UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________ to ______________________
Commission File Number 0-23164
LANDMARK BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Kansas 48-1142260
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification Number
CENTRAL AND SPRUCE STREETS, DODGE CITY, KANSAS 67801
(Address and Zip Code of principal executive offices)
(620) 227-8111
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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 [ ]
The number of shares outstanding of each of the issuer's classes of common
stock, as of May 4, 2001:
$.10 par value common stock 1,092,438 shares
(Class) (Outstanding)
LANDMARK BANCSHARES, INC.
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Financial Condition as of
March 31, 2001 (unaudited) and September 30, 2000 1
Statements of Income for the Three and Six Months Ended
March 31, 2001 and 2000 (unaudited) 2
Statements of Comprehensive Income for the Three and
And Six Months Ended March 31, 2001 and 2000 (unaudited) 4
Statements of Cash Flows for the Six Months Ended
March 31, 2001 and 2000 (unaudited) 5 - 6
Notes to Financial Statements 7 - 11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12 - 18
Item 3. Quantitative and Qualitative Disclosures about Market Risk 19 - 21
PART II OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Changes in Securities and Use of Proceeds 22
Item 3. Default Upon Senior Securities 22
Item 4. Submission of Matter to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Report on Form 8-K 22
SIGNATURES 23
LANDMARK BANCSHARES, INC.
Consolidated Statements of Financial Condition
March 31, 2001 September 30, 2000
(Unaudited)
-------------------- --------------------
ASSETS Cash and due from banks:
Non-interest bearing $ 1,290,153 $ 1,335,431
Interest bearing 5,569,777 3,754,540
-------------------- --------------------
Total cash and due from banks 6,859,930 5,089,971
Time deposits in other financial institutions 259,342 281,771
Investment securities held-to-maturity 0 28,666,885
Investment securities available-for-sale 27,474,107 9,587,607
Mortgage-backed securities held-to-maturity 0 10,112,018
Mortgage-backed securities available-for-sale 24,068,306 0
Loans receivable, net 157,930,559 182,659,647
Loans held-for-sale 1,526,908 8,854,493
Accrued income receivable 1,338,682 1,641,904
Foreclosed assets, net 383,473 170,724
Office properties and equipment, net 1,528,876 1,635,170
Prepaid expenses and other assets 1,845,300 1,666,882
Income taxes receivable, current 0 99,217
Deferred income taxes 0 209,686
-------------------- --------------------
TOTAL ASSETS $ 223,215,483 $ 250,675,975
==================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits 151,822,692 165,325,440
Advances and other borrowings from
Federal Home Loan Bank 42,000,000 57,000,000
Advances from borrowers for taxes and insurance 1,316,824 2,337,045
Accrued expenses and other liabilities 3,068,503 2,351,486
Income taxes:
Current 23,542 0
Deferred 241,980 0
-------------------- --------------------
TOTAL LIABILITIES $ 198,473,541 $ 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 22,388,208 22,475,208
Retained income, substantially restricted 24,724,757 24,022,616
Accumulated other comprehensive income (loss) 624,857 (110,594)
Unamortized stock acquired by Employee Stock
Ownership Plan (418,963) (418,963)
Treasury Stock, at cost, 1,188,874 shares at March 31, 2001
and 1,173,938 shares at September 30, 2000 (22,805,048) (22,534,394)
-------------------- --------------------
Total Stockholders' Equity $ 24,741,942 $ 23,662,004
-------------------- --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 223,215,483 $ 250,675,975
==================== ====================
1
LANDMARK BANCSHARES, INC.
Consolidated Statements of Income
Three Months Ended March 31 Six Months Ended March 31
2001 2000 2001 2000
(unaudited) (unaudited)
------------------------------ ------------------------------
INTEREST INCOME
Interest on loans $ 3,636,346 $ 3,611,972 $ 7,385,425 $ 7,176,709
Interest and dividends on investment securities 468,278 650,927 1,037,944 1,362,253
Interest on mortgage-backed securities 163,922 194,282 329,812 397,442
------------- ------------- ------------- -------------
Total interest income 4,268,546 4,457,181 8,753,181 8,936,404
------------- ------------- ------------- -------------
INTEREST EXPENSE
Deposits 2,001,198 1,854,420 4,117,459 3,651,861
Borrowed funds 641,909 868,298 1,403,754 1,660,929
------------- ------------- ------------- -------------
Total interest expense 2,643,107 2,722,718 5,521,213 5,312,790
------------- ------------- ------------- -------------
Net interest income 1,625,439 1,734,463 3,231,968 3,623,614
PROVISION FOR LOSSES ON LOANS 45,000 95,000 90,000 230,000
------------- ------------- ------------- -------------
Net interest income after provision for losses 1,580,439 1,639,463 3,141,968 3,393,614
------------- ------------- ------------- -------------
NON-INTEREST INCOME
Service charges and late fees 112,930 111,745 232,879 218,290
Net gain on sale of trading investments 0 0 43,618 0
Net gain on sale of available-for-sale investments 147,163 32,695 170,412 43,286
Net gain on sale of loans 60,041 41,481 378,770 92,213
Service fees on loans sold 4,243 20,316 15,812 41,048
Other income 24,834 17,693 51,452 55,968
------------- ------------- ------------- -------------
349,211 223,930 892,943 450,805
------------- ------------- ------------- -------------
NON-INTEREST EXPENSE
Compensation and related expenses 637,699 531,840 1,264,946 1,139,880
Occupancy expense 62,765 61,352 132,686 124,799
Advertising 18,106 34,851 38,941 54,534
Federal insurance premium 27,222 33,261 49,296 70,980
Loss (gain) from real estate operations 2,675 (414) 7,916 5,514
Data processing 44,096 62,713 76,103 100,258
Other expense 261,813 278,393 499,132 531,153
------------- ------------- ------------- -------------
1,054,376 1,001,996 2,069,020 2,027,118
------------- ------------- ------------- -------------
Income before income taxes and cumulative
effect on prior years of accounting change 875,274 861,397 1,965,891 1,817,301
INCOME TAXES EXPENSES 322,400 357,000 732,544 726,300
------------- ------------- ------------- -------------
Net income before cumulative effect
on prior years of accounting change 552,874 504,397 1,233,347 1,091,001
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 $ 552,874 $ 504,397 $ 1,018,794 $ 1,091,001
============= ============= ============= =============
2
LANDMARK BANCSHARES, INC.
