<Page>
1
LANDMARK BANCSHARES, INC.
Consolidated Statements of Financial Condition (unaudited)
<Table>
<Caption>
June 30, 2001 September 30, 2000
------------- ------------------
ASSETS
Cash and due from banks:
Non-interest bearing $ 1,054,410 $ 1,335,431
Interest bearing 7,382,825 3,754,540
-------------- ------------------
Total cash and due from banks 8,437,235 5,089,971
Time deposits in other financial institutions 234,957 281,771
Investment securities held-to-maturity 0 28,666,885
Investment securities available-for-sale 25,931,028 9,587,607
Mortgage-backed securities held-to-maturity 0 10,112,018
Mortgage-backed securities available-for-sale 17,867,936 0
Loans receivable, net 148,074,477 182,659,647
Loans held-for-sale 3,251,014 8,854,493
Accrued income receivable 1,414,111 1,641,904
Foreclosed assets, net 665,622 170,724
Office properties and equipment, net 1,479,941 1,635,170
Prepaid expenses and other assets 2,417,180 1,666,882
Income taxes receivable, current 0 99,217
Deferred income taxes 0 209,686
-------------- ------------------
TOTAL ASSETS $ 209,773,501 $ 250,675,975
============== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 153,021,402 $ 165,325,440
Advances and other borrowings from
Federal Home Loan Bank 26,000,000 57,000,000
Advances from borrowers for taxes and insurance 1,285,450 2,337,045
Accrued expenses and other liabilities 3,774,956 2,351,486
Income taxes:
Current 45,792 0
Deferred 235,708
-------------- ------------------
TOTAL LIABILITIES 184,363,308 227,013,971
-------------- ------------------
Stockholders' Equity:
Preferred Stock, no par value; 5,000,000 shares
authorized; none issued
Common Stock, $0.10 par value; 10,000,000 shares
authorized; 2,281,312 shares issued 228,131 228,131
Additional paid-in capital 22,393,181 22,475,208
Retained income, substantially restricted 25,398,269 24,022,616
Accumulated other comprehensive income (loss) 614,623 (110,594)
Unamortized stock acquired by Employee Stock
Ownership Plan (418,963) (418,963)
Treasury Stock, at cost, 1,188,874 shares at June 30, 2001 and 1,173,938
shares at September 30, 2000 (22,805,048) (22,534,394)
-------------- ------------------
Total Stockholders' Equity 25,410,193 23,662,004
-------------- ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 209,773,501 $ 250,675,975
============== ==================
<Page>
2
LANDMARK BANCSHARES, INC.
Consolidated Statements of Income
<Table>
<Caption>
Three Months Ended June 30 Nine Months Ended June 30
2001 2000 2001 2000
(unaudited) (unaudited)
INTEREST INCOME
Interest on loans $ 3,228,067 $ 3,719,836 $ 10,613,492 $ 10,896,544
Interest and dividends on investment securities 459,273 650,542 1,497,215 2,012,797
Interest on mortgage-backed securities 404,837 188,764 734,649 586,206
------------ ------------ ------------ ------------
Total interest income 4,092,177 4,559,142 12,845,356 13,495,547
------------ ------------ ------------ ------------
INTEREST EXPENSE
Deposits 1,932,182 1,788,288 6,049,640 5,440,149
Borrowed funds 422,404 1,068,290 1,826,158 2,729,216
------------ ------------ ------------ ------------
Total interest expense 2,354,586 2,856,578 7,875,798 8,169,365
------------ ------------ ------------ ------------
Net interest income 1,737,591 1,702,564 4,969,558 5,326,182
PROVISION FOR LOSSES ON LOANS 15,000 135,000 105,000 365,000
------------ ------------ ------------ ------------
Net interest income after provision for losses 1,722,591 1,567,564 4,864,558 4,961,182
------------ ------------ ------------ ------------
NON-INTEREST INCOME
Service charges and late fees 107,526 118,299 340,406 336,591
Net gain on sale of trading investments 0 0 43,618 0
