[10-Q] Landmark Bancorp Inc Quarterly Earnings Report
Landmark Bancorp, Inc. reported stronger second-quarter results with net earnings of $4.4 million for the three months ended June 30, 2025, up from $3.0 million a year earlier, and year-to-date net earnings of $9.1 million versus $5.8 million a year ago. Net interest income rose to $13.7 million for the quarter (from $11.0 million), reflecting higher loan interest income of $17.2 million. Earnings per share were $0.76 basic and $0.75 diluted for the quarter.
The balance sheet shows total assets of $1,624.9 million and loans, net of ACL, of $1,103.4 million at June 30, 2025. Deposits declined to $1,273.9 million from $1,328.8 million at year-end, while borrowings from the Federal Home Loan Bank and other sources increased to $155.1 million. The Company recorded a provision for credit losses of $1.0 million for the quarter and reported accumulated other comprehensive loss of $(10.6) million. The Bank remained categorized as well capitalized under regulatory standards.
Landmark Bancorp, Inc. ha registrato risultati del secondo trimestre in miglioramento, con utili netti di $4.4 million nei tre mesi terminati il 30 giugno 2025, rispetto a $3.0 million un anno prima, e utili netti da inizio anno di $9.1 million rispetto a $5.8 million dell'anno precedente. Il reddito netto da interessi è salito a $13.7 million per il trimestre (da $11.0 million), riflettendo maggiori ricavi da interessi sui prestiti pari a $17.2 million. L'utile per azione è stato di $0.76 base e $0.75 diluito per il trimestre.
Lo stato patrimoniale mostra attività totali per $1,624.9 million e prestiti, al netto delle ACL, per $1,103.4 million al 30 giugno 2025. I depositi sono scesi a $1,273.9 million da $1,328.8 million a fine anno, mentre gli indebitamenti presso la Federal Home Loan Bank e altre fonti sono aumentati a $155.1 million. La Società ha registrato una svalutazione per perdite su crediti di $1.0 million nel trimestre e ha riportato un risultato complessivo accumulato negativo di $(10.6) million. La Banca è rimasta classificata come well capitalized secondo gli standard regolamentari.
Landmark Bancorp, Inc. informó resultados del segundo trimestre más sólidos, con ganancias netas de $4.4 million en los tres meses terminados el 30 de junio de 2025, frente a $3.0 million un año antes, y ganancias netas acumuladas en el año de $9.1 million frente a $5.8 million del año anterior. El ingreso neto por intereses aumentó a $13.7 million en el trimestre (desde $11.0 million), reflejando mayores ingresos por intereses de préstamos de $17.2 million. Las ganancias por acción fueron de $0.76 básicas y $0.75 diluidas para el trimestre.
El balance muestra activos totales por $1,624.9 million y préstamos, netos de ACL, por $1,103.4 million al 30 de junio de 2025. Los depósitos disminuyeron a $1,273.9 million desde $1,328.8 million al cierre del año, mientras que los préstamos de la Federal Home Loan Bank y otras fuentes aumentaron a $155.1 million. La Compañía registró una provisión para pérdidas crediticias de $1.0 million en el trimestre y reportó una pérdida acumulada por otro resultado integral de $(10.6) million. El Banco permaneció clasificado como bien capitalizado según las normas regulatorias.
Landmark Bancorp, Inc.는 2025년 6월 30일로 끝나는 세 달 동안 순이익이 $4.4 million으로 전년의 $3.0 million보다 증가했으며, 연초부터 누적 순이익은 $9.1 million으로 전년의 $5.8 million을 상회했다고 발표했습니다. 분기 기준 순이자수익은 $13.7 million(이전 $11.0 million)으로 증가했으며, 이는 대출이자수익이 $17.2 million으로 늘어난 데 따른 것입니다. 주당순이익은 분기 기준 기본 $0.76, 희석 $0.75였습니다.
대차대조표상 2025년 6월 30일 현재 총자산은 $1,624.9 million이고, ACL 차감 후 대출금은 $1,103.4 million입니다. 예금은 연말의 $1,328.8 million에서 $1,273.9 million으로 감소했고, Federal Home Loan Bank 및 기타 출처로부터의 차입금은 $155.1 million으로 증가했습니다. 회사는 분기 중 신용손실충당금으로 $1.0 million을 계상했으며, 누적 기타 포괄손실은 $(10.6) million으로 보고했습니다. 은행은 규제 기준상 well capitalized로 분류된 상태를 유지했습니다.
Landmark Bancorp, Inc. a publié des résultats du deuxième trimestre plus solides, avec un bénéfice net de $4.4 million pour les trois mois clos le 30 juin 2025, contre $3.0 million un an plus tôt, et un bénéfice net cumulé depuis le début de l'année de $9.1 million contre $5.8 million l'an dernier. Le produit net d'intérêts a augmenté à $13.7 million pour le trimestre (contre $11.0 million), reflétant des revenus d'intérêts sur prêts plus élevés de $17.2 million. Le bénéfice par action s'est élevé à $0.76 de base et $0.75 dilué pour le trimestre.
Le bilan fait apparaître un total d'actifs de $1,624.9 million et des prêts nets d'ACL de $1,103.4 million au 30 juin 2025. Les dépôts ont diminué à $1,273.9 million contre $1,328.8 million en fin d'exercice, tandis que les emprunts auprès de la Federal Home Loan Bank et d'autres sources ont augmenté à $155.1 million. La Société a enregistré une provision pour pertes sur prêts de $1.0 million pour le trimestre et a déclaré un autre résultat global accumulé de $(10.6) million. La Banque est demeurée classée well capitalized selon les normes réglementaires.
Landmark Bancorp, Inc. meldete stärkere Ergebnisse im zweiten Quartal mit einem Nettogewinn von $4.4 million für die drei Monate zum 30. Juni 2025, gegenüber $3.0 million ein Jahr zuvor, sowie einem Gewinn seit Jahresbeginn von $9.1 million gegenüber $5.8 million im Vorjahr. Das Nettozinsergebnis erhöhte sich auf $13.7 million für das Quartal (von $11.0 million) und spiegelt höhere Zinseinnahmen aus Krediten in Höhe von $17.2 million wider. Der Gewinn je Aktie betrug im Quartal $0.76 unverwässert und $0.75 verwässert.
Die Bilanz weist zum 30. Juni 2025 Gesamtaktiva von $1,624.9 million und Kredite abzüglich ACL in Höhe von $1,103.4 million aus. Die Einlagen sanken von $1,328.8 million zum Jahresende auf $1,273.9 million, während die Verbindlichkeiten gegenüber der Federal Home Loan Bank und anderen Quellen auf $155.1 million zunahmen. Das Unternehmen bildete im Quartal eine Vorsorge für Kreditverluste von $1.0 million und meldete ein kumuliertes sonstiges Ergebnis in Höhe von $(10.6) million. Die Bank blieb nach regulatorischen Vorgaben als well capitalized eingestuft.
- Net earnings growth: Quarterly net earnings increased to $4.4 million from $3.0 million a year earlier.
