Business Context and Reporting Period
Company: Landmark Bancorp, Inc. (LARK)
Filing Type: Form 10-Q (Unaudited)
Period Ended: March 31, 2026
Overview: Landmark Bancorp is a financial holding company operating primarily through its subsidiary, Landmark National Bank, in Kansas and Missouri. The company focuses on commercial, commercial real estate (CRE), and agriculture lending. It also operates a captive insurance subsidiary, Landmark Risk Management, Inc.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Net Earnings | $5.066 million | $4.701 million |
| Earnings Per Share (Diluted) | $0.83 | $0.77 |
| Net Interest Income | $15.023 million | $13.119 million |
| Net Interest Margin (Tax-Equivalent) | 4.24% | 3.76% |
| Total Assets | $1.606 billion | $1.574 billion (Average) |
| Total Deposits | $1.323 billion | $1.389 billion (Dec 31, 2025) |
| Allowance for Credit Losses | $12.609 million | $12.458 million (Dec 31, 2025) |
| Return on Average Assets | 1.29% | 1.21% |
| Return on Average Equity | 12.65% | 13.71% |
Material Changes vs. Prior Period
- Profitability: Net earnings increased by $365,000 (7.8%) compared to Q1 2025, driven by higher net interest income and non-interest income.
- Net Interest Income: Increased by $1.9 million (14.5%) due to higher loan yields (6.40% vs 6.34%) and lower deposit costs (1.90% vs 2.17%).
- Deposits: Total deposits decreased by $66.2 million (4.8%) from year-end 2025, primarily due to a reduction in brokered deposits and seasonal declines in public funds.
- Borrowings: Total borrowings increased by $57.3 million to $91.0 million, largely to offset the decline in deposits via FHLB advances.
- Asset Quality: Net loan charge-offs increased significantly to $349,000 in Q1 2026 compared to $23,000 in Q1 2025. Non-accrual loans rose slightly to $10.4 million (0.94% of gross loans).
- Non-Interest Expense: Increased by $1.1 million (10.6%), driven by $433,000 in fraud losses related to a non-executive officer and costs associated with core system upgrades.
Guidance, Outlook, and Risks
- Dividends: The company declared its 99th consecutive quarterly dividend of $0.21 per share. Management expects to maintain this strategy given strong capital levels.
- Capital Position: The Bank is categorized as "well capitalized" by regulators, exceeding all minimum requirements and the 2.5% capital conservation buffer.
- Unusual Items: The company recognized $433,000 in fraud losses in Q1 2026 related to previously disclosed fraudulent activity by a non-executive officer. This was coupled with increased insurance loss reserves at the captive subsidiary.
- Risks: Key risks include interest rate volatility, economic uncertainty (inflation, tariffs, geopolitical conflicts), and credit risk within the agriculture and CRE portfolios. The company notes that while asset quality remains strong, further increases in problem assets are possible.
- Liquidity: Liquidity remains strong with $376.9 million in liquid assets and significant available borrowing capacity ($227.0 million) at the Federal Home Loan Bank.
Investor Verification Checklist
- Fraud Impact: Verify the full extent of the $433,000 fraud loss and any potential future legal or reputational costs associated with the non-executive officer incident.
- Deposit Stability: Monitor the trend of deposit outflows, specifically the reduction in brokered deposits and the reliance on FHLB borrowings to fund the loan portfolio.
- Asset Quality Trends: Track the increase in net charge-offs and the concentration of past-due loans in the agriculture portfolio to ensure the allowance for credit losses remains adequate.
- System Upgrade Costs: Assess whether the increased data processing and occupancy expenses related to core system upgrades are one-time or recurring costs.
- Investment Portfolio: Review the unrealized losses on available-for-sale securities ($11.996 million) and the company's intent to hold these securities to maturity.