Net gain on sale of available-for-sale investments 283,290 12,352 453,701 55,635
Net gain on sale of loans 197,120 41,478 575,891 133,691
Service fees on loans sold (7,274) 11,406 8,538 52,454
Other income 26,226 67,816 77,676 123,780
------------ ------------ ------------ ------------
Total non-interest income 606,888 251,351 1,499,830 702,151
------------ ------------ ------------ ------------
NON-INTEREST EXPENSE
Compensation and related expenses 613,891 565,114 1,878,837 1,704,996
Occupancy expense 62,472 68,341 195,157 193,140
Advertising 14,005 20,774 52,946 75,308
Federal insurance premium 26,472 12,407 75,766 83,387
Loss (gain) from real estate operations 2,657 24,444 10,572 29,957
Data processing 34,669 32,657 110,775 132,914
Other expense 255,970 243,113 755,101 774,265
------------ ------------ ------------ ------------
Total non-interest expense 1,010,136 966,850 3,079,154 2,993,967
------------ ------------ ------------ ------------
Income before income taxes and cumulative
effect on prior years of accounting change 1,319,343 852,065 3,285,234 2,669,366
INCOME TAXES EXPENSES 488,250 340,600 1,220,794 1,066,900
------------ ------------ ------------ ------------
Net income before cumulative effect
on prior years of accounting change 831,093 511,465 2,064,440 1,602,466
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR DERIVATIVE FINANCIAL INSTRUMENTS,
NET OF INCOME TAX BENEFIT OF $125,144 0 0 (214,553) 0
------------ ------------ ------------ ------------
Net income $ 831,093 $ 511,465 $ 1,849,887 $ 1,602,466
============ ============ ============ ============
<Page>
3
LANDMARK BANCSHARES, INC.
Consolidated Statements of Income
Continued
<Table>
<Caption>
Three Months Ended June 30 Nine Months Ended June 30
2001 2000 2001 2000
(unaudited) (unaudited)
-------------------------- -------------------------
Basic earnings per share
- ------------------------
Earnings before cumulative effect of change in
accounting for derivative financial instruments $0.79 $0.46 $1.95 $1.48
Cumulative effect of change in accounting for
derivative financial instruments $0.00 $0.00 ($0.20) $0.00
------------- ------------ ---------- --------
Net income $0.79 $0.46 $1.75 $1.48
============= ============ ========== ========
Diluted earnings per share
- --------------------------
Earnings before cumulative effect of change in
accounting for derivative financial instruments $0.73 $0.44 $1.81 $1.37
Cumulative effect of change in accounting for
derivative financial instruments $0.00 $0.00 ($0.18) $0.00
------------- ------------ ---------- --------
Net income $0.73 $0.44 $1.63 $1.37
============= ============ ========== ========
Dividends per share $0.15 $0.15 $0.45 $0.45
- -------------------
<Page>
4
LANDMARK BANCSHARES, INC.
Consolidated Statements of Comprehensive Income
<Table>
<Caption>
Three Months Ended Nine Months Ended
June 30 June 30
2001 2000 2001 2000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ---------- ----------- -----------
Net income $ 831,093 $ 511,465 $ 1,849,887 $ 1,602,466
----------- ---------- ----------- -----------
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities:
Cumulative effect of change in accounting
for financial instruments 0 0 (719,863) 0
Unrealized holding gains (losses) arising
during the period 168,240 83,523 1,758,391 (239,485)
Less: reclassification adjustment for gains
included in net income (178,473) (7,411) (313,311) (33,381)
----------- ---------- ----------- -----------
Total other comprehensive income (10,233) 76,112 725,217 (272,866)
----------- ---------- ----------- -----------
Comprehensive income $ 820,860 $ 587,577 $ 2,575,104 $ 1,329,600
=========== ========== =========== ===========
<Page>
5
LANDMARK BANCSHARES, INC.