- Higher net interest income: Net interest income rose to $13.7 million for the quarter driven by loan interest of $17.2 million.
- Loan growth: Loans, net of allowance, totaled $1,103.4 million, up from $1,039.2 million at year-end 2024.
- Well-capitalized: Regulatory ratios exceed minimums and the Bank was categorized as well capitalized at the reporting dates.
- Dividend continuity: Company declared its 96th consecutive quarterly dividend (as noted in MD&A).
- Deposit decline: Total deposits decreased to $1,273.9 million from $1,328.8 million at December 31, 2024.
- Increased reliance on borrowings: Federal Home Loan Bank and other borrowings rose to $155.1 million from $53.0 million at year-end.
- Provision for credit losses increased: The Company recorded a provision of $1.0 million for the quarter versus $0 in the comparable prior quarter.
- Unrealized losses on securities: Available-for-sale securities had aggregate unrealized losses of $14.8 million, reflected in other comprehensive loss.
Insights
TL;DR: Earnings and net interest income improved—loan growth lifted interest but funding shifted toward borrowings as deposits fell.
Landmark delivered a year-over-year increase in quarterly net earnings to $4.4M and raised net interest income to $13.7M, driven by higher loan interest of $17.2M. Loans net increased to $1,103.4M, supporting organic earning asset growth. However, deposits declined ~$54.9M versus December 31, 2024, and the Company increased FHLB and other borrowings to $155.1M, reflecting a funding mix shift. Overall, the operating performance is positive; the funding mix and higher provision for credit losses of $1.0M are key items to monitor.
TL;DR: Credit metrics and liquidity show mixed signals—higher provisions and non-accruals, offset by adequate regulatory capital.
The Company recorded a $1.0M provision for credit losses in the quarter and net loan charge-offs of $40K for Q2 2025, compared with recoveries in the prior year. Non-accrual loans and collateral-dependent balances rose to a total of $16.98M. Investment securities had aggregate unrealized AFS losses of $14.8M, contributing to accumulated other comprehensive loss of $(10.56M). Liquidity shifted toward borrowings (FHLB advances increased materially). Regulatory capital ratios remained above required thresholds and the Bank was "well capitalized" at the reporting dates.
Landmark Bancorp, Inc. ha registrato risultati del secondo trimestre in miglioramento, con utili netti di $4.4 million nei tre mesi terminati il 30 giugno 2025, rispetto a $3.0 million un anno prima, e utili netti da inizio anno di $9.1 million rispetto a $5.8 million dell'anno precedente. Il reddito netto da interessi è salito a $13.7 million per il trimestre (da $11.0 million), riflettendo maggiori ricavi da interessi sui prestiti pari a $17.2 million. L'utile per azione è stato di $0.76 base e $0.75 diluito per il trimestre.
Lo stato patrimoniale mostra attività totali per $1,624.9 million e prestiti, al netto delle ACL, per $1,103.4 million al 30 giugno 2025. I depositi sono scesi a $1,273.9 million da $1,328.8 million a fine anno, mentre gli indebitamenti presso la Federal Home Loan Bank e altre fonti sono aumentati a $155.1 million. La Società ha registrato una svalutazione per perdite su crediti di $1.0 million nel trimestre e ha riportato un risultato complessivo accumulato negativo di $(10.6) million. La Banca è rimasta classificata come well capitalized secondo gli standard regolamentari.
Landmark Bancorp, Inc. informó resultados del segundo trimestre más sólidos, con ganancias netas de $4.4 million en los tres meses terminados el 30 de junio de 2025, frente a $3.0 million un año antes, y ganancias netas acumuladas en el año de $9.1 million frente a $5.8 million del año anterior. El ingreso neto por intereses aumentó a $13.7 million en el trimestre (desde $11.0 million), reflejando mayores ingresos por intereses de préstamos de $17.2 million. Las ganancias por acción fueron de $0.76 básicas y $0.75 diluidas para el trimestre.
El balance muestra activos totales por $1,624.9 million y préstamos, netos de ACL, por $1,103.4 million al 30 de junio de 2025. Los depósitos disminuyeron a $1,273.9 million desde $1,328.8 million al cierre del año, mientras que los préstamos de la Federal Home Loan Bank y otras fuentes aumentaron a $155.1 million. La Compañía registró una provisión para pérdidas crediticias de $1.0 million en el trimestre y reportó una pérdida acumulada por otro resultado integral de $(10.6) million. El Banco permaneció clasificado como bien capitalizado según las normas regulatorias.
Landmark Bancorp, Inc.는 2025년 6월 30일로 끝나는 세 달 동안 순이익이 $4.4 million으로 전년의 $3.0 million보다 증가했으며, 연초부터 누적 순이익은 $9.1 million으로 전년의 $5.8 million을 상회했다고 발표했습니다. 분기 기준 순이자수익은 $13.7 million(이전 $11.0 million)으로 증가했으며, 이는 대출이자수익이 $17.2 million으로 늘어난 데 따른 것입니다. 주당순이익은 분기 기준 기본 $0.76, 희석 $0.75였습니다.
대차대조표상 2025년 6월 30일 현재 총자산은 $1,624.9 million이고, ACL 차감 후 대출금은 $1,103.4 million입니다. 예금은 연말의 $1,328.8 million에서 $1,273.9 million으로 감소했고, Federal Home Loan Bank 및 기타 출처로부터의 차입금은 $155.1 million으로 증가했습니다. 회사는 분기 중 신용손실충당금으로 $1.0 million을 계상했으며, 누적 기타 포괄손실은 $(10.6) million으로 보고했습니다. 은행은 규제 기준상 well capitalized로 분류된 상태를 유지했습니다.
Landmark Bancorp, Inc. a publié des résultats du deuxième trimestre plus solides, avec un bénéfice net de $4.4 million pour les trois mois clos le 30 juin 2025, contre $3.0 million un an plus tôt, et un bénéfice net cumulé depuis le début de l'année de $9.1 million contre $5.8 million l'an dernier. Le produit net d'intérêts a augmenté à $13.7 million pour le trimestre (contre $11.0 million), reflétant des revenus d'intérêts sur prêts plus élevés de $17.2 million. Le bénéfice par action s'est élevé à $0.76 de base et $0.75 dilué pour le trimestre.
Le bilan fait apparaître un total d'actifs de $1,624.9 million et des prêts nets d'ACL de $1,103.4 million au 30 juin 2025. Les dépôts ont diminué à $1,273.9 million contre $1,328.8 million en fin d'exercice, tandis que les emprunts auprès de la Federal Home Loan Bank et d'autres sources ont augmenté à $155.1 million. La Société a enregistré une provision pour pertes sur prêts de $1.0 million pour le trimestre et a déclaré un autre résultat global accumulé de $(10.6) million. La Banque est demeurée classée well capitalized selon les normes réglementaires.
