10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x                                   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

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 0-33203

LANDMARK BANCORP, INC.

(Exact name of Registrant as specified in its charter)

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

701 Poyntz Avenue, Manhattan, Kansas       66502

(Address of principal executive offices)     (Zip Code)

(785) 565-2000

(Registrant's telephone number, including area code)

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company x
(Do not check if a smaller reporting company)

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

Indicate the number of shares outstanding of each of the Issuer's classes of common stock as of the latest practicable date: as of November 9, 2012, the Issuer had outstanding 2,783,380 shares of its common stock, $.01 par value per share.

LANDMARK BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

		Page Number
	PART I
Item 1.	Financial Statements	2 - 22
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23 – 34
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34 – 35
Item 4.	Controls and Procedures	36
	PART II
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	37
Form 10-Q Signature Page		38

1

ITEM 1. FINANCIAL STATEMENTS

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)	September 30,		December 31,
	2012		2011
	(Unaudited)		(Audited)
Assets
Cash and cash equivalents	$	23,117	$	17,501
Investment securities:
Available-for-sale, at fair value		239,018		198,214
Other securities		5,727		6,671
Loans, net		307,292		310,081
Loans held for sale		9,767		9,754
Premises and equipment, net		15,106		14,692
Real estate owned		2,584		2,264
Bank owned life insurance		16,548		16,163
Goodwill		13,075		12,894
Other intangible assets, net		2,266		1,923
Accrued interest and other assets		9,718		8,083
Total assets	$	644,218	$	598,240
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing demand	$	72,647	$	66,122
Money market and NOW		217,963		171,529
Savings		45,410		36,650
Time, $100,000 and greater		64,280		63,374
Time, other		114,520		116,459
Total deposits		514,820		454,134
Federal Home Loan Bank borrowings		35,735		49,163
Other borrowings		23,296		27,434
Accrued interest, taxes, and other liabilities		7,446		8,389
Total liabilities		581,297		539,120
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par, 200,000 shares authorized; none issued		-		-
Common stock, $0.01 par, 7,500,000 shares authorized; 2,783,380 and 2,782,826 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively		28		28
Additional paid-in capital		29,386		29,313
Retained earnings		29,363		26,200
Accumulated other comprehensive income		4,144		3,579
Total stockholders’ equity		62,921		59,120
Total liabilities and stockholders’ equity	$	644,218	$	598,240

See accompanying notes to consolidated financial statements.

2

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

	Three months ended					Nine months ended
(Dollars in thousands, except per share amounts)	September 30,					September 30,
	2012		2011			2012			2011
Interest income:
Loans:
Taxable	$	4,033	$	4,296		$	12,380		$	12,871
Tax-exempt		96		78			287			250
Investment securities:
Taxable		756		712			2,280			2,038
Tax-exempt		604		605			1,802			1,800
Total interest income		5,489		5,691			16,749			16,959
Interest expense:
Deposits		525		669			1,692			2,132
Borrowings		439		471			1,326			1,427
Total interest expense		964		1,140			3,018			3,559
Net interest income		4,525		4,551			13,731			13,400
Provision for loan losses		1,000		500			1,600			1,600
Net interest income after provision for loan losses		3,525		4,051			12,131			11,800
Non-interest income:
Fees and service charges		1,360		1,271			3,851			3,625
Gains on sales of loans, net		1,626		841			4,255			1,923
Bank owned life insurance		103		149			393			443
Other		126		120			416			535
Total non-interest income		3,215		2,381			8,915			6,526
Investment securities:
Net impairment losses		-		(19	)		(63	)		(19	)
Gains on sales of investment securities		-		186			359			186
Investment securities gains, net		-		167			296			167
Non-interest expense:
Compensation and benefits		2,457		2,338			7,265			7,009
Occupancy and equipment		771		755			2,254			2,183
Professional fees		281		159			848			1,190
Amortization of intangibles		481		190			907			551
Data processing		213		187			631			564
Advertising		121		128			363			425
Federal deposit insurance premiums		80		75			262			367
Foreclosure and real estate owned expense		60		20			89			84
Other		804		821			2,508			2,358
Total non-interest expense		5,268		4,673			15,127			14,731
Earnings before income taxes		1,472		1,926			6,215			3,762
Income tax expense		267		437			1,465			573
Net earnings	$	1,205	$	1,489		$	4,750		$	3,189
Earnings per share:
Basic (1)	$	0.43	$	0.54		$	1.71		$	1.15
Diluted (1)	$	0.43	$	0.54		$	1.70		$	1.15
Dividends per share (1)	$	0.19	$	0.18		$	0.57		$	0.54

(1) Per share amounts for the periods ended September 30, 2011 have been adjusted to give effect to the 5% stock dividend paid during December 2011.

See accompanying notes to consolidated financial statements.

3

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three months ended					Nine months ended
(Dollars in thousands)	September 30,					September 30,
	2012		2011			2012			2011
Net earnings	$	1,205	$	1,489		$	4,750		$	3,189
Unrealized holding gains (losses) on available-for-sale securities for which a portion of an other-than-temporary impairment has been recorded in earnings		84		(37	)		178			205
Net unrealized holding gains on all other available-for-sale securities		1,139		1,326			1,011			3,794
Less reclassification adjustment for net gains included in earnings		-		(167	)		(296	)		(167	)
Net unrealized gains		1,223		1,122			893			3,832
Income tax expense		452		418			328			1,420
Total comprehensive income	$	1,976	$	2,193		$	5,315		$	5,601

See accompanying notes to consolidated financial statements.

4

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine months ended
(Dollars in thousands)	September 30,
	2012			2011
Cash flows from operating activities:
Net earnings	$	4,750		$	3,189
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for loan losses		1,600			1,600
Provision for valuation allowance on real estate owned		39			27
Amortization of investment security premiums, net		1,010			627
Amortization of intangibles		907			551
Depreciation		716			669
Bank owned life insurance		(393	)		(443	)
Stock-based compensation		67			76
Deferred income taxes		(420	)		(347	)
Gains on investment securities, net		(296	)		(167	)
Gain on sales of real estate owned, net		(39	)		(166	)
Gains on sales of loans, net		(4,255	)		(1,923	)
Proceeds from sales of loans		159,771			90,209
Origination of loans held for sale		(155,529	)		(84,300	)
Changes in assets and liabilities:
Accrued interest and other assets		(2,349	)		448
Accrued expenses, taxes, and other liabilities		(1,026	)		1,708
Net cash provided by operating activities		4,553			11,758
Cash flows from investing activities:
Net decrease (increase) in loans		16,172			(3,051	)
Maturities and prepayments of investment securities		38,795			40,913
Purchases of investment securities		(73,970	)		(59,643	)
Proceeds from sales of investment securities		9,841			4,740
Net cash received in bank acquisition		3,965			-
Purchase of bank owned life insurance		-			(2,500	)
Proceeds from sales of premises and equipment and real estate owned		412			2,317
Purchases of premises and equipment, net		(721	)		(252	)
Net cash used in investing activities		(5,506	)		(17,476	)
Cash flows from financing activities:
Net increase in deposits		25,716			19,915
Federal Home Loan Bank advance repayments		(28	)		(28	)
Change in Federal Home Loan Bank line of credit, net		(13,400	)		(8,500	)
Proceeds from other borrowings		-			1,237
Repayments on other borrowings		(4,138	)		-
Proceeds from issuance of common stock under stock option plans		5			28
Excess tax benefit related to stock option plans		1			5
Payment of dividends		(1,587	)		(1,507	)
Net cash provided by financing activities		6,569			11,150
Net increase in cash and cash equivalents		5,616			5,432
Cash and cash equivalents at beginning of period		17,501			9,735
Cash and cash equivalents at end of period	$	23,117		$	15,167

5

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

(Unaudited)

	Nine months ended
(Dollars in thousands)	September 30,
	2012		2011
Supplemental disclosure of cash flow information:
Cash payments (refunds) for income taxes	$	1,880	$	(445	)
Cash paid for interest		3,068		3,666
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to real estate owned		125		1,221
Bank acquisition:
Fair value of liabilities assumed		35,061		-
Fair value of assets acquired		31,096		-

See accompanying notes to consolidated financial statements.

6

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except per share amounts)	Common stock		Additional paid-in capital		Retained earnings			Accumulated other Comprehensive income		Total
Balance at December 31, 2011	$	28	$	29,313	$	26,200		$	3,579	$	59,120
Net earnings		-		-		4,750			-		4,750
Change in fair value of investment securities available-for-sale, net of tax		-		-		-			565		565
Dividends paid ($0.57 per share)		-		-		(1,587	)		-		(1,587	)
Stock-based compensation		-		67		-			-		67
Exercise of stock options, 554 shares, including excess tax benefit of $1		-		6		-			-		6
Balance at September 30, 2012	$	28	$	29,386	$	29,363		$	4,144	$	62,921
Balance at December 31, 2010	$	26	$	27,102	$	25,767		$	922	$	53,817
Net earnings		-		-		3,189			-		3,189
Change in fair value of investment securities available-for-sale, net of tax		-		-		-			2,412		2,412
Dividends paid ($0.54 per share)		-		-		(1,507	)		-		(1,507	)
Stock-based compensation		-		76		-			-		76
Exercise of stock options, 2,559 shares, including excess tax benefit of $5		-		33		-			-		33
Balance at September 30, 2011	$	26	$	27,211	$	27,449		$	3,334	$	58,020

7

LANDMARK BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Interim Financial Statements

The consolidated financial statements of Landmark Bancorp, Inc. (the “Company”) and subsidiary have been prepared in accordance with the instructions to Form 10-Q. To the extent that information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements are contained in or consistent with the consolidated audited financial statements incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2011, such information and footnotes have not been duplicated herein. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of financial statements have been reflected herein. The results of the interim period ended September 30, 2012 are not necessarily indicative of the results expected for the year ending December 31, 2012. The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that financial statements are filed for potential recognition or disclosure.

2. Goodwill and Other Intangible Assets

The Company tests goodwill for impairment annually or more frequently if circumstances warrant. The Company’s annual impairment test as of December 31, 2011 concluded that its goodwill was not impaired; however, the Company can make no assurances that future impairment tests will not result in goodwill impairments. The Company concluded there were no triggering events during the first nine months of 2012 that required an interim goodwill impairment test.

On April 1, 2012, the Company’s subsidiary, Landmark National Bank, assumed approximately $35.0 million in deposits with the acquisition of the Wellsville Bank. The Company identified $24.7 million of core deposits and recorded a core deposit intangible asset of $308,000 as a result of the acquisition. The core deposit intangible asset will be amortized over its estimated useful life of ten years on an accelerated basis. A summary of this and the other intangible assets that continue to be subject to amortization is as follows:

(Dollars in thousands)	As of September 30, 2012
	Gross carrying amount		Accumulated amortization			Valuation allowance			Net carrying amount
Core deposit intangible assets	$	4,973	$	(4,171	)	$	-		$	802
Mortgage servicing rights		2,785		(1,109	)		(212	)		1,464
Total other intangible assets	$	7,758	$	(5,280	)	$	(212	)	$	2,266

(Dollars in thousands)	As of December 31, 2011
	Gross carrying amount		Accumulated amortization			Valuation allowance		Net carrying amount
Core deposit intangible assets	$	4,665	$	(3,902	)	$	-	$	763
Mortgage servicing rights		2,149		(989	)		-		1,160
Total other intangible assets	$	6,814	$	(4,891	)	$	-	$	1,923

Aggregate core deposit and mortgage servicing rights amortization expense was $481,000 and $190,000 for the third quarter of 2012 and 2011, respectively. Aggregate core deposit and mortgage servicing rights amortization expense was $907,000 and $551,000 for the first nine months of 2012 and 2011, respectively. The following sets forth estimated amortization expense for other intangible assets for the remainder of 2012 and in successive years ending December 31:

(Dollars in thousands)	Amortization
	expense
Remainder of 2012	$	229
2013		846
2014		756
2015		301
2016		38
Thereafter		96
Total	$	2,266

8

3. Investments

A summary of investment securities available-for-sale is as follows:

	As of September 30, 2012
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value
U. S. federal agency obligations	$	7,135	$	54	$	-		$	7,189
Municipal obligations, tax exempt		73,117		3,989		(32	)		77,074
Municipal obligations, taxable		37,444		912		(8	)		38,348
Mortgage-backed securities		107,319		1,918		(60	)		109,177
Common stocks		621		250		-			871
Pooled trust preferred securities		1,023		-		(458	)		565
Certificates of deposit		5,794		-		-			5,794
Total	$	232,453	$	7,123	$	(558	)	$	239,018

	As of December 31, 2011
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value
U. S. federal agency obligations	$	9,120	$	44	$	-		$	9,164
Municipal obligations, tax exempt		65,404		4,226		(1	)		69,629
Municipal obligations, taxable		18,961		243		(69	)		19,135
Mortgage-backed securities		92,742		1,823		(93	)		94,472
Common stocks		621		198		-			819
Pooled trust preferred securities		1,104		-		(699	)		405
Certificates of deposit		4,590		-		-			4,590
Total	$	192,542	$	6,534	$	(862	)	$	198,214

9

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

			As of September 30, 2012
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
Municipal obligations, tax exempt		15	$	4,512	$	(32	)	$	-	$	-		$	4,512	$	(32	)
Municipal obligations, taxable		7		2,599		(6	)		211		(2	)		2,810		(8	)
Mortgage-backed securities		5		7,079		(60	)		-		-			7,079		(60	)
Pooled trust preferred securities		2		-		-			565		(458	)		565		(458	)
Total		29	$	14,190	$	(98	)	$	776	$	(460	)	$	14,966	$	(558	)

			As of December 31, 2011
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
Municipal obligations, tax exempt		1	$	247	$	(1	)	$	-	$	-		$	247	$	(1	)
Municipal obligations, taxable		15		6,579		(69	)		-		-			6,579		(69	)
Mortgage-backed securities		10		14,260		(93	)		-		-			14,260		(93	)
Pooled trust preferred securities		2		-		-			405		(699	)		405		(699	)
Total		28	$	21,086	$	(163	)	$	405	$	(699	)	$	21,491	$	(862	)

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

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. The Company does not intend to sell and it is more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of its cost. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believes that the municipal obligations identified in the tables above are temporarily impaired.

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

10

As of September 30, 2012, the Company owned two pooled trust preferred securities, which represent investments in pools of collateralized debt obligations issued by financial institutions and insurance companies. The market for these securities is considered to be inactive. The Company’s investments, Preferred Term Security (“PreTSL”) VIII and PreTSL IX, have remaining aggregate cost bases of $318,000 and $705,000 and non-credit-related, unrealized losses of $98,000 and $360,000, respectively. The Company uses discounted cash flow models on these two securities to assess if the present value of the cash flows expected to be collected is less than the amortized cost, which would result in an other-than-temporary impairment associated with the credit of the underlying collateral. The assumptions used in preparing the discounted cash flow models include the following: estimated discount rates, estimated deferral and default rates on collateral, assumed recoveries and estimated cash flows including all information available through the date of issuance of these financial statements. The discounted cash flow analysis includes a review of all issuers within the collateral pool and incorporates higher deferral and default rates, as compared to historical rates, in the cash flow projections through maturity. The Company also reviews stress tests of these securities to determine the additional estimated deferrals or defaults in the collateral pool in excess of what the Company believes is likely, before the payments on the individual securities are negatively impacted.

As of September 30, 2012, the analysis of the Company’s PreTSL VIII and IX investments indicated that the unrealized losses of $98,000 and $360,000, respectively, were not credit-related.

The following table provides additional information related to the Company’s investments in pooled trust preferred securities as of September 30, 2012:

(Dollars in thousands)										Cumulative
			Moody's		Original		Principal			credit			Cost		Unrealized			Fair
Investment	Class		rating		par		payments			losses			basis		loss			value
PreTSL VIII		B		C	$	1,000	$	-		$	(682	)	$	318	$	(98	)	$	220
PreTSL IX		B		Ca		1,000		(60	)		(235	)		705		(360	)		345
Total					$	2,000	$	(60	)	$	(917	)	$	1,023	$	(458	)	$	565

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

Maturities of investment securities at September 30, 2012 are as follows:

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Due in less than one year	$	15,379	$	15,509
Due after one year but within five years		148,248		151,264
Due after five years but within ten years		52,817		55,634
Due after ten years		15,388		15,740
Common stocks		621		871
Total	$	232,453	$	239,018

The preceding table includes scheduled principal payments and estimated prepayments for mortgage-backed securities, where actual maturities may differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties.

11

Gross realized gains and losses on sales of available-for-sale investment securities are as follows:

	Three months ended				Nine months ended
(Dollars in thousands)	September 30,				September 30,
	2012		2011		2012		2011
Realized gains	$	-	$	186	$	359	$	186
Realized losses		-		-		-		-
Total	$	-	$	186	$	359	$	186

Other investment securities primarily consist of restricted investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock. The carrying value of the FHLB stock was $3.9 million and $4.9 million at September 30, 2012 and December 31, 2011, respectively. The carrying value of the FRB stock was $1.8 million at September 30, 2012 and December 31, 2011. These securities are not readily marketable and are required for regulatory purposes and borrowing availability. Since there is no available market value, these securities are carried at cost. Redemption of these investments at par value is at the option of the FHLB or FRB. Also included in other investment securities are other miscellaneous investments in the common stock of various correspondent banks which are held for borrowing purposes and totaled $112,000 and $60,000 at September 30, 2012 and December 31, 2011, respectively. The Company assessed the ultimate recoverability of these investments and believes that no impairment has occurred.

4. Loans and Allowance for Loan Losses

Loans consisted of the following as of:

	September 30,			December 31,
(Dollars in thousands)	2012			2011
One-to-four family residential real estate	$	82,457		$	79,108
Construction and land		24,619			21,672
Commercial real estate		90,163			93,786
Commercial loans		59,360			57,006
Agriculture loans		32,927			39,052
Municipal loans		10,065			10,366
Consumer loans		13,563			13,584
Total gross loans		313,154			314,574
Net deferred loan costs and loans in process		305			214
Allowance for loan losses		(6,167	)		(4,707	)
Loans, net	$	307,292		$	310,081

12

The following tables provide information on the Company’s allowance for loan losses by loan class and allowance methodology:

	Three and nine months ended September 30, 2012
(Dollars in thousands)	One-to-four family residential real estate			Construction and land			Commercial real estate			Commercial loans			Agriculture loans			Municipal loans		Consumer loans			Total
Allowance for loan losses:
Balance at June 30, 2012	$	708		$	1,786		$	1,485		$	652		$	402		$	112	$	127		$	5,272
Charge-offs		-			(15	)		-			(60	)		-			-		(43	)		(118	)
Recoveries		1			1			-			5			1			-		5			13
Net charge-offs		1			(14	)		-			(55	)		1			-		(38	)		(105	)
Provision for loan losses		76			523			265			18			47			20		51			1,000
Balance at September 30, 2012		785			2,295			1,750			615			450			132		140			6,167
Balance at December 31, 2011	$	560		$	928		$	1,791		$	745		$	433		$	130	$	120		$	4,707
Charge-offs		(15	)		(15	)		-			(70	)		-			-		(120	)		(220	)
Recoveries		6			4			-			10			39			-		21			80
Net charge-offs		(9	)		(11	)		-			(60	)		39			-		(99	)		(140	)
Provision for loan losses		234			1,378			(41	)		(70	)		(22	)		2		119			1,600
Balance at September 30, 2012		785			2,295			1,750			615			450			132		140			6,167
Allowance for loan losses:
Individually evaluated for loss		184			1,414			-			-			-			65		16			1,679
Collectively evaluated for loss		601			881			1,750			615			450			67		124			4,488
Total		785			2,295			1,750			615			450			132		140			6,167
Loan balances:
Individually evaluated for loss		848			3,326			-			204			5			772		72			5,227
Collectively evaluated for loss		81,609			21,293			90,163			59,156			32,922			9,293		13,491			307,927
Total	$	82,457		$	24,619		$	90,163		$	59,360		$	32,927		$	10,065	$	13,563		$	313,154

	Three and nine months ended September 30, 2011
(Dollars in thousands)	One-to-four family residential real estate			Construction and land			Commercial real estate			Commercial loans			Agriculture loans			Municipal loans			Consumer loans			Total
Allowance for loan losses:
Balance at June 30, 2011	$	339		$	1,022		$	1,482		$	612		$	376		$	102		$	72		$	4,005
Charge-offs		-			(208	)		-			-			-			-			(41	)		(249	)
Recoveries		2			3			37			3			34			-			(12	)		67
Net charge-offs		2			(205	)		37			3			34			-			(53	)		(182	)
Provision for loan losses		(12	)		117			149			106			36			(3	)		107			500
Balance at September 30, 2011		329			934			1,668			721			446			99			126			4,323
Balance at December 31, 2010		395			1,186			1,576			1,173			399			99			139			4,967
Charge-offs		(104	)		(1,173	)		(434	)		(590	)		(1	)		-			(93	)		(2,395	)
Recoveries		26			3			37			11			35			-			39			151
Net charge-offs		(78	)		(1,170	)		(397	)		(579	)		34			-			(54	)		(2,244	)
Provision for loan losses		12			918			489			127			13			-			41			1,600
Balance at September 30, 2011		329			934			1,668			721			446			99			126			4,323
Allowance for loan losses:
Individually evaluated for loss		19			11			-			-			-			66			23			119
Collectively evaluated for loss		310			923			1,668			721			446			33			103			4,204
Total		329			934			1,668			721			446			99			126			4,323
Loan balances:
Individually evaluated for loss		803			225			18			-			71			775			39			1,931
Collectively evaluated for loss		77,901			21,882			94,114			53,209			42,206			6,499			13,407			309,218
Total	$	78,704		$	22,107		$	94,132		$	53,209		$	42,277		$	7,274		$	13,446		$	311,149

13

The Company’s key credit quality indicator is a loan’s performance status, defined as accruing or non-accruing. Performing loans are considered to have a lower risk of loss. Non-accrual loans are those which the Company believes have a higher risk of loss. The accrual of interest on non-performing loans is discontinued at the time the loan is ninety days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of principal or interest is considered doubtful. There were no loans 90 days delinquent and accruing interest at September 30, 2012 or December 31, 2011. The following tables present information on the Company’s past due and non-accrual loans by loan class:

	As of September 30, 2012
(Dollars in thousands)	30-59 days			60-89 days			90 days or
	delinquent			delinquent			more			Total past			Non-
	and			and			delinquent			due loans			accrual
	accruing			accruing			and accruing			accruing			loans			Total
One-to-four family residential real estate	$	500		$	1,752		$	-		$	2,252		$	839		$	3,091
Construction and land		19			-			-			19			3,326			3,345
Commercial real estate		148			-			-			148			-			148
Commercial loans		20			150			-			170			204			374
Agriculture loans		22			39			-			61			5			66
Municipal loans		-			-			-			-			131			131
Consumer loans		239			45			-			284			72			356
Total	$	948		$	1,986		$	-		$	2,934		$	4,577		$	7,511
Percent of gross loans		0.30	%		0.63	%		0.00	%		0.94	%		1.46	%		2.40	%

	As of December 31, 2011
(Dollars in thousands)	30-59 days			60-89 days			90 days or
	delinquent			delinquent			more			Total past			Non-
	and			and			delinquent			due loans			accrual
	accruing			accruing			and accruing			accruing			loans			Total
One-to-four family residential real estate	$	368		$	1,174		$	-		$	1,542		$	752		$	2,294
Construction and land		21			-			-			21			225			246
Commercial real estate		64			211			-			275			17			292
Commercial loans		1			201			-			202			78			280
Agriculture loans		1			-			-			1			63			64
Municipal loans		-			-			-			-			241			241
Consumer loans		160			18			-			178			43			221
Total	$	615		$	1,604		$	-		$	2,219		$	1,419		$	3,638
Percent of gross loans		0.20	%		0.51	%		0.00	%		0.71	%		0.45	%		1.16	%

