**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

** **

**FORM 10-Q**

** **

**x**                              QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF

**THESECURITIES EXCHANGE ACT OF 1934**

** **

**For the quarterly periodended June 30, 2006**

** **

**OR**

** **

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

**SECURITIESEXCHANGE ACT OF 1934**

** **

**For transition periodfrom          to          **

** **

**Commission File Number0-33203**

** **

**LANDMARK BANCORP, INC.**

(Exact name of Registrant asspecified in its charter)

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

 

 

 
| **701 Poyntz Avenue, Manhattan, Kansas**  | **66502**  |
|-------------------------------------------|------------|
| (Address of  principal executive offices) | (Zip Code) |

** **

**(785) 565-2000**(Registrant’stelephone number, including area code)

 

Indicate by check markwhether the Registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the Registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.  Yes x   No o

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

Large accelerated filer o                    Acceleratedfiler o              Non-acceleratedfiler x

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

Indicate the number ofshares outstanding of each of the Registrant’s classes of common stock as ofthe latest practicable date:  As of July31, 2006, the Registrant had outstanding 2,229,258 shares of its common stock,$.01 par value per share.

 

 

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** **

**LANDMARK BANCORP,INC.Form 10-Q Quarterly Report**

**Table ofContents**
| **PART I**                |
|---------------------------|
|                      |   |   |   |   |
| Item 1.                   |   | Financial Statements and Related Notes |   |   |
| Item 2.                   |   | Management’s  Discussion and Analysis of Financial Condition |   |   |
|                      |   | and Results of  Operations |   |   |
| Item 3.                   |   | Quantitative  and Qualitative Disclosures about |   |   |
|                      |   | Market Risk |   |   |
| Item 4.                   |   | Controls and  Procedures |   |   |
| ** **                |
| **PART  II**              |
|                      |   |   |   |   |
| Item 1.                   |   | Legal Proceedings |   |   |
| Item  1A.                 |   | Risk  Factors |   |   |
| Item 2.                   |   | Unregistered  Sales of Equity Securities and |   |   |
|                      |   | Use of Proceeds |   |   |
| Item 3.                   |   | Defaults Upon  Senior Securities |   |   |
| Item 4.                   |   | Submission of Matters  to a Vote of |   |   |
|                      |   | Security  Holders |   |   |
| Item 5.                   |   | Other Information |   |   |
| Item  6.                  |   | Exhibits |   |   |
|                      |   |   |   |   |
| Form 10-Q  Signature Page |

 

1

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**LANDMARKBANCORP, INC. AND SUBSIDIARYCONDENSED CONSOLIDATED BALANCE SHEETS**
| ** **                                               | ** ** | **June 30,** | ** **  | **December 31,** | ** ** |
|----------------------------------------------------------|------------|-------------------|-------------|-----------------------|------------|
| ** **                                               | ** ** | **2006**          | ** **  | **2005**              | ** ** |
| **ASSETS**                                               | ** ** | **(Unaudited)**   | ** **  | ** **            | ** ** |
| Cash  and cash equivalents                               |       | $                 | 13,832,885  |                  | $          | 21,490,512 |   |
| Investment  securities available for sale, at fair value |       | 134,557,744       |        | 140,130,512           |       |
| Loans,  net                                              |       | 392,953,154       |        | 274,565,855           |       |
| Loans  held for sale                                     |       | 4,137,150         |        | 1,163,211             |       |
| Premises  and equipment, net                             |       | 12,992,315        |        | 8,412,235             |       |
| Goodwill                                                 |       | 13,009,167        |        | 7,535,584             |       |
| Other  intangible assets, net                            |       | 4,512,120         |        | 2,418,213             |       |
| Accrued  interest and other assets                       |       | 17,582,041        |        | 9,393,839             |       |
|                                                     |       |              |        |                  |       |
| Total assets                                             |       | $                 | 593,576,576 |                  | $          | 465,109,961 |   |
|                                                     |       |              |        |                  |       |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**           |       |              |        |                  |       |
| Liabilities:                                             |       |              |        |                  |       |
| Deposits                                                 |       | $                 | 429,796,665 |                  | $          | 331,272,731 |   |
| Federal Home Loan Bank borrowings                        |       | 80,317,370        |        | 63,212,318            |       |
| Other borrowings                                         |       | 30,552,178        |        | 22,046,000            |       |
| Accrued expenses, taxes and other liabilities            |       | 7,223,297         |        | 4,506,305             |       |
| Total liabilities                                        |       | 547,889,510       |        | 421,037,354           |       |
|                                                     |       |              |        |                  |       |
| Stockholders’  equity:                              |       |              |        |                  |       |
| Common stock, $0.01 par, 5,000,000 shares authorized,    |       |              |        |                  |       |
| 2,244,994 and 2,244,327 shares issued, respectively      |       | 22,450            |        | 22,443                |       |
| Additional paid-in capital                               |       | 19,943,097        |        | 19,868,567            |       |
| Retained earnings                                        |       | 27,581,301        |        | 25,322,019            |       |
| Accumulated other comprehensive loss                     |       | (1,445,268        | )           | (725,908              | )          |
| Treasury stock, at cost; 15,736 shares                   |       | (414,514          | )           | (414,514              | )          |
| Total stockholders’ equity                          |       | 45,687,066        |        | 44,072,607            |       |
|                                                     |       |              |        |                  |       |
| Total  liabilities and stockholders’ equity         |       | $                 | 593,576,576 |                  | $          | 465,109,961 |   |

*See accompanying notes to condensed consolidatedfinancial statements.*

2

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**LANDMARK BANCORP,INC. AND SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF EARNINGS**(Unaudited)
| ** **                                 | ** ** | **Three Months Ended June 30,** | ** ** |
|--------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                 | ** ** | **2006**                                            | ** ** | **2005** | ** ** |
| Interest  income:                          |       |                                                |       |   |   |
| Loans                                      |       | $                                                   | 6,860,807  |   | $ | 4,288,778 |   |
| Investment securities                      |       | 1,455,327                                           |       | 1,121,711 |   |
| Other                                      |       | 30,108                                              |       | 40,175 |   |
| Total interest income                      |       | 8,346,242                                           |       | 5,450,664 |   |
|                                       |       |                                                |       |   |   |
| Interest  expense:                         |       |                                                |       |   |   |
| Deposits                                   |       | 2,616,379                                           |       | 1,355,432 |   |
| Borrowed funds                             |       | 1,182,976                                           |       | 874,884 |   |
| Total interest expense                     |       | 3,799,355                                           |       | 2,230,316 |   |
|                                       |       |                                                |       |   |   |
| Net interest income                        |       | 4,546,887                                           |       | 3,220,348 |   |
|                                       |       |                                                |       |   |   |
| Provision  for loan losses                 |       | 15,000                                              |       | 105,000 |   |
|                                       |       |                                                |       |   |   |
| Net interest income after                  |       |                                                |       |   |   |
| provision for loan losses                  |       | 4,531,887                                           |       | 3,115,348 |   |
|                                       |       |                                                |       |   |   |
| Non-interest  income:                      |       |                                                |       |   |   |
| Fees and service charges                   |       | 1,128,463                                           |       | 892,928 |   |
| Gains on sale of loans                     |       | 322,983                                             |       | 205,818 |   |
| Gains (losses) on sale of investments, net |       | (443,797                                            | )          | 40,540 |   |
| Gains on sale of other assets              |       | 681,630                                             |       | — |   |
| Bank owned life insurance                  |       | 112,300                                             |       | 20,287 |   |
| Other                                      |       | 139,746                                             |       | 117,447 |   |
| Total non-interest income                  |       | 1,941,325                                           |       | 1,277,020 |   |
|                                       |       |                                                |       |   |   |
| Non-interest  expense:                     |       |                                                |       |   |   |
| Compensation and benefits                  |       | 2,112,612                                           |       | 1,505,144 |   |
| Occupancy and equipment                    |       | 687,102                                             |       | 484,108 |   |
| Data processing                            |       | 187,543                                             |       | 141,237 |   |
| Amortization of intangibles                |       | 259,679                                             |       | 86,932 |   |
| Professional fees                          |       | 126,349                                             |       | 98,913 |   |
| Advertising                                |       | 111,219                                             |       | 97,007 |   |
| Other                                      |       | 732,650                                             |       | 597,588 |   |
| Total non-interest expense                 |       | 4,217,154                                           |       | 3,010,929 |   |
|                                       |       |                                                |       |   |   |
| Earnings before income taxes               |       | 2,256,058                                           |       | 1,381,439 |   |
|                                       |       |                                                |       |   |   |
| Income  tax expense                        |       | 659,968                                             |       | 431,775 |   |
|                                       |       |                                                |       |   |   |
| Net earnings                               |       | $                                                   | 1,596,090  |   | $ | 949,664 |   |
|                                       |       |                                                |       |   |   |
| Earnings  per share:                       |       |                                                |       |   |   |
| Basic                                      |       | $                                                   | 0.72       |   | $ | 0.43 |   |
| Diluted                                    |       | $                                                   | 0.71       |   | $ | 0.43 |   |
|                                       |       |                                                |       |   |   |
| Dividends per share                        |       | $                                                   | 0.1700     |   | $ | 0.1619 |   |

