**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 21549**

** **

**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, 2002**                                                                                                                         |
|                                                                                                                                                                 |
| **OR**                                                                                                                                                               |
|                                                                                                                                                                 |
| **o**                                                                                                                                                                |   | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)**

**OF THE SECURITIES AND EXCHANGE ACT OF 1934** |
|                                                                                                                                                                 |
| **For  transition period from             to             ** |
|                                                                                                                                                                 |
| **Commission  File Number 0-33203**                                                                                                                                  |

 

**LANDMARK BANCORP, INC.**

(Exactname of Registrant as specified in its charter)

** **

| **Delaware**                                                     |   | **43-1930755**                           |
|------------------------------------------------------------------|--------|------------------------------------------|
| (State or other  jurisdiction  of incorporation or organization) |   | (I.R.S. Employer  Identification Number) |
|                                                             |   |                                     |
| **800 Poyntz Avenue, Manhattan,  Kansas  66505**            |
| (Address of principal  executive offices)  (Zip Code)       |
|                                                             |   |                                     |
| **(785) 565-2000**                                               |
| (Registrant’s telephone  number, including area code)       |
|                                                             |   |                                     |
| Securities registered  pursuant to Section 12(b) of the Act:     |

 

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

 

Securities registeredpursuant to Section 12(g) of the Act:

 

# **Common Stock, par value $0.01 per sharePreferred Share Purchase Rights**

(Title of Class)

 

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 of 1934 during the preceding 12 months (or for such shorter periodthat the Registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.  Yes ý  No o

 

Indicate by check mark if disclosure of delinquentfilers pursuant to Item 405 of Regulation S-K is not contained herein, and willnot be contained, to the best of Registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this 10-K orany amendment to this form 10-K. ý

 

Indicate by check mark whether the registrant is anaccelerated filer (as defined in Rule 12b-2 of the Act).  Yes o  No ý

 

The aggregate market value of the voting andnon-voting common equity held by non-affiliates of the registrant, based on thelast sales price quoted on the Nasdaq National Market System on June 28, 2002,the last business day of the registrant’s most recently completed second fiscalquarter, was approximately $32 million*. At March 24, 2003, the total number of shares of common stockoutstanding was 1,993,549.

 

 

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Documents incorporated by Reference:

 

Portions of the 2002 Annual Report to Stockholders forthe fiscal year ended December 31, 2002, are incorporated by reference intoParts I and II hereof, to the extent indicated herein.  Portions of the Proxy Statement for theAnnual Meeting of Stockholders to be held May 21, 2003, are incorporated byreference in Part III hereof, to the extent indicated herein.

 

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*                                         Basedon the last reported price of actual transactions in Registrant’s common stockon June 28, 2002, and reports of beneficial ownership prepared by alldirectors, executive officers and beneficial owners of more than 5% of theoutstanding shares of common stock of Registrant; however, such determinationof shares owned by affiliates does not constitute an admission of affiliatestatus or beneficial interest in shares of common stock of Registrant.

 

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**LANDMARK BANCORP, INC.**

 

2002 Form 10-K AnnualReport

 

Table of Contents

 
| **PART I** |
|------------|
|       |   |
| ITEM 1.    | BUSINESS |
|       |   |
| ITEM 2.    | PROPERTIES |
|       |   |
| ITEM 3.    | LEGAL PROCEEDINGS |
|       |   |
| ITEM  4.   | SUBMISSION  OF MATTERS TO A VOTE OF SECURITY HOLDERS |
|       |   |
| ITEM  5.   | MARKET  FOR THE COMPANY’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS |
|       |   |
| ITEM 6.    | SELECTED FINANCIAL DATA |
|       |   |
| ITEM  7.   | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|       |   |
| ITEM  8.   | FINANCIAL  STATEMENTS AND SUPPLEMENTAL DATA |
|       |   |
| ITEM  9.   | CHANGES  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
|       |   |
| ITEM  10.  | DIRECTORS  AND EXECUTIVE OFFICERS OF THE REGISTRANT |
|       |   |
| ITEM 11.   | EXECUTIVE COMPENSATION |
|       |   |
| ITEM  12.  | SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
|       |   |
| ITEM  13.  | CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS |
|       |   |
| ITEM 14.   | CONTROLS AND  PROCEDURES |
|       |   |
| ITEM  15.  | EXHIBITS,  FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K |
|       |
| SIGNATURES |

 

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**PART I.**

 

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

 

This document (including information incorporated byreference) contains, and future oral and written statements by us and ourmanagement may contain, forward-looking statements, within the meaning of suchterm in the Private Securities Litigation Reform Act of 1995, with respect toour financial condition, results of operations, plans, objectives, futureperformance and business.  Forward-lookingstatements, which may be based upon beliefs, expectations and assumptions ofour management and on information currently available to management, aregenerally identifiable by the use of words such as “believe,” “expect,”“anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,”“should” or other similar expressions. Additionally, all statements in this document, including forward-lookingstatements, speak only as of the date they are made, and we undertake noobligation to update any statement in light of new information or futureevents.

 

Our ability to predict results or the actual effect offuture plans or strategies is inherently uncertain.  Factors which could have a material adverse effect on ouroperations and future prospects include, but are not limited to, the following:

 

•                                          Thestrength of the United States economy in general and the strength of the localeconomies in which we conduct our operations which may be less favorable thanexpected and may result in, among other things, a deterioration in the creditquality and value of our assets.

 

•                                          Theeconomic impact of past and future terrorist attacks, acts of war or threatsthereof, and the response of the United States to any such threats and attacks.

 

•                                          Theeffects of, and changes in, federal, state and local laws, regulations andpolicies affecting banking, securities, insurance and monetary and financialmatters.

 

•                                          Theeffects of changes in interest rates (including the effects of changes in therate of prepayments of our assets) and the policies of the Board of Governorsof the Federal Reserve System.

 

•                                          Ourability to compete with other financial institutions as effectively as wecurrently intend due to increases in competitive pressures in the financialservices sector.

 

•                                          Ourinability to obtain new customers and to retain existing customers.

 

•                                          Thetimely development and acceptance of products and services, including productsand services offered through alternative delivery channels such as theInternet.

 

•                                          Technologicalchanges implemented by us and by other parties, including third party vendors,which may be more difficult or more expensive than anticipated or which mayhave unforeseen consequences to us and our customers.

 

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•                                          Ourability to develop and maintain secure and reliable electronic systems.

 

•                                          Ourability to retain key executives and employees and the difficulty that we mayexperience in replacing key executives and employees in an effective manner.

 

•                                          Consumerspending and saving habits which may change in a manner that affects ourbusiness adversely.

 

•                                          Businesscombinations and the integration of acquired businesses which may be moredifficult or expensive than expected.

 

•                                          Thecosts, effects and outcomes of existing or future litigation.

 

•                                          Changesin accounting policies and practices, as may be adopted by state and federalregulatory agencies and the Financial Accounting Standards Board.

 

•                                          Ourability to manage the risks associated with the foregoing as well asanticipated.

 

These risks and uncertainties should be considered inevaluating forward-looking statements and undue reliance should not be placedon such statements.  Additionalinformation concerning us and our business, including other factors that couldmaterially affect our financial results, is included in our filings with theSecurities and Exchange Commission.

 

**TheCompany**

 

Effective October 9, 2001, Landmark Bancshares, Inc.,the holding company for Landmark Federal Savings Bank, and MNB Bancshares,Inc., the holding company for Security National Bank, completed their mergerinto Landmark Merger Company, which immediately changed its name to LandmarkBancorp, Inc. (the “Merger”).  Inaddition, Landmark Federal Savings Bank merged with Security National Bank andthe resulting bank changed its name to Landmark National Bank (the “Bank”),which is the wholly-owned subsidiary of Landmark Bancorp, Inc. (the “Company”or the “Registrant”).

 

The Company is the accounting successor to the priorLandmark Bancshares, Inc. and therefore, all financial information presentedfor periods prior to October 9, 2001, reflects only the operations of LandmarkBancshares, Inc.  Landmark Bancshares,Inc. filed an Annual Report on Form 10-K for its fiscal year ended September30, 2001.  The Company has a fiscal yearending on December 31.  Therefore, theCompany elected to file a Form 10-K for the transition period from October 1,2001 to December 31, 2001, which included audited consolidated financialinformation.  The results for the threemonth transition period ended December 31, 2001 included MNB Bancshares, Inc.’sresults 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, 2002.

 

The Company is a bank holding company incorporatedunder the laws of the State of Delaware. Currently, the Company’s business consists solely of the ownership ofthe Bank, which is a wholly-owned subsidiary of the Company.

 

 

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As a bank holding company, the Company is subject toregulation by the Board of Governors of the Federal Reserve System (the“Federal Reserve”).  The Company is alsosubject to various reporting requirements of the Securities and ExchangeCommission (the “SEC”).

 

Pursuant to the Merger, the Bank succeeded to all ofthe assets and liabilities of Landmark Federal Savings Bank and SecurityNational Bank.  The Bank is principallyengaged in the business of attracting deposits from the general public andusing such deposits, together with borrowings and other funds, to originateconsumer, commercial, multi-family, and one-to-four family residential mortgageloans in the Bank’s principal lending areas, consisting primarily of Manhattan,Auburn, Dodge City, Garden City, Great Bend, Hoisington, LaCrosse, Topeka,Osage City and Wamego, Kansas and the surrounding communities in Riley, Barton,Finney, Ford, Pottawatomie, Rush, Shawnee and Osage Counties in Kansas.  Since the Merger, the Bank has focused onoriginating greater numbers and amounts of consumer, commercial, andagricultural loans.  Additionally,greater emphasis has been placed on diversification of the deposit mix throughexpansion of core deposit accounts such as checking, savings, and money marketaccounts.  The Bank has also diversifiedits geographical markets as a result of the Merger, with its main office inManhattan, Kansas and branch offices in central and southwestern Kansas.  The Company continues to exploreopportunities to expand its banking markets through mergers and acquisitions,as well as branching opportunities.