Landmark Bancorp, Inc. meldete stärkere Ergebnisse im zweiten Quartal mit einem Nettogewinn von $4.4 million für die drei Monate zum 30. Juni 2025, gegenüber $3.0 million ein Jahr zuvor, sowie einem Gewinn seit Jahresbeginn von $9.1 million gegenüber $5.8 million im Vorjahr. Das Nettozinsergebnis erhöhte sich auf $13.7 million für das Quartal (von $11.0 million) und spiegelt höhere Zinseinnahmen aus Krediten in Höhe von $17.2 million wider. Der Gewinn je Aktie betrug im Quartal $0.76 unverwässert und $0.75 verwässert.
Die Bilanz weist zum 30. Juni 2025 Gesamtaktiva von $1,624.9 million und Kredite abzüglich ACL in Höhe von $1,103.4 million aus. Die Einlagen sanken von $1,328.8 million zum Jahresende auf $1,273.9 million, während die Verbindlichkeiten gegenüber der Federal Home Loan Bank und anderen Quellen auf $155.1 million zunahmen. Das Unternehmen bildete im Quartal eine Vorsorge für Kreditverluste von $1.0 million und meldete ein kumuliertes sonstiges Ergebnis in Höhe von $(10.6) million. Die Bank blieb nach regulatorischen Vorgaben als well capitalized eingestuft.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
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
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
(Address of principal executive offices) (Zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol(s) | Name of exchange on which registered: | ||
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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ☐ Accelerated filer ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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2025, the issuer had outstanding
LANDMARK BANCORP, INC.
Form 10-Q Quarterly Report
Table of Contents
Page Number | ||
| PART I | ||
| Item 1. | Financial Statements | 2 - 27 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28 – 36 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 37 – 38 |
| Item 4. | Controls and Procedures | 39 |
| PART II | ||
| Item 1. | Legal Proceedings | 40 |
| Item 1A. | Risk Factors | 40 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 40 |
| Item 3. | Defaults Upon Senior Securities | 40 |
| Item 4. | Mine Safety Disclosures | 40 |
| Item 5. | Other Information | 40 |
| Item 6. | Exhibits | 41 |
| Signature Page | 42 | |
| 1 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LANDMARK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| (Unaudited) | ||||||||
| June 30, | December 31, | |||||||
| (Dollars in thousands, except per share amounts) | 2025 | 2024 | ||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Interest-bearing deposits at other banks | ||||||||
| Investment securities available-for-sale, at fair value | ||||||||
| Investment securities, held-to-maturity, net of allowance for credit losses of $ | ||||||||
| Bank stocks, at cost | ||||||||
| Loans, net of allowance for credit losses of $ | ||||||||
| Loans held for sale, at fair value | ||||||||
| Bank owned life insurance | ||||||||
| Premises and equipment, net | ||||||||
| Goodwill | ||||||||
| Other intangible assets, net | ||||||||
| Mortgage servicing rights | ||||||||
| Real estate owned, net | ||||||||
| Accrued interest and other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Non-interest-bearing demand | $ | $ | ||||||
| Money market and checking | ||||||||
| Savings | ||||||||
| Certificates of deposit | ||||||||
| Total deposits | ||||||||
| Federal Home Loan Bank and other borrowings | ||||||||
| Subordinated debentures | ||||||||
| Repurchase agreements | ||||||||
| Accrued interest and other liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | - | - | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ | - | - | ||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
| 2 |
LANDMARK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
| (Dollars in thousands, except per share amounts) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (Dollars in thousands, except per share amounts) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Interest income: | ||||||||||||||||
| Loans | $ | $ | $ | $ | ||||||||||||
| Investment securities: | ||||||||||||||||
| Taxable | ||||||||||||||||
| Tax-exempt | ||||||||||||||||
| Interest-bearing deposits at banks | ||||||||||||||||
| Total interest income | ||||||||||||||||
| Interest expense: | ||||||||||||||||
| Deposits | ||||||||||||||||
| Federal Home Loan Bank and other borrowings | ||||||||||||||||
| Subordinated debentures | ||||||||||||||||
| Repurchase agreements | ||||||||||||||||
| Total interest expense | ||||||||||||||||
| Net interest income | ||||||||||||||||
| Provision for credit losses | - | |||||||||||||||
| Net interest income after provision for credit losses | ||||||||||||||||
| Non-interest income: | ||||||||||||||||
| Fees and service charges | ||||||||||||||||
| Gains on sales of loans, net | ||||||||||||||||
| Increase in cash surrender value of bank owned life insurance | ||||||||||||||||
| Losses on sales of investment securities, net | - | - | ( | ) | - | |||||||||||
| Other | ||||||||||||||||
| Total non-interest income | ||||||||||||||||
| Non-interest expense: | ||||||||||||||||
| Compensation and benefits | ||||||||||||||||
| Occupancy and equipment | ||||||||||||||||
| Data processing | ||||||||||||||||
| Amortization of mortgage servicing rights and other intangibles | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Valuation allowance on real estate held for sale | - | - | ||||||||||||||
| Other | ||||||||||||||||
| Total non-interest expense | ||||||||||||||||
| Earnings before income taxes | ||||||||||||||||
| Income tax expense | ||||||||||||||||
| Net earnings | $ | $ | $ | $ | ||||||||||||
| Earnings per share: | ||||||||||||||||
| Basic (1) | $ | $ | $ | $ | ||||||||||||
| Diluted (1) | $ | $ | $ | $ | ||||||||||||
| Dividends per share (1) | $ | $ | $ | $ | ||||||||||||
| (1) |
See accompanying notes to consolidated financial statements.
| 3 |
LANDMARK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| (Dollars in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Net earnings | $ | $ | $ | $ | ||||||||||||
| Other comprehensive income: | ||||||||||||||||
| Net unrealized holding gains (losses) on available-for-sale securities | ( | ) | ( | ) | ||||||||||||
| Reclassification adjustment for net losses included in earnings | - | - | - | |||||||||||||
| Net unrealized gains (losses) | ( | ) | ( | ) | ||||||||||||
| Income tax effect on net unrealized holding (gains) losses | ( | ) | ( | ) | ||||||||||||
| Other comprehensive income (loss) | ( | ) | ( | ) | ||||||||||||
| Total comprehensive income | $ | $ | $ | $ | ||||||||||||
See accompanying notes to consolidated financial statements.
| 4 |
LANDMARK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| (Dollars in thousands, except per share amounts) | Common stock | Additional paid-in capital | Retained earnings | Treasury stock | Accumulated other comprehensive income (loss) | Total | ||||||||||||||||||
| Balance at April 1, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||
| Net earnings | - | - | - | - | ||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Dividends paid ($ | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||
| Issue of restricted common stock, | - | - | - | - | - | - | ||||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||
| Purchase of | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||
| Balance at April 1, 2025 | $ | $ | $ | $ | - | $ | ( | ) | $ | |||||||||||||||
| Net earnings | - | - | - | - | ||||||||||||||||||||
| Other comprehensive income | - | - | - | - | ||||||||||||||||||||
| Dividends paid ($ | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | - | $ | ( | ) | $ | |||||||||||||||
| (1) |
See accompanying notes to consolidated financial statements.