*See accompanying notes to condensed consolidated financial statements.*

3

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**LANDMARK BANCORP,INC. AND SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF EARNINGS(Unaudited)**
| ** **                                  | ** ** | **Six Months Ended June 30,** | ** ** |
|---------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                  | ** ** | **2006**                                          | ** ** | **2005** | ** ** |
| Interest income:                            |       |                                              |       |   |   |
| Loans                                       |       | $                                                 | 13,511,515 |   | $ | 8,390,492 |   |
| Investment securities                       |       | 2,870,664                                         |       | 2,158,512 |   |
| Other                                       |       | 101,394                                           |       | 53,245 |   |
| Total interest income                       |       | 16,483,573                                        |       | 10,602,249 |   |
|                                        |       |                                              |       |   |   |
| Interest expense:                           |       |                                              |       |   |   |
| Deposits                                    |       | 5,043,714                                         |       | 2,515,497 |   |
| Borrowed funds                              |       | 2,247,585                                         |       | 1,755,610 |   |
| Total interest expense                      |       | 7,291,299                                         |       | 4,271,107 |   |
|                                        |       |                                              |       |   |   |
| Net interest income                         |       | 9,192,274                                         |       | 6,331,142 |   |
|                                        |       |                                              |       |   |   |
| Provision for loan losses                   |       | 75,000                                            |       | 225,000 |   |
|                                        |       |                                              |       |   |   |
| Net interest income after                   |       |                                              |       |   |   |
| provision for loan losses                   |       | 9,117,274                                         |       | 6,106,142 |   |
|                                        |       |                                              |       |   |   |
| Non-interest income:                        |       |                                              |       |   |   |
| Fees and service charges                    |       | 2,135,335                                         |       | 1,668,954 |   |
| Gains on sale of loans                      |       | 586,364                                           |       | 371,394 |   |
| Gains (losses) on sale of  investments, net |       | (300,256                                          | )          | 40,540 |   |
| Gains on sale of other assets               |       | 728,453                                           |       | 17,211 |   |
| Bank owned life insurance                   |       | 157,654                                           |       | 41,920 |   |
| Other                                       |       | 325,316                                           |       | 197,416 |   |
| Total non-interest income                   |       | 3,632,866                                         |       | 2,337,435 |   |
|                                        |       |                                              |       |   |   |
| Non-interest expense:                       |       |                                              |       |   |   |
| Compensation and benefits                   |       | 4,248,576                                         |       | 2,962,862 |   |
| Occupancy and equipment                     |       | 1,396,022                                         |       | 974,342 |   |
| Data processing                             |       | 348,990                                           |       | 270,233 |   |
| Amortization of intangibles                 |       | 524,172                                           |       | 182,962 |   |
| Professional fees                           |       | 210,726                                           |       | 185,056 |   |
| Advertising                                 |       | 218,737                                           |       | 181,847 |   |
| Other                                       |       | 1,506,785                                         |       | 1,151,869 |   |
| Total non-interest expense                  |       | 8,454,008                                         |       | 5,909,171 |   |
|                                        |       |                                              |       |   |   |
| Earnings before income taxes                |       | 4,296,132                                         |       | 2,534,406 |   |
|                                        |       |                                              |       |   |   |
| Income tax expense                          |       | 1,279,128                                         |       | 781,366 |   |
|                                        |       |                                              |       |   |   |
| Net earnings                                |       | $                                                 | 3,017,004  |   | $ | 1,753,040 |   |
|                                        |       |                                              |       |   |   |
| Earnings per share:                         |       |                                              |       |   |   |
| Basic                                       |       | $                                                 | 1.35       |   | $ | 0.79 |   |
| Diluted                                     |       | $                                                 | 1.35       |   | $ | 0.79 |   |
|                                        |       |                                              |       |   |   |
| Dividends  per share                        |       | $                                                 | 0.3400     |   | $ | 0.3238 |   |

*See accompanying notes to condensed consolidatedfinancial statements.*

4

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**LANDMARK BANCORP,INC. AND SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)**
| ** **                                                           | ** ** | **Six Months Ended June 30,** | ** ** |
|----------------------------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                                           | ** ** | **2006**                                          | ** ** | **2005** | ** ** |
|                                                                 |       |                                              |       |   |   |
| Net cash provided by (used in) operating activities                  |       | $                                                 | (4,193,736 | ) | $ | 3,846,525 |   |
|                                                                 |       |                                              |       |   |   |
| Cash flows from investing activities:                                |       |                                              |       |   |   |
| Net increase in loans                                                |       | (10,573,691                                       | )          | (429,630 | ) |
| Maturities and prepayments of  investments                           |       | 22,388,576                                        |       | 21,712,032 |   |
| Purchase of investment  securities                                   |       | (27,281,977                                       | )          | (27,804,212 | ) |
| Proceeds from sale of  investment securities                         |       | 19,804,823                                        |       | 140,540 |   |
| Net cash paid in FMB  acquisition                                    |       | (8,023,721                                        | )          | — |   |
| Proceeds from sales of  premises and equipment and foreclosed assets |       | 564,923                                           |       | 247,943 |   |
| Purchases of premises and  equipment, net                            |       | (1,979,916                                        | )          | (258,374 | ) |
| Net cash used in investing  activities                               |       | (5,100,983                                        | )          | (6,391,701 | ) |
|                                                                 |       |                                              |       |   |   |
| Cash flows from financing activities:                                |       |                                              |       |   |   |
| Net increase (decrease) in  deposits                                 |       | (8,401,243                                        | )          | 59,891 |   |
| Federal Home Loan Bank advance  borrowings                           |       | —                                            |       | 3,500,000 |   |
| Federal Home Loan Bank advance  repayments                           |       | (1,018,384                                        | )          | (5,018,384 | ) |
| Federal Home Loan Bank line of  credit borrowings, net               |       | 10,000,000                                        |       | 2,400,000 |   |
| Proceeds from other borrowings                                       |       | 6,675,686                                         |       | 2,375,000 |   |
| Repayments on other borrowings                                       |       | (4,873,240                                        | )          | (725,000 | ) |
| Purchase of treasury stock                                           |       | —                                            |       | (531 | ) |
| Proceeds from issuance of  common stock under stock option plans     |       | 9,491                                             |       | 147,566 |   |
| Tax benefit related to stock option  plans                           |       | 2,503                                             |       | 32,541 |   |
| Payment of dividends                                                 |       | (757,721                                          | )          | (717,597 | ) |
| Net cash provided by financing  activities                           |       | 1,637,092                                         |       | 2,053,486 |   |
| Net decrease in cash and cash  equivalents                           |       | (7,657,627                                        | )          | (491,690 | ) |
| Cash and cash equivalents at  beginning of period                    |       | 21,490,512                                        |       | 7,845,438 |   |
| Cash and cash equivalents at  end of period                          |       | $                                                 | 13,832,885 |   | $ | 7,353,748 |   |
|                                                                 |       |                                              |       |   |   |
| Supplemental disclosure of cash flow information:                    |       |                                              |       |   |   |
| Cash paid during period for  interest                                |       | $                                                 | 6,329,000  |   | $ | 3,829,000 |   |
| Cash paid during period for taxes                                    |       | $                                                 | 560,000    |   | $ | — |   |
|                                                                 |       |                                              |       |   |   |
| Supplemental schedule of non-cash investing activities:              |       |                                              |       |   |   |
| Transfer of loans to real  estate owned                              |       | $                                                 | 25,000     |   | $ | 486,000 |   |
| FMB Acquisition:                                                     |       |                                              |       |   |   |
| Fair value of liabilities  assumed                                   |       | 131,988,000                                       |       | — |   |
| Fair value of assets acquired, including goodwill                    |       | 123,964,000                                       |       | — |   |

*See accompanying notes to condensed consolidatedfinancial statements.*

5

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**LANDMARK BANCORP,INC. AND SUBSIDIARYNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**1.      Interim Financial Statements**

The condensed consolidatedfinancial statements of Landmark Bancorp, Inc. (the “Company”) and subsidiaryhave been prepared in accordance with the instructions to Form 10-Q.  To the extent that information and footnotesrequired by U.S. generally accepted accounting principles for completefinancial statements are contained in or consistent with the consolidatedaudited financial statements incorporated by reference in the Company’s Form10-K for the year ended December 31, 2005, such information and footnotes havenot been duplicated herein.  In theopinion of management, all adjustments, consisting of normal recurringaccruals, considered necessary for a fair presentation of financial statementshave been reflected herein.  The December31, 2005, condensed consolidated balance sheet has been derived from theaudited consolidated balance sheet as of that date.  The results of the interim periods ended June30, 2006 are not necessarily indicative of the results expected for the yearending December 31, 2006 and include the results of operations of FirstManhattan Bancorporation, Inc. (“FMB”) beginning on January 1, 2006.