Consolidated Statements of Cash Flows
<Table>
<Caption>
Nine Months Ended June 30
2001 2000
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,849,887 $ 1,602,464
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Cumulative effect of change in accounting for financial instruments 214,553 0
Amortization of mortgage servicing rights (229,450) 0
Depreciation 158,443 173,676
Realized gain on sale of investment securities available-for-sale (453,701) (55,635)
Decrease (increase) in accrued interest receivable 219,436 402
Increase (decrease) in income taxes 590,405 (10,653)
Increase (decrease) in accounts payable and accrued expenses 1,448,680 (656,969)
Amortization of premiums and discounts on investments and loans, net (48,087) (14,816)
Provision for losses on loans and investments 105,000 365,000
Net change in trading securities 9,642,188 0
Other non-cash items, net (429,962) (2,808)
Sale of loans held-for-sale 28,225,069 6,820,415
Gain on sale of loans held-for-sale (575,891) (133,691)
Origination of loans held-for-sale (22,029,418) (5,533,026)
Purchase of loans held-for-sale (36,000) (771,400)
------------ ------------
Net cash provided by operating activities $ 18,651,152 $ 1,782,959
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations and principal collections, net $ 17,699,407 $ 1,220,212
Loans purchased for investment (1,809,650) (13,224,384)
Principal repayments on mortgage-backed securities 0 2,507,729
Principal repayments on available-for-sale mortgage-backed securities 3,652,490 0
Acquisition of investment securities available-for-sale (6,610,000) (675,000)
Proceeds from sale of investment securities available-for-sale 16,527,335 3,177,693
Proceeds from maturities or calls of investment securities held to maturity 0 200,000
Net (increase) decrease in time deposits 56,834 0
Proceeds from sale of foreclosed assets 280,850 263,936
Acquisition of fixed assets (3,214) (92,382)
------------ ------------
Net cash provided (used) by investing activities $ 29,794,052 $ (6,622,196)
------------ ------------
<Page>
6
LANDMARK BANCSHARES, INC.
Consolidated Statements of Cash Flows
(Continued)
<Table>
<Caption>
Nine Months Ended June 30
2001 2000
(unaudited) (unaudited)
----------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits $ (12,304,038) $ (10,084,976)
Net increase (decrease) in escrow accounts (1,049,012) (447,313)
Proceeds from FHLB advances and other borrowings 203,000,000 130,500,000
Repayment of FHLB advances and other borrowings (234,000,000) (115,500,000)
Purchase of treasury stock (270,654) 514,503
Dividends paid (474,236) (486,912)
------------- -------------
Net cash provided (used) by financing activities (45,097,940) 4,495,302
------------- -------------
Net increase (decrease) in cash and cash equivalents 3,347,264 (343,935)
Cash and cash equivalents at beginning of period 5,089,971 5,975,730
------------- -------------
Cash and cash equivalents at end of period $ 8,437,235 $ 5,631,795
============= =============
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest on deposits, advances, and other borrowings $ 8,262,790 $ 8,559,182
Income taxes 1,132,640 930,390
Transfers from loans to real estate acquired through foreclosure 870,799 520,782
Exchanged loans receivable for mortgage-backed securities 17,945,036 0
Cumulative effect of change in accounting for financial investments:
Transfer of held-to-maturity securities to trading investments 9,642,188 0
Transfer of held-to-maturity securities to available-for-sale 27,657,273 0
<Page>
7
LANDMARK BANCSHARES, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements were prepared in accordance
with the requirements for interim financial statements contained in SEC
regulation S-X and, accordingly, do not include all information and disclosures
necessary to present financial condition, results of operations and cash flows
of Landmark Bancshares, Inc. (the "Company") and its wholly-owned subsidiary
Landmark Federal Savings Bank (the "Bank") in conformity with generally
accepted accounting principles. However, all normal recurring adjustments have
been made which, in the opinion of management, are necessary for the fair
presentation of the financial statements.
The results of operation for the three and nine months ended June 30, 2001 are
not necessarily indicative of the results which may be expected for the fiscal
year ending September 30, 2001, or an other future interim period.
2. LIQUIDATION ACCOUNT
On March 28, 1994, the Bank segregated and restricted $15,144,357 of retained
earnings in a liquidation account for the benefit of eligible savings account
holders who continue to maintain their accounts at the bank after the conversion
of the bank from mutual to stock form. In the event of a complete liquidation of
the Bank, and only in such event, each eligible account holder will be entitled
to receive a distribution from the liquidation account in an amount
proportionate to the current adjusted balances of all qualifying deposits then
held. The liquidation account will be reduced annually at September 30th to the
extent that eligible account holders have reduced their qualifying deposits.