| (Dollars in thousands, except per share amounts) | Common stock | Additional paid-in capital | Retained earnings | Treasury stock | Accumulated other comprehensive income (loss) | Total | ||||||||||||||||||
| Balance at January 1, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||
| Net earnings | - | - | - | - | ||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Dividends paid ($ | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||
| Issue of restricted common stock, | - | - | - | - | - | - | ||||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||
| Purchase of | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Purchase of shares treasury stock | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | $ | - | $ | ( | ) | $ | |||||||||||||||
| Balance | $ | $ | $ | $ | - | $ | ( | ) | $ | |||||||||||||||
| Net earnings | - | - | - | - | ||||||||||||||||||||
| Other comprehensive income | - | - | - | - | ||||||||||||||||||||
| Other comprehensive income (loss) | - | - | - | - | ||||||||||||||||||||
| Dividends paid ($ | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||
| Dividends paid | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | - | $ | ( | ) | $ | |||||||||||||||
| Balance | $ | $ | $ | $ | - | $ | ( | ) | $ | |||||||||||||||
| (1) |
See accompanying notes to consolidated financial statements.
| 5 |
LANDMARK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| (Dollars in thousands) | 2025 | 2024 | ||||||
| Six months ended | ||||||||
| June 30, | ||||||||
| (Dollars in thousands) | 2025 | 2024 | ||||||
| Cash flows from operating activities: | ||||||||
| Net earnings | $ | $ | ||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
| Provision for credit losses | ||||||||
| Valuation allowance on real estate held for sale | - | |||||||
| Amortization of investment security (discount) premiums, net | ( | ) | ||||||
| Accretion of purchase accounting adjustments | ( | ) | ( | ) | ||||
| Amortization of mortgage servicing rights and other intangibles | ||||||||
| Depreciation | ||||||||
| Increase in cash surrender value of bank owned life insurance | ( | ) | ( | ) | ||||
| Stock-based compensation | ||||||||
| Deferred income taxes | ( | ) | ( | ) | ||||
| Net losses on sales of investment securities | - | |||||||
| Net loss on sales of premises and equipment and foreclosed assets | - | |||||||
| Net gains on sales of loans | ( | ) | ( | ) | ||||
| Proceeds from sales of loans | ||||||||
| Origination of loans held for sale | ( | ) | ( | ) | ||||
| Changes in assets and liabilities: | ||||||||
| Accrued interest and other assets | ||||||||
| Accrued expenses, taxes, and other liabilities | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Net increase in loans | ( | ) | ( | ) | ||||
| Net change in interest-bearing deposits at banks | ||||||||
| Maturities and prepayments of investment securities | ||||||||
| Purchases of investment securities | ( | ) | ( | ) | ||||
| Proceeds from sales of available-for-sale investment securities | - | |||||||
| Redemption of bank stocks | ||||||||
| Purchase of bank stocks | ( | ) | ( | ) | ||||
| Proceeds from bank owned life insurance | - | |||||||
| Proceeds from sales of premises and equipment and foreclosed assets | - | |||||||
| Purchases of premises and equipment, net | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net decrease in deposits | ( | ) | ( | ) | ||||
| Federal Home Loan Bank advance borrowings | ||||||||
| Federal Home Loan Bank advance repayments | ( | ) | ( | ) | ||||
| Proceeds from other borrowings | - | |||||||
| Repayments on other borrowings | ( | ) | ( | ) | ||||
| Change in repurchase agreements | ( | ) | ( | ) | ||||
| Payment of dividends | ( | ) | ( | ) | ||||
| Purchase of treasury stock | - | ( | ) | |||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
(Continued)
| 6 |
LANDMARK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(Unaudited)
| Six months ended | ||||||||
| June 30, | ||||||||
| (Dollars in thousands) | 2025 | 2024 | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash payments for income taxes | $ | $ | - | |||||
| Cash paid for interest | ||||||||
| Cash paid for operating leases | ||||||||
See accompanying notes to consolidated financial statements.
| 7 |
LANDMARK BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Interim Financial Statements |
The unaudited consolidated financial statements of Landmark Bancorp, Inc. (the “Company”) and its wholly owned subsidiaries, Landmark National Bank (the “Bank”) and Landmark Risk Management Inc., have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and should be read in conjunction with the Company’s most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 25, 2025, containing the latest audited consolidated financial statements and notes thereto. The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but 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 six month interim period ended June 30, 2025 are not necessarily indicative of the results expected for the year ending December 31, 2025 or any other future time period. The Company has evaluated subsequent events for recognition and disclosure up to the date the financial statements were issued. Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
| 2. | Investments |
A summary of the Company’s investment securities classified as available-for-sale and held-to-maturity as of June 30, 2025 and December 31, 2024 is as follows:
Schedule of Available-for-sale and Held to Maturity Securities
| As of June 30, 2025 | ||||||||||||||||
| Gross | Gross | |||||||||||||||
| Amortized | unrealized | unrealized | Estimated | |||||||||||||
| (Dollars in thousands) | cost | gains | losses | fair value | ||||||||||||
| Available-for-sale: | ||||||||||||||||
| U. S. treasury securities | $ | $ | $ | ( | ) | $ | ||||||||||
| Municipal obligations, tax exempt | ( | ) | ||||||||||||||
| Municipal obligations, taxable | ( | ) | ||||||||||||||
| Agency mortgage-backed securities | ( | ) | ||||||||||||||
| Total available-for-sale | $ | $ | $ | ( | ) | $ | ||||||||||
| Held-to-maturity: | ||||||||||||||||
| Other | $ | $ | - | $ | ( | ) | $ | |||||||||
| Total held-to-maturity | $ | $ | - | $ | ( | ) | $ | |||||||||
| As of December 31, 2024 | ||||||||||||||||
| Gross | Gross | |||||||||||||||
| Amortized | unrealized | unrealized | Estimated | |||||||||||||
| cost | gains | losses | fair value | |||||||||||||
| Available-for-sale: | ||||||||||||||||
| U. S. treasury securities | $ | $ | $ | ( | ) | $ | ||||||||||
| Municipal obligations, tax exempt | ( | ) | ||||||||||||||
| Municipal obligations, taxable | ( | ) | ||||||||||||||
| Agency mortgage-backed securities | ( | ) | ||||||||||||||
| Total available-for-sale | $ | $ | $ | ( | ) | $ | ||||||||||
| Held-to-maturity: | ||||||||||||||||
| Other | $ | $ | - | $ | ( | ) | $ | |||||||||
| Total held-to-maturity | $ | $ | - | $ | ( | ) | $ | |||||||||
The
amortized cost of the above held-to-maturity investment securities has been further reduced by the allowance for credit losses of $
| 8 |
The tables above show that some of the securities in the Company’s available-for-sale and held-to-maturity investment portfolios had unrealized losses, or were temporarily impaired, as of both June 30, 2025 and December 31, 2024. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date.
