Landmark Bancorp(LARK) - 2025 Q2 - Quarterly Results

Executive Summary & Financial Highlights This section provides an overview of Landmark Bancorp, Inc.'s financial performance for Q2 and H1 2025, highlighting key metrics and management's strategic commentary Second Quarter 2025 Financial Performance Overview Landmark Bancorp, Inc. reported diluted earnings per share of $0.75 for Q2 2025, a decrease from the prior quarter but a significant increase compared to Q2 2024, with substantial year-over-year net earnings growth and improved profitability ratios | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----------------------- | :------ | :------ | :------ | | Diluted EPS ($) | $0.75 | $0.81 | $0.52 | | Net Earnings ($) | $4.4M | $4.7M | $3.0M | | Return on Average Assets (%) | 1.11% | | | | Return on Average Equity (%) | 12.25% | | | | Efficiency Ratio (%) | 62.8% | | | First Six Months 2025 Financial Performance Overview For the first six months of 2025, Landmark Bancorp, Inc. achieved strong growth in diluted earnings per share and net earnings compared to the same period in 2024, alongside improved returns on average assets and equity | Metric | H1 2025 | H1 2024 | | :----------------------- | :------ | :------ | | Diluted EPS ($) | $1.56 | $1.01 | | Net Earnings ($) | $9.1M | $5.8M | | Return on Average Assets (%) | 1.16% | | | Return on Average Equity (%) | 12.96% | | | Efficiency Ratio (%) | 63.4% | | Management Commentary and Strategic Highlights CEO Abby Wendel highlighted continued strong net earnings driven by robust loan growth, particularly in commercial, commercial real estate, and residential mortgage loans, alongside significant net interest income growth and net interest margin expansion, while maintaining solid credit quality and controlled expenses, and declaring a cash dividend - Strong net earnings driven by growth in loans and net interest income[5] - Total gross loans increased by $42.9 million, an annualized increase of 16.0%[5] - Net interest income grew 24.7% over the previous year, and net interest margin expanded to 3.83%[5] - A cash dividend of $0.21 per share was declared[5] Key Performance Indicators Key performance indicators for Q2 2025 demonstrated substantial year-over-year improvements, including significant loan growth, an expanded net interest margin, and increased stockholders' equity, despite a quarterly decline in total deposits | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------- | :------ | :------ | :------ | | Total Gross Loans (QoQ Ann.) (%) | +16.0% | | | | Net Interest Margin (%) | 3.83% | 3.76% | 3.25% | | Net Interest Income (YoY) (%) | +24.7% | | | | Deposits (YoY) (%) | +1.9% | | | | Total Assets (QoQ Ann.) (%) | +11.9% | | | | Net Charge-offs ($) | $40K | | | | Stockholders' Equity ($) | +$5.7M | | | | Equity to Assets Ratio (%) | 9.13% | | | Detailed Income Statement Analysis This section analyzes the components of the income statement, including net interest income, non-interest income, non-interest expense, and income tax expense Net Interest Income Analysis Net interest income increased both sequentially and year-over-year, primarily driven by higher interest income on loans due to increased average balances and yields, coupled with lower interest expense on deposits, leading to a net interest margin expansion to 3.83% | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------- | :------ | :------ | :------ | | Net Interest Income ($) | $13.7M | $13.1M | $11.0M | | QoQ Change (%) | +4.3% | | | | YoY Change (%) | +24.7% | | | | Net Interest Margin (%) | 3.83% | 3.76% | 3.25% | - Increase driven by higher interest income on loans ($791K increase to $17.2M) and lower interest expense on deposits ($92K decrease)[9] Non-Interest Income Analysis Non-interest income for Q2 2025 increased from the prior quarter, mainly attributable to higher gains on sales of loans and an increase in fees and service charges | Metric | Q2 2025 | Q1 2025 | | :-------------------------- | :------ | :------ | | Total Non-Interest Income ($) | $3.6M | $3.4M | | Gains on Sales of Loans ($) | +$178K | | | Fees and Service Charges ($) | +$88K | | Non-Interest Expense Analysis Non-interest expense saw a modest increase quarter-over-quarter, primarily due to higher data processing expenses and other non-interest expenses, partially mitigated by a reduction in professional fees | Metric | Q2 2025 | Q1 2025 | | :-------------------- | :------ | :------ | | Total Non-Interest Expense ($) | $11.0M | $10.8M | | QoQ Change (%) | +1.9% | | | Data Processing Expense ($) | +$233K | | | Other Non-Interest Expense ($) | +$101K | | - Increase in data processing expense due to additional services and account growth; increase in other non-interest expense due to higher losses at captive insurance subsidiary[11] Income Tax Expense Income tax expense slightly decreased in Q2 2025 compared to Q1 2025, with the effective tax rate remaining stable | Metric | Q2 2025 | Q1 2025 | | :---------------- | :------ | :------ | | Income Tax Expense ($) | $944K | $1.0M | | Effective Tax Rate (%) | 17.7% | 17.8% | Balance Sheet and Asset Quality Review This section reviews the company's balance sheet components, including loans, investment securities, deposits, borrowings, stockholders' equity, and credit quality metrics Loans and Investment Securities Gross loans reached $1.1 billion, showing significant annualized growth driven by increases in residential real estate, commercial, and commercial real estate loans, while investment securities available-for-sale decreased slightly, and pre-tax unrealized net losses on the portfolio improved | Metric | June 30, 2025 | March 31, 2025 | | :------------------------------------ | :------------ | :------------- | | Gross Loans ($) | $1.1B | $1.07B | | Loan Growth (QoQ annualized) (%) | +16.0% | | | Investment Securities Available-for-Sale ($) | $352.4M | $356.0M | | Pre-tax Unrealized Net Losses (Inv. Sec.) ($) | $13.9M | $17.1M | - Loan growth primarily comprised of one-to-four family residential real estate (+$21.5M), commercial (+$13.4M), and commercial real estate (+$10.9M)[13] Deposits and Borrowings Period-end deposit balances decreased, primarily due to declines in money market, checking, and non-interest-bearing demand deposits, partially offset by an increase in certificates of deposit, while total borrowings increased to fund asset growth and compensate for lower deposit balances, resulting in a higher loan-to-deposits ratio | Metric | June 30, 2025 | March 31, 2025 | | :-------------------- | :------------ | :------------- | | Total Deposits ($) | $1.3B | $1.34B | | Total Borrowings ($) | $155.1M | $48.8M | | Loan to Deposits Ratio (%) | 86.6% | 79.5% | - Decline in deposits driven by decreases in money market and checking accounts (-$50.5M) and non-interest-bearing demand deposits (-$16.5M)[14] - Total borrowings increased $105.9 million to fund asset growth and offset lower deposit balances[14] Stockholders' Equity Stockholders' equity increased, primarily driven by a reduction in accumulated other comprehensive losses (due to lower unrealized net losses on investment securities) and net earnings during the quarter, with the ratio of equity to total assets also improving | Metric | June 30, 2025 | March 31, 2025 | | :----------------------- | :------------ | :------------- | | Stockholders' Equity ($) | $148.4M | $142.7M | | Book Value per Share ($) | $25.66 | $24.69 | | Equity to Total Assets Ratio (%) | 9.13% | 9.04% | - Increase in stockholders' equity mainly due to a decrease in accumulated other comprehensive losses and net earnings[15] Credit Quality and Non-Performing Assets The allowance for credit losses increased, and a provision for credit losses was recorded in Q2 2025, while non-performing loans and total non-performing assets increased quarter-over-quarter, and loans 30-89 days delinquent decreased | Metric | June 30, 2025 | March 31, 2025 | Q2 2025 | Q1 2025 | | :------------------------------------ | :------------ | :------------- | :------ | :------ | | Allowance for Credit Losses ($) | $13.8M | $12.8M | | | | Allowance for Credit Losses (% Gross Loans) | 1.23% | 1.19% | | | | Net Loan Charge-offs ($) | | | $40K | $23K | | Provision for Credit Losses on Loans ($) | | | $1.0M | $0 | | Non-performing Loans ($) | $17.0M | $13.3M | | | | Non-performing Loans (% Gross Loans) | 1.52% | 1.24% | | | | Loans 30-89 Days Delinquent ($) | $4.3M | $10.0M | | | Corporate Information This section provides background information on Landmark Bancorp, Inc. and includes a special note regarding forward-looking statements About Landmark Bancorp, Inc. Landmark Bancorp, Inc. is the holding company for Landmark National Bank, a community banking organization listed on the Nasdaq Global Market under the symbol "LARK," headquartered in Manhattan, Kansas, providing financial and banking services through 29 locations across 23 communities in Kansas - Landmark Bancorp, Inc. is the holding company for Landmark National Bank, listed on Nasdaq (LARK)[18] - Operates 29 locations in 23 communities across Kansas[18] Special Note Concerning Forward-Looking