**2.      Acquisition of First ManhattanBancorporation, Inc.**

The Company completed theacquisition of FMB effective January 1, 2006. FMB’s subsidiary thrift was merged into the Company’s wholly-ownedsubsidiary, Landmark National Bank, immediately following the acquisition.  This acquisition expanded our market share inManhattan and further expanded the Company’s presence in higher-growth marketareas.  At December 31, 2005, FMB hadtotal assets of $129 million, including loans and deposits of $109 million and$107 million, respectively.  The Companypaid cash in the amount of $12.9 million for all of the outstanding stock of FMB.  In connection with the acquisition, theCompany recorded a core deposit intangible asset of $2.6 million, which isbeing amortized on an accelerated basis over 10 years.  The acquisition cost in excess of thetangible and identifiable net assets acquired has been recorded as goodwill of$5.5 million, none of which is deductible for tax purposes.  Pro forma information, for the three and sixmonths ended June 30, 2005, as if the acquisition was consummated January 1,2005, is as follows (in thousands, except per share data):

 

|                             | ** ** | **Three months ended   June 30, 2005** | ** ** | **Six months ended   June 30, 2005** | ** ** |
|-----------------------------|------------|-----------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| Interest income             |       | $                                                               | 7,238      |                                                          | $          | 14,086 |   |
| Net earnings                |       | 1,082                                                           |       | 1,910                                                         |       |
| Basic earnings  per share   |       | 0.49                                                            |       | 0.86                                                          |       |
| Diluted earnings per  share |       | 0.49                                                            |       | 0.86                                                          |       |
|                             |            |                                                                 |            |                                                               |            |  |  |

 

6

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**3.      Stock Based Compensation**

In December 2004, TheFinancial Accounting Standards Board issued SFAS No. 123 (revised),Shared-Based Payment (123R).  Therevision disallows the expense recognition alternatives permitted in theoriginal statement and requires entities to recognize stock-based compensationcost in their statements of earnings. The revision contains additional guidance in several areas includingaward modifications and forfeitures, measuring fair value, classifying an awardas equity or as a liability, and attributing compensation cost to reportingperiods.  It also contains additionaldisclosure requirements.  Prior to theadoption of SFAS No. 123R on January 1, 2006, the Company recorded the fairvalue of options issued under the plan as expense in accordance with SFAS No. 123,*Accounting for Stock Based Compensation*.  The Company’s adoption of the revisedStatement on January 1, 2006, did not have a material effect on itsconsolidated financial statements.

The Company has a stockoption plan, the purpose of which is to provide additional incentive to certainofficers, directors, and key employees by facilitating their purchase of astock interest in the Company. The plan is administered by the board ofdirectors who selects employees to whom options are granted and the number ofshares granted. The option price may not be less than 100% of the fair marketvalue of the shares on the date of the grant, and no option shall beexercisable after the expiration of ten years from the grant date. In thecase of any employee who owns more than 10% of the outstanding common stock atthe time the option is granted, the option price may not be less than 110% ofthe fair market value of the shares on the date of the grant, and the optionshall not be exercisable after the expiration of ten years from the grantdate.   The Company intends to utilizeauthorized, but un-issued shares to satisfy option exercises.  The stock-based compensation cost that hasbeen recognized was $63,000 in the first six months of 2006 and $55,000 in thefirst six months of 2005.

In determining compensationcost, the Black-Scholes option-pricing model is used to estimate the fair valueof options on date of grant.  TheBlack-Scholes model is a closed-end model that uses the assumptions outlinedbelow.  Expected volatility is based onhistorical volatility of the Company’s stock and a consideration of otherfactors.  The Company uses historicalexercise behavior and other factors to estimate the expected term of theoptions, which represents the period of time that the options granted areexpected to be outstanding.  Therisk-free rate for the expected term is based on U.S. Treasury rates in effectat the time of grant.  The fair value of eachoption grant is estimated on the date of grant. The fair value of optionsgranted in 2005 were estimated utilizing the following assumptions: dividendrate of 4.8%, volatility of 18.0%, risk-free interest rate of 4.3%, andexpected lives of five years, resulting in a fair value of $3.40 per option atgrant date.  The fair value of optionsgranted in 2006 were estimated utilizing the following assumptions: dividendrate of 5.0%, volatility of 19.1%, risk-free interest rate of 4.9%, andexpected lives of five years, resulting in a fair value of $3.55 per option atgrant date.

7

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A summary of optionactivity during the first six months of 2006 is presented below.

 
| **(Dollars in thousands, except per share data)** | ** ** | **Shares** | ** ** | **Weighted  Average  Exercise  Price** | ** ** | **Weighted  Average  Remaining  Contractual  Term** | ** ** | **Aggregate  Intrinsic  Value** | ** ** |
|---------------------------------------------------------------------------------|------------|------------|------------|----------------------------------------|------------|-----------------------------------------------------|------------|---------------------------------|------------|
| Outstanding at  January 1, 2006                                                 |       | 127,340    |       | $                                      | 23.73      |                                                | 7.38 years |                            | n/a        |   |
| Granted                                                                         |       | 109,025    |       | 27.15                                  |       | —                                              |       | n/a                             |       |
| Cancelled                                                                       |       | —     |       | —                                 |       | —                                              |       | n/a                             |       |
| Exercised                                                                       |       | (667       | )          | 14.23                                  |       | —                                              |       | n/a                             |       |
| Outstanding at  June 30, 2006                                                   |       | 235,698    |       | $                                      | 25.34      |                                                | 8.25 years |                            | $          | 569,000 |   |
| Exercisable at  June 30, 2006                                                   |       | 76,334     |       | $                                      | 22.04      |                                                | 6.35 years |                            | $          | 436,000 |   |
| Vested and expected to  vest at June 30, 2006                                   |       | 226,146    |       | $                                      | 25.27      |                                                | 8.22 years |                            | $          | 561,000 |   |

 

Additional information about stock options exercisedis presented below.

|                                              | ** ** | **Six Months  Ended June 30,** | ** ** |
|----------------------------------------------|------------|-----------------------------------------------|------------|
| **(Dollars in thousands)**         | ** ** | **2006**                                      | ** ** | **2005** | ** ** |
| Intrinsic value  of options exercised        |       | $                                             | 16,852     |   | $ | 243,275 |   |
| Cash received  from options exercised        |       | $                                             | 9,491      |   | $ | 147,469 |   |
| Tax benefit realized  from options exercised |       | $                                             | 2,503      |   | $ | 32,541 |   |

 

As of June 30, 2006,there was $404,000 of total unrecognized compensation cost related to theoptions.  That cost is expected to berecognized over a weighted-average period of 4 years.  The total fair value (at vest date) of sharesvested during the six month periods ended June 30, 2006 and 2005 was $103,000and $93,000 respectively.

**4.     ****Earnings per Share**

Basicearnings per share have been computed based upon the weighted average number ofcommon shares outstanding during each period. Diluted earnings per share include the effect of all potential commonshares outstanding during each period. Earnings and dividends per share for all periods presented have beenadjusted to give effect to the 5% stock dividend paid by the Company inDecember 2005.

The shares used in thecalculation of basic and diluted income per share are shown below:

|                                                     | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|-----------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                          | ** ** | **2006**                                        | ** ** | **2005**                                      | ** ** | **2006** | ** ** | **2005** | ** ** |
| Weighted average  common shares outstanding (basic) |       | 2,228,928                                       |       | 2,217,921                                     |       | 2,228,761 |   | 2,217,025 |   |
| Dilutive stock  options                             |       | 12,362                                          |       | 11,704                                        |       | 9,776 |   | 12,394 |   |
| Weighted average common  shares (diluted)           |       | 2,241,290                                       |       | 2,229,625                                     |       | 2,238,537 |   | 2,229,419 |   |

 

8

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**5.     ****Comprehensive Income**

The Company’s other comprehensive income consists ofthe unrealized holding gains and losses on available-for-sale securities and anunrealized gain on an interest rate swap as shown below.
| ** **                                                                          | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|-------------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                          | ** ** | **2006**                                        | ** ** | **2005**                                      | ** ** | **2006** | ** ** | **2005** | ** ** |
| Net earnings                                                                        |       | $                                               | 1,596,090  |                                          | $          | 949,664 |   | $ | 3,017,004 |   | $ | 1,753,040 |   |
|                                                                                |       |                                            |       |                                          |       |   |   |   |   |
| Change in  unrealized holding(gains)/losses                                         |       | (1,409,756                                      | )          | 715,178                                       |       | (1,506,517 | ) | (105,530 | ) |
| Less — reclassification  adjustment for  gains/(losses) included in net income |       | (443,797                                        | )          | 40,540                                        |       | (300,256 | ) | 40,540 |   |
| Net change in unrealized (gains)/losses on  securities                              |       | (965,959                                        | )          | 674,638                                       |       | (1,206,261 | ) | (146,070 | ) |
| Unrealized  gain/(loss) on interest rate swap                                       |       | 17,000                                          |       | (49,000                                       | )          | 46,000 |   | 9,000 |   |
| Income tax  expense/(benefit)                                                       |       | (360,604                                        | )          | 237,742                                       |       | (440,899 | ) | (52,087 | ) |
| Total  comprehensive income                                                         |       | $                                               | 1,007,735  |                                          | $          | 1,337,560 |   | $ | 2,297,642 |   | $ | 1,668,057 |   |

 

**6.      Other Intangible Assets**

The following table presents information about theCompany’s other intangible assets:
| ** **                             | ** ** | **June 30, 2006** | ** ** | **December 31, 2005** | ** ** |
|----------------------------------------|------------|-----------------------------|------------|---------------------------------|------------|
| ** **                             | ** ** | **Gross  Carrying  Amount** | ** ** | **Accumulated  Amortization**   | ** ** | **Gross  Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** |
| Amortized intangible assets: |       |                        |       |                            |       |   |   |   |   |
| Core deposit premium                   |       | $                           | 5,396,065  |                            | $          | (1,228,525 | ) | $ | 2,818,602 |   | $ | (774,588 | ) |
| Mortgage servicing rights              |       | 791,691                     |       | (447,111                        | )          | 775,666 |   | (401,467 | ) |
| Total                                  |       | $                           | 6,187,756  |                            | $          | (1,675,636 | ) | $ | 3,594,268 |   | $ | (1,176,055 | ) |