 

The results of operations of the Bank are dependentprimarily upon net interest income and, to a lesser extent, upon other incomederived from loan servicing fees and customer deposit services.  Additional expenses of the Bank includegeneral and administrative expenses such as salaries, employee benefits,federal deposit insurance premiums, data processing, occupancy and relatedexpenses.

 

Deposits of the Bank are insured by either the SavingsAssociation Insurance Fund (the “SAIF”) or the Bank Insurance Fund (the “BIF”)of the Federal Deposit Insurance Corporation (the “FDIC”) up to the maximumamount allowable under applicable federal law and regulation.  The Bank is regulated by the Office of theComptroller of the Currency (the “OCC”), as the chartering authority fornational banks, and the FDIC, as the administrator of the SAIF and the BIF.  The Bank is also subject to regulation bythe Board of Governors of the Federal Reserve System with respect to reservesrequired to be maintained against deposits and certain other matters.  The Bank is a member of the Federal ReserveBank of Kansas City and the Federal Home Loan Bank (the “FHLB”) of Topeka.

 

The Company’s executive office and the Bank’s mainoffice are located at 800 Poyntz Avenue, Manhattan, Kansas 66502.  The telephone number is (785) 565-2000.

 

**MarketArea**

 

The Bank’s primary deposit gathering and lendingmarket consists of the Kansas counties of Riley, Barton, Finney, Ford, Osage,Pottawatomie, Rush and Shawnee Counties, Kansas.  Riley County’s economy is significantly influenced by employmentat Fort Riley Military Base and Kansas State University, the second largestuniversity in Kansas, which is located in Manhattan.  The counties of Ford, Finney, Barton and Rush were founded onagriculture, which continues to play a major role in the economy.  Predominant activities involve cropproduction, feed lot operations, and food processing.  Dodge City is known as the “Cowboy Capital of the

 

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World” and maintains a significant tourism industry.  In the central part of Kansas, the oilindustry is also prevalent.  Thesouthwestern market area is dependent upon the agricultural, beef packing, andoil and gas industries.  ShawneeCounty’s economy is strongly influenced by the State of Kansas, City of Topekaand several major private firms and public institutions.  Osage County is primarily agricultural withsmall private industries and business firms.

 

**Competition**

 

The Company faces strong competition both inattracting deposits and making real estate and other loans.  Its most direct competition for depositscomes from commercial banks and other savings institutions located in itsprincipal market areas, including many large financial institutions which havegreater financial and marketing resources available to them.  The ability of the Company to attract andretain deposits generally depends on its ability to provide a rate of return,liquidity and risk comparable to that offered by competing investmentopportunities.  The Company competes forloans principally through the interest rates and loan fees it charges and theefficiency and quality of services it provides borrowers.  Additionally, competition may increase as aresult of the continuing reduction on restrictions on the interstate operationsof financial institutions. Under the Gramm-Leach-Bliley Act, which becameeffective in 2000, securities firms and insurance companies that elect tobecome financial holding companies may acquire banks and other financialinstitutions.  The Gramm-Leach-BlileyAct may significantly change the competitive environment in which the Companyconducts business.  The financialservices industry is also likely to become more competitive as furthertechnological advances enable more companies to provide financialservices.  These technological advancesmay diminish the importance of depository institutions and other financialintermediaries in the transfer of funds between parties.

 

**Employees**

 

At December 31, 2002, theBank had a total of 118 employees (110 full time equivalent employees).  The Company has no direct employees.  Employees are provided with a comprehensivebenefits program, including basic and major medical insurance, life anddisability insurance, sick leave, an employee stock ownership plan and a401(k) profit sharing plan.  Employeesare not represented by any union or collective bargaining group and the Bankconsiders its employee relations to be good.

 

**Lending Activities**

 

***General*.**  The Company strives to provide each market area it serves a fullrange of financial products and services to small and medium sized businessesand to consumers.  The Company targetsowner-operated businesses and utilizes Small Business Administration and FarmServices Administration lending as a part of its product mix.  Each market has an established loancommittee which has authority to approve credits, within establishedguidelines.  Concentrations in excess ofthose guidelines must be approved by either a corporate loan committeecomprised of the Company’s Chief Executive Officer, the Credit Risk Manager,two other senior commercial lenders or the bank’s board of directors.  When lending to an entity, the Companygenerally obtains a guaranty from 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.

 

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Residential loans are priced and originated followingunderwriting standards that are consistent with guidelines established by themajor buyers in the secondary market. Commercial and consumer loans generally are issued at or above thenational prime rate.  The Company has nopotential negative amortization loans. The following is a brief description of each major category of theCompany’s lending activity.

 

***Real Estate Lending***.  Commercial, residential, construction andmulti-family real estate loans represent the largest class of loans of theCompany.  Generally, residential loansretained in portfolio are variable rate with adjustment periods of five yearsor less and amortization periods of over either 15 or 30 years.  Commercial real estate loans, includingagricultural real estate, generally have amortization periods over 15 or 20years.  The Company has a securityinterest in the real estate.  TheCompany also generates long term fixed rate residential real estate loans whichare sold in the secondary market. Commercial real estate, construction and multi-family loans aregenerally limited, by policy, to 80% of the appraised value of the property.  Commercial real estate, includingagricultural real estate loans, also are supported by an analysis demonstratingthe borrower’s ability to repay. Residential loans that exceed 80% of the appraised value of the realestate generally are required, by policy, to be supported by private mortgageinsurance, although on occasion the Company will retain non-conformingresidential loans to known customers at premium pricing.

 

***Commercial Lending***.  Loans in this category include loans toservice, retail, wholesale and light manufacturing businesses, includingagricultural operations.  Commercialloans are made based on the financial strength and repayment ability of theborrower, as well as the collateral securing the loans.  The Company targets owner-operatedbusinesses as its customers and makes lending decisions based upon a cash flowanalysis of the borrower as well as a collateral analysis.  Accounts receivable loans and loans forinventory purchases are generally on a one-year renewable term and loans forequipment generally have a term of seven years or less.  The Company generally takes a blanketsecurity interest in all assets of the borrower.  Equipment loans are generally limited to 75% of the cost orappraised value of the equipment. Inventory loans are generally limited to 50% of the value of theinventory, and accounts receivable loans are generally limited to 75% of apredetermined eligible base.  TheCompany provides short-term credit for operating loans and intermediate termloans for farm product, livestock and machinery purchases and otheragricultural improvements.  Farm productloans have generally a one-year term and machinery and equipment and breedinglivestock loans generally have five to seven year terms.  Extension of credit is based upon theborrower’s ability to repay, as well as the existence of federal guarantees andcrop insurance coverage.  These loansare generally secured by a blanket lien on livestock, equipment, feed, hay,grain and growing crops.  Equipment andbreeding livestock loans are generally limited to 75% of appraised value.

 

***Consumer and Other Lending***.  Loans classified as consumer and other loansinclude automobile, boat, student loans, home improvement and home equityloans, the latter two secured principally through second mortgages.  The Company generally takes a purchase moneysecurity interest in collateral for which it provides the originalfinancing.  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.  The majority of these loans are installmentloans with fixed interest rates.

 

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**Loan Origination and Processing**

 

Loan originations are derived from a number ofsources.  Residential loan originationsresult from real estate broker referrals, mortgage loan brokers, directsolicitation by the Bank’s loan officers, present savers and borrowers,referrals from builders and attorneys, walk in customers and, in someinstances, other lenders.  Residentialloan applications, whether originated through the Bank or through mortgagebrokers, are underwritten and closed based on the same standards, whichgenerally meet secondary market guidelines. Consumer and commercial real estate loan originations emanate from manyof the same sources.  The average loanis less than $500,000.

 

The loan underwriting procedures followed by the Bankconform to regulatory specifications and are designed to assess both theborrower’s ability to make principal and interest payments and the value of anyassets or property serving as collateral for the loan.  Generally, as part of the process, a loanofficer meets with each applicant to obtain the appropriate employment andfinancial information as well as any other required loan information.  The bank then obtains reports with respectto the borrower’s credit record, and orders, on real estate loans, and reviewsan appraisal of any collateral for the loan (prepared for the Bank through anindependent appraiser).

 

Loan applicants are notifiedpromptly of the decision of the bank. Prior to closing any long-term loan, the borrower must provide proof offire and casualty insurance on the property serving as collateral, and suchinsurance must be maintained during the full term of the loan.  Title insurance is required on loanscollateralized by real property.

 

**SU****PERVISION ANDREGULATION**

 

**General**

 

Financial institutions, their holding companies andtheir affiliates are extensively regulated under federal and state law.  As a result, the growth and earnings performanceof the Company may be affected not only by management decisions and generaleconomic conditions, but also by the requirements of federal and state statutesand by the regulations and policies of various bank regulatory authorities,including the Office of the Comptroller of the Currency (the “OCC”), the Boardof Governors of the Federal Reserve System (the “Federal Reserve”)and the Federal Deposit Insurance Corporation (the “FDIC”).  Furthermore, taxation laws administered bythe Internal Revenue Service and state taxing authorities and securities lawsadministered by the Securities and Exchange Commission (the “SEC”) andstate securities authorities have an impact on the business of the Company. Theeffect of these statutes, regulations and regulatory policies may besignificant, and cannot be predicted with a high degree of certainty.

