Unassociated Document

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

		Page Number

PART I

Item 1.	Financial Statements	2 - 19
Item 2.	Management's Discussion and Analysis of Financial Condition
	and Results of Operations	20 – 28
Item 3.	Quantitative and Qualitative Disclosures about
	Market Risk	28 - 29
Item 4.	Controls and Procedures	30

PART II

Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and
	Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	[Removed and Reserved]	31
Item 5.	Other Information	31
Item 6.	Exhibits	31

Form 10-Q Signature Page		32

(Dollars in thousands)	March 31,		December 31,
	2011		2010
Assets
Cash and cash equivalents	$	10,540	$	9,735
Investment securities:
Available-for-sale, at fair value		181,334		167,689
Other securities		8,197		8,183
Loans, net		309,514		306,668
Loans held for sale		3,351		12,576
Premises and equipment, net		15,038		15,225
Real estate owned		2,912		3,194
Bank owned life insurance		15,718		13,080
Goodwill		12,894		12,894
Other intangible assets, net		2,123		2,233
Accrued interest and other assets		10,114		10,029
Total assets	$	571,735	$	561,506

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing demand	$	59,324	$	52,683
Money market and NOW		179,088		167,815
Savings		35,905		32,369
Time, $100,000 and greater		49,438		49,390
Time, other		125,338		129,057
Total deposits		449,093		431,314

Federal Home Loan Bank borrowings		35,790		44,300
Other borrowings		25,328		26,001
Accrued interest, taxes, and other liabilities		6,946		6,074
Total liabilities		517,157		507,689

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.01 par, 200,000 shares authorized; none issued		-		-
Common stock, $0.01 par, 7,500,000 shares authorized; 2,639,450 and 2,636,891 shares issued at March 31, 2011 and December 31, 2010, respectively		26		26
Additional paid-in capital		27,154		27,102
Retained earnings		26,243		25,767
Accumulated other comprehensive income		1,155		922
Total stockholders’ equity		54,578		53,817

Total liabilities and stockholders’ equity	$	571,735	$	561,506

	Three months ended
(Dollars in thousands, except per share amounts)	March 31,
	2011		2010
Interest income:
Loans:
Taxable	$	4,271	$	4,792
Tax-exempt		86		78
Investment securities:
Taxable		604		794
Tax-exempt		598		627
Other		2		1
Total interest income		5,561		6,292
Interest expense:
Deposits		760		1,039
Borrowings		487		685
Total interest expense		1,247		1,724
Net interest income		4,314		4,568
Provision for loan losses		400		700
Net interest income after provision for loan losses		3,914		3,868
Non-interest income:
Fees and service charges		1,137		1,005
Gains on sales of loans, net		619		511
Bank owned life insurance		144		124
Other		137		125
Total non-interest income		2,037		1,765
Investment securities gains:
Gains on sales of investment securities		-		563
Investment securities gains		-		563
Non-interest expense:
Compensation and benefits		2,374		2,324
Occupancy and equipment		708		719
Professional fees		285		134
Data processing		198		208
Amortization of intangibles		179		179
Federal deposit insurance premiums		175		179
Advertising		159		118
Foreclosure and real estate owned expense		25		182
Other		728		765
Total non-interest expense		4,831		4,808
Earnings before income taxes		1,120		1,388
Income tax expense		142		245
Net earnings	$	978	$	1,143
Earnings per share:
Basic	$	0.37	$	0.44
Diluted	$	0.37	$	0.44
Dividends per share	$	0.19	$	0.18

	Three months ended
(Dollars in thousands)	March 31,
	2011			2010

Net cash provided by (used in) operating activities	$	9,128		$	(2,013	)

Investing activities:
Net increase in loans		(4,387	)		(4,154	)
Maturities and prepayments of investment securities		15,257			8,789
Purchases of investment securities		(28,754	)		(18,058	)
Proceeds from sale of investment securities		-			10,097
Proceeds from sales of foreclosed assets		1,475			142
Purchases of premises and equipment, net		(41	)		(26	)
Net cash used in investing activities		(16,450	)		(3,210	)
Financing activities:
Net increase in deposits		17,779			7,987
Federal Home Loan Bank advance repayments		(10	)		(5,009	)
Change in Federal Home Loan Bank line of credit, net		(8,500	)		-
Other borrowings, net		(673	)		505
Proceeds from issuance of common stock under stock option plans		28			143
Excess tax benefit related to stock option plans		5			31
Payment of dividends		(502	)		(475	)
Net cash provided by financing activities		8,127			3,182
Net increase (decrease) in cash and cash equivalents		805			(2,041	)
Cash and cash equivalents at beginning of period		9,735			12,379
Cash and cash equivalents at end of period	$	10,540		$	10,338