3. INVESTMENTS AND MORTGAGE - BACKED SECURITIES
A summary of the Bank's carrying values of investments and mortgage - backed
securities as of June 30, 2001 and September 30, 2000, is as follows:
<Table>
<Caption>
June 30, 2001 September 30,2000
------------- -----------------
Investment Securities:
Held to maturity:
Government Agency Securities $ 0 $27,481,885
Municipal Obligations 0 1,185,000
Other 0 0
----------- -----------
$ 0 $28,666,885
=========== ===========
Available for sale:
Common Stock 9,515,693 3,643,607
Stock in Federal Home Loan Bank 3,785,000 3,800,000
Government Agency Securities 11,457,490 0
Municipal Obligations 1,013,720 0
Other 159,125 2,144,000
----------- -----------
$25,931,028 $ 9,587,607
=========== ===========
Mortgage - Backed Securities:
Held to Maturity:
FNMA - Arms 0 4,985,758
FHLMC - Arms 0 1,461,099
FHLMC - Fixed Rate 0 49,505
CMO Government Agency 0 2,363,257
CMO Private Issue 0 903,288
FNMA - Fixed Rate 0 305,495
GNMA - Fixed Rate 0 43,616
----------- -----------
$ 0 $10,112,018
=========== ===========
</Table>
<Page>
8
INVESTMENTS AND MORTGAGE - BACKED SECURITIES -- CONTINUED
<Table>
<Caption>
June 30, 2001 September 30, 2000
Available for sale:
FNMA - Arms 3,734,268 0
FHLMC - Arms 1,232,502 0
FHLMC - Fixed Rate 10,577,030 0
CMO Government Agency 1,412,388 0
CMO Private Issue 635,581 0
FNMA - Fixed Rate 258,742 0
GNMA - Fixed Rate 17,425 0
----------- -------------
$17,867,936 $ 0
=========== =============
</Table>
<Page>
9
4. LOAN RECEIVABLE, NET
A summary of the Bank's loans receivable at June 30, 2001 and September 30,
2000, is as follows:
<Table>
<Caption>
Accruing Interest Interest Should
June 30 Past 90 Collected Have Been Collected
2001 Non-Accrual* Days Non-Accrual*** Non-Accrual****
-------------- ------------- ------------- --------------- --------------------
Real Estate loans:
Residential $112,768,982 $ 49,194 $ 902 $ 995
Construction 2,297,266
Commercial 10,248,412
Second mortgage 9,611,949
Commercial loans 7,399,604
Consumer 7,213,063 4,076 76
-------------- ------------- ------------- --------------- --------------------
Gross loans 149,539,276 4,076 49,194 902 1,071
Less: Net deferred loan fees,
premiums and discounts (56,200)
Allowance for Loan Losses (1,408,599)
-------------- ------------- ------------- --------------- --------------------
Total loans, net $148,074,477 $ 4,076 $ 49,194 $ 902 $ 1,071
============== ============= ============= =============== ====================
</Table>
<Table>
<Caption>
Accruing
September 30 Past 90
2000 Non-Accrual* Days**
-------------- ------------- ---------------
Real estate loans:
Residential $147,514,858 $ 661,810 $ 313,729
Construction 857,486
Commercial 9,331,198
Second mortgage 10,403,434
Commercial loans 7,033,573
Consumer 9,050,233 75,645
-------------- ------------- ---------------
Gross loans 184,190,782 737,455 313,729
Less: Net deferred loan fees,
premiums and discounts (154,428)
Allowance for Loan Losses (1,376,707)
-------------- ------------- ---------------
Total loans, net $182,659,647 $ 737,455 $ 313,729
============== ============= ===============
</Table>
The Company has no foreign loans, or loans defined as, "troubled debt
restructurings" in Financial Accounting Standards No.15.
* Loans accounted for on a non-accrual basis
** Accruing loans which are contractually past due 90 days or more as to
principal or interest payments.
*** The amount of interest income on non-accrual loans that was included in
income for the period.
**** The gross interest income that would have been recorded in the period if
the loans had been current in accordance with the original terms and had
been outstanding throughout the period or since origination, if held for
part of the period.