 

Aggregate amortizationexpense for the three months ended June 30, 2006 and 2005, was $260,000 and$87,000, respectively.  Aggregateamortization expense for the six months ended June 30, 2006 and 2005, was$524,000 and $183,000, respectively.  Thefollowing depicts estimated amortization expense for the remainder of 2006 andin successive years ending December 31:

| Year | ** ** | **Amount** | ** ** |
|------|------------|------------|------------|
| 2006 |       | $          | 549,000    |   |
| 2007 |       | 972,000    |       |
| 2008 |       | 697,000    |       |
| 2009 |       | 599,000    |       |
| 2010 |       | 500,000    |       |
|      |            |            |            |  |

 

9

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The mortgage servicingrights correspond to loans serviced by the Company for others with outstandingprincipal balances of $105.9 million and $107.2 million at June 30, 2006 andDecember 31, 2005, respectively.  Grossservice fee income related to such loans was $67,000 and $69,000 for the threemonths ended June 30, 2006 and June 30, 2005, respectively, and was $135,000and $139,000 for the six months ended June 30, 2006 and June 30, 2005,respectively.  The income is included infees and service charges in the condensed consolidated statements of earnings.

The following isan analysis of the changes in mortgage servicing rights:

 
| ** **                      | ** ** | **Three Months  Ended June 30,** | ** ** | **Six Months  Ended June 30,** | ** ** |
|---------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                      | ** ** | **2006**                                        | ** ** | **2005**                                      | ** ** | **2006** | ** ** | **2005** | ** ** |
| Balance at  beginning of period |       | $                                               | 356,973    |                                          | $          | 442,786 |   | $ | 374,199 |   | $ | 446,332 |   |
| Additions                       |       | 21,692                                          |       | 10,954                                        |       | 40,616 |   | 51,120 |   |
| Amortization                    |       | (34,085                                         | )          | (37,363                                       | )          | (70,235 | ) | (81,075 | ) |
| Balance at end of  period       |       | $                                               | 344,580    |                                          | $          | 416,377 |   | $ | 344,580 |   | $ | 416,377 |   |

 

**7.      Impact of RecentAccounting Pronouncements**

In February 2006, the FASB issued Statement ofFinancial Accounting Standards No. 155, “Accounting for Certain HybridFinancial Instruments - an amendment of FASB Statements No. 133 and 140”.  The Statement permits fair value remeasurementfor certain hybrid financial instruments containing embedded derivatives, andclarifies the derivative accounting requirements for interest andprincipal-only strip securities and interests in securitized financial assets.It also clarifies that concentrations of credit risk in the form ofsubordination are not embedded derivatives and eliminates a previousprohibition on qualifying special-purpose entities from holding certainderivative financial instruments.  Forcalendar year companies, this statement is effective for all financialinstruments acquired or issued after January 1, 2007.  The Company does not expect that adoption of theStatement will have a material effect on its consolidated financial statements.

InMarch 2006, the FASB issued Statement of Financial Accounting Standards No.156, “Accounting for Servicing of Financial Assets — an amendment of FASBStatement No. 140”. The Statement specifies under what situations servicingassets and servicing liabilities must be recognized. It requires these assetsand liabilities to be initially measured at fair value and specifies acceptablemeasurement methods subsequent to their recognition. Separate presentation inthe financial statements and additional disclosures are also required. Forcalendar year companies, this statement is effective beginning January 1, 2007.The Company does not expect that adoption of the Statement will have a materialeffect on its consolidated financial statements.

10

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Alsoin March 2006, the FASB issued Staff Position 85-4-1, which provides initialand subsequent measurement guidance and financial statement presentation anddisclosure guidance for investments by third-party investors in life settlementcontracts. The investments must be accounted for by either (a) recognizing theinitial investment at transaction price plus direct external costs andcapitalizing continuing costs, with no gain recognized in earnings until theinsured dies, or (b) recognizing the initial investment at transaction priceand remeasuring the investment at fair value at each reporting period, withfair value changes recognized in earnings as they occur. For calendar yearcompanies, the guidance in this staff position must be applied beginningJanuary 1, 2007. The Company does not expect that adoption of the StaffPosition will have a material effect on its consolidated financial statements.

InJune 2006, the FASB issued Interpretation No. 48 (FIN 48), *AccountingFor Uncertainty in Income Taxes*. FIN 48 clarifies the accounting for uncertainty in income taxesrecognized in an enterprise’s financial statements in accordance with FASBStatement No. 109, *Accounting for IncomeTaxes. *This interpretationprescribes a recognition threshold and measurement attribute for the financialstatement recognition and measurement of a tax position taken or expected to betaken in a tax return.  Thisinterpretation is effective for fiscal years beginning after December 15, 2006.  The Company is evaluating any impact that theadoption of this Interpretation may have on the Company’s consolidatedfinancial statements.

**8.     ****Other Events**

The Company has entered into an agreement to constructa new branch location in Topeka, Kansas, which is anticipated to be completedin August 2006.

 

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**ITEM2.  MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*Overview*.  Landmark Bancorp, Inc. is a bank holdingcompany incorporated under the laws of the State of Delaware and is engaged inthe banking business through its wholly-owned subsidiary, Landmark NationalBank.  Landmark Bancorp is listed on theNASDAQ Global Market under the symbol “LARK”. Landmark National Bank is dedicated to providing quality financial andbanking services to its local communities. Landmark National Bank originates commercial, commercial realestate,  one-to-four family residentialmortgage loans, consumer loans, multi-family residential mortgage loans, andhome equity loans.

Effective January 1, 2006we completed our acquisition of FMB, which was a thrift holding company.  Immediately following the acquisition, theCompany merged the thrift into Landmark National Bank.  This acquisition expanded our market share inManhattan and further expanded the Company’s presence in higher-growth marketareas including Lawrence and Junction City, Kansas.  At December 31, 2005, FMB had total assets of$129 million, including loans and deposits of $109 million and $107 million,respectively.  We paid cash in the amountof $12.9 million for all of the outstanding stock of FMB.  In connection with the acquisition, theCompany recorded a core deposit intangible asset of $2.6 million, which isbeing amortized on an accelerated basis over 10 years, and goodwill of $5.5 million,none of which is deductible for tax purposes.

Ourresults of operations depend primarily on net interest income, which is thedifference between interest income from interest-earning assets and interestexpense on interest-bearing liabilities. Net interest income is affected by regulatory, economic and competitivefactors that influence interest rates, loan demand and deposit flows.  In addition, we are subject to interest raterisk to the degree that our interest-earning assets mature or reprice atdifferent times, or at different speeds, than our interest-bearingliabilities.  Our results of operationsare also affected by non-interest income, such as service charges, loan feesand gains and losses from the sale of newly originated loans and investments.  Our principal operating expenses, aside frominterest expense, consist of compensation and employee benefits, occupancycosts, federal deposit insurance costs, data processing expenses and provisionfor loan losses.

We are significantlyimpacted by prevailing economic conditions including federal monetary andfiscal policies and federal regulations of financial institutions.  Deposit balances are influenced by numerousfactors such as competing personal investments, the level of personal incomeand the personal rate of savings within our market areas.  Factors influencing lending activitiesinclude the demand for housing and the interest rate pricing competition fromother lending institutions.

*Critical Accounting Policies.*Critical accounting policies are those which are both most important to theportrayal of our financial condition and results of operations, and require ourmanagement’s most difficult, subjective or complex judgments, often as a resultof the need to make estimates about the effect of matters that are inherentlyuncertain.  Our critical accountingpolicies relate to the allowance for loan losses, the valuation of investmentsecurities, accounting for income taxes and the accounting related to businessacquisitions, all of which involve significant judgment by our management.

12

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Weperform periodic and systematic detailed reviews of our lending portfolio toassess overall collectability.  The levelof the allowance for loan losses reflects our estimate of the collectability ofthe loan portfolio.  While theseestimates are based on substantive methods for determining allowancerequirements, nevertheless, actual outcomes may differ significantly fromestimated results.  Additionalexplanation of the methodologies used in establishing this reserve is providedin the “Asset Quality and Distribution” section.

Wereport our investment securities at estimated fair values based on publishedmarket ascertainable values, which are obtained from independent sources.  We perform periodic reviews of the fair valueof investment securities to determine if any declines in value might beconsidered other than temporary.  Ourmost recent review showed that the decrease in fair value of the securities,resulting in an unrealized loss position, was related to changes in interestrates.  None of the unrealized losses arerelated to credit deterioration.  TheCompany has the ability to hold these securities until market values recover,including up to the maturity date. Although we believe that our estimates of the fair values of investmentsecurities to be reasonable, economic and market factors may affect the amountsthat will ultimately be realized from these investments.

Theobjectives of accounting for income taxes are to recognize the amount of taxespayable or refundable for the current year and deferred tax liabilities andassets for the future tax consequences of events that have been recognized inan entity’s financial statements or tax returns.  Judgment is required in assessing the futuretax consequences of events that have been recognized in our financialstatements or tax returns.  Fluctuationsin the actual outcome of these future tax consequences, including the effectsof IRS examinations and examinations by other state agencies, could materiallyimpact our financial position and results of operations.