The following table summarizes available-for-sale securities in an unrealized loss position for which an allowance for credit losses has not been recorded at June 30, 2025 and December 31, 2024 along with the length of time each category of securities has been in a continuous loss position:
Schedule of Available for Sale Securities Continuous Unrealized Loss Position Fair Value
| As of June 30, 2025 | ||||||||||||||||||||||||||||
| Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||||
| No. of | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||||
| (Dollars in thousands) | securities | value | losses | value | losses | value | losses | |||||||||||||||||||||
| Available-for-sale: | ||||||||||||||||||||||||||||
| U.S. treasury securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| Municipal obligations, tax exempt | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Municipal obligations, taxable | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Agency mortgage-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Total for available-for-sale | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||||
| Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||||
| No. of | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||||
| securities | value | losses | value | losses | value | losses | ||||||||||||||||||||||
| Available-for-sale: | ||||||||||||||||||||||||||||
| U.S. treasury securities | $ | $ | - | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||
| Municipal obligations, tax exempt | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Municipal obligations, taxable | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Agency mortgage-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Total for available-for-sale | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
The Company’s U.S. treasury portfolio consists of securities issued by the United States Department of the Treasury (“U.S. treasury”). The receipt of principal and interest on U.S. treasury securities is guaranteed by the full faith and credit of the U.S. government. Based on these factors, along with the Company’s intent to not sell the securities and its belief that it was more likely than not that the Company will not be required to sell the securities before recovery of its cost basis, the Company believed that the available-for-sale U.S. treasury securities identified in the table above were temporarily impaired as of June 30, 2025 and December 31, 2024.
The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. As of June 30, 2025, the Company did not intend to sell and it was more likely than not that the Company would not be required to sell its municipal obligations in an unrealized loss position until the recovery of its cost basis. 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 believed that the municipal obligations identified in the tables above were temporarily impaired as of June 30, 2025 and December 31, 2024.
The Company’s agency mortgage-backed securities portfolio consists of securities underwritten to the standards of and guaranteed by the government-sponsored agencies of Federal Home Loan Mortgage Corporation, Federal National Mortgage Association and the Government National Mortgage Association. The receipt of principal, at par, and interest on agency mortgage-backed securities is guaranteed by the respective government-sponsored agency guarantor, such that the Company believed that its agency mortgage-backed securities did 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 was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the agency mortgage-backed securities identified in the table above were temporarily impaired as of June 30, 2025 and December 31, 2024.
Management
determined that
| 9 |
The Company’s other investment securities portfolio consists of seven subordinated debentures issued by financial institutions. These investment securities were acquired in the Freedom Bank acquisition in 2022 and classified as held-to-maturity. The securities were issued in 2021 and 2022 with a 10 year maturity and a fixed rate for five years. The securities are callable after the end of the fixed rate term, beginning September 3, 2026. The following table provides information regarding the Company’s allowance for credit losses related to held-to-maturity investment securities for the period presented:
Schedule of Allowance for Credit Losses Related to Held-to-maturity Investment Securities
| Six months ended | ||||||||
| June 30, | ||||||||
| (Dollars in thousands) | 2025 | 2024 | ||||||
| Balance at January 1, | $ | $ | ||||||
| Balance | $ | $ | ||||||
| Provision for credit losses | - | - | ||||||
| Balance at June 30, | $ | $ | ||||||
| Balance | $ | $ | ||||||
The table below sets forth the amortized cost and fair value of investment securities at June 30, 2025. The table includes scheduled principal payments and estimated prepayments, based on observable market inputs, for agency mortgage-backed securities. Actual maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties.
Schedule of Investments Classified by Contractual Maturity Date
| Amortized | Estimated | |||||||
| (Dollars in thousands) | cost | fair value | ||||||
| Available-for-sale: | ||||||||
| Due in less than one year | $ | $ | ||||||
| Due after one year but within five years | ||||||||
| Due after five years but within ten years | ||||||||
| Due after ten years | ||||||||
| Total available-for-sale | $ | $ | ||||||
| Held-to-maturity: | ||||||||
| Due after one year but within five years | ||||||||
| Total held-to-maturity | $ | $ | ||||||
Sale proceeds and gross realized gains and losses on sales of available-for-sale securities were as follows for the three and six months ended June 30, 2025 and 2024:
Schedule of Realized Gain (loss)
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Sales proceeds | $ | - | $ | - | $ | $ | - | |||||||||
| Realized gains | $ | - | $ | - | $ | $ | - | |||||||||
| Realized losses | - | - | ( | ) | - | |||||||||||
| Net realized losses | $ | - | $ | - | $ | ( | ) | $ | - | |||||||
Securities
with carrying values of $
| 10 |
| 3. | Loans and Allowance for Credit Losses |
Loans consisted of the following as of the dates indicated below:
Schedule of Loans
| June 30, | December 31, | |||||||
| (Dollars in thousands) | 2025 | 2024 | ||||||
| One-to-four family residential real estate loans | $ | $ | ||||||
| Construction and land loans | ||||||||
| Commercial real estate loans | ||||||||
| Commercial loans | ||||||||
| Agriculture loans | ||||||||
| Municipal loans | ||||||||
| Consumer loans | ||||||||
| Total gross loans | ||||||||
| Net deferred loan fees and loans in process | ( | ) | ( | ) | ||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Loans, net | $ | $ | ||||||
The following tables provide information on the Company’s allowance for credit losses by loan class and allowance methodology for the three and six months ended June 30, 2025 and 2024:
Schedule of Allowance for Credit Losses on Financing Receivables
| Three months and six months ended June 30, 2025 | ||||||||||||||||||||||||||||||||
| (Dollars in thousands) | One-to- four family residential real estate loans | Construction and land loans | Commercial real estate loans | Commercial loans | Agriculture loans | Municipal loans | Consumer loans | Total | ||||||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||||||||
| Balance at April 1, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Charge-offs | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Recoveries | - | - | - | - | - | |||||||||||||||||||||||||||