A summary of the Bank's allowance for loan losses for the three and nine months
ended June 30, 2001 and 2000, is as follows:
<Table>
<Caption>
Three Months Ended Nine Months Ended
June 30 June 30
2001 2000 2001 2000
---------------- ---------------- ---------------- -----------------
Balance Beginning $ 1,410,591 $ 1,424,205 $ 1,376,707 $ 1,317,676
Provisions Charged to Operations 15,000 135,000 105,000 365,000
Loans Charged Off Net of Recoveries (16,992) (13,443) (73,108) (136,914)
---------------- ---------------- ---------------- -----------------
Balance Ending $ 1,408,599 $ 1,545,762 $ 1,408,599 $ 1,545,762
================ ================ ================ =================
<Page>
10
The allowance for loan losses is increased by charges to income and decreased by
charge-offs (net of recoveries). Management's periodic evaluation of the
adequacy of the allowance is based on the Bank's past loan loss experience,
known and inherent risks in the portfolio, adverse situations that may affect
the borrower's ability to repay, the estimated value of any underlying
collateral, the current level of non-performing assets and current economic
conditions. This evaluation is inherently subjective as it requires estimates
that are susceptible ot significant revision as more information becomes
available.
The Bank has enjoyed a significant reduction in charged off loans, net of
recoveries, from FYE September 30, 1999 to June 30, 2001.
<Table>
<Caption>
Nine Months FYE FYE
June 30 September 30 September 30
2001 2000 1999
------------ ------------- -------------
Loans charged off Net of Recoveries $73,108 $207,939 $604,077
============ ============= =============
</Table>
The decrease is due to improvements in the asset quality of the consumer loan
portfolio. Management, through its Asset Liability Committee, quarterly performs
an analytical review of the loan provision to insure the allowance for loan loss
is in compliance with policy. Based upon this analytical review and the
improvement of the asset quality of the consumer loan portfolio, management has
concluded the additions to the Allowance for Loan Losses account are adequate
for the current fiscal year.
5. FORECLOSED ASSETS - NET
Real Estate owned or in judgment and other repossessed property:
<Table>
<Caption>
June 30, 2001 September 30, 2000
-------------- ------------------
Real Estate Acquired by Foreclosure $ 0 $ 130,000
Real Estate Loans in Judgement and
Subject to Redemption 623,095 40,724
Other Repossessed Assets 42,527 0
------------- -------------
Total Foreclosed Assets - Net $ 665,622 $ 170,724
============= =============
</Table>
6. FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financial needs of its customers and to
reduce its own exposure to fluctuations in interest rates. The financial
instruments include commitments to extend credit and commitments to sell loans.
The instruments involve, to varying degrees, elements of credit and interest
rate risk in excess of the amount recognized in the statement of financial
condition. The contract, or notional amounts of those instruments, reflects the
extent of involvement the Bank has in particular classes of financial
instruments.
The Bank's exposure to credit loss in the event of non-performance by the other
party to the financial instrument for loan commitments is represented by the
contractual or notional amount of those instruments. The Bank uses the same
credit policies in making commitments as it does for on-balance-sheet
instruments.
On June 30, 2001, the Bank had outstanding commitments to fund real estate loans
of $2,292,051. Of the commitments outstanding, $2,017,801 were for fixed rate
loans at rates of 6.850% to 9.500%. Commitments for adjustable rate loans amount
to $274,250 with initial rates of 7.375% to 9.000%. Outstanding loan commitments
to sell as of June 30, 2001 were $1,827,950. The Bank had outstanding commercial
loan commitments of $2,385,000 with initial rates of 8.000% to 8.500%, at June
30, 2001.
<Page>
11
7. EARNINGS PER SHARE
Basic earnings per share (EPS) is computed by dividing income available to
common stockholders by the weighted-average number of common shares outstanding
for the period. Diluted earnings per share reflects the potential dilution that
could occur if securities or other contracts to issue common stock (potential
common stock) were exercised or converted to common stock. For periods presented
potential common stock includes outstanding stock options and nonvested stock
awarded under the management stock bonus plan.