Consolidated Statements of Income
Continued
Three Months Ended March 31 Six Months Ended March 31
2001 2000 2001 2000
(unaudited) (unaudited)
------------------------------ -----------------------------
Basic earnings per share
- ------------------------
Earnings before cumulative effect of change in
accounting for derivative financial instruments $0.52 $0.47 $1.16 $1.01
Cumulative effect of change in accounting for
derivative financial instruments $0.00 $0.00 ($0.20) $0.00
-------------- ------------- ------------ -------------
Net income $0.52 $0.47 $0.96 $1.01
============== ============= ============ =============
Diluted earnings per share
- --------------------------
Earnings before cumulative effect of change in
accounting for derivative financial instruments $0.49 $0.43 $1.08 $0.94
Cumulative effect of change in accounting for
derivative financial instruments $0.00 $0.00 ($0.18) $0.00
-------------- ------------- ------------ -------------
Net income $0.49 $0.43 $0.90 $0.94
============== ============= ============ =============
Dividends per share $0.15 $0.15 $0.30 $0.30
- -------------------
3
LANDMARK BANCSHARES, INC.
Consolidated Statements of Comprehensive Income
Three Months Ended Six Months Ended
March 31 March 31
2001 2000 2001 2000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------- -------------- -------------- --------------
Net income $ 552,874 $ 504,397 $ 1,018,794 $ 1,091,001
-------------- -------------- -------------- --------------
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 831,442 (178,744) 1,562,673 (323,006)
Less: reclassification adjustment for gains included
in net income (92,713) (19,617) (107,360) (25,972)
-------------- -------------- -------------- --------------
Total other comprehensive income 738,729 (198,361) 735,450 (348,978)
-------------- -------------- -------------- --------------
Comprehensive income $ 1,291,603 $ 306,036 $ 1,754,244 $ 742,023
============== ============== ============== ==============
4
LANDMARK BANCSHARES, INC.
Consolidated Statements of Cash Flows
Six Months Ended March 31
2001 2000
(unaudited) (unaudited)
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,018,794 $ 1,091,001
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 (241,367) 0
Depreciation 109,509 116,559
Realized gain on sale of investment securities available-for-sale (170,412) (43,286)
Decrease (increase) in accrued interest receivable 293,408 (87,297)
Increase (decrease) in income taxes 306,380 35,280
Increase (decrease) in accounts payable and accrued expenses 726,830 (845,372)
Amortization of premiums and discounts on investments and loans, net (14,141) (11,614)
Provision for losses on loans and investments 90,000 230,000
Net change in trading securities 9,642,188 0
Other non-cash items, net 138,025 (259,355)
Sale of loans held-for-sale 19,198,821 4,720,329
Gain on sale of loans held-for-sale (378,770) (92,213)
Origination of loans held-for-sale (11,479,355) (3,674,878)
Purchase of loans held-for-sale (23,000) (557,900)
------------ ------------
Net cash provided by operating activities $ 19,431,463 $ 621,254
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations and principal collections, net $ 4,708,903 $ 2,915,038
Loans purchased for investment 1,632,950 (9,846,025)
Principal repayments on mortgage-backed securities 0 1,849,115
Principal repayments on available-for-sale mortgage-backed securities 1,451,517 0
Acquisition of investment securities available-for-sale (1,260,000) (300,000)
Proceeds from sale of investment securities available-for-sale 5,621,456 3,046,914
Proceeds from maturities or calls of investment
securities held to maturity 0 200,000
Net (increase) decrease in time deposits 29,079 0
Proceeds from sale of foreclosed assets 272,102 228,245
Acquisition of fixed assets (3,214) (71,730)
------------ ------------
Net cash provided (used) by investing activities $ 12,452,793 $ (1,978,443)
------------ ------------
5
LANDMARK BANCSHARES, INC.
