EXHIBIT
13.1





TO
OUR STOCKHOLDERS, CUSTOMERS, AND FRIENDS





Landmark
Bancorp, Inc. reported net earnings of $3.4 million in 2009 with total assets
equaling $584 million at year end.  2009 can be classified as the
second year of a very difficult economic and banking environment where
approximately thirty percent of banks across the nation reported negative
earnings for the year.  Fully diluted earnings per share were
$1.31.  This financial performance translates to a 6.18% return on
average equity and a .54% return on average assets.  We continued our
historical practice of declaring a 5 percent stock dividend.  Our cash
dividend paid in 2009, adjusted to give effect to the 5 percent stock dividend,
increased approximately 5% compared to 2008.  The results of 2009 took
place against a backdrop of continued recession, declining residential and
commercial real estate values, rising unemployment to levels as high as 10.5%
nationally, government assistance to financial and manufacturing firms, high
rates of residential mortgage delinquency and foreclosures, an increasing rate
of bank failures, and unprecedented government borrowing and spending in an
effort to stimulate the economy.  Despite these challenges your
company continues to experience solid profitability, good liquidity, and a
strong capital position.  The company continues to weather this
economic storm and provide quality banking services to our customers and value
to our shareholders.  We look forward to capitalizing on opportunities
that we expect to present themselves as the economy recovers.  In the
space below I will recap the challenges and successes we experienced in 2009 and
provide my outlook for 2010.





The
economic environment over the past two years has certainly had an impact on our
loan portfolio.  In 2009 your company contributed $3.3 million to its
loan loss reserve as we identified and quantified problem loans at levels much
higher than our historical levels, and even in excess of those identified in
2008.  The loan loss reserve increased to $5.4 million at year end
which is 1.6% of gross loans outstanding.  We are aggressively
managing our loan portfolio to either remediate or move problem credits out of
the portfolio, as our non-performing loans escalated over the past year to $13.6
million at June 30, 2009.  We believe these levels have peaked and are
now in the process of declining as we work through the legal process on several
of these credits.  Non-performing loans totaled $11.8 million at year
end.  Also contributing to our belief that our non-performing loans
have peaked is the number of new problem credits identified in the third and
fourth quarter were significantly fewer than in previous quarters.  We
are optimistic that our problem credits will continue to decline absent any
further adverse economic developments.  We are disappointed that we
have experienced the problems in the credit portfolio over the past couple of
years.  However, the overall risk management disciplines employed in
managing loan portfolio concentrations and loan underwriting standards have
allowed your company to weather this economic storm of the past two years in
relatively good condition.  Improving economic trends should
positively impact the loan portfolio and further contribute to the progress we
expect to achieve in 2010.





As a
testament to the very difficult banking environment in which we are operating,
the company experienced a net loss of $961 thousand in the investment portfolio
resulting from other-than-temporary losses on three of our investment
securities.  These losses were limited to one class of securities
known as collateralized debt obligations.  Specifically, these were
securities comprised of pools of trust preferred securities issued
primarily by commercial banks and savings institutions.  These
trust preferred instruments are able to be classified as capital on the issuing
bank’s balance sheet and are designed to pay a return to investors based upon a
rate of interest that generally fluctuates with the overall level of interest
rates.  The pools are comprised of issues to a number of banks that
were diversified in both balance sheet composition and geographical
location.  The other-than-temporary losses that were recognized on
these pools reflects the large number of financial institutions that have either
failed over the past two years or have experienced financial difficulty severe
enough to prevent them from paying dividends or interest payments on these
securities, thus putting these institutions into a state of deferral or
default.  The extent of these deferrals and defaults dramatically
highlights the extremely difficult economic and banking environment in which we
are operating.  Fortunately, your company only invested in three of
these securities for a total exposure of $2.5 million.  Additional
losses on these respective investments may be incurred as this economic
environment continues to evolve.  However, over the long term, the
company may be able to recover some of the losses recognized now, as the economy
recovers and some of the banks within these pools rectify their problems and
recover to a performance status.