Supplemental disclosure of cash flow information:
Cash (refunds) paid during the period for income taxes	$	(575	)	$	450
Cash paid during the period for interest		1,314			1,838

Supplemental schedule of noncash investing and financing activities:
Transfer of loans to real estate owned	$	1,198		$	2,095

(Dollars in thousands, except per share amounts)	Common stock		Additional paid-in capital		Retained earnings			Treasury stock		Accumulated other comprehensive income			Total
Balance at December 31, 2009	$	25	$	24,844	$	27,523		$	-	$	1,503		$	53,895
Comprehensive income:
Net earnings		-		-		1,143			-		-			1,143
Change in fair value of investment securities available-for-sale, net of tax		-		-		-			-		(312	)		(312	)
Total comprehensive income														831
Dividends paid ($0.18 per share)		-		-		(475	)		-		-			(475	)
Stock based compensation		-		39		-			-		-			39
Exercise of stock options, 14,486 shares, including excess tax benefit of $31		-		174		-			-		-			174
Balance at March 31, 2010	$	25	$	25,057	$	28,191		$	-	$	1,191		$	54,464

Balance at December 31, 2010	$	26	$	27,102	$	25,767		$	-	$	922		$	53,817
Comprehensive income:
Net earnings		-		-		978			-		-			978
Change in fair value of investment securities available-for-sale, net of tax		-		-		-			-		233			233
Total comprehensive income														1,211
Dividends paid ($0.19 per share)		-		-		(502	)		-		-			(502	)
Stock based compensation		-		19		-			-		-			19
Exercise of stock options, 2,559 shares, including excess tax benefit of $5		-		33		-			-		-			33
Balance at March 31, 2011	$	26	$	27,154	$	26,243		$	-	$	1,155		$	54,578

The condensed consolidated financial statements of Landmark Bancorp, Inc. (the “Company”) and subsidiary have been prepared in accordance with the instructions to Form 10-Q. To the extent that information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements are contained in or consistent with the consolidated audited financial statements incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2010, such information and footnotes have not been duplicated herein. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of financial statements have been reflected herein. The December 31, 2010 consolidated balance sheet has been derived from the audited consolidated balance sheet as of that date. The results of the interim period ended March 31, 2011 are not necessarily indicative of the results expected for the year ending December 31, 2011. The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that financial statements are filed for potential recognition or disclosure.

The Company tests goodwill for impairment annually or more frequently if circumstances warrant. The Company’s annual impairment test as of December 31, 2010 concluded that its goodwill was not impaired, however the Company can make no assurances that future impairment tests will not result in goodwill impairments. The Company concluded there were no triggering events during the first quarter of 2011 that required an interim goodwill impairment test.

On May 8, 2009, the Company’s subsidiary, Landmark National Bank, assumed approximately $6.4 million in deposits in connection with a branch acquisition. As part of the transaction, Landmark National Bank agreed to pay a deposit premium of 1.75 percent on the core deposit balance as of 270 days after the close of the transaction. The core deposit premium, based on the acquired core deposit balances, was $86,000. The final core deposit premium, measured on February 2, 2010, was $49,000. The following is an analysis of changes in the Company’s core deposit intangible assets:

	Three months ended March 31,
(Dollars in thousands)	2011					2010
	Fair value at acquisition		Accumulated amortization			Fair value at acquisition			Accumulated amortization
Balance at beginning of period	$	5,445	$	(4,272	)	$	5,482		$	(3,767	)
Additions		-		-			-			-
Adjustments to prior estimates		-		-			(37	)
Amortization		-		(108	)		-			(129	)
Balance at end of period	$	5,445	$	(4,380	)	$	5,445		$	(3,896	)