 

Federal and state laws and regulations generallyapplicable to financial institutions regulate, among other things, the scope ofbusiness, the kinds and amounts of investments, reserve requirements, capitallevels relative to operations, the nature and amount of collateral for loans,the establishment of branches, mergers and consolidations and the payment ofdividends. This system of supervision and regulation establishes acomprehensive 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.

 

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The following is asummary of the material elements of the regulatory framework that applies tothe Company and its subsidiaries.  Itdoes not describe all of the statutes, regulations and regulatory policies thatapply, nor does it restate all of the requirements of those statutes,regulations and regulatory policies that are described. As such, the followingis qualified in its entirety 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.

 

**TheCompany**

 

***General****. *The Company, as the sole shareholder of the Bank, is a bankholding company.  As a bank holdingcompany, the Company is registered with, and is subject to regulation by, theFederal Reserve under the Bank Holding Company Act of 1956, as amended (the“BHCA”).  In accordance with FederalReserve policy, the Company is expected to act as a source of financial strengthto the Bank and to commit resources to support the Bank in circumstances wherethe Company might not otherwise do so. Under the BHCA, the Company is subject to periodic examination by theFederal Reserve.  The Company is alsorequired to file with the Federal Reserve periodic reports of the Company’soperations and such additional information regarding the Company and itssubsidiaries as the Federal Reserve may require.

 

***Acquisitions, Activities and Change inControl.***The primary purpose of a bank holding company isto control and manage banks.****The BHCA generally requires the priorapproval of the Federal Reserve for any merger involving a bank holding companyor any acquisition by a bank holding company of another bank or bank holdingcompany.  Subject to certain conditions(including deposit concentration limits established by the BHCA), the FederalReserve may allow a bank holding company to acquire banks located in any stateof the United States. In approving interstate acquisitions, the Federal Reserveis required to give effect to applicable state law limitations on the aggregateamount of deposits that may be held by the acquiring bank holding company andits insured depository institution affiliates in the state in which the targetbank is located (provided that those limits do not discriminate againstout-of-state depository institutions or their holding companies) and state lawsthat require that the target bank have been in existence for a minimum periodof time (not to exceed five years) before being acquired by an out-of-state bankholding 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 prohibitionis subject to a number of exceptions. The principal exception allows bankholding companies to engage in, and to own shares of companies engaged in, certainbusinesses found by the Federal Reserve to be “so closely related to banking.... as to be a proper incident thereto.” This authority would permit the Company to engage in a variety ofbanking-related businesses, including the operation of a thrift, consumerfinance, equipment leasing, the operation of a computer service bureau(including software development), and mortgage banking and brokerage. The BHCAgenerally does not place territorial restrictions on the domestic activities ofnon-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

 

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companies engaged in, a widerrange of nonbanking activities, including securities and insurance underwritingand sales, merchant banking and any other activity that the Federal Reserve, inconsultation with the Secretary of the Treasury, determines by regulation ororder is financial in nature, incidental to any such financial activity orcomplementary to any such financial activity and does not pose a substantialrisk to the safety or soundness of depository institutions or the financial systemgenerally.  As of the date of thisfiling, the Company has neither applied for nor received approval tooperate as a financial holding company.

 

Federal law also prohibits any person or company fromacquiring “control” of an FDIC-insured depository institution or its holdingcompany without prior notice to the appropriate 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.

 

***Capital Requirements****.*  Bank holding companies are required tomaintain minimum levels of capital in accordance with Federal Reserve capitaladequacy guidelines.  If capital levelsfall below the minimum required levels, a bank holding company, among otherthings, may be denied approval to acquire or establish additional banks ornon-bank businesses.

 

The Federal Reserve’s capitalguidelines establish the following minimum regulatory capital requirements forbank holding companies:  (i) arisk-based requirement expressed as a percentage of total assets weightedaccording to risk; and (ii) a leverage requirement expressed as a percentage oftotal assets.  The risk-basedrequirement consists of a minimum ratio of total capital to total risk-weightedassets of 8%, and a minimum ratio of Tier 1 capital to total risk-weightedassets of 4%.  The leverage requirementconsists of a minimum ratio of Tier 1 capital to total assets of 3% for themost highly rated companies, with a minimum requirement of 4% for allothers.  For purposes of these capitalstandards, Tier 1 capital consists primarily of permanent stockholders’ equityless intangible assets (other than certain loan servicing rights and purchasedcredit card relationships). Total capital consists primarily of Tier 1 capitalplus certain other debt and equity instruments that do not qualify as Tier 1capital and a portion of the company’s allowance for loan and lease losses.

 

The risk-based and leverage standards described aboveare minimum requirements. Higher capital levels will be required if warrantedby the particular circumstances or risk profiles of individual bankingorganizations. For example, the Federal Reserve’s capital guidelinescontemplate that additional capital may be required to take adequate accountof, among other things, interest rate risk, or the risks posed byconcentrations of credit, nontraditional activities or securities tradingactivities.  Further, any bankingorganization experiencing or anticipating significant growth would be expectedto maintain capital ratios, including tangible capital positions (*i.e.*,Tier 1 capital less all intangible assets), well above the minimum levels.  As of December 31, 2002, the Company hadregulatory capital in excess of the Federal Reserve’s minimum requirements.

 

***Dividend Payments****. *The Company’s ability to pay dividends to its shareholdersmay be affected by both general corporate law considerations and policies ofthe Federal Reserve applicable to bank holding companies*.* As a Delaware corporation,the Company is subject to the limitations of the Delaware General CorporationLaw (the “DGCL”). The DGCL allows the Company to pay dividends only out ofits surplus (as defined and computed in accordance with the provisions of theDGCL) or if the Company has no such surplus, out of its net profits for the

 

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fiscal year in which the dividend is declared and/or the precedingfiscal year. Additionally, policies of the Federal Reserve caution that a bankholding company should not pay cash dividends that exceed its net income orthat can only be funded in ways that weaken the bank holding company’sfinancial health, such as by borrowing. The Federal Reserve also possesses enforcement powers over bank holdingcompanies and their non-bank subsidiaries to prevent or remedy actions thatrepresent unsafe or unsound practices or violations of applicable statutes andregulations.  Among these powers is theability to proscribe the payment of dividends by banks and bank holdingcompanies.

 

***Federal Securities Regulation****.*  The Company’s common stock is registeredwith the SEC under the Securities Act of 1933, as amended, and the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”).  Consequently, the Company is subject to theinformation, proxy solicitation, insider trading and other restrictions andrequirements of the SEC under the Exchange Act.

 

**The Bank**

 

***General.*** The Bank is a national bank, chartered by the OCCunder the National Bank Act. The deposit accounts of the Bank are insured by the FDIC’s BankInsurance Fund (“BIF”), but a portion of its deposits are deemed to be insuredby the FDIC’s Savings Association Insurance Fund (“SAIF”). The Bank is a memberof the Federal Reserve System and the Federal Home Loan Bank System.  As a national bank, the Bank is subject tothe examination, supervision, reporting and enforcement requirements of theOCC, the chartering authority for national banks. The FDIC, as administrator ofthe BIF and the SAIF, also has regulatory authority over the Bank.

 

***Deposit Insurance.* **As an FDIC-insured institution, the Bankis required to pay deposit insurance premium assessments to the FDIC.  The FDIC has adopted a risk-based assessmentsystem under which all insured depository institutions are placed into one ofnine categories and assessed insurance premiums based upon their respectivelevels of capital and results 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.  Risk classification of all insuredinstitutions is made by the FDIC for each semi-annual assessment period.

 

During the year ended December 31, 2002, BIFassessments ranged from 0% of deposits to 0.27% of deposits.  For the semi-annual assessment periodbeginning January 1, 2003, BIF assessment rates will continue 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, theSAIF’s predecessor insurance fund. As a result of federal legislation enactedin 1996, beginning as of January 1, 1997, both SAIF members and BIFmembers became subject to assessments to cover the interest payments onoutstanding FICO obligations until the final maturity of such obligations in2019.  These FICO assessments are inaddition to amounts assessed by the FDIC for deposit insurance. During the

 

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year ended December 31, 2002, the FICO assessmentrate for BIF and SAIF members was approximately 0.02% of deposits.

 

***Supervisory Assessments.***  Nationalbanks are required to pay supervisory assessments to the OCC to fund theoperations of the OCC.  The amount ofthe assessment is calculated using a formula that takes into account the bank’ssize and its supervisory condition (as determined by the composite ratingassigned to the bank as a result of its most recent OCC examination).** **During the year ended December31, 2002, the Bank paid supervisory assessments to the OCC totaling $91,000.

 

***Capital Requirements.* **Banks are generally required to maintain capitallevels in excess of other businesses. The OCC has established the followingminimum capital standards for national banks, such as the Bank: (i) a leveragerequirement consisting of a minimum ratio of Tier 1 capital to total assets of3% for the most highly-rated banks with a minimum requirement of at least 4%for all others; and (ii) a risk-based capital requirement consisting of aminimum ratio of total capital to total risk-weighted assets of 8% and aminimum ratio of Tier 1 capital to total risk-weighted assets of 4%.  For purposes of these capital standards, thecomponents of Tier 1 capital and total capital are the same as those for bankholding companies discussed above.

 

Thecapital requirements described above are minimum requirements.  Higher capital levels will be required ifwarranted by the particular circumstances or risk profiles of individualinstitutions.  For example, regulationsof the OCC provide that additional capital may be required to take adequateaccount of, among other things, interest rate risk or the risks posed byconcentrations of credit, nontraditional activities or securities tradingactivities.

