ZACKSยท2025-07-29 17:16Core Viewpoint - Landmark Bancorp, Inc. (LARK) experienced a decline in share price of 3.8% following its second-quarter 2025 results, contrasting with a 0.6% increase in the S&P 500 index during the same period [1] Financial Performance - For Q2 2025, Landmark Bancorp reported diluted earnings per share (EPS) of 75 cents, a 44% increase year-over-year from 52 cents, but a decrease from 81 cents in Q1 2025. Net income was $4.4 million, up from $3 million year-over-year but down from $4.7 million sequentially [2] - Total revenues were primarily driven by net interest income, which rose 24.7% year-over-year to $13.7 million and improved 4.3% sequentially. Return on average assets was 1.11%, and return on average equity was 12.25%, both up from the prior year [3] Net Interest & Non-Interest Metrics - The net interest margin improved by 62 basis points year-over-year to 3.83%, attributed to higher loan yields and controlled funding costs. Average loan balances increased by $33.3 million, with loan yields rising by 3 basis points to 6.37% [4] - Non-interest income was $3.6 million, up $268,000 from Q1 but slightly down from $3.7 million year-over-year. Gains on mortgage loan sales increased by $178,000 sequentially, while fee and service charge income grew by $88,000 [5] Expense Management - Non-interest expenses totaled $11 million, up $200,000 from Q1, driven by higher data processing costs and increased losses at the captive insurance subsidiary. Year-over-year, expenses declined by $134,000 due to the absence of a prior-year valuation adjustment [6] Management Commentary - CEO Abigail Wendel highlighted loan growth and margin expansion as key earnings drivers, with strong demand across commercial, commercial real estate, and residential mortgage lending contributing to a $42.9 million increase in gross loans. Minimal net charge-offs of $40,000 were noted [7] - CFO Mark Herpich pointed out a strong capital base, with stockholders' equity rising by $5.7 million, increasing book value per share to $25.66 from $24.69. The efficiency ratio improved to 62.8% from 67.9% year-over-year, indicating better operational leverage [8] Credit Quality & Provision - Landmark Bancorp recorded a $1 million provision for credit losses in Q2, reflecting growth in loan balances and a conservative reserve stance. The allowance for credit losses increased to $13.8 million, or 1.23% of gross loans [9] - Non-performing loans rose to $17 million from $13.3 million in the prior quarter, attributed to two newly impaired commercial real estate credits. However, loans 30-89 days delinquent fell to $4.3 million from $10 million in Q1, indicating improving performance metrics [10] Deposit Dynamics & Funding Strategy - Total deposits decreased by $61.9 million from the prior quarter to $1.3 billion, mainly due to brokered deposit outflows and lower balances in money market and checking accounts. Year-over-year, deposits rose by $23.4 million, or 1.9%. To support loan growth, borrowings from the Federal Home Loan Bank increased by $105.9 million [12] - Management expressed confidence in liquidity, noting significant capacity for additional borrowing and plans to reduce borrowings through investment portfolio cash flows in the coming quarters [13] Strategic Outlook - Management reiterated plans to deepen customer relationships and grow deposits through its 29 community bank branches in Kansas, with deposit-gathering initiatives set to roll out in the second half of 2025 [14] Other Developments - Landmark Bancorp's board declared a quarterly cash dividend of 21 cents per share, marking the 96th consecutive quarterly dividend since the company's formation in 2001 [15]