIN RELATIONSHIPS AND  RELATED TRANSACTIONS** |
|--------------|-----------------------------------------------------|

 

The Company incorporatesby reference the information called for by Item 13 of this Form 10-K from thesection entitled “Transactions with Directors, Officers and Associates” of the2006 Proxy Statement.

 
| **ITEM 14.** | **PRINCIPAL ACCOUNTANT FEES AND  SERVICES** |
|--------------|---------------------------------------------|

 

The Companyincorporates by reference the information called for by Item 14 of this Form 10-Kfrom the section entitled “Independent Public Accountants” of the 2006 ProxyStatement.

 

**PART IV**

 
| **ITEM 15.** | **EXHIBITS AND FINANCIAL  STATEMENT SCHEDULES** |
|--------------|-------------------------------------------------|

 

ITEM 15(a)1 and 2. FinancialStatements and Schedules

 

LANDMARK BANCORP,INC. AND SUBSIDIARIES

 

LIST OF FINANCIALSTATEMENTS

 

The following auditedConsolidated Financial Statements of the Company and its subsidiaries andrelated notes and auditors’ report are incorporated by reference from theCompany’s 2005 Annual Report to Stockholders (attached as Exhibit 13.1).

 
| Report of Independent  Registered Public Accounting Firm                                                                            |
|-------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                |
| Consolidated Balance  Sheets - December 31, 2005 and 2004                                                                           |
|                                                                                                                                |
| Consolidated Statements  of Earnings – Years ended December 31, 2005, 2004 and 2003                                            |
|                                                                                                                                |
| Consolidated Statements  of Stockholders’ Equity and Comprehensive Income – Years ended  December 31, 2005, 2004 and 2003 |
|                                                                                                                                |
| Consolidated Statements  of Cash Flows – Years ended December 31, 2005, 2004 and 2003                                          |
|                                                                                                                                |
| Notes to Consolidated  Financial Statements                                                                                         |

 

All schedules are omittedbecause they are not required or are not applicable or the required informationis shown in the financial statements incorporated by reference or notesthereto.

 

38

----

 

Item 15(a)3.            Exhibits

 

The exhibits required byItem 601 of Regulation S-K are included with this Form 10-K and are listed onthe “Index to Exhibits” immediately following the signature page.

 

Upon written request tothe President of the Company, P.O. Box 308, Manhattan, Kansas 66505-0308,copies of the exhibits listed above are available to stockholders of theCompany by specifically identifying each exhibit desired in the request. The Company’sfilings with the Securities and Exchange Commission are also available via theInternet at www.sec.gov, www.banklandmark.com or www.landmarkbancorpinc.com .

 

39

----

 

**SIGNATURES**

 

Pursuant to the requirementsof Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registranthas duly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.

 
| ** ** | **LANDMARK BANCORP, INC.** |                                   |
|------------|----------------------------|----------------------------------------|
|       | (Registrant)               |                                   |
|       |                       |                                   |
|       | By:                        | /s/  Patrick L. Alexander              |   | By: | /s/  Mark A. Herpich |   |
|       |                       | Patrick L. Alexander                   |   | Mark A. Herpich |
|       |                       | President and Chief  Executive Officer |   | Principal Financial and  Accounting Officer |
|            |                            |                                        |  |  |  |  |

 

 

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has been signedbelow by the following persons on behalf of the Registrant and in thecapacities and on the dates indicated.

 
| **SIGNATURE**             | ** ** | ** **     | ** ** | **TITLE**                   |
|---------------------------|------------|----------------|------------|-----------------------------|
|                      |       |           |       |                        |
| /s/ Patrick L.  Alexander |       | March 29, 2006 |       | President, Chief  Executive |
| Patrick L. Alexander      |       | Date           |       | Officer and Director        |
|                      |       |           |       |                        |
| /s/ Larry L. Schugart     |       | March 29, 2006 |       | Chairman of the Board       |
| Larry L. Schugart         |       | Date           |       |                        |
|                      |       |           |       |                        |
| /s/ Richard A. Ball       |       | March 29, 2006 |       | Director                    |
| Richard A. Ball           |       | Date           |       |                        |
|                      |       |           |       |                        |
| /s/ Brent A. Bowman       |       | March 29, 2006 |       | Director                    |
| Brent A. Bowman           |       | Date           |       |                        |
|                      |       |           |       |                        |
| /s/ Joseph L. Downey      |       | March 29, 2006 |       | Director                    |
| Joseph L. Downey          |       | Date           |       |                        |
|                      |       |           |       |                        |
| /s/ Jim W. Lewis          |       | March 29, 2006 |       | Director                    |
| Jim W. Lewis              |       | Date           |       |                        |
|                      |       |           |       |                        |
| /s/ Jerry R. Pettle       |       | March 29, 2006 |       | Director                    |
| Jerry R. Pettle           |       | Date           |       |                        |
|                      |       |           |       |                        |
| /s/ Susan E. Roepke       |       | March 29, 2006 |       | Director                    |
| Susan E. Roepke           |       | Date           |       |                        |
|                      |       |           |       |                        |
| /s/ C. Duane Ross         |       | March 29, 2006 |       | Director                    |
| C. Duane Ross             |       | Date           |       |                        |
|                      |       |           |       |                        |
| /s/ David H. Snapp        |       | March 29, 2006 |       | Director                    |
| David H. Snapp            |       | Date           |       |                        |

