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According to the 2010 census, Panama has a total area of 0.361 square miles (0.93 km 2 ), of which 0.36 square miles (0.93 km 2 ) (or 99.72%) is land and 0.001 square miles (0.00 km 2 ) (or 0.28%) is water.
Two-thirds of the village is in Montgomery County, with the remainder in Bond County. Local law enforcement is dispatched through the Montgomery County Sheriff's Office in Hillsboro .