Consolidated Statements of Cash Flows
(Continued)
Six Months Ended March 31
2001 2000
(unaudited) (unaudited)
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits $ (13,502,748) $ (457,549)
Net increase (decrease) in escrow accounts (1,024,242) (769,361)
Proceeds from FHLB advances and other borrowings 196,000,000 36,000,000
Repayment of FHLB advances and other borrowings (211,000,000) (33,500,000)
Purchase of treasury stock (270,654) 312,378
Dividends paid (316,653) (322,231)
------------- -------------
Net cash provided (used) by financing activities (30,114,297) 1,263,237
------------- -------------
Net increase (decrease) in cash and cash equivalents 1,769,959 (93,952)
Cash and cash equivalents at beginning of period 5,089,971 5,975,730
------------- -------------
Cash and cash equivalents at end of period $ 6,859,930 $ 5,881,778
============= =============
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest on deposits, advances, and other borrowings $ 5,787,795 $ 5,722,342
Income taxes 704,240 489,590
Transfers from loans to real estate acquired through foreclosure 430,333 467,009
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 investments 27,657,273 0
6
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 six months ended March 31, 2001 are not
necessarily indicative of the results which may be expected for the fiscal year
ending September 30, 2001.
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 March 31, 2001 and September 30, 2000, is as follows:
March 31, 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 4,921,358 3,643,607
Stock in Federal Home Loan Bank 3,800,000 3,800,000
Government Agency Securities 17,481,615 0
Municipal Obligations 1,115,134 0
Other 156,000 2,144,000
-------------------- --------------------
$ 27,474,107 $ 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
==================== ====================
7
INVESTMENTS AND MORTGAGE - BACKED SECURITIES -- CONTINUED
March 31, 2001 September 30, 2000
Available for sale:
FNMA - Arms 4,349,612 0
FHLMC - Arms 1,385,928 0
FHLMC - Fixed Rate 15,339,825 0
CMO Government Agency 1,998,418 0
CMO Private Issue 689,407 0
FNMA - Fixed Rate 280,367 0
GNMA - Fixed Rate 24,749 0
---------------- --------------------
$ 24,068,306 $ 0
================ ====================
4. LOAN RECEIVABLE, NET
A summary of the Bank's loans receivable at March 31, 2001 and September 30,
2000, is as follows:
March 31, 2001 September 30, 2000
------------------- -------------------
Real Estate loans:
Residential $ 121,619,893 $ 147,514,858
Construction 2,333,866 857,486
Commercial 10,327,344 9,331,198
Second mortgage 10,339,942 10,403,434
Commercial business 6,831,259 7,033,573
Consumer 7,931,470 9,050,233
------------------ ----------------
Gross loans 159,383,774 184,190,782
Less: Net deferred loan fees, premiums
and discounts (42,624) (154,428)
Allowance for Loan Losses (1,410,591) (1,376,707)
------------------ -----------------
Total loans, net $ 157,930,559 $ 182,659,647
================== =================
A summary of the Bank's allowance for loan losses for the three and six months
ended March 31, 2001 and 2000, is as follows:
Three Months Ended Six Months Ended
March 31 March 31
2001 2000 2001 2000
---------------- ---------------- ---------------- -----------------
Balance Beginning $ 1,378,720 $ 1,400,104 $ 1,376,707 $ 1,317,676
Provisions Charged to Operations 45,000 95,000 90,000 230,000
Loans Charged Off Net of Recoveries (13,129) (70,899) (56,116) (123,471)
---------------- ---------------- ---------------- -----------------
Balance Ending $ 1,410,591 $ 1,424,205 $ 1,410,591 $ 1,424,205
================ ================ ================ =================
8
5. FORECLOSED ASSETS - NET
Real Estate owned or in judgment and other repossessed property:
March 31, 2001 September 30, 2000
------------------- ------------------
Real Estate Acquired by Foreclosure $ 0 $ 130,000
Real Estate Loans in Judgement and
Subject to Redemption 377,893 40,724
Other Repossessed Assets 5,580 0
------------------- ------------------
Total Foreclosed Assets - Net $ 383,473 $ 170,724
=================== ==================
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 March 31, 2001, the Bank had outstanding commitments to fund real estate
loans of $1,845,106. Of the commitments outstanding, $1,648,731 were for fixed
rate loans at rates of 6.850% to 9.500%. Commitments for adjustable rate loans
amounted to $196,375 with initial rates of 6.875% to 7.125%. Outstanding loan
commitments to sell as of March 31, 2001 were $1,721,566. The Bank had
outstanding commercial loan commitments of $2,430,000 with initial rates of
8.000% to 9.000%, at March 31, 2001.