Wehave completed several business and asset acquisitions which have generatedsignificant amounts of goodwill and intangible assets and related amortization.The values assigned to goodwill and intangibles, as well as their related usefullives, are subject to judgment and estimation by the Company. Goodwill andintangibles related to acquisitions are determined and based on purchase priceallocations.  Valuation of intangible assets is generally based on theestimated cash flows related to those assets, while the initial value assignedto goodwill is the residual of the purchase price over the fair value of allidentifiable assets acquired and liabilities assumed. If the carrying value ofthe goodwill exceeded the implied fair value of the goodwill, an impairmentloss would be recorded in an amount equal to that excess. Performing such adiscounted cash flow analysis involves the use of estimates andassumptions.  Useful lives are determinedbased on the expected future period of the benefit of the asset, the assessmentof which considers various characteristics of the asset, including thehistorical cash flows.  Due to the number of estimates involved related tothe allocation of purchase price and determining the appropriate useful livesof intangible assets, we have identified purchase accounting as a criticalaccounting policy.

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*Summary of Results*.  Net earnings for the three months ended June30, 2006, increased $646,000, or 68.1%, to $1.6 million as compared to thethree months ended June 30, 2005.  Ourimproved earnings were attributed primarily to our acquisition of FMB alongwith continued improvement in our net interest margin.  The acquisition allowed for continued growthin non-interest income areas such as fees and service charges and gains on saleof loans.  At the same time, we were ableto realize some cost savings associated with the acquisition during the secondquarter of 2006.  In addition, werealized gains on sale of other assets of approximately $682,000, which was partiallyoffset by losses of $444,000 on the sale of investments.

Net earnings for the sixmonths ended June 30, 2006, increased $1.3 million, or 72.1%, to $3.0 millionas compared to the six months ended June 30, 2005.  Our improved earnings were attributedprimarily to our acquisition of FMB along with continued improvement in our netinterest margin.  The acquisition allowedfor continued growth in non-interest income areas such as fees and servicecharges and gains on sale of loans.  Atthe same time, we were able to begin realizing some cost savings associatedwith the acquisition during the first six months of 2006.  In addition, we realized gains on sale ofother assets of approximately $728,000, which was partially offset by losses of$300,000 on the sale of investments.

The three months endedJune 30, 2006 resulted in diluted earnings per share of $0.71 compared to $0.43for the same period in 2005.  Return onaverage assets was 1.07% for the period compared to 0.85% for the same periodin 2005.  Return on average stockholders’equity was 14.05% for the period compared to 8.99% for the same period in 2005.

The six months ended June30, 2006 resulted in diluted earnings per share of $1.35 compared to $0.79 forthe same period in 2005.  Return onaverage assets was 1.02% for the period compared to 0.80% for the same periodin 2005.  Return on average stockholder’sequity was 13.54% for the period compared to 8.35% for the same period in 2005.

The following tablesummarizes net earnings per share and key performance measures for the periodspresented.

 
| ** **                   | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                   | ** ** | **2006**                                        | ** ** | **2005**                                      | ** ** | **2006** | ** ** | **2005** | ** ** |
| Net earnings:                |       |                                            |       |                                          |       |   |   |   |   |
| Basic earnings per share     |       | $                                               | 0.72       |                                          | $          | 0.43 |   | $ | 1.35 |   | $ | 0.79 |   |
| Diluted earnings per share   |       | $                                               | 0.71       |                                          | $          | 0.43 |   | $ | 1.35 |   | $ | 0.79 |   |
| Earnings ratios:             |       |                                            |       |                                          |       |   |   |   |   |
| Return on average assets (1) |       | 1.07                                            | %          | 0.85                                          | %          | 1.02 | % | 0.80 | % |
| Return on average equity (1) |       | 14.05                                           | %          | 8.99                                          | %          | 13.54 | % | 8.35 | % |
| Dividend payout ratio        |       | 23.94                                           | %          | 37.78                                         | %          | 25.19 | % | 40.96 | % |
| Net interest  margin (1)     |       | 3.39                                            | %          | 3.10                                          | %          | 3.42 | % | 3.09 | % |

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(1)             Theratio has been annualized and is not necessarily indicative of the results forthe entire year.

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*Interest Income.*  Interest income for the three months endedJune 30, 2006, increased $2.9 million, or 53.1%, to $8.3 million from $5.4million in the same period of 2005, resulting from increased interest income onboth investment securities and loans. Average loans for the quarter ended June 30, 2006 increased to $393.9million from $279.0 million for the quarter ended June 30, 2005.  The increase in average loans was primarilydue to the $109.4 million in loans acquired in the FMB acquisition.  Additionally, the rise in interest ratesexperienced during the past year contributed to the increased interestincome.  As a result, interest income onloans increased $2.6 million, or 60.0%, to $6.9 million for the quarter endedJune 30, 2006.  Average investmentsecurities increased from $134.7 million for the quarter ended June 30, 2005,to $143.8 million for the quarter ended June 30, 2006.  Corresponding with the increase in averageinvestments for the comparable periods, interest income on investmentsecurities increased $334,000, or 29.7%, to $1.5 million for the second quarterof 2006, as compared to the same period of 2005.  Also contributing to the increased investmentincome was the increase in interest rates, which resulted in yields on ourinvestments purchased during the past year being higher than the yields on ourmaturing investments.

Interestincome for the six months ended June 30, 2006, increased $5.9 million, or55.5%, to $16.5 million from $10.6 million in the same period of 2005,resulting largely from increased interest income on investment securities andloans.  Average loans for the first sixmonths of 2006 increased to $392.3 million from $279.3 million for the sameperiod in 2005.  The increase in averageloans was primarily due to the $109.4 million in loans acquired in the FMBacquisition.  Additionally, the rise ininterest rates experienced during the past year contributed to the increasedinterest income.  As a result, interestincome on loans increased $5.1 million, or 61.0%, to $13.5 million for thefirst six months of 2006.  Averageinvestment securities increased from $132.8 million for the six months endedJune 30, 2005, to $145.9 million for the six months ended June 30, 2006.  Corresponding with the increase in averageinvestments for the comparable periods, interest income on investmentsecurities increased $712,000, or 33.0%, to $2.9 million for the first sixmonths of 2006, as compared to the same period of 2005.  Also contributing to the increased investmentincome was the increase in interest rates, which resulted in yields on ourinvestments purchased during the past year being higher than the yields on ourmaturing investments.

*Interest Expense*.  Interest expense during the three monthsended June 30, 2006, increased $1.6 million, or 70.4%, as compared to the sameperiod of 2005.  For the three monthsended June 30, 2006, interest expense on deposits increased $1.3 million, or93.0%.  The increase in interest expenseon deposits resulted from the addition of approximately $106.8 million indeposits that we acquired through the FMB acquisition on January 1, 2006 andfrom the rise in interest rates and the associated repricing of deposits asthey matured.  Average borrowings for thequarter ended June 30, 2006 increased to $107.3 million from $91.5 million forthe quarter ended June 30, 2005. Corresponding with the increase in average borrowings for the comparableperiods, interest expense on borrowings increased $308,000, or 35.2%.  Also contributing to the increased interestexpense was the increase in interest rates.

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Interestexpense during the six months ended June 30, 2006, increased $3.0 million, or70.7%, as compared to the same period of 2005. For the six months ended June 30, 2006, interest expense on depositsincreased $2.5 million, or 100.5%.  Theincrease in interest expense on deposits resulted from the addition ofapproximately $106.8 million in deposits that we acquired through the FMBacquisition on January 1, 2006 and from the rise in interest rates and theassociated repricing of deposits as they matured.  Average borrowings for the six months endedJune 30, 2006 increased to $103.6 million from $92.9 million for the six monthsended June 30, 2005.  Corresponding withthe increase in average borrowings for the comparable periods, interest expenseon borrowings increased $492,000, or 28.0%. Also contributing to the increased interest expense was the increase ininterest rates.

*Net Interest Income*.  Net interest income for the three monthsended June 30, 2006, totaled $4.5 million, increasing $1.3 million, or 41.2%,as compared to the three months ended June 30, 2005.  This increase resulted primarily from theincreased level of average interest earning assets associated with the January1, 2006 FMB acquisition.  Average earningassets increased during the second quarter of 2006, increasing to $538.5million from $416.6 million for the second quarter of 2005.  Also contributing to the improvement in netinterest income was an increase in our net interest margin.  The net interest margin was 3.39% for thesecond quarter of 2006, up from 3.10% during the second quarter of 2005.

Netinterest income for the six months ended June 30, 2006, totaled $9.2 million,increasing $2.9 million, or 45.2%, as compared to the six months ended June 30,2005.  This increase resulted primarilyfrom the increased level of average interest earning assets associated with theJanuary 1, 2006 FMB acquisition.  Averageearning assets increased during the first six months of 2006, increasing to$541.4 million from $413.3 million for the first six months of 2005.  Also contributing to the improvement in netinterest income was an increase in our net interest margin.  The net interest margin was 3.42% for thefirst six months of 2006, up from 3.09% during the first six months of 2005.