14

The Company’s impaired loans increased from $2.5 million at December 31, 2011 to $5.2 million at September 30, 2012. The difference between the unpaid contractual principal and the impaired loan balance is a result of charge-offs recorded against impaired loans. The difference in the Company’s non-accrual loan balances and impaired loan balances at September 30, 2012 and December 31, 2011, was related to troubled debt restructurings (“TDR”) that are current and accruing interest, but still classified as impaired. The following tables present information on impaired loans:

(Dollars in thousands)	As of September 30, 2012
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	1,138	$	848	$	648	$	200	$	184	$	873	$	-
Construction and land		3,326		3,326		60		3,266		1,414		3,334		-
Commercial		204		204		203		1		-		335		-
Agriculture loans		5		5		5		-		-		10		-
Municipal loans		772		772		641		131		65		782		15
Consumer loans		72		72		56		16		16		73		-
Total impaired loans	$	5,517	$	5,227	$	1,613	$	3,614	$	1,679	$	5,407	$	15

(Dollars in thousands)	As of December 31, 2011
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	1,570	$	1,280	$	1,072	$	208	$	65	$	1,311	$	32
Construction and land		574		225		200		25		8		419		-
Commercial real estate		17		17		17		-		-		20		-
Commercial loans		78		78		-		78		35		83		-
Agriculture loans		63		63		63		-		-		65		-
Municipal loans		784		784		653		131		65		772		35
Consumer loans		43		43		10		33		32		49		-
Total impaired loans	$	3,129	$	2,490	$	2,015	$	475	$	205	$	2,719	$	67

During the first nine months of 2012, the Company classified a commercial loan relationship consisting of two commercial loans as a troubled debt restructuring after agreeing to extend the maturity of the loans while the borrower liquidated the business assets securing the loans. The Company did not charge-off any of the loan balances as the anticipated proceeds were expected to exceed the loan balances. As of September 30, 2012, the outstanding balances of these loans totaled $196,000 and were classified as non-accrual and impaired. During the third quarter of 2011, the Company restructured a construction and land loan relationship totaling $599,000 which was secured by raw land which had experienced a severe decline in value. As part of the agreement the Company agreed to reduce the outstanding loan balance to $250,000 in exchange for a $50,000 principal payment in the third quarter of 2011 and the remaining $200,000 to be received during the first quarter of 2012. The Company charged off $141,000 of the loan during the third quarter of 2010 and $208,000 during the third quarter of 2011, and the remaining $200,000 loan balance was classified as non-accrual and impaired as of September 30, 2011. The collateral deficiency of the raw land had previously been included in the allowance on impaired loans. During the first quarter of 2012, a construction and land loan totaling $200,000, after a modification during the third quarter of 2011, was paid off per the terms of the loan modification agreement. As of September 30, 2012, the Company had six loan modifications classified as TDRs. The Company evaluates each TDR individually and returns the loan to accrual status when a payment history is established after the restructuring and future payments are reasonably assured. There were no loans as of September 30, 2012 that had been modified as TDRs and then subsequently defaulted. At September 30, 2012, there are no commitments to lend additional funds to any borrower whose loan terms have been modified as a TDR. As of September 30, 2012, the Company had $148,000 of allowance recorded against loans classified as TDRs compared to $5,000 recorded at December 31, 2011. The following table presents information on loans that are classified as TDRs:

15

(Dollars in thousands)
	As of September 30, 2012				As of December 31, 2011
	Number of loans		Loan balance		Number of loans		Loan balance
One-to-four family residential real estate		2	$	503		2	$	528
Construction and land		-		-		1		200
Commerical loans		2		196		-		-
Municipal loans		2		641		2		653
Total troubled debt restructurings		6	$	1,340		5	$	1,381

The Company services one-to-four family residential real estate loans for others with outstanding principal balances of $240.2 million and $183.3 million at September 30, 2012 and December 31, 2011, respectively. Gross service fee income related to such loans was $145,000 and $106,000 for the quarters ended September 30, 2012 and 2011, respectively, and is included in fees and service charges in the consolidated statements of earnings. Gross service fee income for the nine months ended September 30, 2012 and 2011 was $394,000 and $319,000, respectively.

The Company had a mortgage repurchase reserve of $418,000 and $500,000 at September 30, 2012 and December 31, 2011, respectively, which represents the Company’s best estimate of probable losses that the Company will incur related to the repurchase of one-to-four family residential real estate loans previously sold or to reimburse investors for credit losses incurred on loans previously sold where a breach of the contractual representations and warranties occurred. Because the level of mortgage repurchase losses depends upon economic factors, investor demand strategies and other external conditions that may change over the life of the underlying loans, mortgage repurchase losses are difficult to estimate and require considerable judgment. The Company did not make any provisions against the reserve during the first nine months of 2012. Actual losses during the first nine months of 2012, which were charged against the reserve, were $82,000. As of September 30, 2012, the Company did not have any outstanding mortgage repurchase requests.

5. Earnings per Share

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

	Three months ended				Nine months ended
(Dollars in thousands, except per share amounts)	September 30,				September 30,
	2012		2011		2012		2011
Net earnings	$	1,205	$	1,489	$	4,750	$	3,189
Weighted average common shares outstanding - basic (1)		2,783,271		2,780,453		2,783,054		2,776,578
Assumed exercise of stock options (1)		24,053		600		18,663		647
Weighted average common shares outstanding - diluted (1)		2,807,324		2,781,053		2,801,717		2,777,225
Net earnings per share (1):
Basic	$	0.43	$	0.54	$	1.71	$	1.15
Diluted	$	0.43	$	0.54	$	1.70	$	1.15

(1) Share and per share values for the periods ended September 30, 2011 have been adjusted to give effect to the 5% stock dividend paid during December 2011.

The diluted earnings per share computations for the three months ended September 30, 2012 and 2011 exclude unexercised stock options of 62,775 and 465,744, respectively, because their inclusion would have been anti-dilutive to earnings per share. The diluted earnings per share computations for the nine months ended September 30, 2012 and 2011 exclude unexercised stock options of 144,948 and 441,918, respectively, for the same reason.

16

6. Fair Value of Financial Instruments and Fair Value Measurements

The Company follows the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures,” which defines fair value, establishes a framework for measuring fair value and expands the disclosures about fair value measurements. ASC Topic 820-10-55 requires the use of a hierarchy of fair value techniques based upon whether the inputs to those fair values reflect assumptions other market participants would use based upon market data obtained from independent sources or reflect the Company’s own assumptions of market participant valuation. The Company applies FASB ASC 820 to certain nonfinancial assets and liabilities, which include foreclosed real estate, long-lived assets, goodwill, and core deposit premium, which are recorded at fair value only upon impairment. The fair value hierarchy is as follows:

• Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

• Level 2: Quoted prices for similar assets in active markets or quoted prices that contain observable inputs such as yield curves, volatilities, prepayment speeds and other inputs derived from market data.

• Level 3: Quoted prices in markets that are not active or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates of the Company’s financial instruments as of September 30, 2012 and December 31, 2011, including methods and assumptions utilized, are set forth below:

(Dollars in thousands)
	September 30, 2012				December 31, 2011
	Carrying		Estimated		Carrying		Estimated
	amount		fair value		amount		fair value
Financial assets:
Cash and cash equivalents	$	23,117	$	23,117	$	17,501	$	17,501
Investment securities:
Available-for-sale		239,018		239,018		198,214		198,214
Other securities		5,727		5,727		6,671		6,671
Loans, net		307,292		307,754		310,081		309,927
Loans held for sale		9,767		9,989		9,754		9,846
Mortgage servicing rights		1,464		1,562		1,160		1,319
Derivative financial instruments		534		534		255		255
Accrued interest receivable		2,964		2,964		2,468		2,468
Financial liabilities:
Non-maturity deposits	$	336,020	$	336,020	$	274,301	$	274,301
Time deposits		178,800		180,058		179,833		181,280
FHLB borrowings		35,735		40,427		49,163		53,376
Other borrowings		23,296		21,052		27,434		25,200
Accrued interest payable		482		482		532		532

Methods and Assumptions Utilized

The carrying amount of cash and cash equivalents is considered to approximate fair value.

The Company’s investment securities classified as available-for-sale include U.S. federal agency securities, municipal obligations, mortgage-backed securities, pooled trust preferred securities, certificates of deposits and common stocks. Quoted exchange prices are available for the Company’s common stock investments, which are classified as Level 1. U.S. federal agency securities and mortgage-backed obligations are priced utilizing industry-standard models that consider various assumptions, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace and are classified as Level 2. Municipal securities are valued using a type of matrix, or grid, pricing in which securities are benchmarked against the treasury rate based on credit rating. These model and matrix measurements are classified as Level 2 in the fair value hierarchy. The Company’s investments in FDIC-insured, fixed-rate certificates of deposits are valued using a net present value model that discounts the future cash flows at the current market rates and are classified as Level 2.

17

The Company classifies the fair value of its pooled trust preferred securities as Level 3. The portfolio consists of two investments in pooled trust preferred securities issued by various financial companies. These securities are valued based on a matrix pricing in which the securities are benchmarked against single issuer trust preferred securities based on credit rating. The pooled trust preferred market is inactive; therefore single issuer trading is used as the benchmark, with additional adjustments made for credit and liquidity risk.

The Company’s other investment securities primarily include investments in FHLB and FRB stock, which are held for regulatory purposes. These investments generally have restrictions on the sale and/or liquidation of stock and the carrying value is approximately equal to fair value. Fair value measurements for these securities are classified as Level 3 based on the restrictions on sale and/or liquidation and related credit risk.

The estimated fair value of the Company’s loan portfolio is based on the segregation of loans by collateral type, interest terms, and maturities. The fair value is estimated based on discounting scheduled and estimated cash flows through maturity using an appropriate risk-adjusted yield curve to approximate current interest rates for each category. No adjustment was made to the interest rates for changes in credit risk of performing loans where there were no known credit concerns. Management segregates loans in appropriate risk categories. Management believes that the risk factor embedded in the interest rates along with the allowance for loan losses applicable to the performing loan portfolio results in a fair valuation of such loans. The fair values of impaired loans are generally based on market prices for similar assets determined through independent appraisals or discounted values of independent appraisals and brokers’ opinions of value. This method of estimating fair value is classified as Level 3 and does not incorporate the exit-price concept of fair value prescribed by ASC Topic 820.

Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value, determined on an aggregate basis. The mortgage loan valuations are based on quoted secondary market prices for similar loans and are classified as Level 2.

The Company measures its mortgage servicing rights at the lower of amortized cost or fair value. Periodic impairment assessments are performed based on fair value estimates at the reporting date. The fair value of mortgage servicing rights is estimated based on a valuation model which calculates the present value of estimated future cash flows associated with servicing the underlying loans. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimated prepayment speeds, market discount rates, cost to service, and other servicing income, including late fees. The fair value measurements are classified as Level 3.

The carrying amount of accrued interest receivable and payable is considered to approximate fair value and is classified as Level 3.

The estimated fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, savings, money market accounts, and NOW accounts, is equal to the amount payable on demand. The fair value of interest-bearing time deposits is based on the discounted value of contractual cash flows of such deposits. The discount rate is tied to the FHLB yield curve plus an appropriate servicing spread. Fair value measurements based on discounted cash flows are classified as Level 3. These fair values do not incorporate the value of core deposit intangibles which may be associated with the deposit base.

The fair value of advances from the FHLB and other borrowings is estimated using current yield curves for similar borrowings adjusted for the Company’s current credit spread, if applicable, and classified as Level 2.

The Company’s derivative financial instruments consist of interest rate lock commitments and corresponding forward sales contracts on mortgage loans held for sale. The fair values of these derivatives are based on quoted prices for similar loans in the secondary market. The market prices are adjusted by a factor, based on the Company’s historical data and its judgment about future economic trends, which considers the likelihood that a commitment will ultimately result in a closed loan. These instruments are classified as Level 2. The amounts are included in other assets or other liabilities on the consolidated balance sheets and gains on sales of loans in the consolidated statements of earnings.

18

Off-Balance Sheet Financial Instruments

The fair value of letters of credit and commitments to extend credit is based on the fees currently charged to enter into similar agreements. The aggregate of these fees is not material.

Transfers

The Company did not transfer any assets or liabilities among levels during the nine months ended September 30, 2012 or during the year ended December 31, 2011.

Limitations

Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.

Valuation methods for instruments measured at fair value on a recurring basis

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis at September 30, 2012 and December 31, 2011, allocated to the appropriate fair value hierarchy:

(Dollars in thousands)			As of September 30, 2012
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities:
U. S. federal agency obligations	$	7,189	$	-	$	7,189	$	-
Municipal obligations, tax exempt		77,074		-		77,074		-
Municipal obligations, taxable		38,348		-		38,348		-
Mortgage-backed securities		109,177		-		109,177		-
Common stocks		871		871		-		-
Pooled trust preferred securities		565		-		-		565
Certificates of deposit		5,794		-		5,794		-
Derivative financial instruments	$	534	$	-	$	534	$	-

			As of December 31, 2011
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities:
U. S. federal agency obligations	$	9,164	$	-	$	9,164	$	-
Municipal obligations, tax exempt		69,629		-		69,629		-
Municipal obligations, taxable		19,135		-		19,135		-
Mortgage-backed securities		94,472		-		94,472		-
Common stocks		819		819		-		-
Pooled trust preferred securities		405		-		-		405
Certificates of deposit		4,590		-		4,590		-
Derivative financial instruments	$	255	$	-	$	255	$	-

19

The following table reconciles the changes in the Company’s Level 3 financial instruments during the first nine months of 2012:

(Dollars in thousands)
	Available-for
	sale securities
Level 3 asset fair value at December 31, 2011	$	405
Payments applied to reduce carrying value		(18	)
Total (losses) gains:
Included in earnings		(63	)
Included in other comprehensive income		241
Level 3 asset fair value at September 30, 2012	$	565

Changes in the fair value of available-for-sale securities are included in other comprehensive income to the extent the changes are not considered other-than-temporary impairments. Other-than-temporary impairment tests are performed on a quarterly basis and any decline in the fair value of an individual security below its cost that is deemed to be other-than-temporary results in a write-down of that security’s cost basis.

Valuation methods for instruments measured at fair value on a nonrecurring basis

The Company does not value its loan portfolio at fair value, however adjustments are recorded on certain loans to reflect the impaired value on the underlying collateral. Collateral values are reviewed on a loan-by-loan basis through independent appraisals. Appraised values may be discounted based on management’s historical knowledge, changes in market conditions and/or management’s expertise and knowledge of the client and the client’s business. Because many of these inputs are unobservable, the valuations are classified as Level 3. The carrying value of the Company’s impaired loans was $5.2 million at September 30, 2012 and $2.5 million at December 31, 2011, with allocated allowances of $1.7 million and $205,000, respectively.

The Company measures the fair value of its goodwill based on the Company’s market capitalization with appropriate control premiums and valuation multiples, as compared to recent similar financial industry acquisition multiples, to estimate the fair value of the Company’s single reporting unit. The fair value measurements are classified as Level 3. Core deposit intangibles are recognized at the time core deposits are acquired, using valuation techniques which calculate the present value of the estimated net cost savings relative to the Company’s alternative costs of funds over the expected remaining economic life of the deposits. Subsequent evaluations are made when facts or circumstances indicate potential impairment may have occurred. The models incorporate market discount rates, estimated average core deposit lives and alternative funding rates. The fair value measurements are classified as Level 3.

Real estate owned includes assets acquired through, or in lieu of, foreclosure and land previously acquired for expansion. Real estate owned is initially recorded at the fair value of the collateral less estimated selling costs. Subsequent valuations are updated periodically and are based upon independent appraisals, third party price opinions or internal pricing models and are classified as Level 3.

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The following table represents the Company’s financial instruments that are measured at fair value on a non-recurring basis as of September 30, 2012 and December 31, 2011 allocated to the appropriate fair value hierarchy:

(Dollars in thousands)			As of September 30, 2012
			Fair value hierarchy						Total
	Total		Level 1		Level 2		Level 3		losses
Assets:
Impaired loans	$	3,548	$	-	$	-	$	3,548	$	(1,535	)
Loans held for sale		9,989		-		9,989		-		-
Mortgage servicing rights		1,562		-		-		1,562		(212	)
Real estate owned	$	2,584	$	-	$	-	$	2,584	$	-

(Dollars in thousands)			As of December 31 ,2011
			Fair value hierarchy						Total
	Total		Level 1		Level 2		Level 3		losses
Assets:
Impaired loans	$	2,285	$	-	$	-	$	2,285	$	(112	)
Loans held for sale		9,846		-		9,846		-		-
Mortgage servicing rights		1,319		-		-		1,319		-
Real estate owned	$	2,264	$	-	$	-	$	2,264	$	(517	)

8. Impact of Recent Accounting Pronouncements

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”). The amendments in ASU No. 2011-04 result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRS. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments in ASU No. 2011-04 became effective for interim and annual periods beginning after December 15, 2011. Adoption of ASU 2011-04 did not have a significant impact on the Company’s consolidated financial statements.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. ASU 2011-05 requires that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. The new guidance became effective for interim and annual periods beginning after December 15, 2011 with early adoption permitted. Adoption of ASU 2011-05 did not have a significant impact on the Company’s consolidated financial statements.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU 2011-08 allows the use of qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amounts as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The new guidance became effective for annual and interim goodwill impairment tests beginning after December 15, 2011 with early adoption permitted. Adoption of ASU 2011-08 did not have a significant impact on the Company’s consolidated financial statements.

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9. Acquisition

The Company completed the acquisition, by its wholly-owned subsidiary, Landmark National Bank, of The Wellsville Bank from Wellsville Bancshares, Inc., effective April 1, 2012. The purchase price consisted of cash of $3.7 million for 100% of The Wellsville Bank. The acquisition was effected through the merger of The Wellsville Bank with and into Landmark National Bank. The acquisition added one additional branch, located in Wellsville, Kansas, to the Company’s existing branch network, giving the Company a total of 22 offices in 17 communities across Kansas.

The assets acquired and liabilities assumed were recorded by Landmark National Bank at their estimated fair value as of April 1, 2012 based on management’s best estimate using information available at the time. The acquisition included the assumption of investments of $14.2 million, loans of $15.0 million and deposits of $35.0 million. The unpaid contractual amount of the loans totaled $15.1 million. During the nine months ended September 30, 2012, the Company incurred $147,000 of acquisition related expenses which are included in professional fees. Based on estimates of the fair values of the net assets acquired, the Company recorded $181,000 of goodwill. The acquisition created $51,000 of tax deductible goodwill.

10. Subsequent Events

On November 5, 2012, the Company entered into an amendment to extend the maturity of its $7.5 million line of credit from November 5, 2012 to November 5, 2013.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview. Landmark Bancorp, Inc. is a one-bank holding company incorporated under the laws of the State of Delaware and is engaged in the banking business through its wholly-owned subsidiary, Landmark National Bank. Landmark Bancorp is listed on the Nasdaq Global Market under the symbol “LARK”. Landmark National Bank is dedicated to providing quality financial and banking services to its local communities. Our overall strategy includes continuing a tradition of quality assets while growing our commercial and commercial real estate loan portfolios. We are committed to developing relationships with our borrowers and providing a total banking service.

Landmark National Bank is principally engaged in the business of attracting deposits from the general public and using such deposits, together with borrowings and other funds, to originate one-to-four family residential real estate, construction and land, commercial real estate, commercial, agriculture, municipal and consumer loans. Although not our primary business function, we also invest in certain investment and mortgage-related securities using deposits and other borrowings as funding sources.

Our results of operations depend generally on net interest income, which is the difference between interest income from interest-earning assets and interest expense on interest-bearing liabilities. Net interest income is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. In addition, we are subject to interest rate risk to the degree that our interest-earning assets mature or reprice at different times, or at different speeds, than our interest-bearing liabilities. Our results of operations are also affected by non-interest income, such as service charges, loan fees and gains from the sale of newly originated loans and gains or losses on investments. Our principal operating expenses, aside from interest expense, consist of compensation and employee benefits, occupancy costs, professional fees, advertising, federal deposit insurance costs, data processing expenses and provision for loan losses.

We are significantly impacted by prevailing economic conditions including federal monetary and fiscal policies and federal regulations of financial institutions. Deposit balances are influenced by numerous factors such as competing investments, the level of income and the personal rate of savings within our market areas. Factors influencing lending activities include the demand for housing and interest rate pricing competition from other lending institutions.

Our business consists of ownership of Landmark National Bank, with its main office in Manhattan, Kansas and twenty one branch offices in eastern, central and southwestern Kansas as of September 30, 2012. In January 2012, we entered into an agreement to purchase a bank in Wellsville, Kansas with approximately $35.0 million in deposits, $14.2 million in investments and $15.0 million in loans, which was merged into Landmark National Bank upon the April 1, 2012 closing of the acquisition.

Recent Regulatory Developments. In June 2012, the federal bank regulatory agencies issued joint proposed rules that would implement an international capital accord called “Basel III,” developed by the Basel Committee on Banking Supervision, a committee of central banks and bank supervisors. The proposed rules would apply to all depository organizations in the United States and most of their parent companies and would increase minimum capital ratios, add a new minimum common equity ratio, add a new capital conservation buffer, and would change the risk-weightings of certain assets for the purposes of calculating certain capital ratios. The proposed changes, if implemented, would be phased in from 2013 through 2019. On October 22, 2012, the comment period for the proposed rules expired. Various banking associations and industry groups provided comments on the proposed rules to the regulators and it is unclear when the final rules will be adopted and what changes, if any, may be made to the proposed rules. Management is currently assessing the effect of the proposed rules on the Company and Landmark National Bank's capital position and will continue to monitor developments concerning the proposed rules.

Critical Accounting Policies. Critical accounting policies are those which are both most important to the portrayal of our financial condition and results of operations, and require our management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies relate to the allowance for loan losses, valuation of real estate owned, valuation of investment securities, accounting for income taxes and accounting for goodwill and other intangible assets, all of which involve significant judgment by our management. Information about our critical accounting policies is included under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2011.

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Summary of Results. During the third quarter of 2012, we recorded net earnings of $1.2 million as compared to net earnings of $1.5 million in the same period of 2011. The decrease in net earnings was primarily due to increases of $500,000 in provision for loans losses and $595,000 in other non-interest expense compared to the prior year period. Partially offsetting the higher expenses was a $785,000 increase in our gains on sales of loans.

During the first nine months of 2012, we recorded net earnings of $4.8 million as compared to $3.2 million in the same period of 2011. The increase in net earnings was primarily due to a $2.3 million increase in our gains on sales of loans compared to the prior year period.

The following table summarizes earnings and key performance measures for the periods presented.

(Dollars in thousands, expcept per share amounts)	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Net earnings:
Net earnings	$	1,205		$	1,489		$	4,750		$	3,189
Basic earnings per share (1)	$	0.43		$	0.54		$	1.71		$	1.15
Diluted earnings per share (1)	$	0.43		$	0.54		$	1.70		$	1.15
Earnings ratios:
Return on average assets (2)		0.74	%		1.02	%		1.00	%		0.74	%
Return on average equity (2)		7.69	%		10.35	%		10.40	%		7.67	%
Equity to total assets		9.77	%		10.00	%		9.77	%		10.00	%
Net interest margin (2) (3)		3.35	%		3.77	%		3.49	%		3.79	%
Dividend payout ratio		44.19	%		33.93	%		33.53	%		47.11	%

(1) Per share values for the periods ended September 30, 2011 have been adjusted to give effect to the 5% stock dividend paid during December 2011.

(2) Ratios have been annualized and are not necessarily indicative of the results for the entire year.