 

Further, federal law andregulations provide various incentives for financial institutions to maintainregulatory capital at levels in excess of minimum regulatory requirements. Forexample, a financial institution that is “well-capitalized” may qualify forexemptions from prior notice or application requirements otherwise applicableto certain types of activities and may qualify for expedited processing ofother required notices or applications. Additionally, one of the criteria thatdetermines a bank holding company’s eligibility to operate as a financialholding company is a requirement that all of its financial institutionsubsidiaries be “well-capitalized”. Under the regulations of the OCC, in order to be “well-capitalized” afinancial institution must maintain a ratio of total capital to totalrisk-weighted assets of 10% or greater, a ratio of Tier 1 capital to totalrisk-weighted assets of 6% or greater and a ratio of Tier 1 capital to totalassets of 5% or greater.

 

Federal law also providesthe federal banking regulators with broad power to take prompt correctiveaction to resolve the problems of undercapitalized institutions.  The extent of the regulators’ powers dependson whether the institution in question is “adequately capitalized,”“undercapitalized,” “significantly undercapitalized” or “criticallyundercapitalized,” in each case as defined by regulation.  Depending upon the capital category to whichan institution is assigned, the regulators’ corrective powers include:  (i) requiring the institution to submit acapital restoration plan; (ii) limiting the institution’s asset growth andrestricting its activities; (iii) requiring the institution to issue additionalcapital stock (including additional voting stock) or to be acquired; (iv)restricting transactions between the institution and its affiliates; (v)restricting the interest rate the institution may pay on deposits; (vi)ordering a new election of directors of the institution; (vii) requiring thatsenior executive officers or directors be dismissed;

 

10

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(viii) prohibiting the institution from accepting deposits fromcorrespondent banks; (ix) requiring the institution to divest certainsubsidiaries; (x) prohibiting the payment of principal or interest onsubordinated debt; and (xi) ultimately, appointing a receiver for theinstitution.

 

As of December 31, 2002:(i) the Bank was not subject to a directive from the OCC to increase itscapital to an amount in excess of theminimum regulatory capital requirements; (ii) the Bank exceeded its minimumregulatory capital requirements under OCC capital adequacy guidelines; and(iii) the Bank was “well-capitalized,” as defined by OCC regulations.

 

***Dividends.*** The primary source of funds for the Company isdividends from the Bank. Under the National Bank Act, a national bank may paydividends out of its undivided profits in such amounts and at such times as thebank’s board of directors deems 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 capitaladequacy guidelines and regulations, and a financial institution generally isprohibited from paying any dividends if, following payment thereof, theinstitution would be undercapitalized. As described above, the Bank exceeded its minimum capital requirementsunder applicable guidelines as of December 31, 2002.  As of December 31, 2002, approximately $2.4 million was availableto be paid as dividends by the Bank. Notwithstanding the availability of funds for dividends, however, theOCC may prohibit the payment of any dividends by the Bank if the OCC determinessuch payment would constitute an unsafe or unsound practice.

 

***Insider Transactions.* **The Bank is subject to certain restrictionsimposed by federal law on extensions of credit to the Company, on investmentsin the stock or other securities of the Company and the acceptance of the stockor other securities of the Company as collateral for loans made by the Bank.Certain limitations and reporting requirements are also placed on extensions ofcredit by the Bank to its directors and officers, to the directors and officersof the Company, to principal stockholders of the Company, and to “relatedinterests” of such directors, officers and principal stockholders.  In addition, federal law and regulations mayaffect the terms upon which any person who is a director or officer of theCompany or the Bank or a principal stockholder of the Company may obtain creditfrom banks with which the Bank maintains correspondent relationships.

 

***Safety and Soundness Standards.***  Thefederal banking agencies have adopted guidelines that establish operational andmanagerial standards to promote the safety and soundness of federally insureddepository institutions.  The guidelinesset forth standards for internal controls, information systems, internal auditsystems, loan documentation, credit underwriting, interest rate exposure, assetgrowth, compensation, fees and benefits, 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.  Ifan institution fails to comply with any of the standards set forth in theguidelines, the institution’s primary federal regulator may require theinstitution to submit a plan for achieving and maintaining compliance. If aninstitution fails to submit an acceptable compliance plan, or fails in anymaterial respect to implement a compliance plan that has been accepted by itsprimary federal regulator, the

 

11

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regulator is required to issue anorder directing the institution to cure the deficiency. Until the deficiencycited in the regulator’s order is cured, the regulator may restrict theinstitution’s rate of growth, require the institution to increase its capital,restrict the rates the institution pays on deposits or require the institutionto take any action the regulator deems appropriate under the circumstances.Noncompliance with the standards established by the safety and soundness guidelinesmay also constitute grounds for other enforcement action by the federal bankingregulators, including cease and desist orders and civil money penaltyassessments.

 

***Branching Authority.*** National banks headquartered in Kansas, such asthe Bank, have the same branching rights in Kansas as banks chartered underKansas law, subject to OCC approval. Kansas law grants Kansas-chartered banks the authority to establishbranches anywhere in the State of Kansas, subject to receipt of all requiredregulatory approvals.

 

**S**tate and national banks are allowed to establishinterstate branch networks through acquisitions of other banks, subject tocertain conditions, including limitations on the aggregate amount of depositsthat may be held by the surviving bank and all of its insured depositoryinstitution affiliates.  Theestablishment of new interstate branches or the acquisition of individualbranches of a bank in another state (rather than the acquisition of anout-of-state bank in its entirety) is allowed only if specifically authorizedby state law.  Kansas law permitsinterstate bank mergers subject to certain conditions.

 

***Financial Subsidiaries. ***UnderFederal law and OCC regulations, national banks are authorized to engage,through “financial subsidiaries,” in any activity that is permissible for afinancial holding company and any activity that the Secretary of the Treasury,in consultation with the Federal Reserve, determines is financial in nature orincidental to any such financial activity, except (i) insurance underwriting,(ii) real estate development or real estate investment activities (unlessotherwise permitted by law), (iii) insurance company portfolio investments and(iv) merchant banking.  The authority ofa national bank to invest in a financial subsidiary is subject to a number ofconditions, including, among other things, requirements that the bank must bewell-managed and well-capitalized (after deducting from capital the bank’soutstanding investments in financial subsidiaries).  The Bank has neither applied for nor received approval toestablish any financial subsidiaries.

 

***Federal Reserve System.***  FederalReserve regulations, 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 transaction accounts aggregating $42.1million or less, the reserve requirement is 3% of total transaction accounts;and for transaction accounts aggregating in excess of $42.1 million, thereserve requirement is $1.083 million plus 10% of the aggregate amount of totaltransaction accounts in excess of $42.1 million.  The first $6.0 million of otherwise reservable balances areexempted from the reserve requirements. These reserve requirements are subject to annual adjustment by theFederal Reserve.  The Bank is incompliance with the foregoing requirements.

 

**STATISTICAL DATA**

 

The statistical data required by Guide 3 of the Guidesfor Preparation and Filing of Reports and Registration Statements under theSecurities Exchange Act of 1934 is set forth in the following pages.  This data should be read in conjunction withthe consolidated financial statements, related

 

12

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notesand “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” as set forth in the Company’s 2002 Annual Report to Stockholders(attached hereto as Exhibit 13.1).  Alldollars in the tables are expressed in thousands.

 

13

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**I.**              **Distribution of Assets, Liabilities, andStockholders’ Equity; Interest Rates and Interest Differentials**

 

The average balance sheets are incorporated byreference from the Company’s 2002 Annual Report to Stockholders (attached asExhibit 13.1).  The following tabledescribes the extent to which changes in interest income and interest expensefor major components of interest-earning assets and interest-bearingliabilities affected the Company’s interest income and expense during theperiods indicated.  The tabledistinguishes 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 attributableto the combined effect of volume and rate, which cannot be segregated, havebeen allocated proportionately to the change due to volume and the change dueto rate.

 
|                  |   | **December 2002 vs September 2001  Increase/(Decrease) Attributable to** |    | **December 2001 vs December 2000  Increase/(Decrease) Attributable to** |   | **September 2001 vs September 2000  Increase/(Decrease) Attributable to** |   |
|-----------------------|--------|--------------------------------------------------------------------------|---------|-------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|
|                  |   | **Volume**                                                               |    | **Rate**                                                                |   | **Net**                                                                   |   | **Volume** |   | **Rate** |   | **Net** |   | **Volume** |   | **Rate** |   | **Net** |   |
|                  |   | **(Dollars in thousands)**                                               |    | **(Dollars in thousands)**                                              |   | **(Dollars in thousands)**                                                |   |
| Interest income:      |   |                                                                     |    |                                                                    |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment securities |   | $                                                                        | 132     |                                                                    | $      | (68                                                                       | )      | $ | 64 |   | $ | (316 | ) | $ | 175 |   | $ | (141 | ) | $ | (448 | ) | $ | (152 | ) | $ | (600 | ) |
| Loans                 |   | 4,544                                                                    |    | (1,485                                                                  | )      | 3,059                                                                     |   | 1,209 |   | (329 | ) | 880 |   | (1,696 | ) | 504 |   | (1,192 | ) |
| Total                 |   | 4,676                                                                    |    | (1,553                                                                  | )      | 3,123                                                                     |   | 893 |   | (154 | ) | 739 |   | (2,144 | ) | 352 |   | (1,792 | ) |
| Interest expense:     |   |                                                                     |    |                                                                    |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits              |   | $                                                                        | (24,840 | )                                                                       | $      | 22,832                                                                    |   | $ | (2,008 | ) | $ | 33 |   | $ | (19 | ) | $ | 14 |   | $ | 47 |   | $ | 394 |   | $ | 441 |   |
| Other borrowings      |   | (408                                                                     | )       | (382                                                                    | )      | (790                                                                      | )      | (169 | ) | (248 | ) | (417 | ) | (1,692 | ) | (69 | ) | (1,761 | ) |
| Total                 |   | (25,248                                                                  | )       | 22,450                                                                  |   | (2,798                                                                    | )      | (136 | ) | (267 | ) | (403 | ) | (1,645 | ) | 325 |   | (1,320 | ) |
| Net interest income   |   | $                                                                        | 29,924  |                                                                    | $      | (24,003                                                                   | )      | $ | 5,921 |   | $ | 1,029 |   | $ | 113 |   | $ | 1,142 |   | $ | (499 | ) | $ | 27 |   | $ | (472 | ) |

 

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**II.  Investment Portfolio**

 

***Investment Securities****.*  The following table sets forth the carryingvalue of the Company’s investment securities at the dates indicated.  None of the investment securities held as ofDecember 31, 2002 was issued by an individual issuer in excess of 10% of theCompany’s stockholders’ equity, excluding the securities of U.S. government and federal agency obligations.