| Provision for credit losses | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Charge-offs | - | - | - | ( | ) | - | - | ( | ) | ( | ) | |||||||||||||||||||||
| Recoveries | - | - | - | |||||||||||||||||||||||||||||
| Provision for credit losses | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| 11 |
| Three months and six months ended June 30, 2024 | ||||||||||||||||||||||||||||||||
| (Dollars in thousands) | One-to- four family residential real estate loans | Construction and land loans | Commercial real estate loans | Commercial loans | Agriculture loans | Municipal loans | Consumer loans | Total | ||||||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||||||||
| Balance at April 1, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Charge-offs | - | - | - | ( | ) | - | - | ( | ) | ( | ) | |||||||||||||||||||||
| Recoveries | - | - | - | |||||||||||||||||||||||||||||
| Provision for credit losses | ( | ) | ( | ) | ( | ) | ( | ) | - | - | ||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| (Dollars in thousands) | One-to- four family residential real estate loans | Construction and land loans | Commercial real estate loans | Commercial loans | Agriculture loans | Municipal loans | Consumer loans | Total | ||||||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||||||||
| Balance at January 1, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Charge-offs | - | - | - | ( | ) | - | - | ( | ) | ( | ) | |||||||||||||||||||||
| Recoveries | - | - | - | |||||||||||||||||||||||||||||
| Provision for credit losses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
The
Company recorded net loan charge-offs of $
| 12 |
The following table presents information regarding non-accrual and loans past due over 89 days and still accruing as of the dates indicated:
Schedule of Non-accrual and Loans Past Due Over 89 Days Still Accruing
Non-accrual with no allowance for credit loss | Non-accrual with allowance for credit losses | Loans past due over 89 days still accruing | ||||||||||
| As of June 30, 2025 | ||||||||||||
| (Dollars in thousands) | Non-accrual with no allowance for credit loss | Non-accrual with allowance for credit losses | Loans past due over 89 days still accruing | |||||||||
| One-to-four family residential real estate loans | $ | $ | - | $ | - | |||||||
| Commercial real estate loans | - | - | ||||||||||
| Commercial loans | - | |||||||||||
| Agriculture loans | - | |||||||||||
| Total loans | $ | $ | $ | - | ||||||||
Non-accrual with no allowance for credit loss | Non-accrual with allowance for credit losses | Loans past due over 89 days still accruing | ||||||||||
| As of December 31, 2024 | ||||||||||||
| (Dollars in thousands) | Non-accrual with no allowance for credit loss | Non-accrual with allowance for credit losses | Loans past due over 89 days still accruing | |||||||||
| One-to-four family residential real estate loans | $ | $ | - | $ | - | |||||||
| Commercial real estate loans | - | - | ||||||||||
| Commercial loans | - | |||||||||||
| Agriculture loans | - | - | ||||||||||
| Total loans | $ | $ | $ | - | ||||||||
The Company has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following table presents information regarding the amortized cost basis and collateral type of collateral-dependent loans as of the dates indicated:
Schedule of Amortized Cost Basis and Collateral Type
| As of June 30, 2025 | ||||||
| (Dollars in thousands) | Loan balance | Collateral Type | ||||
| One-to-four family residential real estate loans | $ | |||||
| Commercial real estate loans | ||||||
| Commercial loans | ||||||
| Agriculture loans | ||||||
| Total loans | $ | |||||
| 13 |
| As of December 31, 2024 | ||||||
| (Dollars in thousands) | Loan balance | Collateral Type | ||||
| One-to-four family residential real estate loans | $ | |||||
| Commercial real estate loans | ||||||
| Commercial loans | ||||||
| Agriculture loans | ||||||
| Total loans | $ | |||||
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 90 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 or more delinquent and accruing interest at either June 30, 2025 or December 31, 2024.
The following tables present information regarding the Company’s past due and non-accrual loans by loan class, as of the dates indicated:
Schedule of Past Due Financing Receivables
| 30-59 days delinquent and accruing | 60-89 days delinquent and accruing | 90 days or more delinquent and accruing | Total past due loans accruing | Non-accrual loans | Total past due and non-accrual loans | Total loans not past due | ||||||||||||||||||||||
| As of June 30, 2025 | ||||||||||||||||||||||||||||
| (Dollars in thousands) | 30-59 days delinquent and accruing | 60-89 days delinquent and accruing | 90 days or more delinquent and accruing | Total past due loans accruing | Non-accrual loans | Total past due and non- accrual loans | Total loans not past due | |||||||||||||||||||||
| One-to-four family residential real estate loans | $ | $ | $ | - | $ | $ | $ | $ | ||||||||||||||||||||
| Construction and land loans | - | - | - | - | - | - | ||||||||||||||||||||||
| Commercial real estate loans | - | |||||||||||||||||||||||||||
| Commercial loans | - | |||||||||||||||||||||||||||
| Agriculture loans | - | - | ||||||||||||||||||||||||||
| Municipal loans | - | - | - | - | - | - | ||||||||||||||||||||||
| Consumer loans | - | - | ||||||||||||||||||||||||||
| Total | $ | $ | $ | - | $ | $ | $ | $ | ||||||||||||||||||||
| Percent of gross loans | % | % | % | % | % | % | % | |||||||||||||||||||||
| 14 |
| As of December 31, 2024 | ||||||||||||||||||||||||||||
| (Dollars in thousands) | 30-59 days delinquent and accruing | 60-89 days delinquent and accruing | 90 days or more delinquent and accruing | Total past due loans accruing | Non-accrual loans | Total past due and non -accrual loans | Total loans not past due | |||||||||||||||||||||
| One-to-four family residential real estate loans | $ | $ | $ | - | $ | $ | $ | $ | ||||||||||||||||||||
| Construction and land loans | - | - | - | $ | ||||||||||||||||||||||||
| Commercial real estate loans | - | $ | ||||||||||||||||||||||||||
| Commercial loans | - | $ | ||||||||||||||||||||||||||
| Agriculture loans | - | - | $ | |||||||||||||||||||||||||
| Municipal loans | - | - | - | - | - | $ | - | |||||||||||||||||||||
| Consumer loans | - | - | $ | |||||||||||||||||||||||||
| Total | $ | $ | $ | - | $ | $ | $ | $ | ||||||||||||||||||||
| Percent of gross loans | % | % | % | % | % | % | % | |||||||||||||||||||||
Under
the original terms of the Company’s non-accrual loans, interest earned on such loans for the six months ended June 30, 2025 and
2024 would have increased interest income by $
The Company also categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. Nonclassified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those that are assigned a special mention, substandard or doubtful risk rating using the following definitions:
Special Mention: Loans are currently protected by the current net worth and paying capacity of the obligor or of the collateral pledged but such protection is potentially weak. These loans constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of substandard. The credit risk may be relatively minor, yet constitutes an unwarranted risk in light of the circumstances surrounding a specific asset.
Substandard: Loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged. Loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
Doubtful: Loans classified doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.