Statements This section serves as a disclaimer for forward-looking statements, highlighting that actual results may differ materially due to various factors, including economic conditions, interest rate fluctuations, increased competition, technological changes, regulatory policies, and credit risk management - Press release contains forward-looking statements subject to beliefs, expectations, and assumptions of management[19] - Actual results could differ materially due to factors such as economic conditions, interest rates, competition, technological changes, and regulatory actions[19] Financial Statements and Supplementary Data This section presents the unaudited consolidated financial statements, including balance sheets, statements of earnings, select ratios, and non-GAAP reconciliations Consolidated Balance Sheets (Unaudited) This section presents the unaudited consolidated balance sheets of Landmark Bancorp, Inc. and its subsidiaries, providing a detailed breakdown of assets, liabilities, and stockholders' equity as of June 30, 2025, and comparative periods | Metric (in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------- | :------------ | | Total Assets (in thousands $) | $1,624,865 | $1,578,589 | $1,560,754 | | Total Gross Loans (in thousands $) | $1,117,784 | $1,074,924 | $980,575 | | Total Deposits (in thousands $) | $1,273,901 | $1,335,822 | $1,250,482 | | Total Liabilities (in thousands $) | $1,476,489 | $1,435,938 | $1,432,500 | | Total Stockholders' Equity (in thousands $) | $148,376 | $142,651 | $128,254 | Consolidated Statements of Earnings (Unaudited) This section provides the unaudited consolidated statements of earnings, detailing interest income, interest expense, net interest income, non-interest income, non-interest expense, and net earnings for the three and six months ended June 30, 2025, and comparative periods | Metric (in thousands, except per share) | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Total Interest Income (in thousands $) | $20,098 | $19,342 | $18,180 | $39,440 | $35,925 | | Total Interest Expense (in thousands $) | $6,415 | $6,223 | $7,206 | $12,638 | $14,204 | | Net Interest Income (in thousands $) | $13,683 | $13,119 | $10,974 | $26,802 | $21,721 | | Total Non-Interest Income (in thousands $) | $3,626 | $3,358 | $3,720 | $6,984 | $7,120 | | Total Non-Interest Expense (in thousands $) | $10,961 | $10,761 | $11,095 | $21,722 | $21,646 | | Net Earnings (in thousands $) | $4,404 | $4,701 | $3,012 | $9,105 | $5,790 | | Diluted EPS ($) | $0.75 | $0.81 | $0.52 | $1.56 | $1.01 | | Dividends per Share ($) | $0.21 | $0.21 | $0.20 | $0.42 | $0.40 | Select Ratios and Other Data (Unaudited) This section provides a comprehensive overview of the company's financial health and operational efficiency through key performance, capital, and asset quality ratios, along with average balances and yield/cost data for various periods | Metric | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | | Return on Average Assets (%) | 1.11% | 1.21% | 0.78% | 1.16% | 0.75% | | Return on Average Equity (%) | 12.25% | 13.71% | 9.72% | 12.96% | 9.30% | | Net Interest Margin (%) | 3.83% | 3.76% | 3.21% | 3.80% | 3.16% | | Efficiency Ratio (%) | 62.8% | 64.1% | 67.9% | 63.4% | 70.0% | | Equity to Total Assets (%) | 9.13% | 9.04% | 8.22% | | | | Book Value per Share ($) | $25.66 | $24.69 | $22.33 | | | | Allowance for Credit Losses to Gross Loans (%) | 1.23% | 1.19% | 1.11% | | | | Total Non-Performing Loans to Gross Loans (%) | 1.52% | 1.24% | 0.51% | | | | Net Loan Charge-offs to Average Loans (%) | 0.01% | 0.01% | -0.02% | 0.01% | -0.01% | Non-GAAP Financial Measures Reconciliation (Unaudited) This section provides detailed reconciliations of non-GAAP financial measures, including adjusted non-interest expense, adjusted non-interest income, tangible equity, and tangible assets, to their most comparable GAAP equivalents for transparency and comparability | Non-GAAP Metric | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Adjusted Non-Interest Expense (in thousands $) | $10,859 | $10,559 | $9,984 | $21,418 | $20,186 | | Adjusted Non-Interest Income (in thousands $) | $3,617 | $3,360 | $3,720 | $6,977 | $7,129 | | Efficiency Ratio (Adjusted) (%) | 62.8% | 64.1% | 67.9% | 63.4% | 70.0% | | Tangible Equity (in thousands $) | $113,724 | $107,848 | $92,977 | | | | Tangible Assets (in thousands $) | $1,590,213 | $1,543,786 | $1,525,477 | | | | Tangible Equity to Tangible Assets (%) | 7.15% | 6.99% | 6.09% | | | | Tangible Book Value per Share ($) | $19.66 | $18.66 | $16.19 | | |