9
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 six months ended March 31, 2001 and 2000, were
determined as follows:
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
Basic Earnings Per Share
Three months ended Six months ended
March 31 March 31
2001 2000 2001 2000
----------- ----------- ----------- -----------
Weighted average common shares outstanding
net of treasury shares 1,092,438 1,131,302 1,097,511 1,130,412
Average unallocated ESOP shares (38,436) (52,124) (40,148) (53,836)
----------- ----------- ----------- -----------
Weighted Average Shares for Basic EPS 1,054,002 1,079,178 1,057,363 1,076,576
=========== =========== =========== ===========
Net Income before cumulative effect
of accounting change $ 552,874 $ 504,397 $ 1,233,347 $ 1,091,001
=========== =========== =========== ===========
Net Income $ 552,874 $ 504,397 $ 1,018,794 $ 1,091,001
=========== =========== =========== ===========
Earnings per share amount before cumulative effect of
change in accounting for financial instruments $ 0.52 $ 0.47 $ 1.16 $ 1.01
=========== =========== =========== ===========
Earnings Per Share $ 0.52 $ 0.47 $ 0.96 $ 1.01
=========== =========== =========== ===========
Diluted Earnings Per Share
Three months ended Six months ended
March 31 March 31
2001 2000 2001 2000
---------- ---------- ---------- ----------
Weighted average shares for Basic EPS 1,054,002 1,079,178 1,057,363 1,076,576
Dilutive stock options 78,706 84,352 81,681 88,750
---------- ---------- ---------- ----------
Weighted Average Shares for Diluted EPS 1,132,708 1,163,530 1,139,044 1,165,326
========== ========== ========== ==========
Net Income before cumulative effect
of accounting change $ 552,874 $ 504,397 $1,233,347 $1,091,001
========== ========== ========== ==========
Net Income $ 552,874 $ 504,397 $1,018,794 $1,091,001
========== ========== ========== ==========
Earnings per share amount before cumulative effect
of change in accounting for financial instruments $ 0.49 $ 0.43 $ 1.08 $ 0.94
========== ========== ========== ==========
Earnings Per Share $ 0.49 $ 0.43 $ 0.90 $ 0.94
========== ========== ========== ==========
10
8. DIVIDENDS
At the Company's January 17, 2001 board meeting, the Directors of the Company
declared a $0.15 per share dividend. The dividend was paid February 15, 2001 to
all stockholders of record as of February 1, 2001.
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:
Securities Transferred
-------------------------------------------------------------------------
Available
Trading For Sale Total Total
(at fair value) (at fair value) (at fair value) (at book value)
---------------- ---------------- --------------- ----------------
Security
- --------
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
================ ================ =============== ================
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:
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.
11
LANDMARK BANCSHARES, INC.
PART I - FINANCIAL INFORMATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Landmark Bancshares, Inc. (the "Registrant" or the "Company") may from time to
time make written or oral "forward-looking statements", including statements
contained in the Company's filings with the Securities and Exchange Commission
(including the reports on Form 10-K, and 10-Q and the exhibits thereto), in its
reports to stockholders and in other communications by the Company, which are
made in good faith by the Company pursuant to the "Safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations, estimates and
intentions, that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's financial performance to differ materially from the
plans, objectives, expectations, estimates and intentions expressed in such
forward-looking statements: the strength of the United States economy in general
and the strength of the local economies in which the Company conducts
operations; the effects of, and changes in, trade, monetary and fiscal policies
and laws, including interest rate policies of the Board of Governors of the
Federal Reserve System, inflation, interest rate, market and monetary
fluctuations; the timely development of and acceptance of new products and
services of the Company and the perceived overall value of these products and
services by users, including the features, pricing and quality compared to
competitors' products and services; the success of the Company in gaining
regulatory approval of its products and services, when required; the impact of
changes in financial services' laws and regulations (including laws concerning
taxes, banking, securities and insurance); technological changes; changes in
consumer spending and savings habits; and the success of the Company at managing
these risks.
The Company cautions that this list of important factors is not exclusive. The
company does not undertake to update any forward-looking statement, whether
written or oral, that may be made from time to time by or on behalf of the
Company.
This commentary is based on the assumption the reader of the form 10-Q has read,
or has access to Managements' Discussion and Analysis, MD&A, for the preceding
fiscal year-end September 30, 2000 filed in form 10-K. The results for the three
months ended March 31, 2001 are not necessarily indicative of the results that
may be expected for the final year ending September 30, 2001 or any other
period.
General:
Landmark Bancshares, Inc. ("Company") is the holding company for Landmark
Federal Savings Bank ("Bank"). Apart from the operations of the Bank, the
Company did not engage in any significant operations during the quarter ended
March 31, 2001. The Bank is engaged in the business of accepting deposit
accounts from the general public. These funds are used to originate mortgage
loans for the purchase and refinancing of single-family homes located in Central
and Southwestern Kansas, and the purchase of mortgage-backed and investment
securities. In addition, the Bank offers and purchases loans through
correspondent lending relationships. The Bank also has a Loan Origination Office
located in Overland Park, Kansas. To a lesser extent, the Bank will purchase
adjustable rate mortgage loans to manage its interest rate risk as deemed
necessary. The Bank also makes automobile loans, second mortgage loans, home
equity loans, savings deposit loans, and small business loans.