(3) Net interest margin is presented on a fully tax equivalent basis, using a 34% federal tax rate.

Interest Income. Interest income for the quarter ended September 30, 2012 decreased $202,000 to $5.5 million, a decrease of 3.5% as compared to the same period of 2011. Interest income on loans decreased $245,000, or 5.6%, to $4.1 million for the quarter ended September 30, 2012, due primarily to lower tax equivalent yields earned on loans and lower average outstanding loan balances. Our average tax equivalent yield on loans decreased to 5.32% in the third quarter of 2012 from 5.56% in the same period of 2011 while our average loan balances decreased to $312.4 million from $315.1 million over the same periods. Interest income on investment securities increased $43,000, or 3.3%, to $1.4 million for the third quarter of 2012, as compared to the same period of 2011. The increase in interest income on investment securities was due to higher average balances of investment securities, which increased from $197.5 million during the third quarter of 2011 to $252.2 million during the third quarter of 2012 resulting in part from our purchases of additional investment securities with excess liquidity and in part from our acquisition of The Wellsville Bank. Partially offsetting the effects of this increase in average balances was a decline in the tax equivalent yield on our investment portfolio from 3.24% during the third quarter of 2011 to 2.61% during the third quarter of 2012. The yield on our investment securities declined as the current interest rate environment resulted in the purchase of lower yielding investment securities with funds from the maturities, prepayments and sales of higher yielding investment securities.

Interest income for the nine months ended September 30, 2012 decreased $210,000 to $16.7 million, an decrease of 1.2% as compared to the same period of 2011. Interest income on loans decreased $454,000, or 3.5%, to $12.7 million for the nine months ended September 30, 2012, due to lower tax equivalent yields earned on loans. Our average tax equivalent yield on loans decreased to 5.44% in the first nine months of 2012 from 5.64% in the same period of 2011. Interest income on investment securities increased $244,000, or 6.4%, to $4.1 million for the first nine months of 2012, as compared to the same period of 2011. The increase in interest income on investment securities was due to higher average balances of investment securities, which increased from $190.9 million during the first nine months of 2011 to $237.3 million during the same period of 2012 resulting in part from our purchases of additional investment securities with excess liquidity and in part from our acquisition of The Wellsville Bank. Partially offsetting the effects of this increase in average balances was a decline in the tax equivalent yield on our investment portfolio from 3.31% during the first nine months of 2011 to 2.79% during the same period of 2012. The yield on our investment securities declined as the current interest rate environment resulted in the purchase of lower yielding investment securities with funds from the maturities, prepayments and sales of higher yielding investment securities.

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Interest Expense. Interest expense during the quarter ended September 30, 2012 decreased $176,000, or 15.4%, to $964,000 as compared to the same period of 2011. For the third quarter of 2012, interest expense on interest-bearing deposits decreased $144,000, or 21.5%, to $525,000 as a result of lower rates paid on our certificates of deposit, money market, NOW and savings accounts. Our total cost of deposits declined from 0.69% during the third quarter of 2011 to 0.47% during the same period of 2012 as we were able to reprice our deposits lower in the current low rate environment. Our average deposit balances increased from $387.4 million for the third quarter of 2011 to $443.2 million for the third quarter of 2012 due both to organic growth and our acquisition of The Wellsville Bank. For the third quarter of 2012, interest expense on borrowings decreased $32,000, or 6.8%, to $439,000 due to lower outstanding balances on our borrowings. Our average outstanding borrowings declined from $70.6 million in the third quarter of 2011 to $57.6 million in the same period of 2012 as we repaid our lower rate, short-term borrowings, which increased our average cost of borrowings from 2.65% in the third quarter of 2011 to 3.03% in the same period of 2012.

Interest expense during the nine months ended September 30, 2012 decreased $541,000, or 15.2%, to $3.0 million as compared to the same period of 2011. For the first nine months of 2012, interest expense on interest-bearing deposits decreased $440,000, or 20.6%, to $1.7 million as a result of lower rates on deposit balances. Our total cost of deposits declined from 0.74% during the first nine months of 2011 to 0.53% during the same period of 2012 as we were able to reprice our deposits lower in the current low rate environment. Our average deposit balances increased from $384.9 million to $429.2 million over the same periods due both to organic growth and our acquisition of The Wellsville Bank. For the first nine months of 2012, interest expense on borrowings decreased 101,000, or 7.2%, to $887,000 due to lower outstanding balances on our borrowings. Our average outstanding borrowings declined from $69.4 million in the first half of 2011 to $60.2 million in the same period of 2012 as we repaid our lower rate, short-term borrowings, which increased our average cost of borrowings from 2.73% in the first nine months of 2011 to 2.99% in the same period of 2012.

Net Interest Income. Net interest income decreased $26,000, or 0.6%, for the third quarter of 2012 to $4.5 million compared to the same period of 2011. The lower net interest income resulted from a decline in our net interest margin, on a tax equivalent basis, to 3.35% during the third quarter of 2012 compared to 3.77% during the same period of 2011. Our average interest-earning asset balances increased from $514.5 million during the third quarter of 2011 to $578.2 million during the third quarter of 2012. Our average interest-earning asset balances increased primarily as a result of the acquisition of The Wellsville Bank on April 1, 2012, as well as from holding higher relative levels of investment securities and cash and cash equivalents due to organic growth in our deposit balances. Our net interest margin declined as the yields on our investment securities and cash and cash equivalents are typically lower than those earned on loans.

Net interest income increased $331,000, or 2.5%, for the first nine months of 2012 to $13.7 million compared to the same period of 2011. Our net interest margin, on a tax equivalent basis, decreased to 3.49% during the first nine months of 2012 compared to 3.79% during the same period of 2011. The increase in net interest income was a result of our average interest-earning asset balances increasing from $507.9 million during the first nine months of 2011 to $564.4 million during the same period of 2012. Our average interest-earning asset balances increased primarily as a result of the acquisition of The Wellsville Bank on April 1, 2012, as well as from holding higher relative levels of investment securities and cash and cash equivalents due to organic growth in our deposit balances. Our net interest margin declined as the yields on our investment securities and cash and cash equivalents are typically lower than those earned on loans.

See the Average Assets/Liabilities and Rate/Volume tables at the end of Item 2 “Management’s Discussion and Analysis of Financial Condition” for additional details on asset yields, liability rates and net interest margin.

Provision for Loan Losses. We maintain, and our Board of Directors monitors, an allowance for losses on loans. The allowance is established based upon management's periodic evaluation of known and inherent risks in the loan portfolio, review of significant individual loans and collateral, review of delinquent loans, past loss experience, adverse situations that may affect the borrowers’ ability to repay, current and expected market conditions, and other factors management deems important. Determining the appropriate level of reserves involves a high degree of management judgment and is based upon historical and projected losses in the loan portfolio and the collateral value of specifically identified problem loans. Additionally, allowance policies are subject to periodic review and revision in response to a number of factors, including current market conditions, actual loss experience and management’s expectations.

Our provision for loan losses increased from $500,000 during the third quarter of 2011 to $1.0 million during the same period of 2012. During the third quarter of 2012, we recorded net loan charge-offs of $105,000 compared to $182,000 during the same period of 2011. The increase in our provision for loan losses was principally associated with a $3.3 million land loan which was classified as non-accrual and impaired during the third quarter of 2012 after an updated appraisal indicated a significant decline in the value of the collateral securing the loan.We are currently negotiating with the borrowers to restructure the loan.

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Our provision for loan losses totaled $1.6 million during the first nine months of both 2012 and 2011. During the first nine months of 2012 we recorded net loan charge-offs of $140,000 compared to $2.2 million during the same period of 2011. The net loan charge-offs in 2011 were primarily related to a previously identified and impaired construction loan totaling $4.3 million, which had previously experienced a significant decline in the appraised value of the collateral securing the loan. Due to additional delays associated with the litigation to collect payment from the guarantor, we charged-off the remaining $1.0 million balance on this loan in the second quarter of 2011. We are currently continuing to pursue recovery on this loan. In addition to the charge-off of the construction loan, the 2011 period also reflects the charge-off of a previously identified and impaired commercial relationship consisting of $2.0 million in real estate and operating loans, which was charged down to market value after we acquired ownership of the property securing the loans during the first quarter of 2011. The commercial real estate property was sold during the first quarter of 2011 without incurring any further losses.

For further discussion of the allowance for loan losses, refer to the “Asset Quality and Distribution” section.

Non-interest Income. Total non-interest income increased $834,000, or 35.0%, to $3.2 million in the third quarter of 2012 compared to the same period of 2011. The increase in non-interest income was primarily the result of a $785,000 increase in our gains on sales of loans, as the volume of loans sold in the secondary market was higher in the third quarter of 2012 compared to a year earlier. We believe the low mortgage rates experienced in 2012 have contributed to the higher volume of mortgage loans originated for sale as consumers continue refinance; higher rates in the future may reduce volumes of originations. In addition, our fees and service charges increased by $89,000, or 7.0%, as a result of higher fees and service charges received on our deposit accounts and service fee income on one-to-four family residential real estate loans serviced for others. Partially offsetting these increases was a $46,000 decline in bank owned life insurance income resulting from a penalty incurred as a result of transferring some of our policies to a different insurance company after our internal review identified credit quality concerns with the previous insurance company.

Total non-interest income increased $2.4 million, or 36.6%, to $8.9 million in the first nine months of 2012 compared to the same period of 2011. The increase in non-interest income was primarily the result of a $2.3 million increase in our gains on sales of loans, as the volume of loans sold in the secondary market was higher in the first nine months of 2012 compared to a year earlier. In addition, our fees and service charges increased by $226,000, or 6.2%, as a result of higher fees and service charges received on our deposit accounts and service fee income on one-to-four family residential real estate loans serviced for others. Partially offsetting these increases was a $119,000 decline in other non-interest income which had been elevated in first nine months of 2011 due to gains on sales of other real estate.

Investment Securities Gains, Net. No gains or losses on sales of investment securities were realized during the third quarter of 2012. During the third quarter of 2011, we recognized $186,000 in gains on sales of investment securities as a result of selling approximately $4.7 million of short-term, tax-exempt municipal investment securities. Partially offsetting the 2011 gains was $19,000 of other-than-temporary impairment losses that we recorded on two common stock investment securities during the third quarter of 2011.

During the first nine months of 2012, we recognized $359,000 in gains on sales of investment securities as a result of selling approximately $8.0 million of mortgage-backed investment securities, as we capitalized on what we believed to be premium pricing that existed in the markets for these types of securities at the time. Partially offsetting the gains on sales of investment securities was a credit-related, other-than-temporary impairment loss of $63,000 recognized during the first quarter of 2012 on one of our investments in pooled trust preferred securities. During the first nine months of 2011, we recognized $186,000 in gains on sales of investments securities and other-than-temporary impairment losses of $19,000 all of which took place in the third quarter, as discussed above.

Non-interest Expense. Non-interest expense increased $595,000, or 12.7%, to $5.3 million for the third quarter of 2012 as compared to the year earlier period. The increase was primarily the result of increases of $291,000 in amortization, $122,000 in professional fees and $119,000 in compensation and benefits. The increase in our amortization expense was primarily associated with recording a $212,000 valuation allowance against our mortgage servicing rights as a decline in mortgage rates decreased the estimated fair value of these assets. The increase in professional fees was primarily related to higher legal and consulting expense. Additionally, The Wellsville Bank acquisition contributed to some of the increases in non-interest expense during the third quarter of 2012, including compensation and benefits as well as occupancy and equipment and data processing.

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Non-interest expense increased $396,000, or 2.7%, to $15.1 million for the first nine months of 2012 as compared to the prior year period. The increase was primarily the result of increases of $356,000 in amortization and $256,000 in compensation and benefits. The increase in our amortization expense was primarily associated with recording a $212,000 valuation allowance against our mortgage servicing rights as a decline in mortgage rates decreased the estimated fair value of these assets. Partially offsetting those increases was a decline of $342,000 in professional fees. The decrease in professional fees was primarily related to engaging consultants to help us review our internal processes and procedures to identify additional opportunities to improve financial performance in 2011 without any comparable cost occurring in the 2012 period. Additionally, The Wellsville Bank acquisition contributed to some of the increases in non-interest expense during the first nine months of 2012, including compensation and benefits as well as occupancy and equipment and data processing.

Income Tax Expense. During the third quarter of 2012, we recorded income tax expense of $267,000, an effective tax rate of 18.1%, compared to income tax expense of $437,000, an effective tax rate of 22.7%, in the same period of 2011. The decrease in effective tax rate was the result of lower earnings before income taxes, while tax-exempt income remained relatively stable between the periods.

During the nine months ended September 30, 2012, we recorded income tax expense of $1.5 million, an effective tax rate of 23.6%, compared to income tax expense of $573,000, an effective tax rate of 15.2%, in the same period of 2011. The increase in effective tax rate was the result of higher earnings before income taxes, while tax-exempt income remained relatively stable between the periods.

Financial Condition. Our asset quality and performance have generally been affected over the past several years by economic conditions, including difficult credit markets, depressed residential and commercial real estate values, generally depressed consumer confidence, heightened unemployment and decreased consumer spending. Even though the geographic markets in which the Company operates have been impacted by these economic conditions, the effect has not been as severe as those experienced in some areas of the U.S. In addition, our loan portfolio is diversified across various types of loans and collateral throughout the markets in which we operate. Outside of identified problem assets, management believes that it continues to have a high quality asset base and solid core earnings, and anticipates that its efforts to run a high quality financial institution with a sound asset base will continue to create a strong foundation for continued growth and profitability in the future.

Asset Quality and Distribution. Our primary investing activities are the origination of commercial real estate, commercial and consumer loans, and the purchase of investment and mortgage-backed securities. Total assets increased to $644.2 million at September 30, 2012, compared to $598.2 million at December 31, 2011. Both organic growth and our acquisition of The Wellsville Bank on April 1, 2012 contributed to the increase in assets. Net loans, excluding loans held for sale, decreased to $307.3 million at September 30, 2012 from $310.1 million at December 31, 2011. The $2.8 million decrease in net loans was primarily the result of lower outstanding balances in our commercial real estate, agriculture and municipal loan categories. The decline in these loan balances is the result of multiple factors, including reduced loan demand from our customers, seasonal factors and early payoffs. Our one-to-four family residential real estate and consumer loan portfolios increased primarily as a result of loans acquired with The Wellsville Bank. Generally, we originate fixed-rate, residential mortgage loans with maturities in excess of ten years for sale in the secondary market. These loans are typically sold soon after the loan closing. We also retain some of our newly originated one-to-four family residential real estate loans that meet internal criteria as well as secondary market qualifications. We typically only retain loans with maturities of 15 years or less. While we do not intend to continue to increase our one-to-four family residential real estate loan portfolio, we are currently slowing the normal runoff of the portfolio by retaining some of the new loan originations to offset weak commercial loan demand; however, most of the new loan originations will still be sold. We do not originate and warehouse these fixed-rate residential loans for resale in order to speculate on interest rates.

The allowance for loan losses is established through a provision for loan losses based on our evaluation of the risk inherent in the loan portfolio and changes in the nature and volume of our loan activity. This evaluation, which includes a review of all loans with respect to which full collectability may not be reasonably assured, considers the fair value of the underlying collateral, economic conditions, historical loan loss experience, level of classified loans and other factors that warrant recognition in providing for an appropriate allowance for loan losses. At September 30, 2012, our allowance for loan losses totaled $6.2 million, or 1.97% of gross loans outstanding, as compared to $4.7 million, or 1.50% of gross loans outstanding, at December 31, 2011. The increase in our allowance for loan losses at September 30, 2012 was principally associated with an increase in our non-accrual loans.

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Loans past due 30-89 days and still accruing interest totaled $2.9 million, or 0.94% of gross loans at September 30, 2012 compared to $2.2 million, or 0.71% of gross loans, at December 31, 2011. At September 30, 2012, $4.6 million in loans were on non-accrual status, or 1.46% of gross loans, compared to a balance of $1.4 million, or 0.45% of gross loans, at December 31, 2011. Non-accrual loans consist of loans 90 or more days past due and certain impaired loans. There were no loans 90 days or more delinquent and still accruing interest at September 30, 2012 or December 31, 2011. Our impaired loans totaled $5.2 million at September 30, 2012, compared to $2.5 million at December 31, 2011. The difference in the Company’s non-accrual loan balances and impaired loan balances at September 30, 2012 and December 31, 2011 was related to troubled debt restructurings that are current but still classified as impaired.

At September 30, 2012, we had six loan relationships that were classified as troubled debt restructurings compared to five at December 31, 2011. During the first nine months of 2012, the Company classified a commercial loan relationship consisting of two commercial loans as a troubled debt restructuring after agreeing to extend the maturity of the loans while the borrower liquidated the business assets securing the loans. The Company did not charge-off any of the loan balances as the anticipated proceeds were expected to exceed the loan balances. As of September 30, 2012, the outstanding balances of these loans totaled $196,000 and were classified as non-accrual and impaired.

During 2011, we restructured three loan relationships that we identified as troubled debt restructurings. One of the restructurings was a construction and land loan relationship totaling $599,000 which was secured by raw land which had experienced a severe decline in value. We agreed to reduce the outstanding loan balance to $250,000 in exchange for a $50,000 principal payment in 2011 with the remaining $200,000 to be received during the first quarter of 2012. We had charged-off $141,000 of the loan during 2010 and an additional $208,000 during 2011, with the remaining $200,000 loan balance classified as non-accrual and impaired as of December 31, 2011. The loan was paid off during the first quarter of 2012. Another loan relationship totaling $110,000 to a municipal sanitary and improvement district was also restructured in 2011 to extend the maturity and lower the interest rate to allow the district more time to develop the taxable valuation that will provide cash flow for repayment of the loan. The loan was returned to accrual status during the third quarter of 2012 after a payment history was established. The outstanding balance of $98,000 was current and accruing interest as September 30, 2012, but still classified as impaired. The restructuring did not impact our allowance for loan losses. Also during 2011, a one-to-four family residential real estate loan totaling $10,000 was classified as a troubled debt restructuring as a result of the customer receiving a zero interest rate loan. The balance on this loan at September 30, 2012 was $9,000. This loan was classified as impaired as of September 30, 2012 and December 31, 2011.

During 2010, we restructured two loan relationships that were identified as troubled debt restructurings. One of the relationships was an $853,000 real estate loan which was secured by real estate which was deficient based on the appraised value. The relationship was restructured into two 1-4 family residential real estate loans to a borrower who was experiencing financial difficulty and to whom we granted concessions at renewal. The value of the real estate supported $563,000 of the loan relationship. The $290,000 collateral deficiency of the real estate had previously been included in our allowance on impaired loans. The loan was returned to accrual status during 2010 after a payment history was established, while the collateral deficiency was charged-off. After the death of the borrower during the third quarter of 2012, the loan was placed back on non-accrual until the estate is settled. The outstanding balance of the loan was $494,000 and $518,000 at September 30, 2012 and December 31, 2011, respectively. A second loan relationship totaling $527,000 to another municipal sanitary and improvement district was restructured in 2010 to extend the maturity and lower the interest rate to allow the district more time to develop the taxable valuation that will provide cash flow for repayment of the loan. As of September 30, 2012 and December 31, 2011, the outstanding balance of the loan was $543,000. The restructuring did not impact our allowance for loan losses. This loan was current and accruing interest at September 30, 2012 and December 31, 2011, but still classified as impaired.

As part of our credit risk management, we continue to aggressively manage the loan portfolio to identify problem loans and have placed additional emphasis on commercial real estate and construction and land relationships. We are aggressively working to resolve the remaining problem credits or move the non-performing credits out of the loan portfolio. We had $2.6 million of real estate owned at September 30, 2012 compared to $2.3 million at December 31, 2011. Real estate owned primarily consists of a residential subdivision development we took possession of after the development slowed and the borrower was unable to comply with the contractual terms of the loan, a commercial real estate building resulting from a loan settlement, land previously acquired by the Bank for expansion and a few residential real estate properties. The Company is currently marketing all of the properties in real estate owned.

28

Many financial institutions, including us, experienced a general increase in non-performing assets during recent years, as even well-established business borrowers developed cash flow, profitability and other business-related problems as a result of economic conditions. While we believe that our allowance for loan losses at September 30, 2012 was appropriate, there can be no assurances that loan losses will not exceed the estimated amounts. We believe that we use the best information available to determine the allowance for loan losses; however, unforeseen market conditions could result in adjustment to the allowance for loan losses. In addition, net earnings could be significantly affected if circumstances differ substantially from the assumptions used in establishing the allowance for loan losses. Further deterioration in the local economy or real estate values may create additional problem loans for us and require further adjustment to our allowance for loan losses.

Liability Distribution. Our primary ongoing sources of funds are deposits, FHLB borrowings, proceeds from principal and interest payments on loans and investment securities and proceeds from the sale of mortgage loans and investment securities. While maturities and scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates and economic conditions. We experienced a $60.7 million increase in total deposits during the first nine months of 2012, to $514.8 million at September 30, 2012, from $454.1 million at December 31, 2011, including $35.0 million of growth attributable to the acquisition of The Wellsville Bank’s deposits. The remaining deposit growth occurred in our non-interest-bearing demand, money market and NOW and savings accounts, while our time deposit balances declined, excluding the effects or our acquisition of The Wellsville Bank. Total borrowings decreased $17.6 million to $59.0 million at September 30, 2012, from $76.6 million at December 31, 2011. The decrease was primarily a result of reducing our FHLB line of credit with the liquidity from higher deposit balances and lower outstanding balances on our repurchase agreements.

Non-interest-bearing deposits at September 30, 2012 were $72.6 million, or 14.1% of deposits, compared to $66.1 million, or 14.5%, at December 31, 2011. Money market and NOW deposit accounts were 42.4% of our deposit portfolio and totaled $218.0 million at September 30, 2012, compared to $171.5 million, or 37.8%, at December 31, 2011. Savings accounts increased to $45.4 million, or 8.8% of deposits, at September 30, 2012, from $36.7 million, or 8.1%, at December 31, 2011. Certificates of deposit increased to $178.8 million, or 34.7% of deposits, at September 30, 2012, from $179.8 million, or 39.6%, at December 31, 2011.

Certificates of deposit at September 30, 2012, which are scheduled to mature in one year or less, totaled $122.8 million. Historically, maturing deposits have generally remained with our bank and we believe that a significant portion of the deposits maturing in one year or less will remain with us upon maturity.

Cash Flows. During the nine months ended September 30, 2012, our cash and cash equivalents increased by $5.6 million. Our operating activities provided net cash of $4.6 million during the first nine months of 2012. Our investing activities used net cash of $5.5 million during the first nine of 2012 as we purchased investment securities with our excess liquidity. Financing activities provided net cash of $6.6 million during the first nine months of 2012, primarily from increased deposits which were primarily used to purchase investment securities and reduce our borrowings on our FHLB line of credit.

Liquidity. Our most liquid assets are cash and cash equivalents and investment securities available for sale. The levels of these assets are dependent on the operating, financing, lending and investing activities during any given period. These liquid assets totaled $262.1 million at September 30, 2012 and $215.7 million at December 31, 2011. During periods in which we are not able to originate a sufficient amount of loans and/or periods of high principal prepayments, we increase our liquid assets by investing in short-term, high-grade investments.