	Three months ended March 31,
(Dollars in thousands)	2011						2010
	Cost			Accumulated amortization			Cost			Accumulated amortization
Balance at beginning of period	$	1,880		$	(820	)	$	1,447		$	(681	)
Additions		69			-			63			-
Prepayments		(19	)		19			(14	)		14
Amortization		-			(71	)		-			(50	)
Balance at end of period	$	1,930		$	(872	)	$	1,496		$	(717	)

	As of March 31, 2011
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value

U. S. federal agency obligations	$	21,454	$	113	$	(25	)	$	21,542
Municipal obligations, tax exempt		63,441		2,168		(182	)		65,427
Municipal obligations, taxable		4,232		17		(58	)		4,191
Mortgage-backed securities		80,125		829		(398	)		80,556
Common stocks		693		212		(12	)		893
Pooled trust preferred securities		1,125		-		(840	)		285
Certificates of deposit		8,440		-		-			8,440
Total	$	179,510	$	3,339	$	(1,515	)	$	181,334

	As of December 31, 2010
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value

U. S. federal agency obligations	$	22,060	$	147	$	(20	)	$	22,187
Municipal obligations, tax exempt		63,725		1,907		(345	)		65,287
Municipal obligations, taxable		4,232		12		(56	)		4,188
Mortgage-backed securities		60,238		847		(281	)		60,804
Common stocks		693		190		(55	)		828
Pooled trust preferred securities		1,125		-		(889	)		236
Certificates of deposit		14,159		-		-			14,159
Total	$	166,232	$	3,103	$	(1,646	)	$	167,689

Certain of the Company’s investment securities had unrealized losses, or were temporarily impaired, as of March 31, 2011 and December 31, 2010. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date. Securities which were temporarily impaired are shown below, along with the length of the impairment period.

			As of March 31, 2011
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
U. S. federal agency obligations		5	$	4,089	$	(25	)	$	-	$	-		$	4,089	$	(25	)
Municipal obligations, tax exempt		20		7,015		(182	)		-		-			7,015		(182	)
Municipal obligations, taxable		11		3,955		(58	)		-		-			3,955		(58	)
Mortgage-backed securities		20		35,540		(398	)		-		-			35,540		(398	)
Common stocks		3		63		(12	)		-		-			63		(12	)
Pooled trust preferred securities		2		-		-			285		(840	)		285		(840	)
Total		61	$	50,662	$	(675	)	$	285	$	(840	)	$	50,947	$	(1,515	)

			As of December 31, 2010
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
U. S. federal agency obligations		4	$	3,104	$	(20	)	$	-	$	-		$	3,104	$	(20	)
Municipal obligations, tax exempt		28		8,645		(278	)		439		(67	)		9,084		(345	)
Municipal obligations, taxable		10		2,922		(56	)		-		-			2,922		(56	)
Mortgage-backed securities		11		15,331		(281	)		-		-			15,331		(281	)
Common stocks		4		445		(55	)		-		-			445		(55	)
Pooled trust preferred securities		2		-		-			236		(889	)		236		(889	)
Total		59	$	30,447	$	(690	)	$	675	$	(956	)	$	31,122	$	(1,646	)

The Company performs quarterly reviews of the investment portfolio to determine if investment securities have any declines in fair value which might be considered other-than-temporary. The initial review begins with all securities in an unrealized loss position. The Company’s assessment of other-than-temporary impairment is based on the specific facts and circumstances impacting each individual security. The Company reviews and considers all available information, including expected cash flows, the structure of the security, the credit quality of the underlying assets and the current and anticipated market conditions. Any credit-related impairments on debt securities are realized through a charge to earnings. If an equity security is determined to be other-than-temporarily impaired, the entire impairment is realized through a charge to earnings.

The receipt of principal and interest on U.S. federal agency obligations is guaranteed by the respective government-sponsored agency guarantor, such that the Company believes that its U.S. federal agency obligations do not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and that it is more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believes that the U.S. federal agency obligations identified in the tables above were temporarily impaired as of March 31, 2011 and December 31, 2010. The Company’s U.S. federal agency portfolio consists of securities issued by the government-sponsored agencies of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Bank (“FHLB”).