 

 
|                                      |   | **At  December 31,**        |   | **At  September 30,** |   |
|-------------------------------------------|--------|-----------------------------|--------|-----------------------|--------|
|                                      |   | **2002**                    |   | **2001**              |   | **2001** |   | **2000** |   |
|                                      |   | **(Dollars  in thousands)** |   |
| Investments Held to Maturity:             |   |                        |   |                  |   |   |   |   |   |
| U.S. Agency Securities                    |   | $                           | — |                  | $      | — |   | $ | — |   | $ | 27,482 |   |
| Municipal Obligations                     |   | —                      |   | —                |   | — |   | 1,185 |   |
| Mortgage-backed securities                |   | —                      |   | —                |   | — |   | 10,112 |   |
| Total Investments Held toMaturity         |   | —                      |   | —                |   | — |   | 38,779 |   |
|                                      |   |                        |   |                  |   |   |   |   |   |
| Investment Securities Available-for-Sale: |   |                        |   |                  |   |   |   |   |   |
| U.S. Agency Securities                    |   | 12,656                      |   | 12,768                |   | 8,508 |   | 1,952 |   |
| Municipal Obligations                     |   | 13,179                      |   | 11,948                |   | 1,019 |   | — |   |
| Mortgage-backed securities                |   | 58,107                      |   | 44,773                |   | 15,892 |   | — |   |
| FHLB Stock                                |   | 2,521                       |   | 3,425                 |   | 3,598 |   | 3,800 |   |
| Common Stock                              |   | 1,475                       |   | 1,455                 |   | 1,444 |   | 3,644 |   |
| FRB Stock                                 |   | 805                         |   | 288                   |   | — |   | — |   |
| Corporate Notes and Bonds                 |   | 101                         |   | 204                   |   | 198 |   | 182 |   |
| Other investments                         |   | 452                         |   | 450                   |   | 230 |   | 291 |   |
| Total Investments Available-for-Sale      |   | $                           | 89,296 |                  | $      | 75,311 |   | $ | 30,889 |   | $ | 9,869 |   |
| Total Investments                         |   | $                           | 89,296 |                  | $      | 75,311 |   | $ | 30,889 |   | $ | 48,648 |   |

 

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The following table sets forth certain information regarding thecarrying values, weighted average yields, and maturities of the Company’sinvestment securities portfolio as of December 31, 2002.  Yields on tax-exempt obligations have notbeen computed on a tax equivalent basis. The table includes scheduled principal payments and estimatedprepayments.

 
|                                    |   | **As of  December 31, 2002** |   |
|-----------------------------------------|--------|------------------------------|--------|
|                                    |   | **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 |   | $                            | 3,041  |   | 6.01% |   | $ | 9,615 |   | 5.96% |   | $ | — |   | —% |   | $ | — |   | —% |   | $ | 12,656 |   | 5.97% |   |
| Municipal  obligations                  |   | 3,133                        |   | 4.15 |   | 9,538 |   | 4.61 |   | 508 |   | 4.95 |   | — |   | — |   | 13,179 |   | 4.51 |   |
| Mortgage-backed  securities             |   | 27,339                       |   | 2.65 |   | 27,765 |   | 5.06 |   | 1,692 |   | 6.00 |   | 1,311 |   | 4.80 |   | 58,107 |   | 4.16 |   |
| Corporate bonds                         |   | —                       |   | — |   | 51 |   | 11.00 |   | — |   | — |   | 50 |   | 9.00 |   | 101 |   | 10.00 |   |
| Total                                   |   | $                            | 33,513 |   | 4.60% |   | $ | 46,969 |   | 5.15% |   | $ | 2,200 |   | 6.18% |   | $ | 1,361 |   | 4.80% |   | $ | 84,043 |   | 4.95% |   |

 

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**III.****                                 LoanPortfolio**

***Loan Portfolio Composition****.*  The following table sets forth the compositionof the loan portfolio by type of loan at the dates indicated.

 
|                                 |   | **December 31,**           |    | **December 31,**      |       | **September 30,** |       |
|--------------------------------------|--------|----------------------------|---------|-----------------------|------------|-------------------|------------|
|                                 |   | **2002**                   |    | **2001**              |       | **2001**          |       | **2000** |   | **1999** |   | **1998** |   |
|                                 |   | **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       |   | $                          | 106,341 |                  | 46.4       | %                 | $          | 135,179 |   | 56.1 | % | $ | 118,087 |   | 81.7 | % | $ | 166,772 |   | 87.1 | % | $ | 148,329 |   | 83.4 | % | $ | 142,149 |   | 81.4 | % |
| Commercial                           |   | 62,207                     |    | 27.2                  |       | 48,818            |       | 20.3 |   | 10,084 |   | 7.0 |   | 9,331 |   | 4.9 |   | 9,050 |   | 5.1 |   | 4,937 |   | 2.8 |   |
| Construction                         |   | 8,969                      |    | 3.9                   |       | 10,799            |       | 4.5 |   | 3,248 |   | 2.2 |   | 858 |   | 0.4 |   | 1,848 |   | 1.0 |   | 1,386 |   | 0.8 |   |
| Commercial loans                     |   | 41,809                     |    | 18.2                  |       | 33,077            |       | 13.7 |   | 7,604 |   | 5.3 |   | 7,034 |   | 3.7 |   | 6,531 |   | 3.7 |   | 8,579 |   | 4.9 |   |
| Consumer loans                       |   | 12,810                     |    | 5.6                   |       | 15,979            |       | 6.6 |   | 6,926 |   | 4.8 |   | 9,050 |   | 4.7 |   | 13,579 |   | 7.6 |   | 19,048 |   | 10.9 |   |
| Gross loans                          |   | 232,136                    |    | 101.3                 |       | 243,852           |       | 101.2 |   | 145,949 |   | 101.0 |   | 193,045 |   | 100.8 |   | 179,337 |   | 100.8 |   | 176,099 |   | 100.8 |   |
|                                 |   |                       |    |                  |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:                                |   |                       |    |                  |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred fees & loans in process |   | 459                        |    | 0.2                   |       | 233               |       | 0.1 |   | 52 |   | 0.0 |   | 154 |   | 0.1 |   | 179 |   | 0.1 |   | 229 |   | 0.1 |   |
| Allowance for loan losses            |   | 2,565                      |    | 1.1                   |       | 2,640             |       | 1.1 |   | 1,424 |   | 1.0 |   | 1,377 |   | 0.7 |   | 1,318 |   | 0.7 |   | 1,137 |   | 0.7 |   |
| Total loans                          |   | $                          | 229,112 |                  | 100.0      | %                 | $          | 240,979 |   | 100.0 | % | $ | 144,473 |   | 100.0 | % | $ | 191,514 |   | 100.0 | % | $ | 177,840 |   | 100.0 | % | $ | 174,733 |   | 100.0 | % |

 

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(1)                                  Includes loans held for sale.

 

17

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The following table sets forth the contractualmaturities of loans at December 31, 2002. The table does not include unscheduled prepayments.

 
|                                    |   | **Less than  1 year**      |   | **2-5 years** |   | **Over  5 years** |   | **Total** |    |
|-----------------------------------------|--------|----------------------------|--------|---------------|--------|-------------------|--------|-----------|---------|
|                                    |   | **(Dollars in thousands)** |   |
| Real estate loans:                      |   |                       |   |          |   |              |   |      |    |
| Residential one-to-four family          |   | $                          | 10,810 |          | $      | 38,027            |   | $         | 57,504  |   | $ | 106,341 |   |
| Commercial                              |   | 12,987                     |   | 23,191        |   | 26,029            |   | 62,207    |    |
| Construction                            |   | 8,100                      |   | 253           |   | 616               |   | 8,969     |    |
| Commercial                              |   | 27,456                     |   | 13,051        |   | 1,302             |   | 41,809    |    |
| Consumer                                |   | 5,903                      |   | 6,566         |   | 341               |   | 12,810    |    |
| Gross loans                             |   | $                          | 65,256 |          | $      | 81,088            |   | $         | 85,792  |   | $ | 232,136 |   |
| Deferred loan fees and loans in process |   |                       |   |          |   |              |   | 459       |    |
| Allowance for loan losses               |   |                       |   |          |   |              |   | 2,565     |    |
| Loans, net                              |   |                       |   |          |   |              |   | $         | 229,112 |   |

 

The following table setsforth, at December 31, 2002, the dollar amount of all loans due after December31, 2003 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 |   | $                          | 40,839 |           | $      | 54,692    |   | $ | 95,531 |   |
| Commercial                     |   | 9,440                      |   | 39,780         |   | 49,220    |   |
| Construction                   |   | 226                        |   | 643            |   | 869       |   |
| Commercial                     |   | 7,473                      |   | 6,880          |   | 14,353    |   |
| Consumer                       |   | 6,172                      |   | 735            |   | 6,907     |   |
| Gross loans                    |   | $                          | 64,150 |           | $      | 102,730   |   | $ | 166,880 |   |