Liquidity management is both a daily and long-term function of our strategy. Excess funds are generally invested in short-term investments. In the event we require funds beyond our ability to generate them internally, additional funds are generally available through the use of FHLB advances, a line of credit with the FHLB, other borrowings or through sales of investment securities. At September 30, 2012, we had outstanding FHLB advances of $35.7 million and no borrowings against our line of credit with the FHLB. At September 30, 2012, we had collateral pledged to the FHLB that would allow us to borrow an additional $18.3 million, subject to FHLB credit requirements and policies. At September 30, 2012, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity was $16.0 million. We also have various other fed funds agreements, both secured and unsecured, with correspondent banks totaling approximately $109.2 million under which we had no outstanding borrowings at September 30, 2012. We had other borrowings of $23.3 million at September 30, 2012, which included $16.5 million of subordinated debentures and $5.2 million in repurchase agreements. The Company has a $7.5 million line of credit from an unrelated financial institution maturing on November 5, 2013, with an interest rate that adjusts daily based on the prime rate plus 0.25%, but not less than 4.00%. This line of credit has covenants specific to capital and other financial ratios, which the Company was in compliance with at September 30, 2012. The outstanding balance on the line of credit at September 30, 2012 was $1.6 million, which was also included in other borrowings.

29

Off Balance Sheet Arrangements. As a provider of financial services, we routinely issue financial guarantees in the form of financial and performance standby letters of credit. Standby letters of credit are contingent commitments issued by us generally to guarantee the payment or performance obligation of a customer to a third party. While these standby letters of credit represent a potential outlay by us, a significant amount of the commitments may expire without being drawn upon. We have recourse against the customer for any amount the customer is required to pay to a third party under a standby letter of credit. The letters of credit are subject to the same credit policies, underwriting standards and approval process as loans made by us. Most of the standby letters of credit are secured, and in the event of nonperformance by the customers, we have the right to the underlying collateral, which could include commercial real estate, physical plant and property, inventory, receivables, cash and marketable securities. The contract amount of these standby letters of credit, which represents the maximum potential future payments guaranteed by us, was $2.2 million at September 30, 2012.

At September 30, 2012, we had outstanding loan commitments, excluding standby letters of credit, of $62.1 million. We anticipate that sufficient funds will be available to meet current loan commitments. These commitments consist of unfunded lines of credit and commitments to finance real estate loans.

Capital. Current regulatory capital regulations require financial institutions (including banks and bank holding companies) to meet certain regulatory capital requirements. Institutions are required to have minimum leverage capital equal to 4% of total average assets and total qualifying capital equal to 8% of total risk weighted assets in order to be considered “adequately capitalized.” As of September 30, 2012 and December 31, 2011, both the Company and the Landmark National Bank were rated “well capitalized,” which is the highest rating available under the regulatory capital regulations framework for prompt corrective action. Management believes that as of September 30, 2012, the Company and the Landmark National Bank met all capital adequacy requirements to which we are subject.

The following is a comparison of the Company’s regulatory capital to minimum capital requirements at September 30, 2012 and December 31, 2011:

											To be well-capitalized
											under prompt
(Dollars in thousands)						For capital					corrective
	Actual					adequacy purposes					action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2012
Leverage	$	60,225		9.50	%	$	25,350		4.00	%	$	31,688		5.00	%
Tier 1 Capital	$	60,225		15.88	%	$	15,174		4.00	%	$	22,762		6.00	%
Total Risk Based Capital	$	66,132		17.43	%	$	30,349		8.00	%	$	37,936		10.00	%
As of December 31, 2011
Leverage	$	56,273		9.84	%	$	22,871		4.00	%	$	28,589		5.00	%
Tier 1 Capital	$	56,273		15.02	%	$	14,984		4.00	%	$	22,476		6.00	%
Total Risk Based Capital	$	63,085		16.84	%	$	29,968		8.00	%	$	37,460		10.00	%

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The following is a comparison of the Landmark National Bank’s regulatory capital to minimum capital requirements at September 30, 2012 and December 31, 2011:

											To be well-capitalized
											under prompt
(Dollars in thousands)						For capital					corrective
	Actual					adequacy purposes					action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2012
Leverage	$	61,667		9.76	%	$	25,274		4.00	%	$	31,592		5.00	%
Tier 1 Capital	$	61,667		16.32	%	$	15,114		4.00	%	$	22,671		6.00	%
Total Risk Based Capital	$	66,384		17.57	%	$	30,228		8.00	%	$	37,786		10.00	%
As of December 31, 2011
Leverage	$	58,692		10.29	%	$	22,808		4.00	%	$	28,510		5.00	%
Tier 1 Capital	$	58,692		15.73	%	$	14,923		4.00	%	$	22,384		6.00	%
Total Risk Based Capital	$	63,325		16.97	%	$	29,846		8.00	%	$	37,307		10.00	%

Dividends. During the quarter ended September 30, 2012, we paid a quarterly cash dividend of $0.19 per share to our stockholders.

The payment of dividends by any financial institution or its holding company is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations. As described above, Landmark National Bank exceeded its minimum capital requirements under applicable guidelines as of September 30, 2012. The National Bank Act imposes limitations on the amount of dividends that a national bank may pay without prior regulatory approval. Generally, the amount is limited to the bank's current year's net earnings plus the adjusted retained earnings for the two preceding years. As of September 30, 2012, approximately $3.3 million was available to be paid as dividends to the Company by Landmark National Bank without prior regulatory approval.

Additionally, our ability to pay dividends is limited by the subordinated debentures that are held by two business trusts that we control. Interest payments on the debentures must be paid before we pay dividends on our capital stock, including our common stock. We have the right to defer interest payments on the debentures for up to 20 consecutive quarters. However, if we elect to defer interest payments, all deferred interest must be paid before we may pay dividends on our capital stock.

Average Assets/Liabilities. The following tables reflects the tax equivalent yields on average interest-earning assets and costs of average interest-bearing liabilities for the periods indicated (derived by dividing income or expense by the monthly average balance of assets or liabilities, respectively) as well as “net interest margin” (which reflects the effect of the net earnings balance) for the periods shown:

31

	Three months ended							Three months ended
	September 30, 2012							September 30, 2011
	Average balance		Interest		Average yield/rate			Average balance		Interest		Average yield/rate
	(Dollars in thousands)
Assets
Interest-earning assets:
Interest-bearing deposits at banks	$	13,688	$	7		0.20	%	$	1,931	$	-		0.00	%
Investment securities (1)		252,174		1,652		2.61	%		197,471		1,615		3.24	%
Loans receivable, net (2)		312,373		4,177		5.32	%		315,143		4,412		5.56	%
Total interest-earning assets		578,235		5,836		4.02	%		514,545		6,027		4.65	%
Non-interest-earning assets		69,034							66,525
Total	$	647,269						$	581,070
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Certificates of deposit	$	180,289	$	438		0.97	%	$	181,287	$	566		1.24	%
Money market and NOW accounts		216,943		81		0.15	%		169,486		91		0.21	%
Savings accounts		45,922		6		0.05	%		36,671		12		0.13	%
Total deposits		443,154		525		0.47	%		387,444		669		0.69	%
FHLB advances and other borrowings		57,578		439		3.03	%		70,561		471		2.65	%
Total interest-bearing liabilities		500,732		964		0.77	%		458,005		1,140		0.99	%
Non-interest-bearing liabilities		84,209							66,014
Stockholders' equity		62,328							57,051
Total	$	647,269						$	581,070
Interest rate spread (3)						3.25	%						3.66	%
Net interest margin (4)			$	4,872		3.35	%			$	4,887		3.77	%
Tax equivalent interest - imputed				347							336
Net interest income			$	4,525						$	4,551
Ratio of average interest-earning assets to average interest-bearing liabilities						115.5	%						112.3	%

(1) Income on tax exempt securities is presented on a fully tax equivalent basis, using a 34% federal tax rate.

(2) Includes loans classified as non-accrual. Income on tax exempt loans is presented on a fully tax equivalent basis, using a 34% federal tax rate.

(3) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(4) Net interest margin represents annualized, tax-equivalent net interest income divided by average interest-earning assets.

32

	Nine months ended							Nine months ended
	September 30, 2012							September 30, 2011
	Average balance		Interest		Average yield/rate			Average balance		Interest		Average yield/rate
Assets		(Dollars in thousands)
Interest-earning assets:
Interest-bearing deposits at banks	$	12,713	$	18		0.19	%	$	3,042	$	3		0.13	%
Investment securities (1)		237,277		4,955		2.79	%		190,872		4,719		3.31	%
Loans receivable, net (2)		314,435		12,810		5.44	%		314,011		13,245		5.64	%
Total interest-earning assets		564,425		17,783		4.21	%		507,925		17,967		4.73	%
Non-interest-earning assets		69,159							67,766
Total	$	633,584						$	575,691
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Certificates of deposit	$	179,967	$	1,414		1.05	%	$	177,070	$	1,806		1.36	%
Money market and NOW accounts		205,411		254		0.17	%		172,232		288		0.22	%
Savings accounts		43,797		24		0.07	%		35,579		38		0.14	%
Total deposits		429,175		1,692		0.53	%		384,881		2,132		0.74	%
FHLB advances and other borrowings		59,295		1,326		2.99	%		69,792		1,427		2.73	%
Total interest-bearing liabilities		488,470		3,018		0.83	%		454,673		3,559		1.05	%
Non-interest-bearing liabilities		84,096							65,441
Stockholders' equity		61,018							55,577
Total	$	633,584						$	575,691
Interest rate spread (3)						3.38	%						3.68	%
Net interest margin (4)			$	14,765		3.49	%			$	14,408		3.79	%
Tax equivalent interest - imputed				1,034							1,008
Net interest income			$	13,731						$	13,400
Ratio of average interest-earning assets to average interest-bearing liabilities						115.5	%						111.7	%

(1) Income on tax exempt securities is presented on a fully tax equivalent basis, using a 34% federal tax rate.

(2) Includes loans classified as non-accrual. Income on tax exempt loans is presented on a fully tax equivalent basis, using a 34% federal tax rate.

(3) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(4) Net interest margin represents annualized, tax-equivalent net interest income divided by average interest-earning assets.

33

Rate/Volume Table. The following table describes the extent to which changes in tax equivalent interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities affected the Company’s interest income and expense for periods indicated. The table distinguishes between (i) changes attributable to rate (changes in rate multiplied by prior volume), (ii) changes attributable to volume (changes in volume multiplied by prior rate), and (iii) net change (the sum of the previous columns). The net changes attributable to the combined effect of volume and rate that cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

	Three months ended September 30,									Nine months ended September 30,
	2012 vs 2011									2012 vs 2011
	Increase/(decrease) attributable to									Increase/(decrease) attributable to
	Volume			Rate			Net			Volume			Rate			Net
	(Dollars in thousands)									(Dollars in thousands)
Interest income:
Interest-bearing deposits at banks	$	-		$	7		$	7		$	13		$	2		$	15
Investment securities		125			(88	)		37			666			(430	)		236
Loans		(40	)		(196	)		(236	)		17			(453	)		(436	)
Total		85			(277	)		(192	)		696			(881	)		(185	)
Interest expense:
Deposits		118			(262	)		(144	)		300			(740	)		(440	)
Other borrowings		(145	)		113			(32	)		(275	)		174			(101	)
Total		(27	)		(149	)		(176	)		25			(566	)		(541	)
Net interest income	$	112		$	(128	)	$	(16	)	$	671		$	(315	)	$	356

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our assets and liabilities are principally financial in nature and the resulting net interest income thereon is subject to changes in market interest rates and the mix of various assets and liabilities. Interest rates in the financial markets affect our decision on pricing our assets and liabilities, which impacts net interest income, a significant cash flow source for us. As a result, a substantial portion of our risk management activities relates to managing interest rate risk.

Our Asset/Liability Management Committee monitors the interest rate sensitivity of our balance sheet using earnings simulation models and interest sensitivity gap analysis. We have set policy limits of interest rate risk to be assumed in the normal course of business and monitor such limits through our simulation process.

We have been successful in meeting the interest rate sensitivity objectives set forth in our policy. Simulation models are prepared to determine the impact on net interest income for the coming twelve months, including one using rates at September 30, 2012, and forecasting volumes for the twelve-month projection. This position is then subjected to a shift in interest rates of 100 and 200 basis points with an impact to our net interest income on a one-year horizon as follows:

	Dollar change in net			Percent change in
Scenario	interest income ($000’s)			net interest income
200 basis point rising	$	381			2.0	%
100 basis point rising	$	227			1.2	%
100 basis point falling	$	(391	)		(2.1	)%
200 basis point falling		NM			NM

The 200 basis point falling scenario is considered to be not meaningful (“NM”) in the current low rate environment.

34

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Forward-Looking Statements

This document (including information incorporated by reference) contains, and future oral and written statements by us and our management may contain, forward-looking statements, within the meaning of such term in the Private Securities Litigation Reform Act of 1995, with respect to our financial condition, results of operations, plans, objectives, future performance and business. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and we undertake no obligation to update any statement in light of new information or future events.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on operations and future prospects by us and our subsidiaries include, but are not limited to, the following:

· The strength of the United States economy in general and the strength of the local economies in which we conduct our operations which may be less favorable than expected and may result in, among other things, a deterioration in the credit quality and value of our assets.

· The effects of, and changes in, federal, state and local laws, regulations and policies affecting banking, securities, insurance and monetary and financial matters (including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated thereunder, as well as rules jointly proposed by the federal bank regulatory agencies to implement Basel III) and the effects of increases in FDIC premiums.

· The effects of changes in interest rates (including the effects of changes in the rate of prepayments of our assets) and the policies of the Board of Governors of the Federal Reserve System.

· Our ability to compete with other financial institutions as effectively as we currently intend due to increases in competitive pressures in the financial services sector.

· Our inability to obtain new customers and to retain existing customers.

· The timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet.

· Technological changes implemented by us and by other parties, including third party vendors, which may be more difficult or more expensive than anticipated or which may have unforeseen consequences to us and our customers.

· Our ability to develop and maintain secure and reliable electronic systems.

· Our ability to retain key executives and employees and the difficulty that we may experience in replacing key executives and employees in an effective manner.

· Consumer spending and saving habits which may change in a manner that affects our business adversely.

· Our ability to successfully integrate acquired businesses and future growth.

· The costs, effects and outcomes of existing or future litigation.

· Changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board.

· The economic impact of past and any future terrorist attacks, acts of war or threats thereof, and the response of the United States to any such threats and attacks.

· Our ability to effectively manage our credit risk.

· Our ability to forecast probable loan losses and maintain an adequate allowance for loan losses.

· The effects of declines in the value of our investment portfolio.

· Our ability to raise additional capital if needed.

· The effects of declines in real estate markets.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning us and our business, including other factors that could materially affect our financial results, is included in our filings with the Securities and Exchange Commission, including the “Risk Factors” section in our Form 10-K.

35

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of September 30, 2012. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2012.

There were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2012 that materially affected or were likely to materially affect the Company’s internal control over financial reporting.

36

LANDMARK BANCORP, INC. AND SUBSIDIARY

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors applicable to the Company from those disclosed in Part I, Item 1A. “Risk Factors,” in the Company's 2011 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

On November 5, 2012, the Company entered into the Fourth Amendment (the “Amendment”) to the Revolving Credit Agreement, dated November 19, 2008 between the Company and First National Bank of Omaha, as amended (the “Credit Agreement”). Under the Amendment, the maturity date of the Credit Agreement was extended to November 5, 2013. The Amendment also amended certain financial covenants included in the Credit Agreement.

ITEM 6. EXHIBITS 

Exhibit 10.1	Fourth Amendment to Revolving Credit Agreement, dated November 5, 2012, between Landmark Bancorp, Inc. and First National Bank of Omaha
Exhibit 31.1	Certificate of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
Exhibit 31.2	Certificate of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
Exhibit 32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011; (ii) Consolidated Statements of Earnings for the three and nine months ended September 30, 2012 and September 30, 2011; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and September 30, 2011; (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and September 30, 2011; (v) Consolidated Statements of Stockholders’ Equity for the nine months ended September 30, 2012 and September 30, 2011; and (vi) Notes to Consolidated Financial Statements*

* As provided in Rule 406T of Regulation S-T, this information shall not be deemed filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, or otherwise subject to liability under those sections.

37

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.

	LANDMARK BANCORP, INC.
Date: November 9, 2012	/s/ Patrick L. Alexander
	Patrick L. Alexander
	President and Chief Executive Officer
Date: November 9, 2012	/s/ Mark A. Herpich
	Mark A. Herpich
	Vice President, Secretary, Treasurer and Chief Financial Officer

38

EX-10.1

Exhibit 10.1

Fourth AMENDMENT TO
REVOLVING CREDIT AGREEMENT

This FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT (this “Loan Amendment”) dated as of November 5, 2012, is entered into by and among LANDMARK BANCORP, INC., a Delaware corporation (the “Borrower”), and FIRST NATIONAL BANK OF OMAHA, a national banking association with principal offices in Omaha, Nebraska (the “Bank”) (the Borrower and the Bank are sometimes hereinafter individually referred to as a “Party” and collectively referred to as the “Parties”).

WHEREAS, the Parties have entered into that certain Revolving Credit Agreement dated as of November 19, 2008 (the “Initial Credit Agreement”), as amended by that certain letter agreement among the Parties dated February 6, 2009 (the “Letter Agreement”), First Amendment to Revolving Credit Agreement among the Parties dated November 18, 2009 (the “First Amendment”), Second Amendment to Revolving Credit Agreement among the Parties dated November 5, 2010 (the “Second Amendment”), and Third Amendment to Revolving Credit Agreement among the Parties dated November 4, 2011 (the “Third Amendment”) (the Initial Credit Agreement, the Letter Agreement, the First Amendment, the Second Amendment, and the Third Amendment are hereinafter collectively referred to as the “Credit Agreement”); and

WHEREAS, the Parties desire to amend and modify the Credit Agreement, as hereinafter provided and subject to the terms and provisions hereof.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements set forth in the Credit Agreement as amended by this Loan Amendment, including the mutual covenants and agreements contained herein, the Parties agree as follows:

1.                  Definitions. Unless otherwise defined in this Loan Amendment, each capitalized term used in this Loan Amendment, including its preamble and recitals, has the meaning ascribed to it in the Credit Agreement.

2.                  Amendment to Definition. The following defined terms as reflected in Section 1.01 of the Credit Agreement shall be, and hereby are, deleted in there entireties and replaced by the definitions reflected below inserted, in alphabetical order, for such defined term:

“ “Loan Termination Date” means the earliest to occur of the following: (a) November 5, 2013, (b) the date the Obligations are accelerated pursuant to this Agreement or the Revolving Note and (c) the date the Bank has received (i) notice in writing from the Borrower of the Borrower’s election to terminate this Agreement or the Revolving Note or (ii) indefeasible payment in full of the Obligations.”

3.                  Amended Revolving Note. Borrower shall, upon execution of this Loan Amendment, execute and deliver to the Bank a Fourth Amended and Restated Revolving Note, in the form attached hereto as Exhibit “A” and incorporated herein by this reference (the “Amended Revolving Note”) for the purpose of extending the Loan Termination Date to November 5, 2013. Such Amended Revolving Note shall be an extension, amendment and restatement of the Third Amended and Restated Revolving Note, dated November 4, 2011, in the form attached to the Third Amendment as Exhibit “A,” and all references to the Revolving Note in the Credit Agreement or in any of the other Loan Documents, shall be deemed for all purposes to be a reference to the Amended Revolving Note.

4.                  Amendment to Section 7.01(b) and (e) of Credit Agreement. The Parties agree that subsections (b) and (e) of Section 7.01 of the Credit Agreement shall be, and hereby are, as of the date hereof, deleted in their entirety and replaced with the following:

“(b) Tier 1 Risk Based Capital Ratio. The Tier 1 Risk Based Capital Ratio (expressed as a percentage), as stated in the most recent Call Reports of such Person, of not less than twelve percent (12.0%).

(e) Loan Loss Reserves to Total Loans Ratio. The ratio (expressed as a percentage) of Loan Loss Reserves to the total of all loans made by such Person, shall not be less than the lesser of (i) one and twenty-five hundredths percent (1.25%), or (ii) the allowance amount as shall be required by Applicable Law or Governmental Authority.”

5.                  Compliance Certificates. The Parties agree that the form of Quarterly Compliance Certificate attached as Exhibit “B” to the Third Amendment is hereby deleted and replaced with the form of Quarterly Compliance Certificate attached as Exhibit “B” to this Loan Amendment and incorporated herein by this reference. The Parties agree that the form of Annual Compliance Certificate attached as Exhibit “C” to the Third Amendment is hereby deleted and replaced with the form of Annual Compliance Certificate attached as Exhibit “C” to this Loan Amendment and incorporated herein by this reference. The Parties hereby agree that all references to the Quarterly Compliance Certificate or the Annual Compliance Certificate in the Credit Agreement or in any of the other Loan Documents shall be deemed to be references to the Quarterly Compliance Certificate or the Annual Compliance Certificate, as applicable, in the form attached hereto.

6.                  Conditions Precedent. In addition to any conditions precedent contained in any of the Loan Documents or otherwise contained in this Loan Amendment, the obligations of the Bank under this Loan Amendment are expressly conditioned upon satisfaction of the following additional conditions precedent:

(a) Execution of the Loan Amendment. The Bank having received from the Borrower counterpart signatures of this Loan Amendment.

(b) Delivery of Documents. The Bank shall have received, each in a form acceptable to the Bank, such other documents, instruments, and writings, including but not limited to authorization and incumbency certificates with reasonable documentation attached thereto and incorporated therein, reasonably requested by the Bank.

7.                  Ratification; No Waiver. The Parties agree that, except as specifically amended hereby, the terms and provisions of the Credit Agreement and all of the other Loan Documents, are hereby ratified and shall remain in full force and effect. No amendment contained in this Loan Amendment shall be construed to amend or waive any obligation of the Borrower under the Credit Agreement or any provision of any of the Loan Documents, except to the extent of the specific amendment referenced herein. No delay or omission by the Bank in exercising any power, right, or remedy shall impair such power, right, or remedy or be construed as a waiver thereof or an acquiescence therein, and no single or partial exercise of any such power, right, or remedy shall preclude other or further exercise thereof or the exercise of any other power, right, or remedy under the Credit Agreement or any other Loan Documents, or otherwise.

8.                  Authorization. The Borrower hereby represents and warrants that (i) the undersigned is a duly authorized representative of the Borrower, (ii) the Borrower has the requisite power and authority to execute and deliver this Loan Amendment, (iii) the execution, delivery and performance of this Loan Amendment have been, duly authorized, approved and ratified by all required organizational action of the Borrower, and (iv) the amendments specifically referenced herein reflect all of the amendments being requested by the Borrower relating to the terms and provisions of the Credit Agreement and the other Loan Documents.

2

9.                 Governing Law. This Loan Amendment shall be governed by the laws of the State of Nebraska, other than conflict of law provisions thereof.

10.              Submission to Jurisdiction; Venue. The Borrower hereby submits to the jurisdiction of any state or federal court sitting in Omaha, Nebraska, in any action or proceeding arising out of or relating to this Loan Amendment, the Credit Agreement or any of the other Loan Documents, and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. The Borrower also agrees not to bring any action or proceeding arising out of or relating to this Loan Amendment, the Credit Agreement, or any other Loan Document in any other court. The Borrower waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of the Bank. The Borrower agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity. The Borrower hereby waives any rights it may have to transfer or change the venue of any suit, action or other proceeding brought against the Borrower by the Bank in accordance with this paragraph or in connection with this Loan Amendment, the Credit Agreement or any other Loan Documents.

11.              JURY TRIAL WAIVER. THE BANK AND THE BORROWER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS LOAN AMENDMENT, THE CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. NO EMPLOYEE OF THE BANK HAS AUTHORITY TO WAIVE, CONDITION, OR MODIFY THE TERMS AND PROVISIONS OF THIS PARAGRAPH OF THIS LOAN AMENDMENT.

12.              Costs and Expenses.  The Borrower agrees to pay on demand all costs and expenses of the Bank in connection with the preparation, execution and delivery of this Loan Amendment, including, without limitation, the cost for reasonable fees and out-of-pocket expenses of outside counsel for the Bank with respect thereto.