| 15 |
The following table presents information regarding the Company’s risk category of loans by type and year of origination, as of the dates indicated:
Schedule of Troubled Debt Restructurings on Financings Receivables and Year of Origination
| As of June 30, 2025 | ||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving loans amortized cost | Revolving loans converted to term | Total | |||||||||||||||||||||||||||
| One-to-four family residential real estate loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Classified | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Construction and land loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | - | $ | ||||||||||||||||||||||||||
| Classified | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | - | $ | ||||||||||||||||||||||||||
| Gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Commercial real estate loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Classified | - | - | - | - | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Classified | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Gross charge-offs | $ | - | $ | $ | - | $ | - | $ | $ | - | $ | - | $ | - | $ | |||||||||||||||||||||
| Agriculture loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Classified | - | - | ||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Municipal loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | - | $ | - | $ | - | $ | $ | $ | - | $ | $ | - | $ | ||||||||||||||||||||||
| Classified | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Total | $ | - | $ | - | $ | - | $ | $ | $ | - | $ | $ | - | $ | ||||||||||||||||||||||
| Gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Consumer loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Classified | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Gross charge-offs | $ | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | ||||||||||||||||||||
| Total loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Classified | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Gross charge-offs for the three months ended June 30, 2025 | $ | $ | $ | - | $ | - | $ | $ | - | $ | - | $ | - | $ | ||||||||||||||||||||||
| 16 |
| 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Revolving loans amortized cost | Revolving loans converted to term | Total | ||||||||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Revolving loans amortized cost | Revolving loans converted to term | Total | |||||||||||||||||||||||||||
| One-to-four family residential real estate loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Classified | $ | - | $ | - | $ | - | $ | - | $ | - | $ | $ | - | $ | - | $ | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Construction and land loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | - | $ | ||||||||||||||||||||||||||
| Classified | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | - | $ | ||||||||||||||||||||||||||
| Gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Commercial real estate loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Classified | $ | $ | - | $ | - | $ | $ | $ | $ | - | $ | - | $ | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Classified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Gross charge-offs | $ | - | $ | - | $ | $ | $ | $ | - | $ | - | $ | - | $ | ||||||||||||||||||||||
| Agriculture loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Classified | $ | $ | $ | $ | $ | $ | $ | $ | - | $ | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | $ | - | $ | - | $ | ||||||||||||||||||||
| Municipal loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | - | $ | $ | - | $ | - | $ | $ | - | $ | - | $ | ||||||||||||||||||||||
| Classified | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Total | $ | $ | - | $ | $ | - | $ | - | $ | $ | - | $ | - | $ | ||||||||||||||||||||||
| Gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Consumer loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Classified | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Gross charge-offs | $ | $ | $ | $ | - | $ | - | $ | $ | - | $ | $ | ||||||||||||||||||||||||
| Total loans | ||||||||||||||||||||||||||||||||||||
| Nonclassified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Classified | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Gross charge-offs for the year ended December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | - | $ | $ | ||||||||||||||||||||||||||
| Gross charge-offs | $ | $ | $ | $ | $ | $ | $ | - | $ | $ | ||||||||||||||||||||||||||
| 17 |
The following table provides information regarding the Company’s allowance for credit losses related to unfunded loan commitments for the periods indicated:
Schedule of Allowance for Credit Losses Related to Unfunded Loan Commitments
| (dollars in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (dollars in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Balance at beginning of period | $ | $ | ||||||||||||||
| Provision for credit losses | - | - | - | |||||||||||||
| Balance at end of period | $ | $ | $ | $ | ||||||||||||
The Company did not make any loan modifications to borrowers experiencing financial difficulty during the three months ended June 30, 2025. The Company made two loan modifications to a single borrower experiencing financial difficulty during the six months ended June 30, 2025. The Company did not make any loan modifications to borrowers experiencing financial difficulty during the three or six months ended June 30, 2024. The following table presents the amortized cost basis of loans at June 30, 2025 that were both experiencing financial difficulty and modified during the six months ended June 30, 2025 by class, type of modification and includes the financial effect of the modification.
Schedule of Troubled Debt Restructurings
| As of June 30, 2025 | ||||||||||
| (Dollars in thousands) | Amortized cost basis | % of loan class total | Financial effect | |||||||
| Term extension: | ||||||||||
| Commercial | $ | % | | |||||||
As of June 30, 2025, all loans both experiencing financial difficulty and modified during the six months ended June 30,2025 were current under the terms of the agreements.
| 4. | 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, 2024 concluded that its goodwill was not impaired. Based on that test and current conditions, as of June 30, 2025, the Company concluded it was more likely than not that its goodwill was not impaired.
Core deposit intangible assets are amortized over the estimated useful life of ten years on an accelerated basis. A summary of the other intangible assets that continue to be subject to amortization as of the dates indicated is presented in the following tables:
Schedule of Other Intangible Assets and Goodwill
| As of June 30, 2025 | ||||||||||||
| (Dollars in thousands) | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||
| Core deposit intangible assets | $ | $ | ( | ) | $ | |||||||
| As of December 31, 2024 | ||||||||||||
| (Dollars in thousands) | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||
| Core deposit intangible assets | $ | $ | ( | ) | $ | |||||||
| 18 |
The following table sets forth estimated amortization expense for core deposit intangible assets for the remainder of 2025 and in successive years ending December 31:
Schedule of Finite-lived Intangible Assets, Future Amortization Expense
| Amortization | ||||
| (Dollars in thousands) | expense | |||
| Remainder of 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
| 5. | Mortgage Loan Servicing |
Mortgage loans serviced for others are not reported as assets. The following table provides information on the principal balances of mortgage loans serviced for others, as of the dates indicated:
Schedule of Participating Mortgage Loans
| June 30, | December 31, | |||||||
| (Dollars in thousands) | 2025 | 2024 | ||||||
| FHLMC | $ | $ | ||||||
| FHLB | ||||||||
| Total | $ | $ | ||||||
Custodial
escrow balances maintained in connection with mortgage loans serviced for others were $
Mortgage servicing rights activity for the periods indicated was as follows for the periods indicated:
Schedule of Servicing Asset at Amortized Cost
| (Dollars in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Mortgage servicing rights: | ||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | ||||||||||||
| Additions | ||||||||||||||||
| Amortization | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Balance at end of period | $ | $ | $ | $ | ||||||||||||
The
fair value of mortgage servicing rights was $
The
Company had a mortgage repurchase reserve of $
| 19 |
| 6. | Earnings per Share |
Basic
earnings per share have been computed based upon the weighted average number of common shares outstanding during each period. Diluted
earnings per share included the effect of all potential common shares outstanding during each period. The diluted earnings per share
computation for both the three and six months ended June 30, 2025, included all unexercised stock options, as
Schedule of Shares Used in Calculation of Basic and Diluted Earnings Per Share
| (Dollars in thousands, except per share amounts) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (Dollars in thousands, except per share amounts) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Net earnings | $ | $ | $ | $ | ||||||||||||
| Weighted average common shares outstanding - basic (1) | ||||||||||||||||
| Assumed exercise of stock options (1) | ||||||||||||||||
| Weighted average common shares outstanding - diluted (1) | ||||||||||||||||
| Earnings per share (1): | ||||||||||||||||
| Basic (1) | $ | $ | $ | $ | ||||||||||||
| Diluted (1) | $ | $ | $ | $ | ||||||||||||
| (1) |
| 7. | Federal Home Loan Bank Borrowings and Other Borrowings |
The
Bank has a line of credit, renewable annually each September, with the Federal Home Loan Bank (“FHLB”) under which there
were $
Although
no loans are specifically pledged, the FHLB requires the Bank to maintain eligible collateral (qualifying loans and investment securities)
that has a lending value at least equal to its required collateral. At June 30, 2025 and December 31, 2024, there were blanket pledges
of loans and securities to the FHLB totaling $
At
June 30, 2025, the Bank had no borrowings through the Federal Reserve discount window, while its borrowing capacity with the Federal
Reserve was $
The
Company has a $
| 20 |
On
September 29, 2022, the Company borrowed $
| 8. | Repurchase Agreements |
The Company has overnight repurchase agreements with certain deposit customers whereby the Company uses investment securities as collateral for non-insured funds. These balances are accounted for as collateralized financing and included in other borrowings on the balance sheet.