12
Changes in financial condition between March 31, 2001 and September 30, 2000:
On October 1, 2000, the Company adopted the provisions of Statement of Financial
Accounting Standards 133 (SFAS 133). As permitted by SFAS 133, the Company
transferred all of its securities from the held-to-maturity portfolio to the
available-for-sale and trading portfolios as follows:
Securities Transferred
-------------------------------------------------------------------------
Available
Trading For Sale Total Total
(at fair value) (at fair value) (at fair value) at book value)
---------------- ---------------- --------------- ----------------
Security
- --------
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
================ ================ =============== ================
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:
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.
All securities, $9,642,188, transferred to the trading portfolio were sold
between October 1 and December 31, 2000. The pretax profit was $43,618. The
proceeds were used to repay borrowings from Federal Home Loan Bank and fund
current operations.
During the quarter ended December 31, 2000 the Company sold approximately
$16,148,425 of longer term fixed rate loans at a pretax profit of $318,730. The
proceeds were used to repay borrowings from Federal Home Loan Bank and fund
current operations.
The sales of the investments and fixed rate loans noted above, were elements of
the Company's Interest Rate Risk Reduction Plan. The Interest Rate Risk
Reduction Plan is designed to lessen the affects of changing interest rates on
the Company's assets and liabilities.
13
Total assets decreased $5 million, or approximately 2% between December 31, 2000
and March 31, 2001. Components of this change are:
(In Millions)
March 31 December 31 Change
----------------- ------------------ ------------------
Investment securities
Held-to-maturity $ 0 $ 0 $ 0
Available-for-sale 27 28 (1)
----------------- ------------------ ----------------
27 28 (1)
----------------- ------------------ ----------------
Mortgaged-backed securities
Held-to-maturity 0 0 0
Available-for-sale 24 9 13
----------------- ------------------ ----------------
24 9 13
----------------- ------------------ ----------------
Loans receivable, net 158 179 (21)
Loans held-for-sale 2 0 (2)
----------------- ------------------ ----------------
160 179 (19)
----------------- ------------------ ----------------
Total cash and due from banks 7 6 1
----------------- ------------------ ----------------
Other 1 0 1
----------------- ------------------ ----------------
$ (5)
================
Improved market conditions permitted the Company to dispose of some
available-for sale assets during the quarter.
During the quarter $17,945,036 of loans receivable were exchanged for a like
dollar amount of mortgage-backed securities issued by Federal Home Loan Mortgage
Corporation, commonly known as, "Freddie Mac." The participation certificates
are traded daily. This allows management to take advantage of changes in the
market more quickly as opposed to selling loans directly to the market. Other
changes to Loans Receivable reflect repayment of loans in the normal course of
business.
Mortgaged-backed securities increased $17,945,036 as noted in the preceding
paragraph. Approximately $3,000,000 of these securities were sold during the
quarter. The proceeds were used to repay borrowings from Federal Home Loan Bank
and fund current operations. The additional decreases reflect principal payments
in the normal course of business.
Liabilities decreased from December 31, 2000 to March 31, 2001 by $7 million.
Components of this change are:
(In Millions)
March 31 December 30 Change
-------------- ------------------ ------------
Deposits $ 152 $ 155 $ (3)
Advances - FHLB 42 46 (4)
------------
Decrease $ (7)
============
Deposits decreased primarily due to maturing deposits being withdrawn by public
entities.
Advances from FHLB (Federal Home Loan Bank) decreased from December 31, 2000 to
March 31, 2001, from repayments funded by sales of mortgage-backed securities.
14
Results of operations: comparison between the three and six months ended March
31, 2001 and 2000:
Three months ended March 31, 2001 and 2000:
Total interest income decreased $188,635, or 4%. Interest and dividends on
investment securities decreased $182,649, or 28%, due to the sales of investment
securities previously discussed.
Total interest expense decreased $79,611, or 3%. Interest expense on deposits
increased $146,778, or 8%. The increase is due primarily to higher interest
rates paid to depositors. The higher interest rates paid were required to
attract and retain deposits in the local market. Although interest rates have
decreased the first quarter of calendar 2001, the effect of the decrease is not
available to reduce expense until maturing deposits are reinvested with the Bank
at current lower interest rates. Interest expense on borrowed funds decreased
$226,389, or 26% due to repayment of principal on loans to Federal Home Loan
Bank previously discussed and declining interest rates on short-term borrowings
from Federal Home Loan Bank.
Provision for loan losses decreased $50,000, or 53%. At September 30, 2000
management conducted a complete review of its reserves for losses and concluded
reserves were adequate in relation to loan balances. Management believes current
additions to the reserves of $45,000 for the quarter is adequate. Management
continues to closely monitor the loan portfolios for potential write-downs.
Net interest income after provision for losses decreased $59,204, or 4%.