Earnings per share for the three and nine months ended June 30, 2001 and 2000,
were determined as follows:
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<Table>
<Caption>
Basic Earnings Per Share
---------------------------------------------------------
Three months ended Nine months ended
June 30 June 30
2001 2000 2001 2000
------------ ------------- ------------ -----------
Weighted average common shares outstanding
net of treasury shares 1,092,438 1,152,393 1,095,820 1,137,739
Average unallocated ESOP shares (35,015) (48,703) (38,437) (52,125)
------------ ------------- ------------ -----------
Weighted Average Shares for Basic EPS 1,057,423 1,103,690 1,057,383 1,085,614
============ ============= ============ ===========
Net Income before cumulative effect
of accounting change $ 831,093 $ 511,465 $ 2,064,440 $ 1,602,466
============ ============= ============ ===========
Net Income $ 831,093 $ 511,465 $ 1,849,887 $ 1,602,466
============ ============= ============ ===========
Earnings per share amount before cumulative effect
of change in accounting for financial instruments $ 0.79 $ 0.46 $ 1.95 $ 1.48
============ ============= ============ ===========
Earnings Per Share $ 0.79 $ 0.46 $ 1.75 $ 1.48
============ ============= ============ ===========
</Table>
<Table>
<Caption>
Diluted Earnings Per Share
---------------------------------------------------------
Three months ended Nine months ended
June 30 June 30
2001 2000 2001 2000
------------ ------------- ------------ -----------
Weighted average shares for Basic EPS 1,057,423 1,103,690 1,057,383 1,085,614
Dilutive stock options 81,537 65,323 81,633 80,942
------------ ------------- ------------ -----------
Weighted Average Shares for Diluted EPS 1,138,960 1,169,013 1,139,016 1,166,556
============ ============= ============ ===========
Net Income before cumulative effect
of accounting change $ 831,093 $ 511,465 $ 2,064,440 $ 1,602,466
============ ============= ============ ===========
Net Income $ 831,093 $ 511,465 $ 1,849,887 $ 1,602,466
============ ============= ============ ===========
Earnings per share amount before cumulative effect
of change in accounting for financial instruments $ 0.73 $ 0.44 $ 1.81 $ 1.37
============ ============= ============ ===========
Earnings Per Share $ 0.73 $ 0.44 $ 1.63 $ 1.37
============ ============= ============ ===========
</Table>
8. DIVIDENDS
At the Company's April 18, 2001 board meeting, the Directors of the Company
declared a $0.15 per share dividend. The dividend was paid May 15, 2001 to all
stockholders of record as of May 1, 2001.
<Page>
12
9. CHANGE IN ACCOUNTING FOR DERIVATIVES AND HEDGING ACTIVITY
In June 1998, FASB issued SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities. This statement requires the recognition of all
derivative financial instruments as either assets or liabilities in the
statement of financial position and measurement of those instruments at fair
value. The accounting for gains and losses associated with changes in the fair
value of a derivative and the effect on the consolidated financial statements
will depend on its hedge designation and whether the hedge is highly effective
in achieving offsetting changes in the fair value or cash flows of the asset or
liability hedged. Management of the Company adopted the provisions of this
statement beginning October 1, 2000.
As permitted by SFAS No. 133, on October 1, 2000, the Company transferred all of
its securities from the held-to-maturity portfolio to the available-for-sale and
trading portfolios as follows:
<Table>
<Caption>
Securities Transferred
-------------------------------------------------------------------------
Available
Trading For Sale Total Total
Security (at fair value) (at fair value) (at fair value) (at book value)
---------------- ---------------- --------------- ----------------
Investment securities $ 9,642,188 $ 17,621,420 $ 27,263,608 $ 28,666,885
Mortgage-backed-securities 10,035,853 10,035,853 10,112,018
---------------- ---------------- --------------- ----------------
Total $ 9,642,188 $ 27,657,273 $ 37,299,461 $ 38,778,903
================ ================ =============== ================
</Table>
As of October 1, 2000, the effect of the transfer of these securities was
reported as a cumulative adjustment from a change in accounting principle, net
of tax benefits, impacting earnings and other comprehensive income as follows:
<Table>
<Caption>
Adjustment to
Adjustment Other
to Comprehensive Total
Earnings Income Adjustments
------------------ ----------------- ------------------
Investment securities $ (339,697) $ (1,063,580) $ (1,403,277)
Mortgage-backed securities (76,165) (76,165)
------------------ ----------------- ------------------
Pre-tax loss (339,697) (1,139,745) (1,479,442)
Income tax benefit 125,144 419,882 545,026
------------------ ----------------- ------------------
Net loss $ (214,553) $ (719,863) $ (934,416)
================== ================= ==================
The impact to earnings resulted in a loss of $214,553 that was recorded against
current operations as of October 1, 2000, as a cumulative adjustment from a
change in accounting principle, net of tax benefits. Future changes in fair
value for any remaining securities in the trading portfolio will be reflected
through current operations. Changes in fair value for any securities in the
available-for-sale portfolio will be adjusted through other comprehensive
income.