*Provision for Loan Losses*.  We maintain, and our Board of Directorsmonitors, an allowance for losses on loans. The allowance is established basedupon management’s periodic evaluation of known and inherent risks in the loanportfolio, review of significant individual loans and collateral, review ofdelinquent loans, past loss experience, adverse situations that may affect theborrowers’ ability to repay, current and expected market conditions, and otherfactors management deems important. Determining the appropriate level ofreserves involves a high degree of management judgment and is based uponhistorical and projected losses in the loan portfolio and the collateral valueof specifically identified problem loans. Additionally, allowance strategiesand policies are subject to periodic review and revision in response to anumber of factors, including current market conditions, actual loss experienceand management’s expectations.

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Theprovision for loan losses for the three months ended June 30, 2006, was$15,000, compared to a provision of $105,000 during the three months ended June30, 2005.  Our continuous review of theloan portfolio prompted a decrease in our provision primarily as a result ofimprovement in the asset quality of the commercial loan portfolio.  Our review also included the analysis of theFMB loans acquired along with the FMB allowance for loan losses acquired in theamount of $891,000.  One measure of theadequacy of the allowance for estimated losses on loans is the ratio of theallowance to the total loan portfolio. At June 30, 2006, and December 31, 2005, the allowance for loan losseswas $4.0 million and $3.2 million, or 1.0% and 1.1%, respectively, of grossloans outstanding.  The provision forloan losses for the six months ended June 30, 2006, was $75,000 compared to aprovision of $225,000 for the same period in 2005.  For further discussion of the provision forloan losses, refer to the “Asset Quality and Distribution” section.

*Non-interest Income*.  Non-interest income increased $664,000, or52.0%, for the three months ended June 30, 2006, to $1.9 million compared tothe three months ended June 30, 2005. This improvement was primarily the result of a $117,000, or 56.9%,increase of gains on sale of loans, and an increase in fees and service chargesof $236,000, or 26.4%, both of which are attributable to volume increasesassociated with the FMB acquisition. Additionally, total non-interest income included $682,000 in gainsrecognized with the sale of other assets, primarily our previous headquarterslocated at 800 Poyntz, during the second quarter of 2006.  Also contributing to the increasednon-interest income during the second quarter was the increase in bank ownedlife insurance income, which resulted from the purchase of additional policiestotaling $7.5 million in March 2006. Partially offsetting these increases werelosses of $444,000 on the sale of investments as we repositioned our investmentportfolio by selling some relatively short term, lower yielding investments andpurchasing longer term, higher yielding investments.

Non-interestincome increased $1.3 million or 55.4%, for the six months ended June 30, 2006,to $3.6 million compared to the six months ended June 30, 2005.  This improvement was primarily the result ofa $215,000, or 57.9%, increase of gains on sale of loans, and an increase infees and service charges of $466,000, or 27.9%, both of which are attributableto volume increases associated with the FMB acquisition.  Additionally, total non-interest incomeincluded $728,000 in gains recognized with the sale of other assets, primarilyour previous headquarters located at 800 Poyntz. Also contributing to theincreased non-interest income during the first six months of 2006 was theincrease in bank owned life insurance income, which resulted from the purchaseof additional policies totaling $7.5 million in March 2006. Partiallyoffsetting these increases were losses of $300,000 on the sale of investmentsas we repositioned our investment portfolio by selling some relatively shortterm, lower yielding investments and purchasing longer term, higher yieldinginvestments.
| ** **                                 | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|--------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                 | ** ** | **2006**                                        | ** ** | **2005**                                      | ** ** | **2006** | ** ** | **2005** | ** ** |
| Non-interest income:                       |       |                                            |       |                                          |       |   |   |   |   |
| Fees and service charges                   |       | $                                               | 1,128,463  |                                          | $          | 892,928 |   | $ | 2,135,335 |   | $ | 1,668,954 |   |
| Gains on sales of loans                    |       | 322,983                                         |       | 205,818                                       |       | 586,364 |   | 371,394 |   |
| Gains (losses) on sale of investments, net |       | (443,797                                        | )          | 40,540                                        |       | (300,256 | ) | 40,540 |   |
| Gains on sale of other assets              |       | 681,630                                         |       | —                                        |       | 728,453 |   | 17,211 |   |
| Bank owned life insurance                  |       | 112,300                                         |       | 20,287                                        |       | 157,654 |   | 41,920 |   |
| Other                                      |       | 139,746                                         |       | 117,447                                       |       | 325,316 |   | 197,416 |   |
| Total  non-interest income                 |       | $                                               | 1,941,325  |                                          | $          | 1,277,020 |   | $ | 3,632,866 |   | $ | 2,337,435 |   |

 

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*Non-interest Expense*.  Non-interest expense increased $1.2 million,or 40.1%, to $4.2 million for the three months ended June 30, 2006, as comparedto the three months ended June 30, 2005, resulting primarily from the impact ofthe acquisition of FMB on January 1, 2006 and the late August 2005 acquisitionof two branches in Great Bend, Kansas. While we have made significant progress achieving cost savings byconsolidating our personnel, operations and facilities, the impact of theacquisition includes a net increase in personnel, equipment and facilities andthe number of accounts being processed. Accordingly the impact of the acquisition includes increases incompensation and benefits of $607,000, occupancy and equipment of $203,000,amortization of acquired intangibles of $173,000 and data processing costs of$46,000.

Non-interestexpense increased $2.5 million, or 43.1%, to $8.5 million for the six monthsended June 30, 2006, as compared to the six months ended June 30, 2005,resulting primarily from the impact of the acquisition of FMB on January 1,2006 and the late August 2005 acquisition of two branches in Great Bend,Kansas.  While we have made significantprogress achieving cost savings by consolidating our personnel, operations andfacilities, the impact of the acquisition includes a net increase in personnel,equipment and facilities and the number of accounts being processed.  Accordingly the impact of the acquisitionincludes increases in compensation and benefits of $1.3 million, occupancy andequipment of $422,000, amortization of acquired intangibles of $341,000 anddata processing costs of $79,000.

 
| ** **                              | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|-----------------------------------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                              | ** ** | **2006**                                            | ** ** | **2005**                                          | ** ** | **2006** | ** ** | **2005** | ** ** |
| Non-interest expense:                   |       |                                                |       |                                              |       |   |   |   |   |
|  Compensation and benefits         |       | $                                                   | 2,112,612  |                                              | $          | 1,505,144 |   | $ | 4,248,576 |   | $ | 2,962,862 |   |
|  Occupancy and equipment           |       | 687,102                                             |       | 484,108                                           |       | 1,396,022 |   | 974,342 |   |
|  Amortization of intangible assets |       | 259,679                                             |       | 86,932                                            |       | 524,172 |   | 182,962 |   |
|  Professional fees                 |       | 126,349                                             |       |  98,913                                      |       |  210,726 |   |  185,056 |   |
|  Data processing                   |       | 187,543                                             |       | 141,237                                           |       | 348,990 |   | 270,233 |   |
|  Advertising                       |       | 111,219                                             |       | 97,007                                            |       | 218,737 |   | 181,847 |   |
|  Other                             |       | 732,650                                             |       | 597,588                                           |       | 1,506,785 |   | 1,151,869 |   |
| Total non-interest expense              |       | $                                                   | 4,217,154  |                                              | $          | 3,010,929 |   | $ | 8,454,008 |   | $ | 5,909,171 |   |

 

*Income Tax Expense*.  Income tax expense increased $228,000, or52.9%, from $432,000 for the three months ended June 30, 2005, to $660,000 forthe three months ended June 30, 2006. The increase in income tax expense for the three months ended June 30,2006, resulted from the increase in taxable income for the second quarter of2006 as compared to the second quarter of 2005. The effective tax rate for the second quarter of 2006 decreased to 29.3%from 31.3% in the second quarter of 2005 as a result of an increase in theutilization of tax exempt investments.

Incometax expense increased $498,000, or 63.7%, from $781,000 for the six monthsended June 30, 2005, to $1.3 million for the six months ended June 30,2006.  The increase in income tax expensefor the six months ended June 30, 2006, resulted from the increase in taxableincome for the first six months of 2006 as compared to the first six months of2005.  The effective tax rate for thefirst six months of 2006 decreased to 29.8% from 30.8% during the first six monthsof 2005 as a result of an increase in the utilization of tax exemptinvestments.

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*Asset Quality and Distribution*.  Total assets increased to $593.6 million atJune 30, 2006, compared to $465.1 million at December 31, 2005, resulting fromthe FMB acquisition.  Our primary ongoingsources of funds are deposits, proceeds from principal and interest payments onloans and investment securities and proceeds from the sale of mortgage loansand investment securities.  Whilematurities and scheduled amortization of loans are a predictable source of funds,deposit flows and mortgage prepayments are greatly influenced by generalinterest rates, economic conditions, competition, and the restructuring of thefinancial services industry.

Netloans, excluding loans held for sale, increased by $118.4 million to $393.0million during the six months ended June 30, 2006.  This increase was primarily the result of theaddition of $109.4 million in loans in the FMB acquisition.  We have concentrated on generating commercialloans over the past years and are pleased that this segment of our loanportfolio has grown.  While the FMBacquisition increased our one-to-four family residential loan totals, as themajority of the acquired loans were residential, we plan to continue ourefforts to grow our commercial lending activities.