Components of the decrease for the three months ended March 31, are:
(In Thousands)
2001 2000 Change
------- ------- -------
Interest income $ 4,269 $ 4,457 $ (188)
Interest expense 2,644 2,723 (79)
Provision for losses on loans 45 95 (50)
-------
Decrease $ (59)
=======
Non-interest income increased $125,281, or 56%. The increase is due primarily to
the gain on sales of available-for-sale investments. Components of the increase
are:
(In Thousands)
2001 2000 Change
------- ------- -------
Net gain on sales of available-for-sale investments $ 147 $ 33 $ 114
Net gain on sales of loans 60 41 19
Other (8)
------
Increase $ 125
======
Non-interest expense increased $52,380, or 5%. The increase is due primarily to
increased compensation expenses incurred as a result of filling positions open
at March 31, 2000 and annual increases given employees in the quarter ended
March 31, 2001. Components of the increase are:
(In Thousands)
2001 2000 Change
------ ------ -------
Compensation and related expenses $ 638 $ 532 $ 106
Advertising 18 35 (17)
Data processing 44 63 (19)
Other expenses 262 278 (16)
Other changes (2)
-----
Increase $ 52
=====
15
Net income increased $48,477, or 10%. Components of the increase are:
(In Thousands)
2001 2000 Change
------ ------ -------
Net interest income after provision for losses $1,580 $1,639 $ (59)
Non-interest income 349 224 125
Non-interest expense 1,054 1,001 (53)
Income taxes 322 357 35
------ ------ ------
Net income $ 553 $ 505 48
====== ====== ======
Six months ended March 31, 2001 and 2000:
Refer to note 9 of the Notes to Consolidated Financial Statements that discusses
a change in accounting for derivative instruments and hedging activities.
Total interest income decreased $183,223, or 2%. Interest on loans increased
$208,716, or 3%, primarily due to higher loan balances prior to sales of loans
and exchange of loans previously discussed. Interest and dividends on investment
securities decreased $324,309, or 24%, due to the sales of investment securities
previously discussed.
Total interest expense increased $208,423, or 4%. Interest expense on deposits
increased $465,598, or 13%. The increase is due primarily to higher interest
rates paid to depositors. The higher interest rates paid were required to
attract and retain deposits in the local market. Although interest rates have
decreased the first quarter of calendar 2001, the effect of the decrease is not
available to reduce expense until maturing deposits are reinvested with the Bank
at current lower interest rates. Interest expense on borrowed funds decreased
$257,175, or 15% due to repayment of principal on loans to Federal Home Loan
Bank previously discussed and declining interest rates on short-term borrowings
from Federal Home Loan Bank.
Provision for loan losses decreased $140,000, or 61%. At September 30, 2000
management conducted a complete review of its reserves for losses and concluded
reserves were adequate in relation to loan balances. Management believes current
additions to the reserves of $90,000 for the six months is adequate. Management
continues to closely monitor the loan portfolios for potential write-downs.
Net interest income after provision for losses decreased $251,646, or 7%.
Components of the decrease for the six months ended March 31, are:
(In Thousands)
2001 2000 Change
------- ------- --------
Interest income $ 8,753 $ 8,936 $ (183)
Interest expense 5,521 5,313 208
Provision for losses on loans 90 230 (140)
-------
Decrease $ (251)
=======
Non-interest income increased $442,138, or 98%. The increase is due primarily to
the gain on sales of available-for-sale investments and loans. Components of the
increase are:
(In Thousands)
2001 2000 Change
---- ---- ------
Net gain on sales of available-for-sale investments $170 $ 43 $127
Net gain on sales of loans 378 92 286
Other 29
----
Increase $442
====
16
Non-interest expense increased $41,902, or 2%. The increase is due primarily to
increased compensation expenses incurred as a result of filling positions open
at March 31, 2000 and annual increases given employees in the quarter ended
March 31, 2001. Components of the increase are:
(In Thousands)
2001 2000 Change
------ ------ -------
Compensation and related expenses $1,265 $1,140 $ 125
Advertising 39 55 (16)
Federal insurance premium 49 71 (22)
Data processing 76 100 (24)
Other expense 499 531 (32)
Other charges 11
------
Increase $ 42
======
Net income decreased $72,207, or 7%. Components of the decrease are:
(In Thousands)
2001 2000 Change
------- ------- -------
Net interest income after provision for losses $ 3,142 $ 3,394 $ (252)
Non-interest income 893 451 442
Non-interest expense 2,069 2,027 42
Income taxes 733 727 6
Cumulative effect of change in accounting
for derivative financial instruments net of
income tax benefit of $125,144 (214) (214)
------- ------- -------
Net income $ 1,019 $ 1,091 $ (72)
======= ======= =======
Liquidity and Capital Resources:
The Bank is required by the regulations of the Office of Thrift Supervision
("OTS") to maintain liquid assets sufficient to ensure its safety and soundness.
The Bank manages its liquidity to meet its funding needs, including: deposit
outflows, disbursement of payments collected from borrowers for taxes and
insurance, and loan principal disbursements. The Bank also manages its liquidity
to meet its asset/liability management objectives.