13.              CREDIT Agreement. A CREDIT Agreement must be in writing to be enforceable under Nebraska law. To protect you and us from any misunderstandings or disappointments, any contract, promise, undertaking, or offer to forbear repayment of money or to make any other financial accommodation in connection with this loan of money or grant or extension of credit, or any amendment of, cancellation of, waiver of, or substitution for any or all of the terms or provisions of any instrument or document executed in connection with this loan of money or grant or extension of credit, must be in writing to be effective.

14.              Counterparts. This Loan Amendment may be executed in one or more counterparts, any one of which need not contain the signatures of more than one Party, but all such counterparts taken together will constitute one and the same instrument. A facsimile signature will be deemed an original signature.

3

IN WITNESS WHEREOF, the Parties hereto have executed this Credit Amendment as of the date first written above.

“Borrower”
LANDMARK BANCORP, INC., a Delaware corporation
By:	/s/ Mark A. Herpich
Title:	Chief Financial Officer
“Bank”
FIRST NATIONAL BANK OF OMAHA, a national banking association
By:	/s/ Chris Reiner
Title:	Vice President

4

Fourth AMENDMENT TO
REVOLVING CREDIT AGREEMENT

EXHIBIT “A”

Form of Amended Revolving Note

Fourth AMENDMENT TO
REVOLVING CREDIT AGREEMENT

EXHIBIT “B”

Form of Quarterly Compliance Certificate

Fourth AMENDMENT TO
REVOLVING CREDIT AGREEMENT

EXHIBIT “C”

Form of Annual Compliance Certificate

5

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a)

I, Patrick L. Alexander, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Landmark Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2012	/s/ Patrick L. Alexander
	Patrick L. Alexander
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a)

I, Mark A. Herpich, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Landmark Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2012	/s/ Mark A. Herpich
	Mark A. Herpich
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Landmark Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Patrick L. Alexander, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Patrick L. Alexander

Patrick L. Alexander

Chief Executive Officer

November 9, 2012

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Landmark Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark A. Herpich, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 /s/ Mark A. Herpich

Mark A. Herpich

Chief Financial Officer

November 9, 2012

XML

Earnings per Share (Details Textual)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Stock Dividend Rate Percentage					5.00%
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	62,775	465,744	144,948	441,918

XML

Acquisition (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2012
Percentage Of Business Acquisition	100.00%
Business Acquisition, Effective Date of Acquisition	Apr. 01, 2012
Business Acquisition,Investments	$ 14,200,000
Business Acquisition Loans	15,000,000
Business Acquisition Deposits	35,000,000
Unpaid Contractual Loan Amount	15,100,000
Business Acquisition Cost Inluded Inprofessional Fees	147,000
Business Acquisition, Purchase Price Allocation, Goodwill Amount	181,000
Business Acquisition, Purchase Price Allocation, Goodwill, Expected Tax Deductible Amount	51,000
The Wellsville Bank [Member]
Business Acquisition, Date of Acquisition Agreement	Apr. 01, 2012
Business Acquisition, Purchase Price Allocation, Current Assets, Cash and Cash Equivalents	$ 3,700,000

XML

Loans and Allowance for Loan Losses (Details 1) (USD $) In Thousands, unless otherwise specified			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Loans [Member]	Sep. 30, 2011 Loans [Member]	Sep. 30, 2012 Loans [Member]	Sep. 30, 2011 Loans [Member]	Sep. 30, 2012 Loans [Member] Residential Real Estate [Member]	Sep. 30, 2011 Loans [Member] Residential Real Estate [Member]	Sep. 30, 2012 Loans [Member] Residential Real Estate [Member]	Sep. 30, 2011 Loans [Member] Residential Real Estate [Member]	Sep. 30, 2012 Loans [Member] Construction Loans [Member]	Sep. 30, 2011 Loans [Member] Construction Loans [Member]	Sep. 30, 2012 Loans [Member] Construction Loans [Member]	Sep. 30, 2011 Loans [Member] Construction Loans [Member]	Sep. 30, 2012 Loans [Member] Commercial Real Estate [Member]	Sep. 30, 2011 Loans [Member] Commercial Real Estate [Member]	Sep. 30, 2012 Loans [Member] Commercial Real Estate [Member]	Sep. 30, 2011 Loans [Member] Commercial Real Estate [Member]	Sep. 30, 2012 Loans [Member] Commercial Loan [Member]	Sep. 30, 2011 Loans [Member] Commercial Loan [Member]	Sep. 30, 2012 Loans [Member] Commercial Loan [Member]	Sep. 30, 2011 Loans [Member] Commercial Loan [Member]	Sep. 30, 2012 Loans [Member] Agriculture Loans [Member]	Sep. 30, 2011 Loans [Member] Agriculture Loans [Member]	Sep. 30, 2012 Loans [Member] Agriculture Loans [Member]	Sep. 30, 2011 Loans [Member] Agriculture Loans [Member]	Sep. 30, 2012 Loans [Member] Municipal Bonds [Member]	Sep. 30, 2011 Loans [Member] Municipal Bonds [Member]	Sep. 30, 2012 Loans [Member] Municipal Bonds [Member]	Sep. 30, 2011 Loans [Member] Municipal Bonds [Member]	Sep. 30, 2012 Loans [Member] Consumer Loan [Member]	Sep. 30, 2011 Loans [Member] Consumer Loan [Member]	Sep. 30, 2012 Loans [Member] Consumer Loan [Member]	Sep. 30, 2011 Loans [Member] Consumer Loan [Member]
Allowance for loan losses:
Balance	$ (6,167)	$ (4,707)	$ 5,272	$ 4,005	$ 4,707	$ 4,967	$ 708	$ 339	$ 560	$ 395	$ 1,786	$ 1,022	$ 928	$ 1,186	$ 1,485	$ 1,482	$ 1,791	$ 1,576	$ 652	$ 612	$ 745	$ 1,173	$ 402	$ 376	$ 433	$ 399	$ 112	$ 102	$ 130	$ 99	$ 127	$ 72	$ 120	$ 139
Charge-offs			(118)	(249)	(220)	(2,395)	0	0	(15)	(104)	(15)	(208)	(15)	(1,173)	0	0	0	(434)	(60)	0	(70)	(590)	0	0	0	(1)	0	0	0	0	(43)	(41)	(120)	(93)
Recoveries			13	67	80	151	1	2	6	26	1	3	4	3	0	37	0	37	5	3	10	11	1	34	39	35	0	0	0	0	5	(12)	21	39
Net charge-offs			(105)	(182)	(140)	(2,244)	1	2	(9)	(78)	(14)	(205)	(11)	(1,170)	0	37	0	(397)	(55)	3	(60)	(579)	1	34	39	34	0	0	0	0	(38)	(53)	(99)	(54)
Provision for loan losses			1,000	500	1,600	1,600	76	(12)	234	12	523	117	1,378	918	265	149	(41)	489	18	106	(70)	127	47	36	(22)	13	20	(3)	2	0	51	107	119	41
Balance	(6,167)	(4,707)	6,167	4,323	6,167	4,323	785	329	785	329	2,295	934	2,295	934	1,750	1,668	1,750	1,668	615	721	615	721	450	446	450	446	132	99	132	99	140	126	140	126
Allowance for loan losses:
Individually evaluated for loss			1,679	119	1,679	119	184	19	184	19	1,414	11	1,414	11	0	0	0	0	0	0	0	0	0	0	0	0	65	66	65	66	16	23	16	23
Collectively evaluated for loss			4,488	4,204	4,488	4,204	601	310	601	310	881	923	881	923	1,750	1,668	1,750	1,668	615	721	615	721	450	446	450	446	67	33	67	33	124	103	124	103
Total	(6,167)	(4,707)	6,167	4,323	6,167	4,323	785	329	785	329	2,295	934	2,295	934	1,750	1,668	1,750	1,668	615	721	615	721	450	446	450	446	132	99	132	99	140	126	140	126
Loan balances:
Individually evaluated for loss			5,227	1,931	5,227	1,931	848	803	848	803	3,326	225	3,326	225	0	18	0	18	204	0	204	0	5	71	5	71	772	775	772	775	72	39	72	39
Collectively evaluated for loss			307,927	309,218	307,927	309,218	81,609	77,901	81,609	77,901	21,293	21,882	21,293	21,882	90,163	94,114	90,163	94,114	59,156	53,209	59,156	53,209	32,922	42,206	32,922	42,206	9,293	6,499	9,293	6,499	13,491	13,407	13,491	13,407
Total	$ 307,292	$ 310,081	$ 313,154	$ 311,149	$ 313,154	$ 311,149	$ 82,457	$ 78,704	$ 82,457	$ 78,704	$ 24,619	$ 22,107	$ 24,619	$ 22,107	$ 90,163	$ 94,132	$ 90,163	$ 94,132	$ 59,360	$ 53,209	$ 59,360	$ 53,209	$ 32,927	$ 42,277	$ 32,927	$ 42,277	$ 10,065	$ 7,274	$ 10,065	$ 7,274	$ 13,563	$ 13,446	$ 13,563	$ 13,446

XML

Goodwill and Other Intangible Assets (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Amortization of intangibles	$ 481,000	$ 190,000	$ 907,000	$ 551,000
Finite-Lived Core Deposits, Gross	24,700,000		24,700,000
Finite-Lived Intangible Asset, Useful Life			10 years
Total deposits	514,820,000		514,820,000		454,134,000
Core Deposits [Member]
Total deposits	308,000		308,000
The Wellsville Bank [Member]
Business Acquisition, Date of Acquisition Agreement			Apr. 01, 2012
Total deposits	$ 35,000,000		$ 35,000,000

XML

Fair Value of Financial Instruments and Fair Value Measurements (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Payments applied to reduce carrying value	$ 73,970	$ 59,643
Fair Value, Inputs, Level 3 [Member]
Level 3 asset fair value at December 31, 2011	405
Payments applied to reduce carrying value	(18)
Total (losses) gains:
Included in earnings	(63)
Included in other comprehensive income	241
Level 3 asset fair value at September 30, 2012	$ 565

XML

Loans and Allowance for Loan Losses (Details Textual) (USD $)	3 Months Ended			9 Months Ended			12 Months Ended			1 Months Ended	3 Months Ended
	Sep. 30, 2012	Mar. 31, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2011	Dec. 31, 2011 Minimum [Member]	Sep. 30, 2012 Maximum [Member]	Jan. 31, 2012 Construction Loans [Member]	Sep. 30, 2011 Construction Loans [Member]	Sep. 30, 2012 Construction Loans [Member]	Dec. 31, 2011 Construction Loans [Member]	Sep. 30, 2012 Residential Real Estate [Member]	Dec. 31, 2011 Residential Real Estate [Member]
Unpaid contractual principal	$ 5,517,000			$ 5,517,000			$ 3,129,000					$ 3,326,000	$ 574,000	$ 1,138,000	$ 1,570,000
Impaired Financing Receivable, Recorded Investment	5,200,000		599,000	5,200,000	599,000		2,500,000	2,500,000	5,200,000
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	250,000			250,000
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance			50,000		50,000
Impaired Financing Receivable Loan Balance To Be Received		200,000			208,000	141,000
Impaired Financing Receivable Loan Balance Receivable			200,000		200,000
Related allowance recorded	1,679,000		5,000	1,679,000	5,000		205,000					1,414,000	8,000	184,000	65,000
Loan Modification Agreement										200,000	200,000
Financing Receivable Outstanding Unpaid Principal Balance														240,200,000	183,300,000
Fees and Commissions, Other	145,000		106,000	394,000	319,000
Mortgage Loans On Real Estate Reserve Amount				418,000			500,000
Provision for Loan and Lease Losses				82,000
Allowance for Credit Losses, Change in Method of Calculating Impairment	148,000			148,000
Financing Receivable Nonaccrual And Impaired	$ 196,000			$ 196,000

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Subsequent Event (Details Textual) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Line of Credit Facility, Amount Outstanding	$ 7.5
Line of Credit Facility, Expiration Date	Nov. 05, 2013

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Interim Financial Statements

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. Interim Financial Statements

The consolidated financial statements of Landmark Bancorp, Inc. (the “Company”) and subsidiary have been prepared in accordance with the instructions to Form 10-Q. To the extent that information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements are contained in or consistent with the consolidated audited financial statements incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2011, such information and footnotes have not been duplicated herein. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of financial statements have been reflected herein. The results of the interim period ended September 30, 2012 are not necessarily indicative of the results expected for the year ending December 31, 2012. The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that financial statements are filed for potential recognition or disclosure.

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Fair Value of Financial Instruments and Fair Value Measurements (Details 3) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Assets:
Impaired loans	$ 3,548	$ 2,285
Loans held for sale	9,989	9,846
Mortgage servicing rights	1,562	1,319
Real estate owned	2,584	2,264
Total losses on Impaired loans	(1,535)	(112)
Total losses on Loans held for sale	0	0
Total loss on Mortgage servicing rights	(212)	0
Total loss on Real estate owned	0	(517)
Fair Value, Inputs, Level 1 [Member]
Assets:
Impaired loans	0	0
Loans held for sale	0	0
Mortgage servicing rights	0	0
Real estate owned	0	0
Fair Value, Inputs, Level 2 [Member]
Assets:
Impaired loans	0	0
Loans held for sale	9,989	9,846
Mortgage servicing rights	0	0
Real estate owned	0	0
Fair Value, Inputs, Level 3 [Member]
Assets:
Impaired loans	3,548	2,285
Loans held for sale	0	0
Mortgage servicing rights	1,562	1,319
Real estate owned	$ 2,584	$ 2,264

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Investments (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Amortized cost of investment securities, Due in less than one year	$ 15,379
Amortized cost of investment securities, Due after one year but within five years	148,248
Amortized cost of investment securities, Due after five years but within ten years	52,817
Amortized cost of investment securities, Due after ten years	15,388
Amortized cost of investment securities	232,453
Estimated fair value of investment securities, Due in less than one year	15,509
Estimated fair value of investment securities, Due after one year but within five years	151,264
Estimated fair value of investment securities, Due after five years but within ten years	55,634
Estimated fair value of investment securities, Due after ten years	15,740
Estimated fair value of investment securities	239,018
Common Stock [Member]
Amortized cost of investment securities	621
Estimated fair value of investment securities	$ 871	$ 819

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Investments (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Investments in available for sale securities, Cost basis	$ 232,453	$ 192,542
Investment securities available-for-sale, Gross unrealized losses	(558)	(862)
Investments in available for sale securities, Fair value	239,018	198,214
Trust Preferred Securities Subject To Mandatory Redemption [Member]
Investments in available for sale securities, Original par	2,000
Investments in available for sale securities, Principal payments	(60)
Investments in available for sale securities, Cumulative credit losses	(917)
Investments in available for sale securities, Cost basis	1,023	1,104
Investment securities available-for-sale, Gross unrealized losses	(458)	(699)
Investments in available for sale securities, Fair value	565	405
Trust Preferred Securities Subject To Mandatory Redemption [Member] | Investment Type Pre T S L VIII [Member] | Preferred Class B [Member] | Moody'S, C Rating [Member]
Investments in available for sale securities, Original par	1,000
Investments in available for sale securities, Principal payments	0
Investments in available for sale securities, Cumulative credit losses	(682)
Investments in available for sale securities, Cost basis	318
Investment securities available-for-sale, Gross unrealized losses	(98)
Investments in available for sale securities, Fair value	220
Trust Preferred Securities Subject To Mandatory Redemption [Member] | Investment Type Pre T S L IX [Member] | Preferred Class B [Member] | Moody'S, Ca Rating [Member]
Investments in available for sale securities, Original par	1,000
Investments in available for sale securities, Principal payments	(60)
Investments in available for sale securities, Cumulative credit losses	(235)
Investments in available for sale securities, Cost basis	705
Investment securities available-for-sale, Gross unrealized losses	(360)
Investments in available for sale securities, Fair value	$ 345

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Fair Value of Financial Instruments and Fair Value Measurements (Details Textual) (USD $)	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Impaired Financing Receivable, Recorded Investment	$ 5,200,000	$ 2,500,000	$ 599,000
Impaired Financing Receivable With Related Allowance Recorded Investment	$ 1,700,000	$ 205,000,000

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Investments (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Realized gains	$ 0	$ 186	$ 359	$ 186
Realized losses	0	0	0	0
Total	$ 0	$ 186	$ 359	$ 186

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Investments (Details Textual) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Federal Home Loan Bank Stock	$ 3,900,000	$ 4,900,000
Federal Reserve Bank Stock	1,800,000	1,800,000
Other Assets, Miscellaneous	112,000	60,000
Investment Type Pre T S L VIII [Member]
Cost Method Investments	318,000
Available-for-sale Securities, Gross Unrealized Gain (Loss)	98,000
Investment Type Pre T S L IX [Member]
Cost Method Investments	705,000
Available-for-sale Securities, Gross Unrealized Gain (Loss)	$ 360,000

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY [Parenthetical] (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011
Dividends per share (in dollars per share)	$ 0.57	[1]	$ 0.54	[1]
Exercise of stock options (in shares)	554		2,559
Excess tax benefit related to stock option plans (in dollars)	$ 1		$ 5

[1] Per share amounts for the periods ended September 30, 2011 have been adjusted to give effect to the 5% stock dividend paid during December 2011.

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Loans and Allowance for Loan Losses (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Total gross loans	$ 313,154	$ 314,574
Net deferred loan costs and loans in process	305	214
Allowance for loan losses	(6,167)	(4,707)
Loans, net	307,292	310,081
Commercial Loan [Member]
Total gross loans	59,360	57,006
Agriculture Loans [Member]
Total gross loans	32,927	39,052
Municipal Bonds [Member]
Total gross loans	10,065	10,366
Consumer Loan [Member]
Total gross loans	13,563	13,584
Residential Real Estate [Member]
Total gross loans	82,457	79,108
Construction Loans [Member]
Total gross loans	24,619	21,672
Commercial Real Estate [Member]
Total gross loans	$ 90,163	$ 93,786

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Fair Value of Financial Instruments and Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Investment securities:
Available-for-sale	$ 239,018	$ 198,214
Loans, net	307,292	310,081
Loans held for sale	9,767	9,754
Derivative financial instruments	534	255
Financial liabilities:
Non-maturity deposits	514,820	454,134
FHLB borrowings	35,735	49,163
Other borrowings	23,296	27,434
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Financial assets:
Cash and cash equivalents	23,117	17,501
Investment securities:
Available-for-sale	239,018	198,214
Other securities	5,727	6,671
Loans, net	307,292	310,081
Loans held for sale	9,767	9,754
Mortgage servicing rights	1,464	1,160
Derivative financial instruments	534	255
Accrued interest receivable	2,964	2,468
Financial liabilities:
Non-maturity deposits	336,020	274,301
Time deposits	178,800	179,833
FHLB borrowings	35,735	49,163
Other borrowings	23,296	27,434
Accrued interest payable	482	532
Estimate Of Fair Value, Fair Value Disclosure [Member]
Financial assets:
Cash and cash equivalents	23,117	17,501
Investment securities:
Available-for-sale	239,018	198,214
Other securities	5,727	6,671
Loans, net	307,754	309,927
Loans held for sale	9,989	9,846
Mortgage servicing rights	1,562	1,319
Derivative financial instruments	534	255
Accrued interest receivable	2,964	2,468
Financial liabilities:
Non-maturity deposits	336,020	274,301
Time deposits	180,058	181,280
FHLB borrowings	40,427	53,376
Other borrowings	21,052	25,200
Accrued interest payable	$ 482	$ 532

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets
Cash and cash equivalents	$ 23,117	$ 17,501
Investment securities:
Available-for-sale, at fair value	239,018	198,214
Other securities	5,727	6,671
Loans, net	307,292	310,081
Loans held for sale	9,767	9,754
Premises and equipment, net	15,106	14,692
Real estate owned	2,584	2,264
Bank owned life insurance	16,548	16,163
Goodwill	13,075	12,894
Other intangible assets, net	2,266	1,923
Accrued interest and other assets	9,718	8,083
Total assets	644,218	598,240
Liabilities and Stockholders' Equity
Non-interest-bearing demand	72,647	66,122
Money market and NOW	217,963	171,529
Savings	45,410	36,650
Time, $100,000 and greater	64,280	63,374
Time, other	114,520	116,459
Total deposits	514,820	454,134
Federal Home Loan Bank borrowings	35,735	49,163
Other borrowings	23,296	27,434
Accrued interest, taxes, and other liabilities	7,446	8,389
Total liabilities	581,297	539,120
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par, 200,000 shares authorized; none issued	0	0
Common stock, $0.01 par, 7,500,000 shares authorized; 2,783,380 and 2,782,826 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	28	28
Additional paid-in capital	29,386	29,313
Retained earnings	29,363	26,200
Accumulated other comprehensive income	4,144	3,579
Total stockholders' equity	62,921	59,120
Total liabilities and stockholders' equity	$ 644,218	$ 598,240

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Impact of Recent Accounting Pronouncements (Details Textual)	9 Months Ended
	Sep. 30, 2012
Accounting Standards Update 2011-04 [Member]
New Accounting Pronouncement or Change in Accounting Principle, Description	In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRS"). The amendments in ASU No. 2011-04 result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRS. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments in ASU No. 2011-04 became effective for interim and annual periods beginning after December 15, 2011. Adoption of ASU 2011-04 did not have a significant impact on the Company''s consolidated financial statements.
Accounting Standards Update 2011-05 [Member]
New Accounting Pronouncement or Change in Accounting Principle, Description	In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. ASU 2011-05 requires that all nonowner changes in stockholders'' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. The new guidance became effective for interim and annual periods beginning after December 15, 2011 with early adoption permitted. Adoption of ASU 2011-05 did not have a significant impact on the Company''s consolidated financial statements.
Accounting Standards Update 2011-08 [Member]
New Accounting Pronouncement or Change in Accounting Principle, Description	In September 2011, the FASB issued ASU No. 2011-08, Intangibles Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU 2011-08 allows the use of qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amounts as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The new guidance became effective for annual and interim goodwill impairment tests beginning after December 15, 2011 with early adoption permitted. Adoption of ASU 2011-08 did not have a significant impact on the Company''s consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net earnings	$ 4,750	$ 3,189
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for loan losses	1,600	1,600
Provision for valuation allowance on real estate owned	39	27
Amortization of investment security premiums, net	1,010	627
Amortization of intangibles	907	551
Depreciation	716	669
Bank owned life insurance	(393)	(443)
Stock-based compensation	67	76
Deferred income taxes	(420)	(347)
Gains on investment securities, net	(296)	(167)
Gain on sales of real estate owned, net	(39)	(166)
Gains on sales of loans, net	(4,255)	(1,923)
Proceeds from sales of loans	159,771	90,209
Origination of loans held for sale	(155,529)	(84,300)
Changes in assets and liabilities:
Accrued interest and other assets	(2,349)	448
Accrued expenses, taxes, and other liabilities	(1,026)	1,708
Net cash provided by operating activities	4,553	11,758
Cash flows from investing activities:
Net decrease (increase) in loans	16,172	(3,051)
Maturities and prepayments of investment securities	38,795	40,913
Purchases of investment securities	(73,970)	(59,643)
Proceeds from sales of investment securities	9,841	4,740
Net cash received in bank acquisition	3,965	0
Purchase of bank owned life insurance	0	(2,500)
Proceeds from sales of premises and equipment and real estate owned	412	2,317
Purchases of premises and equipment, net	(721)	(252)
Net cash used in investing activities	(5,506)	(17,476)
Cash flows from financing activities:
Net increase in deposits	25,716	19,915
Federal Home Loan Bank advance repayments	(28)	(28)
Change in Federal Home Loan Bank line of credit, net	(13,400)	(8,500)
Proceeds from other borrowings	0	1,237
Repayments on other borrowings	(4,138)	0
Proceeds from issuance of common stock under stock option plans	5	28
Excess tax benefit related to stock option plans	1	5
Payment of dividends	(1,587)	(1,507)
Net cash provided by financing activities	6,569	11,150
Net increase in cash and cash equivalents	5,616	5,432
Cash and cash equivalents at beginning of period	17,501	9,735
Cash and cash equivalents at end of period	23,117	15,167
Supplemental disclosure of cash flow information:
Cash payments (refunds) for income taxes	1,880	(445)
Cash paid for interest	3,068	3,666
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to real estate owned	125	1,221
Bank acquisition:
Fair value of liabilities assumed	35,061	0
Fair value of assets acquired	$ 31,096	$ 0

