Landmark Bancorp (LARK) 8-K/A Acquisition or disposition of assets

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report	May 10, 2004
(Date of earliest event reported)	May 10, 2004

Landmark Bancorp, Inc.

(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)
0-20878	43-1930755
(Commission File Number)	(I.R.S. Employer Identification Number)
800 Poyntz Avenue, Manhattan, Kansas	66502
(Address of principal executive offices)	(Zip Code)
(785) 565-2000
(Registrant’s telephone number, including area code)

Item 2.   Acquisition or Disposition of Assets

On November 13, 2003, Landmark Bancorp, Inc. (“Landmark” or “Company”) and First Kansas Financial Corporation (“First Kansas”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) dated November 13, 2003, between Landmark, First Kansas, and Landmark’s wholly owned subsidiary, Landmark Acquisition Corporation.

On April 1, 2004, Landmark acquired First Kansas in accordance with the Merger Agreement and First Kansas became a wholly owned subsidiary of Landmark (the “Merger”).

The consideration for the Merger was $19.00 per issued and outstanding share of First Kansas common stock, for a total aggregate consideration to First Kansas shareholders of $17.1 million.  The sources of the consideration were general corporate funds, approximately $8.0 million in proceeds from the issuance of the Company’s junior subordinated debentures (Trust Preferred Securities) and approximately $7.0 million from a third-party lender.  The Merger was accounted for as a purchase transaction.  First Kansas incurred merger related expenses, consisting primarily of change in control payments, severance, professional fees and other restructuring charges, of $2.6 million during the quarter ended March 31, 2004.

On April 1, 2004, Landmark filed a Form 8-K disclosing the completion of the Merger.  This current report on Form 8-K/A amends the Form 8-K of April 1, 2004, to provide under Item 7 the financial statements of First Kansas and pro forma financial information required to be included in this report.

Item 7.   Financial Statements, Pro Forma Financial Information and Exhibits

(a)Financial Statements of Business Acquired.

(i)The audited consolidated financial statements of First Kansas Financial Corporation for the year ended December 31, 2003 contained in its Form 10-KSB filed with the Securities and Exchange Commission on March 29, 2004 are incorporated by reference thereto.

(ii)The unaudited consolidated financial statements of First Kansas Financial Corporation for the quarters ended March 31, 2004 and March 31, 2003 are included on pages 2 and 3.

(b)Pro Forma Financial Information.

Pro forma financial information for the year ended December 31, 2003 and the three-month period ended March 31, 2004 begins on page 4.

First Kansas Financial Corporation and Subsidiary

Consolidated Balance Sheets (unaudited)

(in thousands)

	March 31, 2004			December 31, 2003
ASSETS
Cash and cash equivalents	$	8,028		12,915
Investment securities:
Available-for-sale, at fair value	54,274			51,436
Held-to-maturity, at cost	8,249			9,376
Loans receivable, net	73,213			72,605
Premises and equipment, net	1,697			1,854
Other assets	4,237			3,194
Total assets	$	149,698		151,380
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits	$	83,758		83,524
Federal Home Loan Bank advances	50,000			50,000
Other liabilities	1,709			1,408
Total liabilities	135,467			134,932
Stockholders’ Equity
Preferred stock, $0.10 par value, 2,000,000 shares authorized; none issued	—			—
Common stock, $0.10 par value, 8,000,000 shares authorized; 1,553,938 issued	155			155
Paid in capital	13,623			15,056
Retained earnings	8,796			9,849
Accumulated other comprehensive income	317			98
Unearned employee benefits	(627		)	(677	)
Treasury stock, at cost (645,693 shares of common stock)	(8,033		)	(8,033	)
Total stockholders’ equity	14,231			16,448
Total liabilities and stockholders’ equity	$	149,698		151,380

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First Kansas Financial Corporation and Subsidiary

Consolidated Statements of Earnings (unaudited)

(in thousands, except per share amounts)

	For the three months ended
	March 31, 2004			March 31, 2003
Interest income
Loans and fees on loans	$	1,003		953
Investment securities	623			787
Other	—			21
Total interest income	1,626			1,761
Interest expense
Deposits	315			460
Federal Home Loan Bank advances and other borrowings	679			672
Total interest expense	994			1,132
Net interest income	632			629
Provision for loan losses	71			—
Net interest income after provision for loan losses	561			629
Non-interest income
Fees and service charges	269			263
Investment securities gain	—			55
Gain on sales of loans, net	—			—
Other	55			52
Total non-interest income	324			370
Non-interest expense
Merger related expenses	2,574			—
Compensation and benefits	444			478
Occupancy and equipment	126			129
Data processing	59			58
Other	249			231
Total non-interest expense	3,452			896
Earnings (loss) before income taxes	(2,567		)	103
Income taxes	(772		)	28
Net earnings (loss)	$	(1,795	)	75
Net earnings (loss) per share - basic and diluted	$	(2.12	)	0.08

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UNAUDITED PRO FORMA CONDENSED

COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated balance sheet as of March 31, 2004 is based on the unaudited historical consolidated balance sheet of Landmark and First Kansas as of that date assuming that the Merger consummated on April 1, 2004 had occurred on March 31, 2004.