As of March 31, 2011, the Company does not intend to sell and it is more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of its cost. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believes that the municipal obligations identified in the tables above were temporarily impaired as of March 31, 2011 and December 31, 2010.

The receipt of principal, at par, and interest on mortgage-backed securities is guaranteed by the respective government-sponsored agency guarantor, such that the Company believes that its mortgage-backed securities do not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and the Company’s belief that it is more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believes that the mortgage-backed securities identified in the tables above were temporarily impaired as of March 31, 2011 and December 31, 2010. The Company’s mortgage-backed securities portfolio consists of securities underwritten to the standards of and guaranteed by the government-sponsored agencies of FHLMC, FNMA and Government National Mortgage Association (“GNMA”).

As of March 31, 2011, the Company owned three pooled trust preferred securities with an original cost basis of $2.5 million, which represent investments in pools of collateralized debt obligations issued by financial institutions and insurance companies. The market for these securities is considered to be inactive. Two of the Company’s three investments in pooled trust preferred securities, Preferred Term Security (“PreTSL”) VIII and PreTSL IX, have a remaining aggregate cost basis of $1.1 million and non-credit related, unrealized losses of $840,000. The Company used discounted cash flow models on these two securities to assess if the present value of the cash flows expected to be collected was less than the amortized cost, which would result in an other-than-temporary impairment associated with the credit of the underlying collateral. The assumptions used in preparing the discounted cash flow models include the following: estimated discount rates, estimated deferral and default rates on collateral, assumed recoveries, and estimated cash flows including all information available through the date of issuance of these financial statements. The discounted cash flow analysis included a review of all issuers within the collateral pool and incorporated higher deferral and default rates, as compared to historical rates, in the cash flow projections through maturity. The Company also reviewed a stress test of these securities to determine the additional estimated deferrals or defaults in the collateral pool in excess of what the Company believes is likely, before the payments on the individual securities are negatively impacted.

As of March 31, 2011, the analysis of the Company’s PreTSL VIII and PreTSL IX investments indicated that the unrealized losses were not credit-related. The Company performed a discounted cash flow analysis, using the factors noted above to determine the amount of the other-than-temporary impairment that was applicable to either credit losses or other factors. During 2010, the Company’s analysis indicated that its investment in a third pooled trust preferred security, PreTSL XVII, had no value and a credit-related, other-than-temporary impairment charge was recorded for the remaining cost basis of the security. As of March 31, 2011, the Company had recorded credit losses on all three PreTSL securities totaling $1.3 million through charges to earnings during 2010 and 2009.

(Dollars in thousands)								Cumulative
		Moody's	Original		Principal			realized			Cost		Unrealized			Fair
Investment	Class	rating	par		payments			losses			basis		loss			value
PreTSL VIII	B	C	$	1,000	$	-		$	(619	)	$	381	$	(296	)	$	85
PreTSL IX	B	C		1,000		(21	)		(235	)		744		(544	)		200
PreTSL XVII	C	C		500		(11	)		(489	)		-		-			-
Total			$	2,500	$	(32	)	$	(1,343	)	$	1,125	$	(840	)	$	285

It is reasonably possible that the fair values of the Company’s investment securities could decline in the future if the overall economy and/or the financial condition of some of the issuers of these securities deteriorate and/or if the liquidity in markets for these securities declines. As a result, there is a risk that additional other-than-temporary impairments may occur in the future and any such amounts could be material to the Company’s consolidated financial statements. The fair value of the Company’s investment securities may also decline from an increase in market interest rates, as the market prices of these investments move inversely to their market yields.

Other investment securities primarily consist of restricted investments in FHLB and Federal Reserve Bank (“FRB”) stock. The carrying value of the FHLB stock was $6.4 million at March 31, 2011 and December 31, 2010. The carrying value of the FRB stock was $1.8 million at March 31, 2011 and December 31, 2010. These securities are not readily marketable and are required for regulatory purposes and borrowing availability. Since there is no available market values, these securities are carried at cost. Redemption of these investments at par value is at the option of the FHLB or FRB. Also included in other investment securities are $60,000 of other miscellaneous investments in the common stock of various correspondent banks which are held for borrowing purposes. The Company assessed the ultimate recoverability of these investments and believes that no impairment has occurred.