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Loans and Allowance for Loan Losses (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Unpaid contractual principal	$ 5,517	$ 3,129
Impaired loan balance	5,227	2,490
Impaired loans without an allowance	1,613	2,015
Impaired loans with an allowance	3,614	475
Related allowance recorded	1,679	205	5
Year-to-date average loan balance	5,407	2,719
Year-to-date interest income recognized	15	67
Residential Real Estate [Member]
Unpaid contractual principal	1,138	1,570
Impaired loan balance	848	1,280
Impaired loans without an allowance	648	1,072
Impaired loans with an allowance	200	208
Related allowance recorded	184	65
Year-to-date average loan balance	873	1,311
Year-to-date interest income recognized	0	32
Construction Loans [Member]
Unpaid contractual principal	3,326	574
Impaired loan balance	3,326	225
Impaired loans without an allowance	60	200
Impaired loans with an allowance	3,266	25
Related allowance recorded	1,414	8
Year-to-date average loan balance	3,334	419
Year-to-date interest income recognized	0	0
Commercial Real Estate [Member]
Unpaid contractual principal		17
Impaired loan balance		17
Impaired loans without an allowance		17
Impaired loans with an allowance		0
Related allowance recorded		0
Year-to-date average loan balance		20
Year-to-date interest income recognized		0
Commercial Loan [Member]
Unpaid contractual principal	204	78
Impaired loan balance	204	78
Impaired loans without an allowance	203	0
Impaired loans with an allowance	1	78
Related allowance recorded	0	35
Year-to-date average loan balance	335	83
Year-to-date interest income recognized	0	0
Agriculture Loans [Member]
Unpaid contractual principal	5	63
Impaired loan balance	5	63
Impaired loans without an allowance	5	63
Impaired loans with an allowance	0	0
Related allowance recorded	0	0
Year-to-date average loan balance	10	65
Year-to-date interest income recognized	0	0
Municipal Bonds [Member]
Unpaid contractual principal	772	784
Impaired loan balance	772	784
Impaired loans without an allowance	641	653
Impaired loans with an allowance	131	131
Related allowance recorded	65	65
Year-to-date average loan balance	782	772
Year-to-date interest income recognized	15	35
Consumer Loan [Member]
Unpaid contractual principal	72	43
Impaired loan balance	72	43
Impaired loans without an allowance	56	10
Impaired loans with an allowance	16	33
Related allowance recorded	16	32
Year-to-date average loan balance	73	49
Year-to-date interest income recognized	$ 0	$ 0

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Fair Value of Financial Instruments and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping [Table Text Block]

Fair value estimates of the Company’s financial instruments as of September 30, 2012 and December 31, 2011, including methods and assumptions utilized, are set forth below:

(Dollars in thousands)
	September 30, 2012				December 31, 2011
	Carrying		Estimated		Carrying		Estimated
	amount		fair value		amount		fair value
Financial assets:
Cash and cash equivalents	$	23,117	$	23,117	$	17,501	$	17,501
Investment securities:
Available-for-sale		239,018		239,018		198,214		198,214
Other securities		5,727		5,727		6,671		6,671
Loans, net		307,292		307,754		310,081		309,927
Loans held for sale		9,767		9,989		9,754		9,846
Mortgage servicing rights		1,464		1,562		1,160		1,319
Derivative financial instruments		534		534		255		255
Accrued interest receivable		2,964		2,964		2,468		2,468
Financial liabilities:
Non-maturity deposits	$	336,020	$	336,020	$	274,301	$	274,301
Time deposits		178,800		180,058		179,833		181,280
FHLB borrowings		35,735		40,427		49,163		53,376
Other borrowings		23,296		21,052		27,434		25,200
Accrued interest payable		482		482		532		532

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Table Text Block]

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis at September 30, 2012 and December 31, 2011, allocated to the appropriate fair value hierarchy:

(Dollars in thousands)			As of September 30, 2012
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities:
U. S. federal agency obligations	$	7,189	$	-	$	7,189	$	-
Municipal obligations, tax exempt		77,074		-		77,074		-
Municipal obligations, taxable		38,348		-		38,348		-
Mortgage-backed securities		109,177		-		109,177		-
Common stocks		871		871		-		-
Pooled trust preferred securities		565		-		-		565
Certificates of deposit		5,794		-		5,794		-
Derivative financial instruments	$	534	$	-	$	534	$	-

			As of December 31, 2011
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities:
U. S. federal agency obligations	$	9,164	$	-	$	9,164	$	-
Municipal obligations, tax exempt		69,629		-		69,629		-
Municipal obligations, taxable		19,135		-		19,135		-
Mortgage-backed securities		94,472		-		94,472		-
Common stocks		819		819		-		-
Pooled trust preferred securities		405		-		-		405
Certificates of deposit		4,590		-		4,590		-
Derivative financial instruments	$	255	$	-	$	255	$	-

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Table Text Block]

The following table reconciles the changes in the Company’s Level 3 financial instruments during the first nine months of 2012:

(Dollars in thousands)
	Available-for
	sale-securities
Level 3 asset fair value at December 31, 2011	$	405
Payments applied to reduce carrying value		(18	)
Total (losses) gains:
Included in earnings		(63	)
Included in other comprehensive income		241
Level 3 asset fair value at September 30, 2012	$	565

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

The following table represents the Company’s financial instruments that are measured at fair value on a non-recurring basis as of September 30, 2012 and December 31, 2011 allocated to the appropriate fair value hierarchy:

(Dollars in thousands)			As of September 30, 2012
			Fair value hierarchy						Total
	Total		Level 1		Level 2		Level 3		losses
Assets:
Impaired loans	$	3,548	$	-	$	-	$	3,548	$	(1,535	)
Loans held for sale		9,989		-		9,989		-		-
Mortgage servicing rights		1,562		-		-		1,562		(212	)
Real estate owned	$	2,584	$	-	$	-	$	2,584	$	-

(Dollars in thousands)			As of December 31 ,2011
			Fair value hierarchy						Total
	Total		Level 1		Level 2		Level 3		losses
Assets:
Impaired loans	$	2,285	$	-	$	-	$	2,285	$	(112	)
Loans held for sale		9,846		-		9,846		-		-
Mortgage servicing rights		1,319		-		-		1,319		-
Real estate owned	$	2,264	$	-	$	-	$	2,264	$	(517	)

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Loans and Allowance for Loan Losses (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Troubled debt restructurings, Number of loans	6	5
Troubled debt restructurings, Loan Balance	$ 1,340	$ 1,381
Residential Real Estate [Member]
Troubled debt restructurings, Number of loans	2	2
Troubled debt restructurings, Loan Balance	503	528
Construction Loans [Member]
Troubled debt restructurings, Number of loans	0	1
Troubled debt restructurings, Loan Balance	0	200
Commercial Loan [Member]
Troubled debt restructurings, Number of loans	2	0
Troubled debt restructurings, Loan Balance	196	0
Municipal Bonds [Member]
Troubled debt restructurings, Number of loans	2	2
Troubled debt restructurings, Loan Balance	$ 641	$ 653

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Goodwill and Other Intangible Assets (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Remainder of 2012	$ 229
2013	846
2014	756
2015	301
2016	38
Thereafter	96
Total	$ 2,266	$ 1,923

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) In Thousands	Common Stock [Member]	Additional Paid In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Total
Balance at Dec. 31, 2010	$ 26	$ 27,102	$ 25,767	$ 922	$ 53,817
Net earnings	0	0	3,189	0	3,189
Change in fair value of investment securities available-for-sale, net of tax	0	0	0	2,412	2,412
Dividends paid	0	0	(1,507)	0	(1,507)
Stock-based compensation	0	76	0	0	76
Exercise of stock options, shares, including excess tax benefit	0	33	0	0	33
Balance at Sep. 30, 2011	26	27,211	27,449	3,334	58,020
Balance at Dec. 31, 2011	28	29,313	26,200	3,579	59,120
Net earnings	0	0	4,750	0	4,750
Change in fair value of investment securities available-for-sale, net of tax	0	0	0	565	565
Dividends paid	0	0	(1,587)	0	(1,587)
Stock-based compensation	0	67	0	0	67
Exercise of stock options, shares, including excess tax benefit	0	6	0	0	6
Balance at Sep. 30, 2012	$ 28	$ 29,386	$ 29,363	$ 4,144	$ 62,921

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CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $)	Sep. 30, 2012	Dec. 31, 2011
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	200,000	200,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	7,500,000	7,500,000
Common stock, shares issued	2,783,380	2,782,826
Common stock, shares, outstanding	2,783,380	2,782,826

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Subsequent Event

9 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

Subsequent Events [Text Block]

10. Subsequent Events

On November 5, 2012, the Company entered into an amendment to extend the maturity of its $7.5 million line of credit from November 5, 2012 to November 5, 2013.

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DOCUMENT AND ENTITY INFORMATION	9 Months Ended
	Sep. 30, 2012	Nov. 09, 2012
Entity Registrant Name	LANDMARK BANCORP INC
Entity Central Index Key	0001141688
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	lark
Entity Common Stock, Shares Outstanding		2,783,380
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Goodwill [Table Text Block]

A summary of this and the other intangible assets that continue to be subject to amortization is as follows:

(Dollars in thousands)	As of September 30, 2012
	Gross carrying amount		Accumulated amortization			Valuation allowance			Net carrying amount
Core deposit intangible assets	$	4,973	$	(4,171	)	$	-		$	802
Mortgage servicing rights		2,785		(1,109	)		(212	)		1,464
Total other intangible assets	$	7,758	$	(5,280	)	$	(212	)	$	2,266

(Dollars in thousands)	As of December 31, 2011
	Gross carrying amount		Accumulated amortization			Valuation allowance		Net carrying amount
Core deposit intangible assets	$	4,665	$	(3,902	)	$	-	$	763
Mortgage servicing rights		2,149		(989	)		-		1,160
Total other intangible assets	$	6,814	$	(4,891	)	$	-	$	1,923

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

The following sets forth estimated amortization expense for other intangible assets for the remainder of 2012 and in successive years ending December 31:

(Dollars in thousands)	Amortization
	expense
Remainder of 2012	$	229
2013		846
2014		756
2015		301
2016		38
Thereafter		96
Total	$	2,266

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CONSOLIDATED STATEMENTS OF EARNINGS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011
Interest income:
Taxable	$ 4,033		$ 4,296		$ 12,380		$ 12,871
Tax-exempt	96		78		287		250
Investment securities:
Taxable	756		712		2,280		2,038
Tax-exempt	604		605		1,802		1,800
Total interest income	5,489		5,691		16,749		16,959
Interest expense:
Deposits	525		669		1,692		2,132
Borrowings	439		471		1,326		1,427
Total interest expense	964		1,140		3,018		3,559
Net interest income	4,525		4,551		13,731		13,400
Provision for loan losses	1,000		500		1,600		1,600
Net interest income after provision for loan losses	3,525		4,051		12,131		11,800
Non-interest income:
Fees and service charges	1,360		1,271		3,851		3,625
Gains on sales of loans, net	1,626		841		4,255		1,923
Bank owned life insurance	103		149		393		443
Other	126		120		416		535
Total non-interest income	3,215		2,381		8,915		6,526
Investment securities:
Net impairment losses	0		(19)		(63)		(19)
Gains on sales of investment securities	0		186		359		186
Investment securities gains, net	0		167		296		167
Non-interest expense:
Compensation and benefits	2,457		2,338		7,265		7,009
Occupancy and equipment	771		755		2,254		2,183
Professional fees	281		159		848		1,190
Amortization of intangibles	481		190		907		551
Data processing	213		187		631		564
Advertising	121		128		363		425
Federal deposit insurance premiums	80		75		262		367
Foreclosure and real estate owned expense	60		20		89		84
Other	804		821		2,508		2,358
Total non-interest expense	5,268		4,673		15,127		14,731
Earnings before income taxes	1,472		1,926		6,215		3,762
Income tax expense	267		437		1,465		573
Net earnings	$ 1,205		$ 1,489		$ 4,750		$ 3,189
Earnings per share:
Basic (in dollars per share)	$ 0.43	[1]	$ 0.54	[1]	$ 1.71	[1]	$ 1.15	[1]
Diluted (in dollars per share)	$ 0.43	[1]	$ 0.54	[1]	$ 1.70	[1]	$ 1.15	[1]
Dividends per share (in dollars per share)	$ 0.19	[1]	$ 0.18	[1]	$ 0.57	[1]	$ 0.54	[1]

[1] Per share amounts for the periods ended September 30, 2011 have been adjusted to give effect to the 5% stock dividend paid during December 2011.

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Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2012

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

4. Loans and Allowance for Loan Losses

Loans consisted of the following as of:

	September 30,			December 31,
(Dollars in thousands)	2012			2011
One-to-four family residential real estate	$	82,457		$	79,108
Construction and land		24,619			21,672
Commercial real estate		90,163			93,786
Commercial loans		59,360			57,006
Agriculture loans		32,927			39,052
Municipal loans		10,065			10,366
Consumer loans		13,563			13,584
Total gross loans		313,154			314,574
Net deferred loan costs and loans in process		305			214
Allowance for loan losses		(6,167	)		(4,707	)
Loans, net	$	307,292		$	310,081

The following tables provide information on the Company’s allowance for loan losses by loan class and allowance methodology:

	Three and nine months ended September 30, 2012
(Dollars in thousands)	One-to-four family residential real estate			Construction and land			Commercial real estate			Commercial loans			Agriculture loans			Municipal loans		Consumer loans			Total
Allowance for loan losses:
Balance at June 30, 2012	$	708		$	1,786		$	1,485		$	652		$	402		$	112	$	127		$	5,272
Charge-offs		-			(15	)		-			(60	)		-			-		(43	)		(118	)
Recoveries		1			1			-			5			1			-		5			13
Net charge-offs		1			(14	)		-			(55	)		1			-		(38	)		(105	)
Provision for loan losses		76			523			265			18			47			20		51			1,000
Balance at September 30, 2012		785			2,295			1,750			615			450			132		140			6,167
Balance at December 31, 2011	$	560		$	928		$	1,791		$	745		$	433		$	130	$	120		$	4,707
Charge-offs		(15	)		(15	)		-			(70	)		-			-		(120	)		(220	)
Recoveries		6			4			-			10			39			-		21			80
Net charge-offs		(9	)		(11	)		-			(60	)		39			-		(99	)		(140	)
Provision for loan losses		234			1,378			(41	)		(70	)		(22	)		2		119			1,600
Balance at September 30, 2012		785			2,295			1,750			615			450			132		140			6,167
Allowance for loan losses:
Individually evaluated for loss		184			1,414			-			-			-			65		16			1,679
Collectively evaluated for loss		601			881			1,750			615			450			67		124			4,488
Total		785			2,295			1,750			615			450			132		140			6,167
Loan balances:
Individually evaluated for loss		848			3,326			-			204			5			772		72			5,227
Collectively evaluated for loss		81,609			21,293			90,163			59,156			32,922			9,293		13,491			307,927
Total	$	82,457		$	24,619		$	90,163		$	59,360		$	32,927		$	10,065	$	13,563		$	313,154

	Three and nine months ended September 30, 2011
(Dollars in thousands)	One-to-four family residential real estate			Construction and land			Commercial real estate			Commercial loans			Agriculture loans			Municipal loans			Consumer loans			Total
Allowance for loan losses:
Balance at June 30, 2011	$	339		$	1,022		$	1,482		$	612		$	376		$	102		$	72		$	4,005
Charge-offs		-			(208	)		-			-			-			-			(41	)		(249	)
Recoveries		2			3			37			3			34			-			(12	)		67
Net charge-offs		2			(205	)		37			3			34			-			(53	)		(182	)
Provision for loan losses		(12	)		117			149			106			36			(3	)		107			500
Balance at September 30, 2011		329			934			1,668			721			446			99			126			4,323
Balance at December 31, 2010		395			1,186			1,576			1,173			399			99			139			4,967
Charge-offs		(104	)		(1,173	)		(434	)		(590	)		(1	)		-			(93	)		(2,395	)
Recoveries		26			3			37			11			35			-			39			151
Net charge-offs		(78	)		(1,170	)		(397	)		(579	)		34			-			(54	)		(2,244	)
Provision for loan losses		12			918			489			127			13			-			41			1,600
Balance at September 30, 2011		329			934			1,668			721			446			99			126			4,323
Allowance for loan losses:
Individually evaluated for loss		19			11			-			-			-			66			23			119
Collectively evaluated for loss		310			923			1,668			721			446			33			103			4,204
Total		329			934			1,668			721			446			99			126			4,323
Loan balances:
Individually evaluated for loss		803			225			18			-			71			775			39			1,931
Collectively evaluated for loss		77,901			21,882			94,114			53,209			42,206			6,499			13,407			309,218
Total	$	78,704		$	22,107		$	94,132		$	53,209		$	42,277		$	7,274		$	13,446		$	311,149

The Company’s key credit quality indicator is a loan’s performance status, defined as accruing or non-accruing. Performing loans are considered to have a lower risk of loss. Non-accrual loans are those which the Company believes have a higher risk of loss. The accrual of interest on non-performing loans is discontinued at the time the loan is ninety days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of principal or interest is considered doubtful. There were no loans 90 days delinquent and accruing interest at September 30, 2012 or December 31, 2011. The following tables present information on the Company’s past due and non-accrual loans by loan class:

	As of September 30, 2012
(Dollars in thousands)	30-59 days			60-89 days			90 days or
	delinquent			delinquent			more			Total past			Non-
	and			and			delinquent			due loans			accrual
	accruing			accruing			and accruing			accruing			loans			Total
One-to-four family residential real estate	$	500		$	1,752		$	-		$	2,252		$	839		$	3,091
Construction and land		19			-			-			19			3,326			3,345
Commercial real estate		148			-			-			148			-			148
Commercial loans		20			150			-			170			204			374
Agriculture loans		22			39			-			61			5			66
Municipal loans		-			-			-			-			131			131
Consumer loans		239			45			-			284			72			356
Total	$	948		$	1,986		$	-		$	2,934		$	4,577		$	7,511
Percent of gross loans		0.30	%		0.63	%		0.00	%		0.94	%		1.46	%		2.40	%

	As of December 31, 2011
(Dollars in thousands)	30-59 days			60-89 days			90 days or
	delinquent			delinquent			more			Total past			Non-
	and			and			delinquent			due loans			accrual
	accruing			accruing			and accruing			accruing			loans			Total
One-to-four family residential real estate	$	368		$	1,174		$	-		$	1,542		$	752		$	2,294
Construction and land		21			-			-			21			225			246
Commercial real estate		64			211			-			275			17			292
Commercial loans		1			201			-			202			78			280
Agriculture loans		1			-			-			1			63			64
Municipal loans		-			-			-			-			241			241
Consumer loans		160			18			-			178			43			221
Total	$	615		$	1,604		$	-		$	2,219		$	1,419		$	3,638
Percent of gross loans		0.20	%		0.51	%		0.00	%		0.71	%		0.45	%		1.16	%

The Company’s impaired loans increased from $2.5 million at December 31, 2011 to $5.2 million at September 30, 2012. The difference between the unpaid contractual principal and the impaired loan balance is a result of charge-offs recorded against impaired loans. The difference in the Company’s non-accrual loan balances and impaired loan balances at September 30, 2012 and December 31, 2011, was related to troubled debt restructurings (“TDR”) that are current and accruing interest, but still classified as impaired. The following tables present information on impaired loans:

(Dollars in thousands)	As of September 30, 2012
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	1,138	$	848	$	648	$	200	$	184	$	873	$	-
Construction and land		3,326		3,326		60		3,266		1,414		3,334		-
Commercial		204		204		203		1		-		335		-
Agriculture loans		5		5		5		-		-		10		-
Municipal loans		772		772		641		131		65		782		15
Consumer loans		72		72		56		16		16		73		-
Total impaired loans	$	5,517	$	5,227	$	1,613	$	3,614	$	1,679	$	5,407	$	15

(Dollars in thousands)	As of December 31, 2011
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	1,570	$	1,280	$	1,072	$	208	$	65	$	1,311	$	32
Construction and land		574		225		200		25		8		419		-
Commercial real estate		17		17		17		-		-		20		-
Commercial loans		78		78		-		78		35		83		-
Agriculture loans		63		63		63		-		-		65		-
Municipal loans		784		784		653		131		65		772		35
Consumer loans		43		43		10		33		32		49		-
Total impaired loans	$	3,129	$	2,490	$	2,015	$	475	$	205	$	2,719	$	67

During the first nine months of 2012, the Company classified a commercial loan relationship consisting of two commercial loans as a troubled debt restructuring after agreeing to extend the maturity of the loans while the borrower liquidated the business assets securing the loans. The Company did not charge-off any of the loan balances as the anticipated proceeds were expected to exceed the loan balances. As of September 30, 2012, the outstanding balances of these loans totaled $196,000 and were classified as non-accrual and impaired. During the third quarter of 2011, the Company restructured a construction and land loan relationship totaling $599,000 which was secured by raw land which had experienced a severe decline in value. As part of the agreement the Company agreed to reduce the outstanding loan balance to $250,000 in exchange for a $50,000 principal payment in the third quarter of 2011 and the remaining $200,000 to be received during the first quarter of 2012. The Company charged off $141,000 of the loan during the third quarter of 2010 and $208,000 during the third quarter of 2011, and the remaining $200,000 loan balance was classified as non-accrual and impaired as of September 30, 2011. The collateral deficiency of the raw land had previously been included in the allowance on impaired loans. During the first quarter of 2012, a construction and land loan totaling $200,000, after a modification during the third quarter of 2011, was paid off per the terms of the loan modification agreement. As of September 30, 2012, the Company had six loan modifications classified as TDRs. The Company evaluates each TDR individually and returns the loan to accrual status when a payment history is established after the restructuring and future payments are reasonably assured. There were no loans as of September 30, 2012 that had been modified as TDRs and then subsequently defaulted. At September 30, 2012, there are no commitments to lend additional funds to any borrower whose loan terms have been modified as a TDR. As of September 30, 2012, the Company had $148,000 of allowance recorded against loans classified as TDRs compared to $5,000 recorded at December 31, 2011. The following table presents information on loans that are classified as TDRs:

(Dollars in thousands)
	As of September 30, 2012				As of December 31, 2011
	Number of loans		Loan balance		Number of loans		Loan balance
One-to-four family residential real estate		2	$	503		2	$	528
Construction and land		-		-		1		200
Commerical loans		2		196		-		-
Municipal loans		2		641		2		653
Total troubled debt restructurings		6	$	1,340		5	$	1,381

The Company services one-to-four family residential real estate loans for others with outstanding principal balances of $240.2 million and $183.3 million at September 30, 2012 and December 31, 2011, respectively. Gross service fee income related to such loans was $145,000 and $106,000 for the quarters ended September 30, 2012 and 2011, respectively, and is included in fees and service charges in the consolidated statements of earnings. Gross service fee income for the nine months ended September 30, 2012 and 2011 was $394,000 and $319,000, respectively.