10. NEW ACCOUNTING STANDARDS
In July of 2001, the Financial Accounting Standards Board issued Statement No.
141, "Business Combinations", and Statement No. 142, "Goodwill and Other
Intangible Assets".
Statement No. 141 requires all business combinations to be accounted for using
the purchase method of accounting as use of the pooling-of-interests method is
prohibited. In addition, this Statement requires that
<Page>
13
negative goodwill that exists after the basis of certain acquired assets is
reduced to zero should be recognized as an extraordinary gain. The provisions
of this Statement apply to all business combinations initiated after June 30,
2001 and to all business combinations accounted for using the purchase method
of accounting for which the acquisition date is July 1, 2001, or later.
Statement No. 142 prescribes that goodwill associated with a business
combination and intangible assets with an indefinite useful life should not
be amortized but should be tested for impairment at least annually. The
Statement requires intangibles that are separable from goodwill and that have
a determinable useful life to be amortized over the determinable useful life.
The provisions of this Statement are required to be applied starting with
fiscal years beginning after December 15,2001. Upon adoption of this
statement, goodwill and other intangible assets arising from acquisitions
completed before adoption of the statement should be accounted for in
accordance with the provisions of this statement. This transition provision
could require a reclassification of a previously separately recognized
intangible to goodwill and vice versa if the intangibles in question do not
meet the new criteria for classification as a separately recognizable
intangible.
The Company has not determined the effect of these new accounting standards
in connection with the proposed merger as described in Note 11.
11. PROPOSED MERGER
We announced on April 19, 2001, an agreement to enter into a merger of equals
with MNB Bancshares, Inc. The proposed merger will be accounted for under the
Purchase Method of accounting. MNB Bancshares, Inc is the holding company for
Security National Bank based in Manhattan, Kansas. It had total assets of
$155 million at June 30, 2001 with branches in Manhattan, Topeka, Osage City,
Auburn and Wamego, Kansas. Pursuant to the agreement to merge, Landmark and
MNB will merge into a newly formed corporation, Landmark Merger Company,
which at the closing of the merger will change its name to Landmark
Bancshares, Inc. As a result of the merger, each issued and outstanding share
of Landmark common stock will be converted into the right to receive one
share of the new company common stock and each issued and outstanding share
of MNB common stock will be converted into the right to receive 0.523 of a
share of the new company common stock. At the closing of the merger, Landmark
Federal Savings Bank will merge with and into Security National Bank, which
will change its name to Landmark National Bank. After the merger, it is
expected that the combined company's common stock will be traded on the
Nasdaq National Market System under the symbol "LARK". We expect the closing
date of this merger transaction to occur late in the third quarter or the
fourth quarter of this year, subject to stockholder and regulatory approvals.
12. CORRECTED PRESS RELEASE
On July 24, 2001, the Company issued a press release for the quarter ended
June 30, 2001. On August 13, 2001, the Company issued a corrected press
release for the same quarter. The amounts as previously reported on July 24,
2001 and revised on August 13, 2001 are set forth below.
<Table>
<Caption>
As
Previously
Reported Increase Revised
July 24, 2001 (Decrease) August 13, 2001
------------- ---------- ---------------
Assets $ 209,873,501 $ (100,000) $ 209,773,501
Stockholders' Equity $ 25,473,193 $ (63,000) $ 25,410,193
Interest Income (3 months ended June 30, 2001) $ 4,192,177 $ (100,000) $ 4,092,177
Interest Income (9 months ended June 30, 2001) $ 12,945,356 $ (100,000) $ 12,845,356
Net Income (3 months ended June 30, 2001) $ 894,094 $ (63,001) $ 831,093
Net Income (9 months ended June 30, 2001) $ 1,912,889 $ (63,002) $ 1,849,887
Basic Earnings per Share (3 months ended June 30, 2001) $ 0.85 $ (0.06) $ 0.79
Diluted Earnings per Share (3 months ended June 30, 2001) $ 0.78 $ (0.05) $ 0.73
Basic Earnings per Share (9 months ended June 30, 2001) $ 1.81 $ (0.06) $ 1.75
Diluted Earnings per Share (9 months ended June 30, 2001) $ 1.68 $ (0.05) $ 1.63
</Table>