Ourprimary investing activities are the origination of commercial, mortgage,consumer loans and the purchase of investment and mortgage-backedsecurities.  Generally, we originatefixed-rate, residential mortgage loans with maturities in excess of ten yearsfor sale in the secondary market.  We donot originate and warehouse these fixed-rate residential loans for resale inorder to speculate on interest rates.

Theallowance for losses on loans is established through a provision for losses on loansbased on our evaluation of the risk inherent in the loan portfolio and changesin the nature and volume of its loan activity. Such evaluation, which includes a review of all loans with respect towhich full collectibility may not be reasonably assured, considers the fairvalue of the underlying collateral, economic conditions, historical loan lossexperience, level of classified loans and other factors that warrantrecognition in providing for an adequate allowance for losses on loans.  We believe that we use the best informationavailable to determine the allowance for losses on loans, unforeseen marketconditions could result in adjustment to the allowance for losses onloans.  In addition, net earnings could besignificantly affected if circumstances differ substantially from theassumptions used in establishing the allowance for losses on loans.

Asummary of the activity in the allowance for loan losses is as follows:

| Balance at December 31, 2005 |   | $        | 3,151,373 |   |
|------------------------------|--------|----------|-----------|--------|
| Allowance of  acquired bank  |   | 891,374  |      |
| Provision for  loan losses   |   | 75,000   |      |
| Charge-offs                  |   | (121,733 | )         |
| Recoveries                   |   | 52,610   |      |
| Balance at June 30,  2006    |   | $        | 4,048,624 |   |

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Webelieve that the quality of the loan portfolio continues to be strong asevidenced by our low levels of past due and non-accrual loans.  The loans acquired from FMB on January 1,2006 did not have a material impact on our non-accrual loan totals or ourclassified asset ratios as the fair market value of impaired loans acquiredwere recorded in accordance with Statement of Position (SOP) 03-03, *Accounting for Certain Loans and Debt Securities Acquired in a Transfer*.  As of June 30, 2006, loans with a balance of$4.9 million were on non-accrual status, or 1.2% of total loans, compared toloan balances totaling $3.3 million on non-accrual status, or 1.2% of totalloans, as of December 31, 2005.  Thisincrease was primarily related to a $1.2 million commercial loan, which becamepast due for payments in excess of 90 days at June 30, 2006.  Management does not anticipate anysignificant loss exposure on this loan. In addition, the ratio of non-performing assets as a percentage of totalassets remained constant at 0.9% as of December 31, 2005 and June 30, 2006.  Residential home loans comprised 40.5% of the$4.9 million non-accrual balance at June 30, 2006.  These loans have been underwritten accordingto our residential lending policies and are well secured by real estatecollateral, and in many instances, private mortgage insurance or governmentguarantees.  We have historicallyincurred minimal losses on mortgage loans based upon collateral values andunderlying insurance or guarantees.  Weare aggressively pursuing collection activity of these loans which shouldenable the collection of principal.

*Liability Distribution*.  Total deposits increased $98.5 million to$429.8 million at June 30, 2006, from $331.3 million at December 31, 2005.  The amount of deposits acquired in theJanuary 1, 2006 FMB acquisition approximated $106.8 million.  Borrowings increased $25.6 million to $110.9million at June 30, 2006, from $85.3 million at December 31, 2005, resultingfrom borrowings utilized to fund the FMB acquisition, $5 million of FHLBadvances acquired in the FMB acquisition, and additional FHLB line of creditborrowings.

Non-interestbearing demand accounts at June 30, 2006, were $49.2 million, or 11.4% ofdeposits, compared to $38.4 million, or 11.6% of deposits, at December 31,2005.  Certificates of deposit increasedto $216.2 million at June 30, 2006, from $163.1 million at December 31,2005.  Money market and NOW demandaccounts increased to $133.8 million at June 30, 2006, from $103.7 million atDecember 31, 2005, and were 31.1% of total deposits.  Savings accounts increased to $30.6 millionat June 30, 2006, from $26.1 million at December 31, 2005.

Certificatesof deposit at June 30, 2006, which were scheduled to mature in one year orless, totaled $150.0 million. Historically, maturing deposits have generally remained with our bankand we believe that a significant portion of the deposits maturing in one yearor less will remain with us upon maturity.

*ContractualObligations and Commercial Commitments*.  Thefollowing table presents our contractual obligations, defined as operatinglease obligations and principal payments due on non-deposit obligations withmaturities in excess of one year as of June 30, 2006, for the periodsindicated.
| **Contractual Cash   Obligations** | ** ** | **Total**  | ** **  | **One Year  or Less** | ** ** | **One to  Three Years** | ** ** | **Four to  Five Years** | ** ** | **More than  Five Years** | ** ** |
|----------------------------------------------|------------|------------|-------------|---------------------------------|------------|-----------------------------------|------------|-----------------------------------|------------|-------------------------------------|------------|
| Operating leases                             |       | $          | 362,272     |                            | $          | 102,132                           |       | $                                 | 200,664    |                                | $          | 59,476 |   | $ | — |   |
| Service  contracts                           |       | 5,880,000  |        | 1,260,000                       |       | 2,520,000                         |       | 2,100,000                         |       | —                              |       |
| FHLB borrowings                              |       | 80,317,370 |        | 17,900,000                      |       | 34,000,000                        |       | 22,767,500                        |       | 5,649,870                           |       |
| Other borrowings                             |       | 30,552,178 |        | 5,916,178                       |       | 8,140,000                         |       | —                            |       | 16,496,000                          |       |
| Total  contractual obligations               |       | $          | 117,111,820 |                            | $          | 25,178,310                        |       | $                                 | 44,860,664 |                                | $          | 24,926,976 |   | $ | 22,145,870 |   |

 

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*Liquidity*.  Our most liquid assets are cash and cashequivalents and investment securities available for sale.  The levels of these assets are dependent onthe operating, financing, lending and investing activities during any givenperiod.  These liquid assets totaled$148.4 million at June 30, 2006, and $161.6 million at December 31, 2005.  During periods in which we are not able tooriginate a sufficient amount of loans and/or periods of high principalprepayments, we increase our liquid assets by investing in short-term U. S.Government and agency securities or high-grade municipal securities.

Liquiditymanagement is both a daily and long-term function of our strategy.  Excess funds are generally invested inshort-term investments.  In the event werequire funds beyond our ability to generate them internally, additional fundsare generally available through the use of Federal Home Loan Bank advances, aline of credit with the Federal Home Loan Bank or through sales ofsecurities.  At June 30, 2006, we hadoutstanding Federal Home Loan Bank advances of $66.9 million and $13.4 millionborrowed against our line of credit with the Federal Home Loan Bank.  At June 30, 2006, our total borrowingcapacity with the Federal Home Loan Bank was $125.8 million.  We also had other borrowings of $30.6 millionat June 30, 2006, which included $16.5 million of subordinated debentures, $8.2million of long-term debt and $5.9 million in repurchase agreements.

As aprovider of financial services, we routinely issue financial guarantees in theform of financial and performance standby letters of credit. Standby letters ofcredit are contingent commitments issued by us generally to guarantee thepayment or performance obligation of a customer to a third party. While thesestandby letters of credit represent a potential outlay by us, a significantamount of the commitments may expire without being drawn upon. We have recourseagainst the customer for any amount the customer is required to pay to a thirdparty under a standby letter of credit. The letters of credit are subject tothe same credit policies, underwriting standards and approval process as loansmade by us. Most of the standby letters of credit are secured, and in the eventof nonperformance by the customers, we have the right to the underlyingcollateral, which could include commercial real estate, physical plant andproperty, inventory, receivables, cash and marketable securities. The contractamount of these standby letters of credit, which represents the maximumpotential future payments guaranteed by us, was $2.8     million at June 30, 2006.

AtJune 30, 2006, we had outstanding loan commitments, excluding standby lettersof credit, of $62.4 million.  Weanticipate that sufficient funds will be available to meet current loancommitments.  These commitments consistof  unfunded lines of credit andcommitments to finance real estate loans.

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*Capital*.  The Federal Reserve Board has establishedcapital requirements for bank holding companies which generally parallel thecapital requirements for national banks under the Office of the Comptroller ofthe Currency regulations.  Theregulations provide that such standards will generally be applied on aconsolidated (rather than a bank-only) basis in the case of a bank holdingcompany with more than $150 million in total consolidated assets.