In addition to funds provided from operations, the Bank's primary sources of
funds are: savings deposits, principal repayments on loans and mortgage-backed
securities, and matured or called investment securities. In addition, the Bank
may borrow funds from the Federal Home Loan Bank of Topeka.
Scheduled loan repayments and maturing investment securities are a relatively
predictable source of funds. However, savings deposit flows and prepayments on
loans and mortgage-backed securities are significantly influenced by changes in
market interest rates, economic conditions and competition. The Bank strives to
manage the pricing of its deposits to maintain a balanced stream of cash flows
commensurate with its loan commitments.
The Bank is subject to various regulatory capital requirements administered by
federal banking agencies. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's assets, liabilities,
and certain off-balance sheet items as calculated under regulatory accounting
practices.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of core and tangible capital (as defined in regulations) to assets (as
defined) and core and total capital to risk weight assets (as defined).
Management believes, as of March 31, 2001, that the Bank meets all capital
adequacy requirements to which it is subject.
17
The Bank's actual capital amounts (in thousands) and ratios as of March 31, 2001
are presented in the following table:
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes: Action Provisions:
Amount Ratio Amount Ratio Amount Ratio
------- ----- ------- ----- ------- -----
As of March 31, 2001:
Total (Risk-Based) Capital $19,430 17.80% $ 8,709 8.00% $10,886 10.00%
(to Risk Weighted Assets)
Core (Tier 1) Capital $18,069 16.60% n/a n/a $ 6,532 6.00%
(to Risk Weighted Assets)
Core (Tier 1) Capital - leverage $18,069 8.30% $ 8,683 4.00% $10,854 5.00%
(to Assets)
18
LANDMARK BANCSHARES, INC.
PART I - FINANCIAL INFORMATION
ITEM 3. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Bank has established an Asset/Liability Management Committee ("ALCO") for
the purpose of monitoring and managing interest rate risk. The Bank is subject
to the risk of interest rate fluctuations to the extent that there is a
difference, or mismatch, between the amount of the Bank's interest-earning
assets and interest-bearing liabilities, which mature or reprice in specified
periods. Consequently, when interest rates change, to the extent the Bank's
interest-earning assets have longer maturities or effective repricing periods
than its interest-bearing liabilities, the interest income realized on the
Bank's interest-earning assets will adjust more slowly than the interest expense
on its interest-bearing liabilities. This mismatch in the maturity and interest
rate sensitivity of assets and liabilities is commonly referred to as the "gap."
A gap is considered positive when the amount of interest rate sensitive assets
maturing or repricing during a specified period exceeds the amount of interest
rate sensitive liabilities maturing or repricing during such period, and is
considered negative when the amount of interest rate sensitive liabilities
maturing or repricing during a specified period exceeds the amount of interest
rate assets maturing or repricing during such period. Generally, during a period
of rising interest rates, a negative gap would adversely affect net interest
income while a positive gap would result in an increase in net interest income,
and during a period of declining interest rates, a negative gap would result in
an increase in net interest income while a positive gap would adversely affect
net interest income. The Bank utilizes externally prepared interest rate
sensitivity of the net portfolio value reports furnished by the OTS to monitor
and manage its interest rate risk.
The Bank has historically invested in interest-earning assets that have a longer
duration than its interest-bearing liabilities. The mismatch in duration of the
interest-sensitive liabilities indicates that the Bank is exposed to interest
rate risk. In a rising rate environment, in addition to reducing the market
value of long-term interest-earning assets, liabilities will reprice faster than
assets; therefore, decreasing net interest income. To mitigate this risk, the
Bank has placed a greater emphasis on shorter-term, higher yielding assets that
reprice more frequently in reaction to interest rate movements. In addition, the
Bank has continued to include in total assets a concentration of adjustable-rate
assets to benefit the one-year cumulative gap as such adjustable-rate assets
reprice and are more responsive to the sensitivity of more frequently repricing
interest-bearing liabilities.
The OTS prepares a report quarterly on the interest rate sensitivity of the net
portfolio value ("NPV") from information provided by the Bank. The OTS adopted a
rule in August 1993 incorporating an interest rate risk ("IRR") component into
the risk-based capital rules. Implementation of the rule has been delayed until
the OTS has tested the process under which institutions may appeal such capital
deductions. The IRR component is a dollar amount that will be deducted from
total capital for the purpose of calculating an institution's risk-based capital
requirement and is measured in terms of the sensitivity of its NPV to changes in
interest rates. The NPV is the difference between incoming and outgoing
discounted cash flows from assets, liabilities, and off-balance sheet contracts.
An institution's IRR is measured as the change to its NPV as the result of a
hypothetical 200 basis point change in market interest rates. A resulting change
in NPV of more than 2% of the estimated market value of its assets will require
the institution to deduct from its capital 50% of that excess change. The rule
provides that the OTS will calculate the IRR component quarterly for each
institution.
19
The following tables present the Bank's NPV as well as other data as of December
31, 2000 (latest information available) as calculated by the OTS, based on
information provided to the OTS by the Bank.