The following unaudited pro forma condensed consolidated statements of earnings for the three months ended March 31, 2004 and the year ended December 31, 2003 reflect the combination of Landmark and First Kansas as if the purchase had occurred at the beginning of the respective periods.  The unaudited condensed consolidated statements of earnings give effect to the purchase accounting adjustments recognized in the transaction.

These pro forma financial statements should be read in conjunction with the historical consolidated financial statements and related notes in Landmark’s December 31, 2003 Form 10-K and in First Kansas’ December 31, 2003 Form 10-KSB.

Goodwill and other intangibles recognized with respect to the merger were approximately $6.7 million.  Other intangibles will be amortized from the acquisition date on an accelerated method using a 10-year amortization period.  In the opinion of Landmark’s management, the estimates used in the preparation of these financial statements are reasonable under the circumstances.

The combined company expects to achieve annualized benefits from the Merger including operating cost savings and revenue enhancements totaling approximately $700,000.  These pro forma financial statements do not reflect any potential cost savings and revenue enhancements that are expected to result from the combination of operations of Landmark and First Kansas and, accordingly, may not be indicative of the results of future operations.  No assurance can be given with respect to the ultimate level of cost savings and revenue enhancements to be realized.  As a result, these pro forma financial statements are not necessarily indicative of either the results of operations or financial condition that would have been achieved had the Merger in fact occurred on the dates indicated, nor do they purport to be indicative of results of operations or financial condition that may be achieved in the future by the combined company.

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Landmark Bancorp, Inc.

Pro Forma Condensed Consolidated Balance Sheet (unaudited)

(in thousands)

	As of March 31, 2004
	Landmark Historical		First Kansas Historical	Pro Forma Adjustments		Pro Forma Consolidated
ASSETS
Cash and cash equivalents	$	5,044	8,028	(9,974	)(A)	3,098
Investment securities:
Available-for-sale, at fair value	100,606		54,274	8,546	(B)	163,426
Held-to-maturity, at cost	—		8,249	(8,249	)(B)	—
Loans receivable, net	212,731		73,213	936	(C)	286,880
Premises and equipment, net	3,667		1,697	—		5,364
Goodwill	1,971		—	5,952	(D)	7,923
Other intangibles, net	938		—	710	(D)	1,648
Other assets	5,630		4,237	1,654	(E)	11,521
Total assets	$	330,587	149,698	(425	)	479,860
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits	$	251,368	83,758	429	(F)	335,555
Federal Home Loan Bank advances and other borrowings	31,546		50,000	6,377	(G)	94,923
				7,000	(A)
Other liabilities	4,546		1,709			6,255
Total liabilities	287,460		135,467	13,806		436,733
Stockholders’ equity	43,127		14,231	(14,231	)(H)	43,127
Total liabilities and stockholders’ equity	$	330,587	149,698	(425	)	479,860

See accompanying notes to the proforma condensed consolidated balance sheet.

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NOTES TO PRO FORMA

CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

Adjustments made in the preparation of the unaudited pro forma condensed consolidated balance sheets are as follows:

A.Adjustment to record the payment of the purchase price of $17.1 million, net of proceeds received from a reduction in cash and cash equivalents available primarily from the issuance of $8.0 million in trust preferred subordinated indebtedness in late December 2003 and additional borrowings of $7.0 million from a third-party lender.

B.Adjustment to record acquired held-to-maturity investment securities at estimated fair value and reclassify the investment securities previously classified as held-to-maturity to available-for-sale.

C.Adjustment to record acquired loans at estimated fair value.

D.Adjustment to record goodwill and other intangibles.

E.Adjustment to record the increase in the net deferred tax assets.

F.Adjustment to record certificates of deposit at estimated fair value.

G.Adjustment to record borrowings at estimated fair value.

H.Adjustment to eliminate shareholders’ equity of First Kansas Financial Corporation.

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Landmark Bancorp, Inc.