	March 31,			December 31,
	2011			2010
	(Dollars in thousands)
One-to-four family residential real estate	$	77,654		$	79,631
Construction and land		23,703			23,652
Commercial real estate		93,817			92,124
Commercial loans		59,863			57,286
Agriculture loans		36,404			38,836
Municipal loans		8,437			5,393
Consumer loans		13,913			14,385
Total gross loans		313,791			311,307
Net deferred loan costs and loans in process		105			328
Allowance for loan losses		(4,382	)		(4,967	)
Loans, net	$	309,514		$	306,668

(Dollars in thousands)
	Three months ended March 31, 2011
	One-to-four family residential real estate			Construction and land		Commercial real estate			Commercial loans			Agriculture loans			Municipal loans		Consumer loans			Total

Allowance for loan losses:
Balance at December 31, 2010	$	395		$	1,186	$	1,576		$	1,173		$	399		$	99	$	139		$	4,967
Charge-offs		(103	)		-		(434	)		(458	)		(1	)		-		(28	)		(1,024	)
Recoveries		22			-		-			4			1			-		12			39
Net charge-offs		(81	)		-		(434	)		(454	)		-			-		(16	)		(985	)
Provision for loan losses		47			256		169			(9	)		(40	)		16		(39	)		400
Balance at March 31, 2011		361			1,442		1,311			710			359			115		84			4,382

Allowance for loan losses:
Individually evaluated for loss		24			654		-			103			-			69		-			850
Collectively evaluated for loss		337			788		1,311			607			359			46		84			3,532
Total		361			1,442		1,311			710			359			115		84			4,382

Loan balances:
Individually evaluated for loss		716			1,217		-			333			65			775		63			3,169
Collectively evaluated for loss		76,938			22,486		93,817			59,530			36,339			7,662		13,850			310,622
Total	$	77,654		$	23,703	$	93,817		$	59,863		$	36,404		$	8,437	$	13,913		$	313,791

	Three months ended March 31, 2010
	One-to-four family residential real estate			Construction and land			Commercial real estate			Commercial loans			Agriculture loans		Municipal loans		Consumer loans			Total

Allowance for loan losses:
Balance at December 31, 2009	$	625		$	1,326		$	705		$	623		$	2,103	$	-	$	86		$	5,468
Charge-offs		(73	)		(19	)		-			(9	)		-		-		(46	)		(147	)
Recoveries		1			-			-			3			-		-		12			16
Net charge-offs		(72	)		(19	)		-			(6	)		-		-		(34	)		(131	)
Provision for loan losses		5			307			(16	)		2			342		26		34			700
Balance at March 31, 2010		558			1,614			689			619			2,445		26		86			6,037

Allowance for loan losses:
Individually evaluated for loss		28			1,101			139			74			2,085		-		3			3,430
Collectively evaluated for loss		530			513			550			545			360		26		83			2,607
Total		558			1,614			689			619			2,445		26		86			6,037

Loan balances:
Individually evaluated for loss		949			5,241			2,706			479			2,343		-		57			11,775
Collectively evaluated for loss		87,900			28,949			96,709			58,997			43,668		5,499		16,118			337,840
Total	$	88,849		$	34,190		$	99,415		$	59,476		$	46,011	$	5,499	$	16,175		$	349,615

The Company’s key credit quality indicator is a loan’s performance status, defined as accruing or non-accruing. Performing loans are considered to have a lower risk of loss. Non-accrual loans are those which the Company believes have a higher risk of loss. The accrual of interest on non-performing loans is discontinued at the time the loan is ninety days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of principal or interest is considered doubtful. At March 31, 2011, the Company had a $146,000 one-to-four family residential real estate loan that was 90 days delinquent and accruing interest. There were no loans 90 days delinquent and still accruing interest at December 31, 2010. The following tables present information on the Company’s past due and non-accrual loans by loan class:

(Dollars in thousands)
	As of March 31, 2011
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total

One-to-four family residential real estate	$	1,186		$	-		$	146		$	1,332		$	185		$	1,517
Construction and land		-			-			-			-			1,217			1,217
Commercial loans		20			-			-			20			333			353
Agriculture loans		-			-			-			-			65			65
Municipal loans		-			-			-			-			232			232
Consumer loans		57			10			-			67			63			130
Total	$	1,263		$	10		$	146		$	1,419		$	2,095		$	3,514