Change in Interest
Rates in Basis
Points (Rate Shock) Net Portfolio Value NPV as % of Present Value of Assets
$ Amount $ Change % Change NPV Ratio Change
- ----------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
+300 bp 10,525 (13,168) (56%) 4.92% (541 bp)
+200 bp (1) 15,240 (8,453) (36%) 6.95% (338 bp)
+100 bp 19,631 (4,062) (17%) 8.74% (159 bp)
0 bp 23,693 10.33%
-100 bp 35,681 11,988 8% 11.05% 72 bp
-200 bp 26,975 3,282 14% 11.50% 117 bp
-300 bp 28,699 5,006 21% 12.10% 177 bp
(1) Denotes rate shock used to compute interest rate risk capital component.
December 31, 2000
-----------------
Risk Measures (200 Basis Point Rate Shock):
Pre-Shock NPV Ratio: NPV as % of Present Value of Assets 10.33%
Exposure Measure: Post-Shock NPV Ratio 6.95%
Sensitivity Measure: Decline in NPV Ratio 3.38%
Utilizing the data above, the Bank, at December 31, 2000, would have been
considered by the OTS to have been subject to "above normal" interest rate risk.
Accordingly, a deduction from risk-based capital would have been required.
However, even with this deduction, the capital of the Bank would continue to
exceed all regulatory requirements.
Set forth below is a breakout, by basis points of the Bank's NPV as of December
31, 2000 (latest information available) by assets, liabilities, and off balance
sheet items.
No
Net Portfolio Value -300 bp -200 bp -100 bp Change +100 bp +200 bp +300 bp
----------------------------------------------------------------------------------------------------
Assets $237,138 $234,509 $232,325 $229,457 $224,542 $219,324 $213,793
-Liabilities 208,556 207,615 206,694 205,785 204,891 204,014 203,144
+Off Balance Sheet 117 81 50 21 (20) (70) (124)
------------------------------------------------------------------------------
Net Portfolio Value $ 28,699 $ 26,975 $ 25,681 $ 23,693 $ 19,631 $ 15,240 $ 10,525
==============================================================================
Certain assumptions utilized by the OTS in assessing the interest rate risk of
savings associations were employed in preparing the previous table. These
assumptions related to interest rates, loan prepayment rates, deposit decay
rates and the market values of certain assets under the various interest rate
scenarios. It was also assumed that delinquency rates would not change as a
result of changes in interest rates although there can be no assurance that this
will be the case. Even if interest rates change in the designated amounts, there
can be no assurance that the Bank's assets and liabilities would perform as set
forth above.
20
Certain shortcomings are inherent in the preceding NPV tables because the data
reflect hypothetical changes in NPV based upon assumptions used by the OTS to
evaluate the Bank as well as other institutions. However, net interest income
should decline with instantaneous increases in interest rates while net interest
income should increase with instantaneous declines in interest rates. Generally,
during periods of increasing interest rates, the Bank's interest rate sensitive
liabilities would reprice faster than its interest rate sensitive assets causing
a decline in the Bank's interest rate spread and margin. This would result from
an increase in the Bank's cost of funds that would not be immediately offset by
an increase in its yield on earning assets. An increase in the cost of funds
without an equivalent increase in the yield of earning assets would tend to
reduce net interest income.
In times of decreasing interest rates, fixed rate assets could increase in value
and the lag in repricing of interest rate sensitive assets could be expected to
have a positive effect on the Bank's net interest income. However, changes in
only certain rates, such as shorter term interest rate declines without longer
term interest rate declines, could reduce or reverse the expected benefit from
decreasing interest rates.
21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matter to a Vote of Security Holders
None
Item 5. Other Information
Events Subsequent to March 31, 2001:
April 21, 2001 the Bank's Hoisington Branch Office was damaged
by a tornado. The estimated costs to repair the building are
$40,000 to $50,000. The building is valued at $80,000. Costs
to repair the building are covered by insurance less a $250
deductible. The Bank is also insured for loss of income and
related costs incurred by the Bank during the time period the
branch is being repaired. The Bank has another branch located
approximately 10 miles from the Hoisington Branch. This branch
has assumed responsibility for the day-to-day operations of
the Hoisington Branch. Repairs are estimated to be completed
June 15, 2001. Management does not believe this event will
have a material effect upon the earnings of the Bank, or the
Company.
On April 19, 2001 the Company filed a current report on Form
8-K with the Securities Exchange Commission. The purpose of
the filing was to disclose the possible merger of equals
between the Company and MNB Bancshares, Inc.
Item 6. Exhibits and Report on Form 8-K
None
22
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 thereunto duly authorized.
Date May 11, 2001 LANDMARK BANCSHARES, INC.
-----------------------
By /S/ Larry Schugart
----------------------------------------
LARRY SCHUGART
President and Chief Executive Officer
(Duly Authorized Representative)
By /S/ Stephen H. Sundberg
----------------------------------------
STEPHEN H. SUNDBERG
Senior Vice President and
Chief Financial Officer
(Duly Authorized Representative)