 

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***Nonperforming Assets****.*The following table sets forth information with respect to nonperformingassets, including non-accrual loans and real estate acquired through foreclosureor by deed in lieu of foreclosure (“real estate owned”).  Under the original terms of the Company’snon-accrual loans at December 31, 2002, interest earned on such loans for theyear period ended December 31, 2002 would not have been significantly differentthan reported.

 
|                                               |   | **At December 31,**        |   | **At September 30,** |   |
|----------------------------------------------------|--------|----------------------------|--------|----------------------|--------|
|                                               |   | **2002**                   |   | **2001**             |   | **2001** |   | **2000** |   | **1999** |   | **1998** |   |
|                                               |   | **(Dollars in thousands)** |   |
| Total non-accrual loans                            |   | $                          | 925    |                 | $      | 1,033 |   | $ | 641 |   | $ | 505 |   | $ | 313 |   | $ | 506 |   |
| Accruing loans over 90 days past due               |   | —                     |   | 148                  |   | 145 |   | 634 |   | 180 |   | 182 |   |
| Real estate owned (“REO”)                |   | 402                        |   | 257                  |   | 233 |   | 171 |   | 147 |   | 71 |   |
| Total nonperforming assets                         |   | $                          | 1,327  |                 | $      | 1,438 |   | $ | 1,019 |   | $ | 1,310 |   | $ | 640 |   | $ | 759 |   |
| Total nonperforming loans to total loans, net      |   | 0.4                        | %      | 0.4                  | %      | 0.5 | % | 0.6 | % | 0.3 | % | 0.4 | % |
| Total nonperforming assets to total assets         |   | 0.4                        | %      | 0.4                  | %      | 0.5 | % | 0.5 | % | 0.3 | % | 0.3 | % |
| Allowance for loanlosses to non-  performing loans |   | 277.3                      | %      | 223.5                | %      | 181.2 | % | 120.9 | % | 267.3 | % | 165.3 | % |

 

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

 

The following table sets forth informationwith respect to the Company’s allowance for loan losses at the dates indicated:

 
|                                                                |   | **At  December 31,**        |    | **At  September 30,** |   |
|---------------------------------------------------------------------|--------|-----------------------------|---------|-----------------------|--------|
|                                                                |   | **2002**                    |    | **2001**              |   | **2001** |   | **2000** |   | **1999** |   | **1998** |   |
|                                                                |   | **(Dollars  in thousands)** |    |
|                                                                |   |                        |    |                  |   |   |   |   |   |   |   |   |   |
| Total loans  outstanding                                            |   | $                           | 229,112 |                  | $      | 240,979 |   | $ | 144,473 |   | $ | 191,514 |   | $ | 177,840 |   | $ | 174,733 |   |
|                                                                |   |                        |    |                  |   |   |   |   |   |   |   |   |   |
| Average loans  outstanding                                          |   | $                           | 233,311 |                  | $      | 245,669 |   | $ | 164,165 |   | $ | 184,269 |   | $ | 176,318 |   | $ | 167,490 |   |
|                                                                |   |                        |    |                  |   |   |   |   |   |   |   |   |   |
| Allowance balances  (at beginning of period)                        |   | 2,640                       |    | 1,424                 |   | 1,377 |   | 1,318 |   | 1,137 |   | 969 |   |
| Provision  (credit):                                                |   |                        |    |                  |   |   |   |   |   |   |   |   |   |
| Real estate                                                         |   | —                      |    | —                |   | — |   | — |   | — |   | 75 |   |
| Non real estate                                                     |   | 182                         |    | 33                    |   | 120 |   | 267 |   | 785 |   | 190 |   |
|                                                                |   | 182                         |    | 33                    |   | 120 |   | 267 |   | 785 |   | 265 |   |
| Allowance of  merged bank:                                          |   |                        |    |                  |   |   |   |   |   |   |   |   |   |
| Real estate                                                         |   | —                      |    | 483                   |   | — |   | — |   | — |   | — |   |
| Non real estate                                                     |   | —                      |    | 755                   |   | — |   | — |   | — |   | — |   |
|                                                                |   | —                      |    | 1,238                 |   | — |   | — |   | — |   | — |   |
| Charge-offs:                                                        |   |                        |    |                  |   |   |   |   |   |   |   |   |   |
| Real estate                                                         |   | (17                         | )       | (15                   | )      | (11 | ) | (21 | ) | — |   | (2 | ) |
| Non real estate                                                     |   | (302                        | )       | (49                   | )      | (149 | ) | (331 | ) | (658 | ) | (105 | ) |
|                                                                |   | (319                        | )       | (64                   | )      | (160 | ) | (352 | ) | (658 | ) | (107 | ) |
| Recoveries:                                                         |   |                        |    |                  |   |   |   |   |   |   |   |   |   |
| Real estate                                                         |   | 30                          |    | —                |   | 9 |   | — |   | — |   | 1 |   |
| Non real estate                                                     |   | 32                          |    | 9                     |   | 78 |   | 144 |   | 54 |   | 9 |   |
|                                                                |   | 62                          |    | 9                     |   | 87 |   | 144 |   | 54 |   | 10 |   |
| Net  (charge-offs) recoveries                                       |   | (257                        | )       | (55                   | )      | (73 | ) | (208 | ) | (604 | ) | (97 | ) |
|                                                                |   |                        |    |                  |   |   |   |   |   |   |   |   |   |
| Allowance  balance (at end of period)                               |   | $                           | 2,565   |                  | $      | 2,640 |   | $ | 1,424 |   | $ | 1,377 |   | $ | 1,318 |   | $ | 1,137 |   |
|                                                                |   |                        |    |                  |   |   |   |   |   |   |   |   |   |
| Allowance for  loan losses as a percent of total loans outstanding  |   | 1.12                        | %       | 1.10                  | %      | 0.99 | % | 0.72 | % | 0.74 | % | 0.65 | % |
| Net loans  charged off as a percent of average loans outstanding(1) |   | 0.11                        | %       | 0.09                  | %      | 0.04 | % | 0.11 | % | 0.34 | % | 0.06 | % |

 

----

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

 

20

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The distribution of theCompany’s allowance for losses on loans at the dates indicated and the percentof loans in each category to total loans is summarized in the followingtable.  This allocation reflects management’sjudgment as to risks inherent in the types of loans indicated, but the generalreserves included in the table are not restricted and are available to absorball loan losses.  The amount allocatedin the following table to any category should not be interpreted as an indicationof expected actual charge-offs in that category.

 
|            |   | **At  December 31,**        |   | **At  September 30,** |   |
|-----------------|--------|-----------------------------|--------|-----------------------|--------|
|            |   | **2002**                    |   | **2001**              |   | **2001** |   | **2000** |   |
|            |   | **Amount**                  |   | **%**                 |   | **Amount** |   | **%** |   | **Amount** |   | **%** |   | **Amount** |   | **%** |   |
|            |   | **(Dollars  in thousands)** |   |
| Real estate     |   | $                           | 1,026  |                  | 76.5   | % | $ | 1,188 |   | 79.9 | % | $ | 789 |   | 90.1 | % | $ | 771 |   | 91.7 | % |
| Non real estate |   | 1,539                       |   | 23.5                  |   | 1,452 |   | 20.1 |   | 635 |   | 9.9 |   | 606 |   | 8.3 |   |
| Total           |   | $                           | 2,565  |                  | 100.0  | % | $ | 2,640 |   | 100.0 | % | $ | 1,424 |   | 100.0 | % | $ | 1,377 |   | 100.0 | % |

 

21

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**V.****                                    Deposits**

 

As of December 31, 2002, the aggregate amount outstanding of jumbocertificates of deposit (amounts of $100,000 or more) was $22.7 million.  The following table presents the maturitiesof these time certificates of deposit at December 31, 2002:

 

**(Dollars in thousands)**

 

| 3 months or less                |   | $     | 6,234  |   |
|---------------------------------|--------|-------|--------|--------|
| Over 3 months through 6 months  |   | 6,617 |   |
| Over 6 months through 12 months |   | 4,481 |   |
| Over 12 months                  |   | 5,352 |   |
| Total                           |   | $     | 22,684 |   |

 

**VI.****                                Returnon Equity and Assets**

 
|                        |     | **At or for the****year ended  December 31,** |   | **At or for the****three  months ended  December 31,** |   |     |   |
|-----------------------------|----------|-----------------------------------------------|--------|--------------------------------------------------------|--------|----------|--------|
|                        |     |                                          |   | **At or for the years ended September 30,**            |   |
| **2002**                    | **2001** | **2001**                                      |   | **2000**                                               |   | **1999** |   | **1998** |
|                        |     |                                          |   |                                                   |   |     |   |   |   |   |   |   |   |
| Return on average assets(1) |     | 1.35                                          | %      | (0.72                                                  | )%     | 1.13     | %      | .97 | % | 1.01 | % | 1.03 | % |
| Return on average equity(1) |     | 11.31                                         |   | (6.29                                                  | )      | 10.17    |   | 10.23 |   | 10.09 |   | 7.52 |   |
| Equity to total assets      |     | 12.03                                         |   | 11.50                                                  |   | 13.03    |   | 9.44 |   | 9.18 |   | 11.10 |   |
| Dividend payout ratio       |     | 27.57                                         |   | NM                                                     |   | 25.38    |   | 27.31 |   | 34.18 |   | 39.31 |   |

 

----

NM – not meaningful

(1) Information for the three months endedDecember 31, 2001 is annualized.  TheCompany incurred severance and other nonrecurring costs related to the mergerwith MNB Bancshares in the three months ended December 31, 2001 approximating$2.7 million on a pre-tax basis.  Theannualized return on average assets and average equity, excluding the severanceand other nonrecurring costs were 1.21% and 10.58%, respectively, for the threemonths ended December 31, 2001.