Pro Forma Condensed Consolidated Statements of Earnings (unaudited)

(in thousands, except per share amounts)

	For the three months ended March 31, 2004
	Landmark Historical		First Kansas Historical		Pro Forma Adjustments		Pro Forma Consolidated
Interest income
Loans and fees on loans	$	3,228	1,003		(47	)(A)	4,184
Investment securities	811		623		(74	)(A)	1,360
Other	8		—		—		8
Total interest income	4,047		1,626		(121	)	5,552
Interest expense
Deposits	933		315		(143	)(A)	1,105
Federal Home Loan Bank advances and other borrowings	349		679		(122	)(A)	906
Total interest expense	1,282		994		(265	)	2,011
Net interest income	2,765		632		144		3,541
Provision for loan losses	60		71		—		131
Net interest income after provision for loan losses	2,705		561		144		3,410
Non-interest income
Fees and service charges	533		269		—		802
Investment securities gain	235		—		—		235
Gain on sales of loans, net	97		—		—		97
Other	82		55		—		137
Total non-interest income	947		324		—		1,271
Non-interest expense
Merger related expenses	—		2,574		(2,574	)(B)	—
Compensation and benefits	1,218		444		—		1,662
Occupancy and equipment	319		126		—		445
Amortization	75		—		32	(D)	107
Professional fees	79		53		—		132
Data processing	79		59		—		138
Other	488		196		—		684
Total non-interest expense	2,258		3,452		(2,542	)	3,168
Earnings (loss) before income taxes	1,394		(2,567	)	2,686		1,513
Income taxes	446		(772	)	813	(E)	487
Net earnings (loss)	$	948	(1,795	)	1,873		1,026
Per share data:
Basic earnings (loss) per share	$	0.45	(2.12	)			0.49
Weighted average shares of common stock outstanding	2,090,676		847,075				2,090,676
Diluted earnings (loss) per share	$	0.45	(2.12	)			0.49
Weighted average shares of common stock and dilutive potential common shares outstanding	2,108,821		895,683				2,108,821

See accompanying notes to the proforma condensed consolidated statements of earnings.

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	For the year ended December 31, 2003
	Landmark Historical		First Kansas Historical		Pro Forma Adjustments		Pro Forma Consolidated
Interest income
Loans and fees on loans	$	14,303	3,876		(187	)(A)	17,992
Investment securities	2,916		2,749		(287	)(A)	5,378
Other	57		74		—		131
Total interest income	17,276		6,699		(474	)	23,501
Interest expense
Deposits	4,446		1,581		(429	)(A)	5,598
Federal Home Loan Bank advances and other borrowings	1,209		2,724		(484	)(A)	3,449
Total interest expense	5,655		4,305		(913	)	9,047
Net interest income	11,621		2,394		439		14,454
Provision for loan losses	240		—		—		240
Net interest income after provision for loan losses	11,381		2,394		439		14,214
Non-interest income
Fees and service charges	2,500		1,168		—		3,668
Investment securities gain	1,588		55		—		1,643
Gain on sales of loans, net	551		—		—		551
Other	335		234		—		569
Total non-interest income	4,974		1,457		—		6,431
Non-interest expense
Merger related expenses	—		131		(131	)(B)	—
Compensation and benefits	4,835		2,212		(307	)(C)	6,740
Occupancy and equipment	1,250		501		—		1,751
Amortization	426		—		129	(D)	555
Professional fees	343		190		—		533
Data processing	311		152		—		463
Other	2,063		769		—		2,832
Total non-interest expense	9,228		3,955		(309	)	12,874
Earnings (loss) before income taxes	7,127		(104	)	748		7,771
Income taxes	2,275		(68	)	284	(E)	2,491
Net earnings (loss)	$	4,852	(36	)	464		5,280
Per share data:
Basic earnings (loss) per share	$	2.31	(0.04	)			2.51
Weighted average shares of common stock outstanding	2,102,922		847,075				2,102,922
Diluted earnings (loss) per share	$	2.28	(0.04	)			2.48
Weighted average shares of common stock and dilutive potential common shares outstanding	2,132,063		895,683				2,132,063

See accompanying notes to the proforma condensed consolidated statements of earnings.

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NOTES TO PRO FORMA

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(UNAUDITED)

Adjustments made in the preparation of the unaudited pro forma condensed consolidated statements of earnings are as follows:

A.Adjustment to reflect (i) the increase in interest expense on new borrowings used to fund the acquisition and (ii) the amortization of purchase accounting adjustments based on the average lives of the corresponding assets and liabilities as yield adjustments.  The expected average lives are as follows:  investment securities – 39 months; loans receivable, net – 60 months; deposits – 9 months; and Federal Home Loan Bank advances – 68 months.

B.Adjustment to reflect the elimination of the non-recurring transaction costs incurred by First Kansas related to severance, change in control payments, professional fees and other restructuring charges incurred in connection with the acquisition.

C.Adjustment to reflect the elimination of a non-recurring expense incurred as a result of First Kansas terminating their defined benefit plan effective October 1, 2003.

D.Adjustment to reflect the amortization of the core deposit intangible recognized in the acquisition over the estimated period of benefit on an accelerated method.

E.Net income tax expense on pro forma adjustments.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	LANDMARK BANCORP, INC.
Dated: May 10, 2004	By:	/s/ Mark A. Herpich
			Mark A. Herpich
			Vice President, Secretary, Treasurer and Chief Financial Officer

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