The Company had a mortgage repurchase reserve of $418,000 and $500,000 at September 30, 2012 and December 31, 2011, respectively, which represents the Company’s best estimate of probable losses that the Company will incur related to the repurchase of one-to-four family residential real estate loans previously sold or to reimburse investors for credit losses incurred on loans previously sold where a breach of the contractual representations and warranties occurred. Because the level of mortgage repurchase losses depends upon economic factors, investor demand strategies and other external conditions that may change over the life of the underlying loans, mortgage repurchase losses are difficult to estimate and require considerable judgment. The Company did not make any provisions against the reserve during the first nine months of 2012. Actual losses during the first nine months of 2012, which were charged against the reserve, were $82,000. As of September 30, 2012, the Company did not have any outstanding mortgage repurchase requests.

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Investments

9 Months Ended

Sep. 30, 2012

Investments, Debt and Equity Securities [Abstract]

Marketable Securities [Text Block]

3. Investments

A summary of investment securities available-for-sale is as follows:

	As of September 30, 2012
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value
U. S. federal agency obligations	$	7,135	$	54	$	-		$	7,189
Municipal obligations, tax exempt		73,117		3,989		(32	)		77,074
Municipal obligations, taxable		37,444		912		(8	)		38,348
Mortgage-backed securities		107,319		1,918		(60	)		109,177
Common stocks		621		250		-			871
Pooled trust preferred securities		1,023		-		(458	)		565
Certificates of deposit		5,794		-		-			5,794
Total	$	232,453	$	7,123	$	(558	)	$	239,018

	As of December 31, 2011
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value
U. S. federal agency obligations	$	9,120	$	44	$	-		$	9,164
Municipal obligations, tax exempt		65,404		4,226		(1	)		69,629
Municipal obligations, taxable		18,961		243		(69	)		19,135
Mortgage-backed securities		92,742		1,823		(93	)		94,472
Common stocks		621		198		-			819
Pooled trust preferred securities		1,104		-		(699	)		405
Certificates of deposit		4,590		-		-			4,590
Total	$	192,542	$	6,534	$	(862	)	$	198,214

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

			As of September 30, 2012
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
Municipal obligations, tax exempt		15	$	4,512	$	(32	)	$	-	$	-		$	4,512	$	(32	)
Municipal obligations, taxable		7		2,599		(6	)		211		(2	)		2,810		(8	)
Mortgage-backed securities		5		7,079		(60	)		-		-			7,079		(60	)
Pooled trust preferred securities		2		-		-			565		(458	)		565		(458	)
Total		29	$	14,190	$	(98	)	$	776	$	(460	)	$	14,966	$	(558	)

			As of December 31, 2011
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
Municipal obligations, tax exempt		1	$	247	$	(1	)	$	-	$	-		$	247	$	(1	)
Municipal obligations, taxable		15		6,579		(69	)		-		-			6,579		(69	)
Mortgage-backed securities		10		14,260		(93	)		-		-			14,260		(93	)
Pooled trust preferred securities		2		-		-			405		(699	)		405		(699	)
Total		28	$	21,086	$	(163	)	$	405	$	(699	)	$	21,491	$	(862	)

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

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. The Company does not intend to sell and it is more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of its cost. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believes that the municipal obligations identified in the tables above are temporarily impaired.

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

As of September 30, 2012, the Company owned two pooled trust preferred securities, which represent investments in pools of collateralized debt obligations issued by financial institutions and insurance companies. The market for these securities is considered to be inactive. The Company’s investments, Preferred Term Security (“PreTSL”) VIII and PreTSL IX, have remaining aggregate cost bases of $318,000 and $705,000 and non-credit-related, unrealized losses of $98,000 and $360,000, respectively. The Company uses discounted cash flow models on these two securities to assess if the present value of the cash flows expected to be collected is less than the amortized cost, which would result in an other-than-temporary impairment associated with the credit of the underlying collateral. The assumptions used in preparing the discounted cash flow models include the following: estimated discount rates, estimated deferral and default rates on collateral, assumed recoveries and estimated cash flows including all information available through the date of issuance of these financial statements. The discounted cash flow analysis includes a review of all issuers within the collateral pool and incorporates higher deferral and default rates, as compared to historical rates, in the cash flow projections through maturity. The Company also reviews stress tests of these securities to determine the additional estimated deferrals or defaults in the collateral pool in excess of what the Company believes is likely, before the payments on the individual securities are negatively impacted.

As of September 30, 2012, the analysis of the Company’s PreTSL VIII and IX investments indicated that the unrealized losses of $98,000 and $360,000, respectively, were not credit-related.

The following table provides additional information related to the Company’s investments in pooled trust preferred securities as of September 30, 2012:

(Dollars in thousands)										Cumulative
			Moody's		Original		Principal			credit			Cost		Unrealized			Fair
Investment	Class		rating		par		payments			losses			basis		loss			value
PreTSL VIII		B		C	$	1,000	$	-		$	(682	)	$	318	$	(98	)	$	220
PreTSL IX		B		Ca		1,000		(60	)		(235	)		705		(360	)		345
Total					$	2,000	$	(60	)	$	(917	)	$	1,023	$	(458	)	$	565

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

Maturities of investment securities at September 30, 2012 are as follows:

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Due in less than one year	$	15,379	$	15,509
Due after one year but within five years		148,248		151,264
Due after five years but within ten years		52,817		55,634
Due after ten years		15,388		15,740
Common stocks		621		871
Total	$	232,453	$	239,018

The preceding table includes scheduled principal payments and estimated prepayments for mortgage-backed securities, where actual maturities may differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties.

Gross realized gains and losses on sales of available-for-sale investment securities are as follows:

	Three months ended				Nine months ended
(Dollars in thousands)	September 30,				September 30,
	2012		2011		2012		2011
Realized gains	$	-	$	186	$	359	$	186
Realized losses		-		-		-		-
Total	$	-	$	186	$	359	$	186

Other investment securities primarily consist of restricted investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock. The carrying value of the FHLB stock was $3.9 million and $4.9 million at September 30, 2012 and December 31, 2011, respectively. The carrying value of the FRB stock was $1.8 million at September 30, 2012 and December 31, 2011. These securities are not readily marketable and are required for regulatory purposes and borrowing availability. Since there is no available market value, these securities are carried at cost. Redemption of these investments at par value is at the option of the FHLB or FRB. Also included in other investment securities are other miscellaneous investments in the common stock of various correspondent banks which are held for borrowing purposes and totaled $112,000 and $60,000 at September 30, 2012 and December 31, 2011, respectively. The Company assessed the ultimate recoverability of these investments and believes that no impairment has occurred.

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Goodwill and Other Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Intangible assets, Gross carrying amount	$ 7,758	$ 6,814
Intangible assets, Accumulated amortization	(5,280)	(4,891)
Intangible assets, Valuation allowance	(212)	0
Intangible assets, Net carrying amount	2,266	1,923
Core Deposits [Member]
Intangible assets, Gross carrying amount	4,973	4,665
Intangible assets, Accumulated amortization	(4,171)	(3,902)
Intangible assets, Valuation allowance	0	0
Intangible assets, Net carrying amount	802	763
Mortgage Servicing Rights [Member]
Intangible assets, Gross carrying amount	2,785	2,149
Intangible assets, Accumulated amortization	(1,109)	(989)
Intangible assets, Valuation allowance	(212)	0
Intangible assets, Net carrying amount	$ 1,464	$ 1,160

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Investments (Tables)

9 Months Ended

Sep. 30, 2012

Investments, Debt and Equity Securities [Abstract]

Available-for-sale Securities [Table Text Block]

A summary of investment securities available-for-sale is as follows:

	As of September 30, 2012
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value
U. S. federal agency obligations	$	7,135	$	54	$	-		$	7,189
Municipal obligations, tax exempt		73,117		3,989		(32	)		77,074
Municipal obligations, taxable		37,444		912		(8	)		38,348
Mortgage-backed securities		107,319		1,918		(60	)		109,177
Common stocks		621		250		-			871
Pooled trust preferred securities		1,023		-		(458	)		565
Certificates of deposit		5,794		-		-			5,794
Total	$	232,453	$	7,123	$	(558	)	$	239,018

	As of December 31, 2011
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value
U. S. federal agency obligations	$	9,120	$	44	$	-		$	9,164
Municipal obligations, tax exempt		65,404		4,226		(1	)		69,629
Municipal obligations, taxable		18,961		243		(69	)		19,135
Mortgage-backed securities		92,742		1,823		(93	)		94,472
Common stocks		621		198		-			819
Pooled trust preferred securities		1,104		-		(699	)		405
Certificates of deposit		4,590		-		-			4,590
Total	$	192,542	$	6,534	$	(862	)	$	198,214

Available For Sale Securities Continuous Unrealized Loss Position Fair Value [Table Text Block]

Securities which are temporarily impaired are shown below, along with the length of the impairment period.

			As of September 30, 2012
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
Municipal obligations, tax exempt		15	$	4,512	$	(32	)	$	-	$	-		$	4,512	$	(32	)
Municipal obligations, taxable		7		2,599		(6	)		211		(2	)		2,810		(8	)
Mortgage-backed securities		5		7,079		(60	)		-		-			7,079		(60	)
Pooled trust preferred securities		2		-		-			565		(458	)		565		(458	)
Total		29	$	14,190	$	(98	)	$	776	$	(460	)	$	14,966	$	(558	)

			As of December 31, 2011
(Dollars in thousands)			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
Municipal obligations, tax exempt		1	$	247	$	(1	)	$	-	$	-		$	247	$	(1	)
Municipal obligations, taxable		15		6,579		(69	)		-		-			6,579		(69	)
Mortgage-backed securities		10		14,260		(93	)		-		-			14,260		(93	)
Pooled trust preferred securities		2		-		-			405		(699	)		405		(699	)
Total		28	$	21,086	$	(163	)	$	405	$	(699	)	$	21,491	$	(862	)

Available For Sale Securities In Pooled Trust Preferred Securities [Table Text Block]

The following table provides additional information related to the Company’s investments in pooled trust preferred securities as of September 30, 2012:

(Dollars in thousands)										Cumulative
			Moody's		Original		Principal			credit			Cost		Unrealized			Fair
Investment	Class		rating		par		payments			losses			basis		loss			value
PreTSL VIII		B		C	$	1,000	$	-		$	(682	)	$	318	$	(98	)	$	220
PreTSL IX		B		Ca		1,000		(60	)		(235	)		705		(360	)		345
Total					$	2,000	$	(60	)	$	(917	)	$	1,023	$	(458	)	$	565

Available For Sale Securities Debt Maturities [Table Text Block]

Maturities of investment securities at September 30, 2012 are as follows:

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Due in less than one year	$	15,379	$	15,509
Due after one year but within five years		148,248		151,264
Due after five years but within ten years		52,817		55,634
Due after ten years		15,388		15,740
Common stocks		621		871
Total	$	232,453	$	239,018

Schedule of Realized Gain (Loss) [Table Text Block]

Gross realized gains and losses on sales of available-for-sale investment securities are as follows:

	Three months ended				Nine months ended
(Dollars in thousands)	September 30,				September 30,
	2012		2011		2012		2011
Realized gains	$	-	$	186	$	359	$	186
Realized losses		-		-		-		-
Total	$	-	$	186	$	359	$	186

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Impact of Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

New Accounting Pronouncements and Changes In Accounting Principles [Abstract]

Accounting Changes and Error Corrections [Text Block]

8. Impact of Recent Accounting Pronouncements

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”). The amendments in ASU No. 2011-04 result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRS. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments in ASU No. 2011-04 became effective for interim and annual periods beginning after December 15, 2011. Adoption of ASU 2011-04 did not have a significant impact on the Company’s consolidated financial statements.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. ASU 2011-05 requires that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. The new guidance became effective for interim and annual periods beginning after December 15, 2011 with early adoption permitted. Adoption of ASU 2011-05 did not have a significant impact on the Company’s consolidated financial statements.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU 2011-08 allows the use of qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amounts as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The new guidance became effective for annual and interim goodwill impairment tests beginning after December 15, 2011 with early adoption permitted. Adoption of ASU 2011-08 did not have a significant impact on the Company’s consolidated financial statements.

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Earnings per Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

5. Earnings per Share

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

	Three months ended				Nine months ended
(Dollars in thousands, except per share amounts)	September 30,				September 30,
	2012		2011		2012		2011
Net earnings	$	1,205	$	1,489	$	4,750	$	3,189
Weighted average common shares outstanding - basic (1)		2,783,271		2,780,453		2,783,054		2,776,578
Assumed exercise of stock options (1)		24,053		600		18,663		647
Weighted average common shares outstanding - diluted (1)		2,807,324		2,781,053		2,801,717		2,777,225
Net earnings per share (1):
Basic	$	0.43	$	0.54	$	1.71	$	1.15
Diluted	$	0.43	$	0.54	$	1.70	$	1.15

(1) Share and per share values for the periods ended September 30, 2011 have been adjusted to give effect to the 5% stock dividend paid during December 2011.

The diluted earnings per share computations for the three months ended September 30, 2012 and 2011 exclude unexercised stock options of 62,775 and 465,744, respectively, because their inclusion would have been anti-dilutive to earnings per share. The diluted earnings per share computations for the nine months ended September 30, 2012 and 2011 exclude unexercised stock options of 144,948 and 441,918, respectively, for the same reason.

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Fair Value of Financial Instruments and Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

6. Fair Value of Financial Instruments and Fair Value Measurements

The Company follows the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures,” which defines fair value, establishes a framework for measuring fair value and expands the disclosures about fair value measurements. ASC Topic 820-10-55 requires the use of a hierarchy of fair value techniques based upon whether the inputs to those fair values reflect assumptions other market participants would use based upon market data obtained from independent sources or reflect the Company’s own assumptions of market participant valuation. The Company applies FASB ASC 820 to certain nonfinancial assets and liabilities, which include foreclosed real estate, long-lived assets, goodwill, and core deposit premium, which are recorded at fair value only upon impairment. The fair value hierarchy is as follows:

• Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

• Level 2: Quoted prices for similar assets in active markets or quoted prices that contain observable inputs such as yield curves, volatilities, prepayment speeds and other inputs derived from market data.

• Level 3: Quoted prices in markets that are not active or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates of the Company’s financial instruments as of September 30, 2012 and December 31, 2011, including methods and assumptions utilized, are set forth below:

(Dollars in thousands)
	September 30, 2012				December 31, 2011
	Carrying		Estimated		Carrying		Estimated
	amount		fair value		amount		fair value
Financial assets:
Cash and cash equivalents	$	23,117	$	23,117	$	17,501	$	17,501
Investment securities:
Available-for-sale		239,018		239,018		198,214		198,214
Other securities		5,727		5,727		6,671		6,671
Loans, net		307,292		307,754		310,081		309,927
Loans held for sale		9,767		9,989		9,754		9,846
Mortgage servicing rights		1,464		1,562		1,160		1,319
Derivative financial instruments		534		534		255		255
Accrued interest receivable		2,964		2,964		2,468		2,468
Financial liabilities:
Non-maturity deposits	$	336,020	$	336,020	$	274,301	$	274,301
Time deposits		178,800		180,058		179,833		181,280
FHLB borrowings		35,735		40,427		49,163		53,376
Other borrowings		23,296		21,052		27,434		25,200
Accrued interest payable		482		482		532		532

Methods and Assumptions Utilized

The carrying amount of cash and cash equivalents is considered to approximate fair value.

The Company’s investment securities classified as available-for-sale include U.S. federal agency securities, municipal obligations, mortgage-backed securities, pooled trust preferred securities, certificates of deposits and common stocks. Quoted exchange prices are available for the Company’s common stock investments, which are classified as Level 1. U.S. federal agency securities and mortgage-backed obligations are priced utilizing industry-standard models that consider various assumptions, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace and are classified as Level 2. Municipal securities are valued using a type of matrix, or grid, pricing in which securities are benchmarked against the treasury rate based on credit rating. These model and matrix measurements are classified as Level 2 in the fair value hierarchy. The Company’s investments in FDIC-insured, fixed-rate certificates of deposits are valued using a net present value model that discounts the future cash flows at the current market rates and are classified as Level 2.

The Company classifies the fair value of its pooled trust preferred securities as Level 3. The portfolio consists of two investments in pooled trust preferred securities issued by various financial companies. These securities are valued based on a matrix pricing in which the securities are benchmarked against single issuer trust preferred securities based on credit rating. The pooled trust preferred market is inactive; therefore single issuer trading is used as the benchmark, with additional adjustments made for credit and liquidity risk.

The Company’s other investment securities primarily include investments in FHLB and FRB stock, which are held for regulatory purposes. These investments generally have restrictions on the sale and/or liquidation of stock and the carrying value is approximately equal to fair value. Fair value measurements for these securities are classified as Level 3 based on the restrictions on sale and/or liquidation and related credit risk.

The estimated fair value of the Company’s loan portfolio is based on the segregation of loans by collateral type, interest terms, and maturities. The fair value is estimated based on discounting scheduled and estimated cash flows through maturity using an appropriate risk-adjusted yield curve to approximate current interest rates for each category. No adjustment was made to the interest rates for changes in credit risk of performing loans where there were no known credit concerns. Management segregates loans in appropriate risk categories. Management believes that the risk factor embedded in the interest rates along with the allowance for loan losses applicable to the performing loan portfolio results in a fair valuation of such loans. The fair values of impaired loans are generally based on market prices for similar assets determined through independent appraisals or discounted values of independent appraisals and brokers’ opinions of value. This method of estimating fair value is classified as Level 3 and does not incorporate the exit-price concept of fair value prescribed by ASC Topic 820.

Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value, determined on an aggregate basis. The mortgage loan valuations are based on quoted secondary market prices for similar loans and are classified as Level 2.

The Company measures its mortgage servicing rights at the lower of amortized cost or fair value. Periodic impairment assessments are performed based on fair value estimates at the reporting date. The fair value of mortgage servicing rights is estimated based on a valuation model which calculates the present value of estimated future cash flows associated with servicing the underlying loans. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimated prepayment speeds, market discount rates, cost to service, and other servicing income, including late fees. The fair value measurements are classified as Level 3.

The carrying amount of accrued interest receivable and payable is considered to approximate fair value and is classified as Level 3.

The estimated fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, savings, money market accounts, and NOW accounts, is equal to the amount payable on demand. The fair value of interest-bearing time deposits is based on the discounted value of contractual cash flows of such deposits. The discount rate is tied to the FHLB yield curve plus an appropriate servicing spread. Fair value measurements based on discounted cash flows are classified as Level 3. These fair values do not incorporate the value of core deposit intangibles which may be associated with the deposit base.

The fair value of advances from the FHLB and other borrowings is estimated using current yield curves for similar borrowings adjusted for the Company’s current credit spread, if applicable, and classified as Level 2.

The Company’s derivative financial instruments consist of interest rate lock commitments and corresponding forward sales contracts on mortgage loans held for sale. The fair values of these derivatives are based on quoted prices for similar loans in the secondary market. The market prices are adjusted by a factor, based on the Company’s historical data and its judgment about future economic trends, which considers the likelihood that a commitment will ultimately result in a closed loan. These instruments are classified as Level 2. The amounts are included in other assets or other liabilities on the consolidated balance sheets and gains on sales of loans in the consolidated statements of earnings.

Off-Balance Sheet Financial Instruments

The fair value of letters of credit and commitments to extend credit is based on the fees currently charged to enter into similar agreements. The aggregate of these fees is not material.

Transfers

The Company did not transfer any assets or liabilities among levels during the nine months ended September 30, 2012 or during the year ended December 31, 2011.

Limitations

Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.

Valuation methods for instruments measured at fair value on a recurring basis

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis at September 30, 2012 and December 31, 2011, allocated to the appropriate fair value hierarchy:

(Dollars in thousands)			As of September 30, 2012
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities:
U. S. federal agency obligations	$	7,189	$	-	$	7,189	$	-
Municipal obligations, tax exempt		77,074		-		77,074		-
Municipal obligations, taxable		38,348		-		38,348		-
Mortgage-backed securities		109,177		-		109,177		-
Common stocks		871		871		-		-
Pooled trust preferred securities		565		-		-		565
Certificates of deposit		5,794		-		5,794		-
Derivative financial instruments	$	534	$	-	$	534	$	-

			As of December 31, 2011
			Fair value hierarchy
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities:
U. S. federal agency obligations	$	9,164	$	-	$	9,164	$	-
Municipal obligations, tax exempt		69,629		-		69,629		-
Municipal obligations, taxable		19,135		-		19,135		-
Mortgage-backed securities		94,472		-		94,472		-
Common stocks		819		819		-		-
Pooled trust preferred securities		405		-		-		405
Certificates of deposit		4,590		-		4,590		-
Derivative financial instruments	$	255	$	-	$	255	$	-

The following table reconciles the changes in the Company’s Level 3 financial instruments during the first nine months of 2012:

(Dollars in thousands)
	Available-for
	sale-securities
Level 3 asset fair value at December 31, 2011	$	405
Payments applied to reduce carrying value		(18	)
Total (losses) gains:
Included in earnings		(63	)
Included in other comprehensive income		241
Level 3 asset fair value at September 30, 2012	$	565

Changes in the fair value of available-for-sale securities are included in other comprehensive income to the extent the changes are not considered other-than-temporary impairments. Other-than-temporary impairment tests are performed on a quarterly basis and any decline in the fair value of an individual security below its cost that is deemed to be other-than-temporary results in a write-down of that security’s cost basis.

Valuation methods for instruments measured at fair value on a nonrecurring basis

The Company does not value its loan portfolio at fair value, however adjustments are recorded on certain loans to reflect the impaired value on the underlying collateral. Collateral values are reviewed on a loan-by-loan basis through independent appraisals. Appraised values may be discounted based on management’s historical knowledge, changes in market conditions and/or management’s expertise and knowledge of the client and the client’s business. Because many of these inputs are unobservable, the valuations are classified as Level 3. The carrying value of the Company’s impaired loans was $5.2 million at September 30, 2012 and $2.5 million at December 31, 2011, with allocated allowances of $1.7 million and $205,000, respectively.

The Company measures the fair value of its goodwill based on the Company’s market capitalization with appropriate control premiums and valuation multiples, as compared to recent similar financial industry acquisition multiples, to estimate the fair value of the Company’s single reporting unit. The fair value measurements are classified as Level 3. Core deposit intangibles are recognized at the time core deposits are acquired, using valuation techniques which calculate the present value of the estimated net cost savings relative to the Company’s alternative costs of funds over the expected remaining economic life of the deposits. Subsequent evaluations are made when facts or circumstances indicate potential impairment may have occurred. The models incorporate market discount rates, estimated average core deposit lives and alternative funding rates. The fair value measurements are classified as Level 3.

Real estate owned includes assets acquired through, or in lieu of, foreclosure and land previously acquired for expansion. Real estate owned is initially recorded at the fair value of the collateral less estimated selling costs. Subsequent valuations are updated periodically and are based upon independent appraisals, third party price opinions or internal pricing models and are classified as Level 3.

The following table represents the Company’s financial instruments that are measured at fair value on a non-recurring basis as of September 30, 2012 and December 31, 2011 allocated to the appropriate fair value hierarchy:

(Dollars in thousands)			As of September 30, 2012
			Fair value hierarchy						Total
	Total		Level 1		Level 2		Level 3		losses
Assets:
Impaired loans	$	3,548	$	-	$	-	$	3,548	$	(1,535	)
Loans held for sale		9,989		-		9,989		-		-
Mortgage servicing rights		1,562		-		-		1,562		(212	)
Real estate owned	$	2,584	$	-	$	-	$	2,584	$	-

(Dollars in thousands)			As of December 31 ,2011
			Fair value hierarchy						Total
	Total		Level 1		Level 2		Level 3		losses
Assets:
Impaired loans	$	2,285	$	-	$	-	$	2,285	$	(112	)
Loans held for sale		9,846		-		9,846		-		-
Mortgage servicing rights		1,319		-		-		1,319		-
Real estate owned	$	2,264	$	-	$	-	$	2,264	$	(517	)

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Acquisition

9 Months Ended

Sep. 30, 2012

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

9. Acquisition

The Company completed the acquisition, by its wholly-owned subsidiary, Landmark National Bank, of The Wellsville Bank from Wellsville Bancshares, Inc., effective April 1, 2012. The purchase price consisted of cash of $3.7 million for 100% of The Wellsville Bank. The acquisition was effected through the merger of The Wellsville Bank with and into Landmark National Bank. The acquisition added one additional branch, located in Wellsville, Kansas, to the Company’s existing branch network, giving the Company a total of 22 offices in 17 communities across Kansas.