 

22

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

 

The Company owns its main office in Manhattan and seven branch officesand leases 4 branch offices.  TheCompany also leases a parking lot for one of the branch offices owned.

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

 

There are no pending legal proceedings to which the Company or the Bankis a party, other than ordinary routine litigation incidental to the Bank’sbusiness.  While the ultimate outcome ofcurrent legal proceedings cannot be predicted with certainty, it is the opinionof management that the resolution of these legal actions should not have a materialeffect on the Company’s consolidated financial position or results ofoperations.

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

 

No matter was submitted to a vote of security holders during thequarter ended December 31, 2002.

 

**PART II.**

 
| **ITEM  5.** |   | **MARKET  FOR THE COMPANY’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS** |
|--------------|--------|---------------------------------------------------------------------------------|

 

The Company incorporates by reference the information called for byItem 5 of this Form 10-K from the section captioned “Stock Price Information”of the Company’s 2002 Annual Report to Stockholders for the year ended December31, 2002 (attached as Exhibit 13.1).

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

 

The Company incorporates by reference the information called for byItem 6 of this Form 10-K from the sections entitled “Selected Financial andOther Data” and “Management’s Discussion and Analysis of Financial Conditionand Results of Operations” of the Company’s 2002 Annual Report to Stockholdersfor the year ended December 31, 2002 (attached as Exhibit 13.1).

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

 

The Company incorporates by reference the information called for byItem 7 of this Form 10-K from the section entitled “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” of the Company’s2002 Annual Report to Stockholders for the year ended December 31, 2002(attached as Exhibit 13.1).

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

 

The Company incorporates by reference the information called for byItem 8 of this Form 10-K from the Financial Statements set forth in theCompany’s 2002 Annual Report to Stockholders for the year ended December 31,2002 (attached as Exhibit 13.1).

 

23

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

 

Prior to the Merger, Landmark Bancshares, Inc.’s independent auditorwas Regier Carr & Monroe, L.L.P. (“Regier”).  At the time of the Merger, which occurred after LandmarkBancshares, Inc.’s last completed fiscal year, the Company, as the successorcompany to Landmark Bancshares, Inc., engaged KPMG LLP (“KPMG”) as itsindependent auditors for the fiscal year ended September 30, 2001.  The Company notified Regier that theauditor-client relationship had ceased upon effectiveness of the Merger.  The decision to engage KPMG was approved bythe Company’s Board of Directors.  Thereports of Regier on Landmark Bancshares Inc.’s consolidated financialstatements for the fiscal years ended September 30, 2000 and September 30, 1999did not contain an adverse opinion or a disclaimer of opinion, and the reportswere not qualified or modified as to uncertainty, audit scope or accountingprinciples.

 

During the two fiscal years ended September30, 2000, and the interim period of October 1, 2000 through the effective dateof the Merger, there were no disagreements with Regier on any matter ofaccounting principles or practices, financial statement disclosure, or auditingscope or procedure which, if not resolved to the satisfaction of Regier, wouldhave caused Regier to make reference to the matter in their report.

 

In connection with the audits of LandmarkBancshares Inc.’s consolidated financial statements for each of the fiscalyears ended September 30, 2000 and September 30, 1999:

 

(a)                                                       Regierdid not advise that the internal controls necessary for Landmark Bancshares,Inc. to develop reliable financial statements do not exist;

 

(b)                                                      Regierdid not advise Landmark Bancshares, Inc. that information had come to theattention of Regier that had led it to no longer be able to rely on LandmarkBancshares, Inc.’s management representations, or that had made Regierunwilling to be associated with the financial statements prepared by Landmark Bancshares,Inc.’s management; and

 

(c)                                                       Regierdid not advise Landmark Bancshares, Inc. that Regier would need to expandsignificantly the scope of its audit, or that information had come to theattention of Regier during such time period that if further investigated may:

 

(i)                                                         materiallyimpact the fairness or reliability of either a previously issued audit reportor the underlying financial statements, or the financial statements issued orto be issued covering the fiscal period subsequent to the date of the mostrecent financial statements covered by an audit report (including informationthat may prevent it from rendering an unqualified audit report on thosefinancial statements); or

 

(ii)                                                      causeRegier to be unwilling to rely on Landmark Bancshares Inc.’s managementrepresentations or to be associated with Landmark Bancshares, Inc.’sconsolidated financial statements.

 

24

----

 

The Company, as successor toLandmark Bancshares, Inc., entered into an agreement with KPMG that providedfor, among other things, the engagement of KPMG as the independent accountingfirm that will audit the consolidated financial statements of the Company forthe twelve month period ended September 30, 2001, the consolidated financial statementsof the Company for the three month period ended December 31, 2001 and the yearended December 31, 2002, which are filed with this Form 10-K.  During the Company’s fiscal years endedSeptember 30, 2000 and September 30, 1999 and the subsequent period prior toengaging KPMG, the Company (or anyone on the Company’s behalf) did not consultKPMG regarding:

 

(a)                                        eitherthe application of accounting principles to a specified transaction, eithercompleted or proposed; or the type of audit opinion that might be rendered onthe Company’s financial statements; and as such no written report was providedto the Company and no oral advice was provided that the new accountantconcluded was an important factor considered by the Company in reaching adecision as to any accounting, auditing or financial reporting issue, or

 

(b)                                       anymatter that was either the subject of disagreement or a reportable event.

 

**PART III.**

 

**ITEM10.****                                              DIRECTORSAND EXECUTIVE OFFICERS OF THE REGISTRANT**

 

**Directors**

 

The Company incorporates by reference theinformation called for by Item 10 of this Form 10-K regarding directors of theCompany from the section entitled “Election of Directors” of the Company’sProxy Statement for the annual meeting of stockholders to be held May 21, 2003(the “2003 Proxy Statement”).

 

Section 16(a) of the Exchange Act requires that the Company’s executiveofficers, directors and persons who own more than 10% of their Company’s CommonStock file reports of ownership and changes in ownership with the Securitiesand Exchange Commission and with the exchange on which the Company’s shares ofCommon Stock are traded.  Such personsare also required to furnish the Company with copies of all Section 16(a) formsthey file.  Based solely on theCompany’s review of the copies of such forms, the Company is not aware that anyof its directors and executive officers or 10% stockholders failed to complywith the filing requirements of Section 16(a) during 2001.

 

25

----

 

 

**ExecutiveOfficers**

 

The executive officers of the Company, each of whom is also currentlyan executive officer of the Bank and both of whom serve at the discretion ofthe Board of Directors, are identified below:

 
| **Name**             |   | **Age** |   | **Positions with the Company**                                    |
|----------------------|--------|---------|--------|-------------------------------------------------------------------|
|                 |   |    |   |                                                              |
| Patrick L. Alexander |   | 50      |   | President and Chief Executive Officer                             |
|                 |   |    |   |                                                              |
| Mark A. Herpich      |   | 35      |   | Vice President, Secretary, Chief Financial Officer  and Treasurer |

 

The executive officers of the Bank are identified below:

 
| **Name**             |   | **Age** |   | **Positions with the Bank**                          |
|----------------------|--------|---------|--------|------------------------------------------------------|
|                 |   |    |   |                                                 |
| Patrick L. Alexander |   | 50      |   | President and Chief Executive Officer                |
|                 |   |    |   |                                                 |
| Mark A. Herpich      |   | 35      |   | Executive Vice President and Chief Financial Officer |
|                 |   |    |   |                                                 |
| Michael E. Scheopner |   | 41      |   | Executive Vice President, Credit Risk Manager        |
|                 |   |    |   |                                                 |
| Mark J. Oliphant     |   | 50      |   | Market President – Dodge City                   |
|                 |   |    |   |                                                 |
| Dean R. Thibault     |   | 51      |   | Market President - Manhattan                         |

 

**ITEM11.****                                              EXECUTIVECOMPENSATION**

 

The Company incorporates by reference the information called for byItem 11 of this Form 10-K from the section entitled “Executive Compensation” ofthe 2003 Proxy Statement, except for information contained under the headings“Compensation Committee Report on Executive Compensation” and “PerformanceGraph”.

 

**ITEM 12.****                                              SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

 

The Company incorporates by reference the information called for byItem 12 of this Form 10-K from the section entitled “Security Ownership ofCertain Beneficial Owners” of the 2003 Proxy Statement.

 

**Equity Compensation Plan Information**

 

The table below sets forth the following information as of December 31,2002 for (i) all compensation plans previously approved by the Company’sshareholders and (ii) all compensation plans not previously approved by theCompany’s shareholders:

 

26

----

 

(a)                                  thenumber of securities to be issued upon the exercise of outstanding options,warrants and rights; 

 

(b)                                 theweighted-average exercise price of such outstanding options, warrants andrights; 

 

(c)                                  otherthan securities to be issued upon the exercise of such outstanding options,warrants and rights, the number of securities remaining available for futureissuance 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     |   | 2,756                                                                           |   | $                                                             | 16.78  |                                                                  | 162,619 |   |
| Equity compensation plans not approved by security  holders |   | - 0 -                                                                           |   | - 0 -                                                         |   | - 0 -                                                                 |    |
| **Total**                                                   |   | 2,756                                                                           |   | $                                                             | 16.78  |                                                                  | 162,619 |   |

----

(1)                                  Doesnot include options assumed by the Company in 2001 in connection with themerger of Landmark Bancshares, Inc. and MNB Bancshares, Inc. with and into theCompany.  At the time of the merger,there were options issued under the previous Company’s plans, each of which wasapproved by stockholders of the respective company at the time of theiradoption.  All of the options granted underthese plans fully vested at the time of the merger and no additional optionswere available for grant after the merger. As of December 31, 2002, there were options outstanding for anaggregate of 106,518 shares of the Company’s common stock under the prior planswith a weighted average exercise price of $11.85.  Additionally, does not include 16,673 shares which areunallocated under the Company’s employee stock ownership plan.