AtJune 30, 2006, we continued to maintain a sound leverage ratio of 7.83% and atotal risk based capital ratio of 12.76%. As shown by the following table, our capital exceeded the minimumcapital requirements at June 30, 2006 (dollars in thousands):

 
| **Company**               | ** ** | **Actual   Amount** | ** ** | **Actual   Percent** | ** ** | **Required  Percent** | ** ** | **Required  Amount** | ** ** | ** ** |
|---------------------------|------------|--------------------------|------------|---------------------------|------------|-----------------------|------------|----------------------|------------|------------|
| Leverage                  |       | $                        | 45,633     |                      | 7.83       | %                     | 4.0        | %                    | $          | 23,301     |   |   |
| Tier 1 Capital            |       | $                        | 45,633     |                      | 11.54      | %                     | 4.0        | %                    | $          | 15,816     |   |   |
| Total Risk Based  Capital |       | $                        | 50,467     |                      | 12.76      | %                     | 8.0        | %                    | $          | 31,632     |   |   |

 

At June 30, 2006, Landmark National Bankcontinued to maintain a sound leverage ratio of 9.07% and a total risk basedcapital ratio of 14.37%.  As shown by thefollowing table, the bank’s capital exceeded the minimum capital requirementsat June 30, 2006 (dollars in thousands):

 
| **Landmark National Bank** | ** ** | **Actual Amount** | ** ** | **Actual Percent** | ** ** | **Required  Percent** | ** ** | **Required  Amount** | ** ** |
|--------------------------------------|------------|------------------------|------------|-------------------------|------------|-----------------------|------------|----------------------|------------|
| Leverage                             |       | $                      | 52,646     |                    | 9.07       | %                     | 4.0        | %                    | $          | 23,220 |   |
| Tier 1 Capital                       |       | $                      | 52,646     |                    | 13.35      | %                     | 4.0        | %                    | $          | 15,778 |   |
| Total Risk Based  Capital            |       | $                      | 56,695     |                    | 14.37      | %                     | 8.0        | %                    | $          | 31,557 |   |

 

Banks and bank holding companies are generallyexpected to operate at or above the minimum capital requirements.  The above ratios are well in excess ofregulatory minimums and should allow us to operate without capital adequacyconcerns.  The Federal Deposit InsuranceCorporation Improvement Act of 1991 establishes a bank rating system based onthe capital levels of banks.  As of June30, 2006, wewere rated “well capitalized”, which is thehighest rating available under this capital-based rating system.

 

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**ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUTMARKET RISK**

*Quantitativeand Qualitative Disclosures about Market Risk*.  Ourassets and liabilities are principally financial in nature and the resultingnet interest income thereon is subject to changes in market interest rates andthe mix of various assets and liabilities. Interest rates in the financial markets affect our decision on pricingour assets and liabilities, which impacts net interest income, a significantcash flow source for us.  As a result, asubstantial portion of our risk management activities relates to managinginterest rate risk.

Our Asset/LiabilityManagement Committee monitors the interest rate sensitivity of our balancesheet using earnings simulation models and interest sensitivity gapanalysis.  We have set policy limits ofinterest rate risk to be assumed in the normal course of business and monitorsuch limits through our simulation process.

We have beensuccessful in meeting the interest rate sensitivity objectives set forth in ourpolicy.  Simulation models are preparedto determine the impact on net interest income for the coming twelve months,including one using rates at June 30, 2006, and forecasting volumes for thetwelve-month projection.  This positionis then subjected to a shift in interest rates of 100 and 200 basis pointsrising and falling with an impact to our net interest income on a one yearhorizon as follows:

 
| Scenario                 | ** ** | **$ Change in Net Interest Income** | ** ** | **% of Net Interest Income** | ** ** |
|--------------------------|------------|--------------------------------------------------------------|------------|--------------------------------------------------|------------|
| 100 basis point  rising  |       | (155,000)                                                    |       | (0.8)%                                           |       |
| 200 basis point  rising  |       | (296,000)                                                    |       | (1.6)%                                           |       |
| 100 basis point  falling |       | (283,000)                                                    |       | (1.5)%                                           |       |
| 200 basis point falling  |       | (907,000)                                                    |       | (4.9)%                                           |       |

 

DuringJuly 2006, FHLB convertible advances totaling $20.0 million were converted fromfixed rates to variable rates.  The tablepresented above includes the impact of this conversion on our interest ratesensitivity position.  We believe that noadditional significant changes in our interest rate sensitivity position haveoccurred since June 30, 2006.

*Safe Harbor Statement under the Private SecuritiesLitigation Reform Act of 1995 - Forward-Looking Statements.*  This document contains, and future oral andwritten statements of the Company and its management may contain,forward-looking statements, within the meaning of such term in the PrivateSecurities Litigation Reform Act of 1995, with respect to the financialcondition, results of operations, plans, objectives, future performance andbusiness of the Company.  Forward-lookingstatements, which may be based upon beliefs, expectations and assumptions ofthe Company’s management and on information currently available to management,are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,”“plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” orother similar expressions.  Additionally,all statements in this document, including forward-looking statements, speakonly as of the date they are made, and the Company undertakes no obligation toupdate any statement in light of new information or future events.

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TheCompany’s ability to predict results or the actual effect of future plans orstrategies is inherently uncertain. The factors which could have a materialadverse effect on the operations and future prospects of the Company and itssubsidiaries are detailed in the “Risk Factors” section included under Item 1A.of Part I of our Form 10-K.  In additionto the risk factors described in that section, there are other factors that mayimpact any public company, including ours, which could have a material adverseeffect on the operations and future prospects of the Company and itssubsidiaries.  These risks anduncertainties should be considered in evaluating forward-looking statements andundue reliance should not be placed on such statements.

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**ITEM 4.  CONTROLS ANDPROCEDURES**

Asrequired by Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of1934, management has evaluated, with the participation of our Chief ExecutiveOfficer and Chief Financial Officer, the effectiveness of our disclosurecontrols and procedures as of the end of the period covered by this report.Based on their evaluation, management concluded our disclosure controls andprocedures (as defined in Securities Exchange Act Rules 13a-15(e) and15d-15(e)) were effective as of March 31, 2006 to ensure that informationrequired to be disclosed by us in reports that we file or submit under theSecurities Exchange Act is recorded, processed, summarized and reported within thetime periods specified in Securities and Exchange Commission rules and formsand were effective as of June 30, 2006. These disclosure controls and procedures include controls and proceduresdesigned to ensure that information required to be disclosed by us in thereports that we file or submit under the Securities Exchange Act is accumulatedand communicated to management, including our Chief Executive Officer and ChiefFinancial Officer, or persons performing similar functions, as appropriate toallow timely decisions regarding required disclosure.

Therewere no changes in our internal control over financial reporting that occurredduring the quarter ended June 30, 2006, that have materially affected, or arereasonably likely to materially affect our internal control over financialreporting.

25

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**LANDMARKBANCORP, INC. AND SUBSIDIARYPART II — OTHER INFORMATION**

**ITEM1.  LEGAL PROCEEDINGS**

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

**ITEM 1A.  RISK FACTORS**

Therehave been no material changes in the risk factors applicable to the Companyfrom those disclosed in Part I, Item 1A. “Risk Factors,” in theCompany’s 2005 Annual Report on Form 10-K. Please refer to that section of the Company’s Form 10-K for disclosuresregarding the risks and uncertainties related to the Company’s business.

**ITEM2.  UNREGISTERED SALES OF EQUITYSECURITIES AND USE OF PROCEEDS**

None

**ITEM3.  DEFAULTS UPON SENIOR SECURITIES**

None

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**ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS**

On May 17, 2006,the annual meeting of Landmark Bancorp, Inc. stockholders was held.  At the meeting, Richard A. Ball, Susan E.Roepke, and C. Duane Ross were elected to serve as Class II directors withterms expiring in 2009.  Continuing asClass I directors (term expires in 2008) are Brent A. Bowman, Joseph L. Downey,and David H. Snapp and continuing as Class III directors (term expires in 2007)are Patrick L. Alexander, Jim W. Lewis, Jerry R. Pettle, and LarrySchugart.  The stockholders also ratifiedthe appointment of KPMG LLP as Landmark Bancorp, Inc.’s independent registeredpublic accounting firm for the year ending December 31, 2006.

There were2,228,591 shares of common stock eligible to vote at the annual meeting.  The voting on each item at the annual meetingwas as follows:

 
| ** **      | ** ** | **For**   | ** ** | **Withheld/  Against** | ** ** | **Abstain** | ** ** | **Broker  Non-Votes** | ** ** |
|-----------------|------------|-----------|------------|------------------------|------------|-------------|------------|-----------------------|------------|
| Richard A. Ball |       | 2,007,302 |       | 78,915                 |       | —      |       | —                |       |
| Susan E. Roepke |       | 2,076,632 |       | 9,585                  |       | —      |       | —                |       |
| C. Duane Ross   |       | 2,074,869 |       | 11,348                 |       | —      |       | —                |       |
|            |       |      |       |                   |       |        |       |                  |       |
| KPMG LLP        |       | 2,035,953 |       | 49,429                 |       | 835         |       | —                |       |

 

**ITEM5.  OTHER INFORMATION**

None

**ITEM6.  EXHIBITS**

| Exhibits     |                                                                                                                                                |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                |
| Exhibit 31.1 | Certificate of Chief Executive Officer Pursuant to

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

Rule 13a-14(a)/15d-14(a)                                                                        |
|         |
| Exhibit 32.1 | Certification of Chief Executive Officer Pursuant to  18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 |
| Exhibit 32.2 | Certification of Chief Financial Officer Pursuant to  18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 |

 

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**SIGNATURES**

Pursuantto the requirements of the Securities Exchange Act of 1934, the Registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.
|                      | LANDMARK BANCORP, INC.                |
|----------------------|---------------------------------------|
|                 |                                  |
|                 |                                  |
| Date: August 3, 2006 | /s/ Patrick L. Alexander              |
|                 | Patrick L. Alexander                  |
|                 | President and Chief Executive Officer |
|                 |                                  |
|                 |                                  |
| Date: August 3, 2006 | /s/ Mark A. Herpich                   |
|                 | Mark A. Herpich                       |
|                 | Vice President, Secretary, Treasurer  |
|                 |  and Chief  Financial Officer    |

 

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