The assets acquired and liabilities assumed were recorded by Landmark National Bank at their estimated fair value as of April 1, 2012 based on management’s best estimate using information available at the time. The acquisition included the assumption of investments of $14.2 million, loans of $15.0 million and deposits of $35.0 million. The unpaid contractual amount of the loans totaled $15.1 million. During the nine months ended September 30, 2012, the Company incurred $147,000 of acquisition related expenses which are included in professional fees. Based on estimates of the fair values of the net assets acquired, the Company recorded $181,000 of goodwill. The acquisition created $51,000 of tax deductible goodwill.

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Loans and Allowance for Loan Losses (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Loans, 30-59days delinquent and accruing	$ 948	$ 615
Loans, 60-89 days delinquent and accruing	1,986	1,604
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	2,934	2,219
Loans, Non-accrual loans	4,577	1,419
Loans, Total	7,511	3,638
Percent of gross loans, 30-59 days delinquent and accruing	0.30%	0.20%
Percent of gross loans, 60-89 days delinquent and accruing	0.63%	0.51%
Percent of gross loans, 90 days or more delinquent and accruing	0.00%	0.00%
Percentage of gross loans, Total past due loans accruing	0.94%	0.71%
Percent of gross loans, Non-accrual loans	1.46%	0.45%
Percentage of gross loans, Total	2.40%	1.16%
Residential Real Estate [Member]
Loans, 30-59days delinquent and accruing	500	368
Loans, 60-89 days delinquent and accruing	1,752	1,174
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	2,252	1,542
Loans, Non-accrual loans	839	752
Loans, Total	3,091	2,294
Construction Loans [Member]
Loans, 30-59days delinquent and accruing	19	21
Loans, 60-89 days delinquent and accruing	0	0
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	19	21
Loans, Non-accrual loans	3,326	225
Loans, Total	3,345	246
Commercial Real Estate [Member]
Loans, 30-59days delinquent and accruing	148	64
Loans, 60-89 days delinquent and accruing	0	211
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	148	275
Loans, Non-accrual loans	0	17
Loans, Total	148	292
Commercial Loan [Member]
Loans, 30-59days delinquent and accruing	20	1
Loans, 60-89 days delinquent and accruing	150	201
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	170	202
Loans, Non-accrual loans	204	78
Loans, Total	374	280
Agriculture Loans [Member]
Loans, 30-59days delinquent and accruing	22	1
Loans, 60-89 days delinquent and accruing	39	0
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	61	1
Loans, Non-accrual loans	5	63
Loans, Total	66	64
Municipal Bonds [Member]
Loans, 30-59days delinquent and accruing	0	0
Loans, 60-89 days delinquent and accruing	0	0
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	0	0
Loans, Non-accrual loans	131	241
Loans, Total	131	241
Consumer Loan [Member]
Loans, 30-59days delinquent and accruing	239	160
Loans, 60-89 days delinquent and accruing	45	18
Loans, 90 days or more delinquent and accruing	0	0
Loans, Total past due loans accruing	284	178
Loans, Non-accrual loans	72	43
Loans, Total	$ 356	$ 221

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Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The shares used in the calculation of basic and diluted earnings per share are shown below:

	Three months ended				Nine months ended
(Dollars in thousands, except per share amounts)	September 30,				September 30,
	2012		2011		2012		2011
Net earnings	$	1,205	$	1,489	$	4,750	$	3,189
Weighted average common shares outstanding - basic (1)		2,783,271		2,780,453		2,783,054		2,776,578
Assumed exercise of stock options (1)		24,053		600		18,663		647
Weighted average common shares outstanding - diluted (1)		2,807,324		2,781,053		2,801,717		2,777,225
Net earnings per share (1):
Basic	$	0.43	$	0.54	$	1.71	$	1.15
Diluted	$	0.43	$	0.54	$	1.70	$	1.15

(1) Share and per share values for the periods ended September 30, 2011 have been adjusted to give effect to the 5% stock dividend paid during December 2011.

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Investments (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Investment securities available-for-sale, Amortized cost	$ 232,453	$ 192,542
Investment securities available-for-sale, Gross unrealized gains	7,123	6,534
Investment securities available-for-sale, Gross unrealized losses	(558)	(862)
Investment securities available-for-sale, Estimated fair value	239,018	198,214
Agency Securities [Member]
Investment securities available-for-sale, Amortized cost	7,135	9,120
Investment securities available-for-sale, Gross unrealized gains	54	44
Investment securities available-for-sale, Gross unrealized losses	0	0
Investment securities available-for-sale, Estimated fair value	7,189	9,164
Nontaxable Municipal Bonds [Member]
Investment securities available-for-sale, Amortized cost	73,117	65,404
Investment securities available-for-sale, Gross unrealized gains	3,989	4,226
Investment securities available-for-sale, Gross unrealized losses	(32)	(1)
Investment securities available-for-sale, Estimated fair value	77,074	69,629
Taxable Municipal Bonds [Member]
Investment securities available-for-sale, Amortized cost	37,444	18,961
Investment securities available-for-sale, Gross unrealized gains	912	243
Investment securities available-for-sale, Gross unrealized losses	(8)	(69)
Investment securities available-for-sale, Estimated fair value	38,348	19,135
Collateralized Mortgage Backed Securities [Member]
Investment securities available-for-sale, Amortized cost	107,319	92,742
Investment securities available-for-sale, Gross unrealized gains	1,918	1,823
Investment securities available-for-sale, Gross unrealized losses	(60)	(93)
Investment securities available-for-sale, Estimated fair value	109,177	94,472
Trust Preferred Securities Subject To Mandatory Redemption [Member]
Investment securities available-for-sale, Amortized cost	1,023	1,104
Investment securities available-for-sale, Gross unrealized gains	0	0
Investment securities available-for-sale, Gross unrealized losses	(458)	(699)
Investment securities available-for-sale, Estimated fair value	565	405
Certificates Of Deposit [Member]
Investment securities available-for-sale, Amortized cost	5,794	4,590
Investment securities available-for-sale, Gross unrealized gains	0	0
Investment securities available-for-sale, Gross unrealized losses	0	0
Investment securities available-for-sale, Estimated fair value	5,794	4,590
Common Stock [Member]
Investment securities available-for-sale, Amortized cost	621	621
Investment securities available-for-sale, Gross unrealized gains	250	198
Investment securities available-for-sale, Gross unrealized losses	0	0
Investment securities available-for-sale, Estimated fair value	$ 871	$ 819

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Fair Value of Financial Instruments and Fair Value Measurements (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets:
Available-for-sale securities, Fair value	$ 239,018
Derivative financial instruments	534	255
Fair Value, Inputs, Level 1 [Member]
Assets:
Derivative financial instruments	0	0
Fair Value, Inputs, Level 2 [Member]
Assets:
Derivative financial instruments	534	255
Fair Value, Inputs, Level 3 [Member]
Assets:
Derivative financial instruments	0	0
Common Stock [Member]
Assets:
Available-for-sale securities, Fair value	871	819
Common Stock [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Available-for-sale securities, Fair value	871	819
Common Stock [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Common Stock [Member] | Fair Value, Inputs, Level 3 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Agency Securities [Member]
Assets:
Available-for-sale securities, Fair value	7,189	9,164
Agency Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Agency Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Available-for-sale securities, Fair value	7,189	9,164
Agency Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Nontaxable Municipal Bonds [Member]
Assets:
Available-for-sale securities, Fair value	77,074	69,629
Nontaxable Municipal Bonds [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Nontaxable Municipal Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Available-for-sale securities, Fair value	77,074	69,629
Nontaxable Municipal Bonds [Member] | Fair Value, Inputs, Level 3 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Taxable Municipal Bonds [Member]
Assets:
Available-for-sale securities, Fair value	38,348	19,135
Taxable Municipal Bonds [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Taxable Municipal Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Available-for-sale securities, Fair value	38,348	19,135
Taxable Municipal Bonds [Member] | Fair Value, Inputs, Level 3 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Collateralized Mortgage Backed Securities [Member]
Assets:
Available-for-sale securities, Fair value	109,177	94,472
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Available-for-sale securities, Fair value	109,177	94,472
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Trust Preferred Securities Subject To Mandatory Redemption [Member]
Assets:
Available-for-sale securities, Fair value	565	405
Trust Preferred Securities Subject To Mandatory Redemption [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Trust Preferred Securities Subject To Mandatory Redemption [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Trust Preferred Securities Subject To Mandatory Redemption [Member] | Fair Value, Inputs, Level 3 [Member]
Assets:
Available-for-sale securities, Fair value	565	405
Certificates Of Deposit [Member]
Assets:
Available-for-sale securities, Fair value	5,794	4,590
Certificates Of Deposit [Member] | Fair Value, Inputs, Level 1 [Member]
Assets:
Available-for-sale securities, Fair value	0	0
Certificates Of Deposit [Member] | Fair Value, Inputs, Level 2 [Member]
Assets:
Available-for-sale securities, Fair value	5,794	4,590
Certificates Of Deposit [Member] | Fair Value, Inputs, Level 3 [Member]
Assets:
Available-for-sale securities, Fair value	$ 0	$ 0

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net earnings	$ 1,205	$ 1,489	$ 4,750	$ 3,189
Unrealized holding gains (losses) on available-for-sale securities for which a portion of an other-than-temporary impairment has been recorded in earnings	84	(37)	178	205
Net unrealized holding gains on all other available-for-sale securities	1,139	1,326	1,011	3,794
Less reclassification adjustment for net gains included in earnings	0	(167)	(296)	(167)
Net unrealized gains	1,223	1,122	893	3,832
Income tax expense	452	418	328	1,420
Total comprehensive income	$ 1,976	$ 2,193	$ 5,315	$ 5,601

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

2. Goodwill and Other Intangible Assets

The Company tests goodwill for impairment annually or more frequently if circumstances warrant. The Company’s annual impairment test as of December 31, 2011 concluded that its goodwill was not impaired; however, the Company can make no assurances that future impairment tests will not result in goodwill impairments. The Company concluded there were no triggering events during the first nine months of 2012 that required an interim goodwill impairment test.

On April 1, 2012, the Company’s subsidiary, Landmark National Bank, assumed approximately $35.0 million in deposits with the acquisition of the Wellsville Bank. The Company identified $24.7 million of core deposits and recorded a core deposit intangible asset of $308,000 as a result of the acquisition. The core deposit intangible asset will be amortized over its estimated useful life of ten years on an accelerated basis. A summary of this and the other intangible assets that continue to be subject to amortization is as follows:

(Dollars in thousands)	As of September 30, 2012
	Gross carrying amount		Accumulated amortization			Valuation allowance			Net carrying amount
Core deposit intangible assets	$	4,973	$	(4,171	)	$	-		$	802
Mortgage servicing rights		2,785		(1,109	)		(212	)		1,464
Total other intangible assets	$	7,758	$	(5,280	)	$	(212	)	$	2,266

(Dollars in thousands)	As of December 31, 2011
	Gross carrying amount		Accumulated amortization			Valuation allowance		Net carrying amount
Core deposit intangible assets	$	4,665	$	(3,902	)	$	-	$	763
Mortgage servicing rights		2,149		(989	)		-		1,160
Total other intangible assets	$	6,814	$	(4,891	)	$	-	$	1,923

Aggregate core deposit and mortgage servicing rights amortization expense was $481,000 and $190,000 for the third quarter of 2012 and 2011, respectively. Aggregate core deposit and mortgage servicing rights amortization expense was $907,000 and $551,000 for the first nine months of 2012 and 2011, respectively. The following sets forth estimated amortization expense for other intangible assets for the remainder of 2012 and in successive years ending December 31:

(Dollars in thousands)	Amortization
	expense
Remainder of 2012	$	229
2013		846
2014		756
2015		301
2016		38
Thereafter		96
Total	$	2,266

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Investments (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Number of temporarily impaired securities at fair value	29	28
Fair value of temporarily impaired securities, Less than 12 months	$ 14,190	$ 21,086
Unrealized losses on temporarily impaired securities, Less than 12 months	(98)	(163)
Fair value of temporarily impaired securities, 12 months or longer	776	405
Unrealized losses on temporarily impaired securities, 12 months or longer	(460)	(699)
Fair value of temporarily impaired securities	14,966	21,491
Unrealized losses on temporarily impaired securities	(558)	(862)
Nontaxable Municipal Bonds [Member]
Number of temporarily impaired securities at fair value	15	1
Fair value of temporarily impaired securities, Less than 12 months	4,512	247
Unrealized losses on temporarily impaired securities, Less than 12 months	(32)	(1)
Fair value of temporarily impaired securities, 12 months or longer	0	0
Unrealized losses on temporarily impaired securities, 12 months or longer	0	0
Fair value of temporarily impaired securities	4,512	247
Unrealized losses on temporarily impaired securities	(32)	(1)
Taxable Municipal Bonds [Member]
Number of temporarily impaired securities at fair value	7	15
Fair value of temporarily impaired securities, Less than 12 months	2,599	6,579
Unrealized losses on temporarily impaired securities, Less than 12 months	(6)	(69)
Fair value of temporarily impaired securities, 12 months or longer	211	0
Unrealized losses on temporarily impaired securities, 12 months or longer	(2)	0
Fair value of temporarily impaired securities	2,810	6,579
Unrealized losses on temporarily impaired securities	(8)	(69)
Collateralized Mortgage Backed Securities [Member]
Number of temporarily impaired securities at fair value	5	10
Fair value of temporarily impaired securities, Less than 12 months	7,079	14,260
Unrealized losses on temporarily impaired securities, Less than 12 months	(60)	(93)
Fair value of temporarily impaired securities, 12 months or longer	0	0
Unrealized losses on temporarily impaired securities, 12 months or longer	0	0
Fair value of temporarily impaired securities	7,079	14,260
Unrealized losses on temporarily impaired securities	(60)	(93)
Trust Preferred Securities Subject To Mandatory Redemption [Member]
Number of temporarily impaired securities at fair value	2	2
Fair value of temporarily impaired securities, Less than 12 months	0	0
Unrealized losses on temporarily impaired securities, Less than 12 months	0	0
Fair value of temporarily impaired securities, 12 months or longer	565	405
Unrealized losses on temporarily impaired securities, 12 months or longer	(458)	(699)
Fair value of temporarily impaired securities	565	405
Unrealized losses on temporarily impaired securities	$ (458)	$ (699)

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Earnings per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011
Net earnings	$ 1,205		$ 1,489		$ 4,750		$ 3,189
Weighted average common shares outstanding - basic (in shares)	2,783,271	[1]	2,780,453	[1]	2,783,054	[1]	2,776,578	[1]
Assumed exercise of stock options	24,053	[1]	600	[1]	18,663	[1]	647	[1]
Weighted average common shares outstanding - diluted (in shares)	2,807,324	[1]	2,781,053	[1]	2,801,717	[1]	2,777,225	[1]
Net earnings per share:
Basic (in dollars per share)	$ 0.43	[2]	$ 0.54	[2]	$ 1.71	[2]	$ 1.15	[2]
Diluted (in dollars per share)	$ 0.43	[2]	$ 0.54	[2]	$ 1.70	[2]	$ 1.15	[2]

[1] Share and per share values for the periods ended September 30, 2011 have been adjusted to give effect to the 5% stock dividend paid during December 2011.

[2] Per share amounts for the periods ended September 30, 2011 have been adjusted to give effect to the 5% stock dividend paid during December 2011.

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Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2012

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Loans consisted of the following as of:

	September 30,			December 31,
(Dollars in thousands)	2012			2011
One-to-four family residential real estate	$	82,457		$	79,108
Construction and land		24,619			21,672
Commercial real estate		90,163			93,786
Commercial loans		59,360			57,006
Agriculture loans		32,927			39,052
Municipal loans		10,065			10,366
Consumer loans		13,563			13,584
Total gross loans		313,154			314,574
Net deferred loan costs and loans in process		305			214
Allowance for loan losses		(6,167	)		(4,707	)
Loans, net	$	307,292		$	310,081

Allowance for Credit Losses on Financing Receivables [Table Text Block]

The following tables provide information on the Company’s allowance for loan losses by loan class and allowance methodology:

	Three and nine months ended September 30, 2012
(Dollars in thousands)	One-to-four family residential real estate			Construction and land			Commercial real estate			Commercial loans			Agriculture loans			Municipal loans		Consumer loans			Total
Allowance for loan losses:
Balance at June 30, 2012	$	708		$	1,786		$	1,485		$	652		$	402		$	112	$	127		$	5,272
Charge-offs		-			(15	)		-			(60	)		-			-		(43	)		(118	)
Recoveries		1			1			-			5			1			-		5			13
Net charge-offs		1			(14	)		-			(55	)		1			-		(38	)		(105	)
Provision for loan losses		76			523			265			18			47			20		51			1,000
Balance at September 30, 2012		785			2,295			1,750			615			450			132		140			6,167
Balance at December 31, 2011	$	560		$	928		$	1,791		$	745		$	433		$	130	$	120		$	4,707
Charge-offs		(15	)		(15	)		-			(70	)		-			-		(120	)		(220	)
Recoveries		6			4			-			10			39			-		21			80
Net charge-offs		(9	)		(11	)		-			(60	)		39			-		(99	)		(140	)
Provision for loan losses		234			1,378			(41	)		(70	)		(22	)		2		119			1,600
Balance at September 30, 2012		785			2,295			1,750			615			450			132		140			6,167
Allowance for loan losses:
Individually evaluated for loss		184			1,414			-			-			-			65		16			1,679
Collectively evaluated for loss		601			881			1,750			615			450			67		124			4,488
Total		785			2,295			1,750			615			450			132		140			6,167
Loan balances:
Individually evaluated for loss		848			3,326			-			204			5			772		72			5,227
Collectively evaluated for loss		81,609			21,293			90,163			59,156			32,922			9,293		13,491			307,927
Total	$	82,457		$	24,619		$	90,163		$	59,360		$	32,927		$	10,065	$	13,563		$	313,154

	Three and nine months ended September 30, 2011
(Dollars in thousands)	One-to-four family residential real estate			Construction and land			Commercial real estate			Commercial loans			Agriculture loans			Municipal loans			Consumer loans			Total
Allowance for loan losses:
Balance at June 30, 2011	$	339		$	1,022		$	1,482		$	612		$	376		$	102		$	72		$	4,005
Charge-offs		-			(208	)		-			-			-			-			(41	)		(249	)
Recoveries		2			3			37			3			34			-			(12	)		67
Net charge-offs		2			(205	)		37			3			34			-			(53	)		(182	)
Provision for loan losses		(12	)		117			149			106			36			(3	)		107			500
Balance at September 30, 2011		329			934			1,668			721			446			99			126			4,323
Balance at December 31, 2010		395			1,186			1,576			1,173			399			99			139			4,967
Charge-offs		(104	)		(1,173	)		(434	)		(590	)		(1	)		-			(93	)		(2,395	)
Recoveries		26			3			37			11			35			-			39			151
Net charge-offs		(78	)		(1,170	)		(397	)		(579	)		34			-			(54	)		(2,244	)
Provision for loan losses		12			918			489			127			13			-			41			1,600
Balance at September 30, 2011		329			934			1,668			721			446			99			126			4,323
Allowance for loan losses:
Individually evaluated for loss		19			11			-			-			-			66			23			119
Collectively evaluated for loss		310			923			1,668			721			446			33			103			4,204
Total		329			934			1,668			721			446			99			126			4,323
Loan balances:
Individually evaluated for loss		803			225			18			-			71			775			39			1,931
Collectively evaluated for loss		77,901			21,882			94,114			53,209			42,206			6,499			13,407			309,218
Total	$	78,704		$	22,107		$	94,132		$	53,209		$	42,277		$	7,274		$	13,446		$	311,149

Past Due Financing Receivables [Table Text Block]

The following tables present information on the Company’s past due and non-accrual loans by loan class:

	As of September 30, 2012
(Dollars in thousands)	30-59 days			60-89 days			90 days or
	delinquent			delinquent			more			Total past			Non-
	and			and			delinquent			due loans			accrual
	accruing			accruing			and accruing			accruing			loans			Total
One-to-four family residential real estate	$	500		$	1,752		$	-		$	2,252		$	839		$	3,091
Construction and land		19			-			-			19			3,326			3,345
Commercial real estate		148			-			-			148			-			148
Commercial loans		20			150			-			170			204			374
Agriculture loans		22			39			-			61			5			66
Municipal loans		-			-			-			-			131			131
Consumer loans		239			45			-			284			72			356
Total	$	948		$	1,986		$	-		$	2,934		$	4,577		$	7,511
Percent of gross loans		0.30	%		0.63	%		0.00	%		0.94	%		1.46	%		2.40	%

	As of December 31, 2011
(Dollars in thousands)	30-59 days			60-89 days			90 days or
	delinquent			delinquent			more			Total past			Non-
	and			and			delinquent			due loans			accrual
	accruing			accruing			and accruing			accruing			loans			Total
One-to-four family residential real estate	$	368		$	1,174		$	-		$	1,542		$	752		$	2,294
Construction and land		21			-			-			21			225			246
Commercial real estate		64			211			-			275			17			292
Commercial loans		1			201			-			202			78			280
Agriculture loans		1			-			-			1			63			64
Municipal loans		-			-			-			-			241			241
Consumer loans		160			18			-			178			43			221
Total	$	615		$	1,604		$	-		$	2,219		$	1,419		$	3,638
Percent of gross loans		0.20	%		0.51	%		0.00	%		0.71	%		0.45	%		1.16	%

Impaired Financing Receivables [Table Text Block]

The following tables present information on impaired loans:

(Dollars in thousands)	As of September 30, 2012
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	1,138	$	848	$	648	$	200	$	184	$	873	$	-
Construction and land		3,326		3,326		60		3,266		1,414		3,334		-
Commercial		204		204		203		1		-		335		-
Agriculture loans		5		5		5		-		-		10		-
Municipal loans		772		772		641		131		65		782		15
Consumer loans		72		72		56		16		16		73		-
Total impaired loans	$	5,517	$	5,227	$	1,613	$	3,614	$	1,679	$	5,407	$	15

(Dollars in thousands)	As of December 31, 2011
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	1,570	$	1,280	$	1,072	$	208	$	65	$	1,311	$	32
Construction and land		574		225		200		25		8		419		-
Commercial real estate		17		17		17		-		-		20		-
Commercial loans		78		78		-		78		35		83		-
Agriculture loans		63		63		63		-		-		65		-
Municipal loans		784		784		653		131		65		772		35
Consumer loans		43		43		10		33		32		49		-
Total impaired loans	$	3,129	$	2,490	$	2,015	$	475	$	205	$	2,719	$	67

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

The following table presents information on loans that are classified as TDRs:

(Dollars in thousands)
	As of September 30, 2012				As of December 31, 2011
	Number of loans		Loan balance		Number of loans		Loan balance
One-to-four family residential real estate		2	$	503		2	$	528
Construction and land		-		-		1		200
Commerical loans		2		196		-		-
Municipal loans		2		641		2		653
Total troubled debt restructurings		6	$	1,340		5	$	1,381