 

**ITEM13.****                                              CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS**

 

The Company incorporates by reference the information called for byItem 13 of this Form 10-K from the section entitled “Transactions withDirectors, Officers and Associates” of the 2003 Proxy Statement.

 

27

----

 

**ITEM14.**                                              **CONTROLS ANDPROCEDURES**

 

Based upon an evaluation within the 90 days prior tothe filing date of this report, the Company’s Chief Executive Officer andPrincipal Financial Officer concluded that the Company’s disclosure controlsand procedures are effective.  Therehave been no significant changes in the Company’s internal controls or in otherfactors that could significantly affect the Company’s internal controlssubsequent to the date of the evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 

**PART IV**

 

**ITEM 15.****                                              EXHIBITS,FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K**

 

ITEM 15(a)1 and 2. Financial Statements and Schedules

 

 

LANDMARK BANCORP, INC.AND SUBSIDIARIES

LIST OF FINANCIALSTATEMENTS

 

The following audited Consolidated Financial Statements of the Companyand its subsidiaries and related notes and auditors’ report are incorporated byreference from the Company’s 2002 Annual Report to Stockholders (attached asExhibit 13.1).

 

Independent Auditors’ Report

 

Consolidated Balance Sheets - December 31, 2002, and2001, and September 30, 2001

 

Consolidated Statements of Earnings – Year endedDecember 31, 2002, Three-month periods ended December 31, 2001, and 2000, andthe Years Ended September 30, 2001, and 2000

 

Consolidated Statements of Stockholders’ Equity andComprehensive Income – Year ended December 31, 2002, Three-month period endedDecember 31, 2001 and the Years Ended September 30, 2001 and 2000

 

Consolidated Statements of Cash Flows – Year endedDecember 31, 2002, Three-month periods ended December 31, 2001 and 2000 andYears Ended September 30, 2001 and 2000

 

Notes to Consolidated Financial Statements

 

All schedules are omitted because they are not required or are notapplicable or the required information is shown in the financial statementsincorporated by reference or notes thereto.

 

28

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Item 15(a)3.                                   Exhibitsand Reports on Form 8-K

 

The exhibits required by Item 601 of Regulation S-K are included withthis Form 10-K and are listed on the “Index to Exhibits” immediately followingthe signature page.

 

A report on Form 8-K was filed on February 4, 2003 to report theissuance of a press release announcing the Company’s results for the quarterand year ended December 31, 2002 and the declaration of a cash dividend tostockholders.

 

***

Upon written request to the President of the Company, P.O. Box 308,Manhattan, Kansas 66505-0308, copies of the exhibits listed above are availableto stockholders of the Company by specifically identifying each exhibit desiredin the request.  The Company’s filingswith the Securities and Exchange Commission are also available via the Internetat www.sec.gov and www.banklandmark.com.

 

29

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**SIGNATURES**

 

Pursuant to the requirements of Section 13 or 15(d) of the SecuritiesExchange Act of 1934, the Registrant has duly caused this report to be signedon 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 the requirements of the Securities Exchange Act of 1934,this report has been signed below by the following persons on behalf of theRegistrant and in the capacities and on the dates indicated.

 
| **SIGNATURE**            |   |           |   | **TITLE**                                       |
|--------------------------|--------|----------------|--------|-------------------------------------------------|
|                     |   |           |   |                                            |
| /s/ Patrick L. Alexander |   | March 28, 2003 |   | President, Chief Executive Officer and Director |
| Patrick L. Alexander     |   | Date           |   |                                            |
|                     |   |           |   |                                            |
| /s/ Larry L. Schugart    |   | March 28, 2003 |   | Chairman of the Board                           |
| Larry L. Schugart        |   | Date           |   |                                            |
|                     |   |           |   |                                            |
| /s/ Richard A. Ball      |   | March 28, 2003 |   | Director                                        |
| Richard A. Ball          |   | Date           |   |                                            |
|                     |   |           |   |                                            |
| /s/ Brent A. Bowman      |   | March 28, 2003 |   | Director                                        |
| Brent A. Bowman          |   | Date           |   |                                            |
|                     |   |           |   |                                            |
| /s/ Joseph L. Downey     |   | March 28, 2003 |   | Director                                        |
| Joseph L. Downey         |   | Date           |   |                                            |
|                     |   |           |   |                                            |
| /s/ Jim W. Lewis         |   | March 28, 2003 |   | Director                                        |
| Jim W. Lewis             |   | Date           |   |                                            |
|                     |   |           |   |                                            |
| /s/ Jerry R. Pettle      |   | March 28, 2003 |   | Director                                        |
| Jerry R. Pettle          |   | Date           |   |                                            |
|                     |   |           |   |                                            |
| /s/ Susan E. Roepke      |   | March 28, 2003 |   | Director                                        |
| Susan E. Roepke          |   | Date           |   |                                            |
|                     |   |           |   |                                            |
| /s/ C. Duane Ross        |   | March 28, 2003 |   | Director                                        |
| C. Duane Ross            |   | Date           |   |                                            |
|                     |   |           |   |                                            |
| /s/ David H. Snapp       |   | March 28, 2003 |   | Director                                        |
| David H. Snapp           |   | Date           |   |                                            |

 

30

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I, Patrick L. Alexander, ChiefExecutive Officer of Landmark Bancorp, Inc**.**, certify that:

 

1.                                       Ihave reviewed this annual report on Form 10-K of Landmark Bancorp, Inc.;

 

2.                                       Basedon my knowledge, this annual report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this annual report;

 

3.                                       Basedon my knowledge, the financial statements, and other financial informationincluded in this annual report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this annual report;

 

4.                                       Theregistrant’s other certifying officers and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and have:

 

(a) designed suchdisclosure controls and procedures to ensure that material information relatingto the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which thisannual report is being prepared;

 

(b) evaluated theeffectiveness of the registrant’s disclosure controls and procedures as of adate within 90 days prior to the filing date of this annual report (the“Evaluation Date”); and

 

(c) presented inthis annual report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

5.                                       Theregistrant’s other certifying officers and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

(a) allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

(b) any fraud, whether or not material, that involves management orother employees who have a significant role in the registrant’s internalcontrols; and

 

6.                                       Theregistrant’s other certifying officers and I have indicated in this annualreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent todate of their evaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

 

Date:  March 28,  2003

 
|   | /s/ Patrick L. Alexander |   |
|--------|--------------------------|--------|
|   | Patrick L. Alexander     |   |
|   | Chief Executive Officer  |   |

 

31

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I, Mark A. Herpich, Principal Financial Officer of Landmark Bancorp,Inc., certify that:

 

1.                                       Ihave reviewed this annual report on Form 10-K of Landmark Bancorp, Inc.;

 

2.                                       Basedon my knowledge, this annual report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this annual report;

 

3.                                       Basedon my knowledge, the financial statements, and other financial informationincluded in this annual report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this annual report;

 

4.                                       Theregistrant’s other certifying officers and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and have:

 

(a) designed such disclosurecontrols and procedures to ensure that material information relating to theregistrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which thisannual report is being prepared;

 

(b) evaluated the effectiveness of the registrant’sdisclosure controls and procedures as of a date within 90 days prior to thefiling date of this annual report (the “Evaluation Date”); and

 

(c) presented in this annualreport our conclusions about the effectiveness of the disclosure controls andprocedures based on our evaluation as of the Evaluation Date;

 

5.                                       Theregistrant’s other certifying officers and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

(a) all significantdeficiencies in the design or operation of internal controls which couldadversely affect the registrant’s ability to record, process, summarize andreport financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

(b) any fraud, whether ornot material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

 

6.                                       Theregistrant’s other certifying officers and I have indicated in this annualreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent todate of their evaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

 

Date:  March 28,  2003

 
|   | /s/ Mark A. Herpich         |   |
|--------|-----------------------------|--------|
|   | Mark A Herpich              |   |
|   | Principal Financial Officer |   |

 

32

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INDEX TO EXHIBITS

 
| **Exhibit Number** |   | **Description**                                                            |   | **Incorporated  by reference to**                                                                                                                                              |   | **Attached  hereto** |
|--------------------|--------|----------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|
| 3.1                |   | Amended and Restated Certificate of Incorporation                          |   | the registrants 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. 000-3320) |   | o                    |
| 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)                                                                         |   |                 |
| 13.1               |   | 2002 Annual Report to Stockholders                                         |   |                                                                                                                                                                           |   | ý               |
| 21.1               |   | Subsidiaries of the Company                                                |   |                                                                                                                                                                           |   | ý               |
| 23.1               |   | Consent of KPMG LLP                                                        |   |                                                                                                                                                                           |   | ý               |
| 23.2               |   | Consent of Regier Carr & Monroe, L.L.P.                                |   |                                                                                                                                                                           |   | ý               |
| 24.1               |   | Power of Attorney (contained on the Signature page)                        |   |                                                                                                                                                                           |   |                 |
| 99.1               |   | Opinion of Regier Carr & Monroe, L.L.P.                                |   |                                                                                                                                                                           |   | ý               |
| 99.2               |   | Certificate of Chief Executive Officer                                     |   |                                                                                                                                                                           |   | ý               |
| 99.3               |   | Certificate of Principal Financial Officer                                 |   |                                                                                                                                                                           |   | ý               |

 

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