Percent of gross loans		0.40	%		0.00	%		0.05	%		0.45	%		0.67	%		1.12	%

	As of December 31, 2010
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total

One-to-four family residential real estate	$	80		$	962		$	-		$	1,042		$	523		$	1,565
Construction and land		-			56			-			56			1,229			1,285
Commercial real estate		116			-			-			116			1,390			1,506
Commercial loans		-			-			-			-			733			733
Agriculture loans		-			1			-			1			65			66
Municipal loans		-			-			-			-			759			759
Consumer loans		125			34			-			159			118			277
Total	$	321		$	1,053		$	-		$	1,374		$	4,817		$	6,191

Percent of gross loans		0.10	%		0.34	%		0.00	%		0.44	%		1.55	%		1.99	%

The Company’s impaired loans decreased from $5.3 million at December 31, 2010 to $3.2 million at March 31, 2011. The difference in the Company’s non-accrual loan balance and impaired loan balance at March 31, 2011 was related to a $531,000 one-to-four family residential real estate loan and a $543,000 municipal loan that were classified as troubled debt restructurings during 2010. Both loans were current and accruing interest at March 31, 2011, but still classified as impaired. The following tables present information on impaired loans:

(Dollars in thousands)
	As of March 31, 2011
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized

One-to-four family residential real estate	$	1,006	$	716	$	689	$	27	$	24	$	717	$	10
Construction and land		4,681		1,217		125		1,092		654		1,226		-
Commercial loans		333		333		-		333		103		333		-
Agriculture loans		65		65		65		-		-		65		-
Municipal loans		775		775		644		131		69		764		21
Consumer loans		63		63		63		-		-		64		-
Total impaired loans	$	6,923	$	3,169	$	1,586	$	1,583	$	850	$	3,169	$	31

	As of December 31, 2010
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized

One-to-four family residential real estate	$	1,352	$	1,054	$	879	$	175	$	99	$	1,366	$	9
Construction and land		4,684		1,229		-		1,229		382		3,008		-
Commercial real estate		1,390		1,390		-		1,390		397		1,400		-
Commercial loans		733		733		-		733		503		733		-
Agriculture loans		65		65		65		-		-		70		-
Municipal loans		759		759		628		131		65		759		-
Consumer loans		118		118		118		-		-		74		-
Total impaired loans	$	9,101	$	5,348	$	1,690	$	3,658	$	1,446	$	7,410	$	9

At March 31, 2011 and December 31, 2010, the Company had two loan relationships totaling $1.4 million that were classified as troubled debt restructurings. One of the relationships was an $853,000 real estate loan which was secured by real estate the value of which was deficient based on a recent appraisal. The relationship was restructured into two 1-4 family residential real estate loans to a borrower who was experiencing financial difficulty and to whom we granted concessions at renewal. The value of the real estate supports $531,000 of the loan relationship. The $531,000 loan was returned to accrual status during 2010 after a payment history was established, while the remainder of the relationship was charged-off. A second loan relationship totaling $543,000 to a municipal sanitary and improvement district was restructured in 2010 to extend the maturity and lower the interest rate to allow the district more time to develop. Both of these loans were current and accruing interest at March 31, 2011, but still classified as impaired.

The Company provides servicing on loans for others with outstanding principal balances of $170.5 million and $168.8 million at March 31, 2011 and December 31, 2010, respectively. Gross service fee income related to such loans was $107,000 and $87,000 for the quarters ended March 31, 2011 and 2010, respectively, and is included in fees and service charges in the consolidated statements of earnings.

Basic earnings per share have been computed based upon the weighted average number of common shares outstanding during each period. Diluted earnings per share includes the effect of all potential common shares outstanding during each period. The shares used in the calculation of basic and diluted earnings per share are shown below:

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)

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Due in less than one year	$	30,742	$	30,908
Due after one year but within five years		100,847		101,914
Due after five years but within ten years		32,583		33,686
Due after ten years		14,645		13,933
Common stocks		693		893
Total	$	179,510	$	181,334

(Dollars in thousands)	Amortization
	expense
Remainder of 2011	$	515
2012		599
2013		515
2014		419
2015		68
Thereafter		7