6


Our
mortgage banking operation played a key role in 2009 activities and
results.  The company originated a record number of 1-4 family
residential mortgage loans totaling approximately $210 million.  Much
of this activity was prompted by the low rates in the residential mortgage
market as the Federal Reserve Bank utilized a number of tools to keep interest
rates low in an effort to stimulate the economy and stabilize the housing
market.  Almost all of these originated loans were conforming
residential real estate loans which were subsequently sold to the secondary
market.  These sales resulted in gains on sales of loans of $3.1
million.  While expenses related to this activity were up due to the
high volumes, mortgage banking was a key contributor to bank profitability in
2009.  Additionally, we were able to capitalize on these loans and
develop many core deposit relationships with mortgage banking customers as we
cross sold a complete banking relationship versus only transacting a mortgage
loan.  A key intangible to the company’s mortgage banking capacity is
our ability to capture these complete banking relationships and further develop
our core deposits.  While it is not expected that mortgage loan
activity will be as robust as it was last year, we still believe that this will
be a significant line of business for your company in 2010.





Non-interest
income continues to play a significant role in the success of your company and
is an area of continual emphasis in daily management
activities.  Non-interest income increased approximately $1.4 million
in 2009 compared to 2008.  Our success in mortgage banking, which was
described above, led to an increase of $1.6 million in gains on sales of
loans.  Additionally, fees and service charges increased approximately
$189 thousand as we continue to grow our base of core
deposits.  Continued progress was achieved in the sale of non-deposit
investment products through our third party provider and the income associated
with that activity.  We are looking for ways to continue the expansion
of our mortgage banking activities.  This continues to be an area of
opportunity due to the significant decrease of mortgage brokers during the last
couple of years, resulting from the difficulties caused by these originating
entities and their contribution to the subprime lending debacle, and the
resultant loss of access to the credit markets they have
experienced.  Growing non-interest income remains a key focus of your
company as we continue to explore other products and services that will
contribute to this goal.





Never
before in my career have I seen banks vilified in a way that the nation has
witnessed these past two years.  Banks, investment banks, huge money
center banks, and community banks have been painted with the same brush by many
media members, pundits, and politicians.  Stories in the press are
focused on the banks not making money, the banking industry being bailed out by
the American taxpayer, huge bonuses paid to employees, and exorbitant interest
and fees being charged by banks.  There seems to be a tremendous fear
of bank failures and, at the same time, a tremendous anger if the banks make any
money.  What much of the press and many of the politicians do not seem
to focus on are the banks, such as Landmark Bancorp, Inc., that did not get
bailed out, did not contribute to the subprime mortgage debacle, that continue
to lend money to credit worthy individuals and businesses within their
community, and continue to function in a safe, sound, and prudent
manner.  It is these financial institutions that will lead our country
out of this economic quagmire and provide the capital that will be needed when
the environment is right for the economy to expand.  We will
not bow to external pressure that would encourage us to lend money to
individuals and entities that we believe are not credit
worthy.  Public policy, loose credit, and excessive leverage by
borrowers were the primary causes of the credit crisis we are currently
experiencing.  Additional loose credit will not fix the problem and
cause the economy to grow.  We must let the free market find its own
level and purge the weaknesses out of the system.  The “too big to
fail’ policy must be addressed, and the economic advantage that policy provides
to the huge money center banks must be eliminated.  Additionally, the
industry must fight ardently against laws and regulations being passed that will
hamper the banks’ ability to do business and be profitable.  The
conflict and state of uncertainty in the political environment needs to subside
soon.  The economy will only begin to recover when individuals and
businesses know and understand the regulatory, business, taxation, and political
environment, and are able to make decisions based upon some degree of certainty
in these areas.





As
difficult as the current environment is, there are several opportunities being
explored that will allow your company to grow and prosper.  This past
year we capitalized on the opportunity in the mortgage banking
arena.  This will continue to be a focus in the upcoming years as
mortgage banking ties in closely with our core value of a complete banking
relationship.  We have begun to experience opportunities in the
commercial lending area as many banks are not loaning money due to their own
financial difficulties and we are able to visit with some high quality borrowers
who are looking to relocate a banking relationship that was previously deeply
entrenched with their existing institution.  The industry has also
witnessed a return of risk-based pricing in the lending area led by the
elimination of many competitive lenders that were not properly underwriting or
pricing risk.  This has helped to contribute to an increase in our net
interest margin from 3.51% in 2008 to 3.57% in 2009, in spite of a reduction in
the total amount of loans outstanding.  We continue to explore
opportunities to acquire other institutions, either through purchase from the
FDIC or through a traditional acquisition of either a branch or whole
institution.  It is expected that many opportunities of this type will
be available as the weaker financial institutions will not have either the
capital or the desire to continue in the current
environment.  Finally, we will not stop our continual and vigilant
review of our cost and organizational structure so that your company can
continue to operate efficiently and respond in a wise and timely manner to
changing conditions in our market.