 

40

----

 

INDEXTO EXHIBITS

 
| **Exhibit  Number** | ** ** | **Description**                                                                            | ** ** | **Incorporated by reference to**                                                                                                                                  | ** ** | **Attached  hereto** |
|---------------------|------------|--------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------|
| 3.1                 |       | Amended  and Restated Certificate of Incorporation                                         |       | the  registrant’s transition report on Form 10-K for the transition period ending  December 31, 2001, filed with the Commission on March 24, 2002 (SEC file no.  000-33203) |       |                 |
| 3.2                 |       | Bylaws                                                                                     |       | the  registrant’s Form S-4, as amended, filed with the Commission on June 7, 2001  (SEC file no. 333-62466)                                                                 |       |                 |
| 4.1                 |       | Form  of stock certificate                                                                 |       | the  registrant’s Form S-4, as amended, filed with the Commission on June 7, 2001  (SEC file no. 333-62466)                                                                 |       |                 |
| 10.1                |       | Form  of employment agreement between Larry Schugart and the Company                       |       | the  registrant’s Form S-4, as amended, filed with the Commission on June 7, 2001  (SEC file no. 333-62466)                                                                 |       |                 |
| 10.2                |       | Form  of employment agreement between Patrick L. Alexander and the Company                 |       | the  registrant’s Form S-4, as amended, filed with the Commission on June 7, 2001  (SEC file no. 333-62466)                                                                 |       |                 |
| 10.3                |       | Form  of employment agreement between Mark A. Herpich and the Company                      |       | the  registrant’s Form S-4, as amended, filed with the Commission on June 7, 2001  (SEC file no. 333-62466)                                                                 |       |                 |
| 10.4                |       | Form  of employment agreement between Michael E. Scheopner and the Company                 |       | the  registrant’s Form S-4, as amended, filed with the Commission on June 7, 2001  (SEC file no. 333-62466)                                                                 |       |                 |
| 10.5                |       | Form  of employment agreement between Dean R. Thibault and the Company                     |       | the  registrant’s Form S-4, as amended, filed with the Commission on June 7, 2001  (SEC file no. 333-62466)                                                                 |       |                 |
| 10.6                |       | Rights  Agreement between the Company and Landmark National Bank                           |       | the  registrant’s Form 8-K filed with the Commission on January 22, 2002 (SEC file  no. 000-33203)                                                                          |       |                 |
| 10.7                |       | Indenture  dated as of December 19, 2003 between the Company and Wilmington Trust  Company |       | the  registrant’s report on Form 10-K for the period ending December 31, 2003,  filed with the Commission on March 30, 2004 (SEC file no. 000-33203)                        |       |                 |
| 10.8                |       | Form  of employment agreement between Mark J. Oliphant and the Company                     |       | The  registrant’s Form 8-K filed with the Commission on March 9, 2005 (SEC file  no. 000-33203)                                                                             |       |                 |
| 10.9                |       | Form  of 2001 Landmark Bancorp, Inc. Stock Incentive Plan Option Grant Agreement           |       | the  registrant’s report on Form 10-K for the period ending December 31, 2004,  filed with the Commission on March 30, 2005 (SEC file no. 000-33203)                        |       |                 |

 

41

----

 
| 10.10  |   | Landmark  Bancorp, Inc. Bonus/Profit Sharing Plan                                                                                                         |   |                                                                                                                                                     |   | X      |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|   |   |                                                                                                                                                      |   |                                                                                                                                                     |   |   |
| 10.11  |   | Form  of Landmark Bancorp, Inc. Deferred Compensation Agreements                                                                                          |   | the  registrant’s report on Form 10-K for the period ending December 31, 2004,  filed with the Commission on March 30, 2005 (SEC file no. 000-33203 |   |   |
| 10.12  |   | Summary  of director’s fees                                                                                                                          |   |                                                                                                                                                     |   | X      |
| 10.13  |   | Indenture  dated as of December 30, 2005 between the Company and Wilmington Trust  Company                                                                |   |                                                                                                                                                     |   | X      |
| 13.1   |   | 2005  Annual Report to Stockholders                                                                                                                       |   |                                                                                                                                                     |   | X      |
| 21.1   |   | Subsidiaries  of the Company                                                                                                                              |   |                                                                                                                                                     |   | X      |
| 23.1   |   | Consent  of KPMG LLP                                                                                                                                      |   |                                                                                                                                                     |   | X      |
| 31.1   |   | Certification  of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)                                                                            |   |                                                                                                                                                     |   | X      |
| 31.2   |   | Certification  of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)                                                                            |   |                                                                                                                                                     |   | X      |
| 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       |   |                                                                                                                                                     |   | X      |
| 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 |   |                                                                                                                                                     |   | X      |

 

42

----