In a very
difficult environment your company remains strong and well positioned to meet
the challenges ahead and take advantage of the opportunities that will be
available.  Landmark has a strong capital base of $54 million and 2009
earnings of $3.3 million.  The asset base is well diversified with
bank locations located in sixteen communities across Kansas.  While no
community has been immune from the economic developments over the past couple of
years, we believe our respective communities have sound economic bases and have
not incurred the steep decline in real property values that many parts of the
country have experienced.  Your company’s balance sheet is also
diversified without large concentrations in any one asset
category.  Your company has an experienced and seasoned management
team and board of directors, many of whom have experienced difficult economic
times before and know how to lead and manage through the challenges that are
present.  This same team is focused on good risk management practices
and enhancing shareholder value.  These are all key elements to meet
the challenges of the future and at the same time have your company continue to
grow and prosper.  We intend to come through this economic downturn as
a stronger, more efficient, and profitable organization.


7


It is
during times like this that you really appreciate all of the people that
contribute to your organization’s success.  I thank our shareholders
for your continued support and confidence.  Your management team and
board of directors continue to strive to enhance your shareholder value and
reward your investment with a quality, strong, and profitable organization of
which you can be proud.  I am proud of our associates and board of
directors who work tirelessly and are focused on the success of our customers
and your company.  Finally, I thank our customers for your confidence,
support, and patronage.  We will continue to deliver quality financial
services to enable you to succeed and prosper in your personal and business
endeavors.  We look forward to the future and are anxious to continue
the Landmark traditions of growth, profitability, financial strength, and
success.





Sincerely,





/s/
Patrick L. Alexander





Patrick
L. Alexander


President
and Chief Executive Officer


8


CORPORATE
INFORMATION





DIRECTORS
OF LANDMARK BANCORP, INC. AND LANDMARK NATIONAL BANK





Larry
Schugart, Chairman


Former
President and Chief Executive Officer


Landmark
Bancshares, Inc.





Patrick
L. Alexander


President
and Chief Executive Officer


Landmark
Bancorp, Inc. and Landmark National Bank





Richard
A. Ball


CPA


Ball
Consulting Group, Ltd.





Brent A.
Bowman


Vice
President


Bowman
Bowman and Novick, Inc.


Architects
and Landscape Architects





Joseph L.
Downey


Retired
Senior Vice President, Director and Executive Officer


Dow
Chemical Company





Jim W.
Lewis


Owner,
Lewis Automotive Group





Jerry R.
Pettle


Retired
Dentist


Dental
Associates of Manhattan, P.A.





Susan E.
Roepke


Retired
Vice President, Secretary and Treasurer, MNB Bancshares, Inc.


Retired
Senior Vice President/Secretary/Cashier, Security National Bank





C. Duane
Ross


Publisher
Emeritus


High
Plains Publishers, Inc.





David H.
Snapp


Law
Partner


Waite,
Snapp & Doll


9


CORPORATE
HEADQUARTERS


701
Poyntz Avenue


Manhattan,
Kansas 66502





ANNUAL
MEETING


The
annual meeting of stockholders will be held at the Kansas State Alumni Center,
17th
and Anderson Avenue, Manhattan, Kansas, on Wednesday, May 19, 2010 at 2:00
PM.





FORM
10-K


A copy of
the Annual Report on Form 10-K filed with the Securities and Exchange Commission
may be obtained by stockholders without charge on written request to Patrick L.
Alexander, President and Chief Executive Officer, Landmark Bancorp, Inc., P.O.
Box 308, Manhattan, Kansas 66505-0308, or by accessing our website at www.landmarkbancorpinc.com or the SEC’s
website at www.sec.gov.





REGISTRAR
AND TRANSFER AGENT


Registrar
and Transfer Company


10
Commerce Drive


Cranford,
NJ 07016-3572





INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM


KPMG
LLP


1000
Walnut, Suite 1000


Kansas
City, Missouri 64106


10