Repurchase
agreements are comprised of non-insured customer funds, totaling $
The following is a summary of the balances and collateral of the Company’s repurchase agreements as of the dates indicated:
Schedule of Repurchase Agreements
| Continuous | Up to 30 days | 30-90 days | than 90 days | Total | ||||||||||||||||
| As of June 30, 2025 | ||||||||||||||||||||
| Overnight and | Greater | |||||||||||||||||||
| (dollars in thousands) | Continuous | Up to 30 days | 30-90 days | than 90 days | Total | |||||||||||||||
| Repurchase agreements: | ||||||||||||||||||||
| U.S. treasury securities | $ | $ | - | $ | - | $ | - | $ | ||||||||||||
| Total | $ | $ | - | $ | - | $ | - | $ | ||||||||||||
| Continuous | Up to 30 days | 30-90 days | than 90 days | Total | ||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||
| Overnight and | Up to | Greater | ||||||||||||||||||
| (dollars in thousands) | Continuous | 30 days | 30-90 days | than 90 days | Total | |||||||||||||||
| Repurchase agreements: | ||||||||||||||||||||
| U.S. treasury securities | $ | $ | - | $ | - | $ | - | $ | ||||||||||||
| Agency mortgage-backed securities | - | - | - | |||||||||||||||||
| Total | $ | $ | - | $ | - | $ | - | $ | ||||||||||||
The investment securities are held by a third party financial institution in the customer’s custodial account. The Company is required to maintain adequate collateral for each repurchase agreement. Changes in the fair value of the investment securities impact the amount of collateral required. If the Company were to default, the investment securities would be used to settle the repurchase agreement with the deposit customer.
| 9. | Revenue from Contracts with Customers |
All of the Company’s revenue from contracts with customers in the scope of ASC 606 is recognized within non-interest income. Items outside the scope of ASC 606 are noted as such.
| 21 |
A description of the Company’s revenue streams under ASC 606 follows for the periods indicated:
Schedule of Revenue from Contracts with Customers Within Non-interest Income
| (Dollars in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Service charges on deposit accounts | ||||||||||||||||
| Overdraft fees | $ | $ | $ | $ | ||||||||||||
| Other | ||||||||||||||||
| Interchange income | ||||||||||||||||
| Loan servicing fees (1) | ||||||||||||||||
| Office lease income (1) | ||||||||||||||||
| Gains on sales of loans (1) | ||||||||||||||||
| Bank owned life insurance income (1) | ||||||||||||||||
| Losses on sales of investment securities (1) | - | - | ( | ) | - | |||||||||||
| Losses on sales of real estate owned | - | - | - | ( | ) | |||||||||||
| Other | ||||||||||||||||
| Total non-interest income | $ | $ | $ | $ | ||||||||||||
| (1) |
Service Charges on Deposit Accounts
The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM usage fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period during which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.
Interchange Income
The Company earns interchange fees from debit cardholder transactions conducted through the interchange payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.
Gains (Losses) on Sales of Real Estate Owned
The Company records a gain or loss from the sale of real estate owned when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of real estate owned to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the real estate owned asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. There were no sales of real estate owned that were financed by the Company during the first six months of 2025 or 2024.
| 10. | Fair Value of Financial Instruments and Fair Value Measurements |
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
| 22 |
Fair value estimates of the Company’s financial instruments as of June 30, 2025 and December 31, 2024, including methods and assumptions utilized, are set forth below:
Schedule of Fair Value Estimates of Financial Instruments
| amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| As of June 30, 2025 | ||||||||||||||||||||
| Carrying | ||||||||||||||||||||
| amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| Financial assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | - | $ | - | $ | |||||||||||||
| Interest-bearing deposits at other banks | - | - | ||||||||||||||||||
| Investment securities available-for-sale | - | |||||||||||||||||||
| Investment securities held-to-maturity | - | - | ||||||||||||||||||
| Bank stocks, at cost | n/a | n/a | n/a | n/a | ||||||||||||||||
| Loans, net | - | - | ||||||||||||||||||
| Loans held for sale | - | - | ||||||||||||||||||
| Mortgage servicing rights | - | - | ||||||||||||||||||
| Accrued interest receivable | ||||||||||||||||||||
| Derivative financial instruments | - | - | ||||||||||||||||||
| Derivative assets | Derivative assets | Derivative assets | Derivative assets | Derivative assets | ||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||
| Non-maturity deposits | $ | ( | ) | $ | ( | ) | $ | - | $ | - | $ | ( | ) | |||||||
| Certificates of deposit | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||
| FHLB and other borrowings | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||
| Subordinated debentures | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||
| Repurchase agreements | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||
| Accrued interest payable | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||
| Derivative financial instruments | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||
| amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||
| Carrying | ||||||||||||||||||||
| amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| Financial assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | - | $ | - | $ | |||||||||||||
| Interest-bearing deposits at other banks | - | - | ||||||||||||||||||
| Investment securities available-for-sale | - | |||||||||||||||||||
| Investment securities held-to-maturity | - | - | ||||||||||||||||||
| Bank stocks, at cost | n/a | n/a | n/a | n/a | ||||||||||||||||
| Loans, net | - | - | ||||||||||||||||||
| Loans held for sale | - | - | ||||||||||||||||||
| Mortgage servicing rights | - | - | ||||||||||||||||||
| Accrued interest receivable | ||||||||||||||||||||
| Derivative financial instruments | - | - | ||||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||
| Non-maturity deposits | $ | ( | ) | $ | ( | ) | $ | - | $ | - | $ | ( | ) | |||||||
| Certificates of deposit | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||
| FHLB and other borrowings | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||
| Subordinated debentures | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||
| Repurchase agreements | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||
| Accrued interest payable | ( | ) | - | ( | ) | - | ( | ) | ||||||||||||
| 23 |
Transfers
The Company did not transfer any assets or liabilities among levels during the six months ended June 30, 2025 or during the year ended December 31, 2024.
Valuation Methods for Instruments Measured at Fair Value on a Recurring Basis
The following tables represent the Company’s financial instruments that are measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024, allocated to the appropriate fair value hierarchy:
Schedule of Fair Value Instruments Measured On Recurring Basis
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| As of June 30, 2025 | ||||||||||||||||
| Fair value hierarchy | ||||||||||||||||
| (Dollars in thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets: | ||||||||||||||||
| Available-for-sale investment securities: | ||||||||||||||||
| U. S. treasury securities | $ | $ | $ | - | $ | - | ||||||||||
| Municipal obligations, tax exempt | - | - | ||||||||||||||
| Municipal obligations, taxable | - | - | ||||||||||||||
| Agency mortgage-backed securities | - | - | ||||||||||||||
| Loans held for sale | - | - | ||||||||||||||
| Derivative financial instruments | - | - | ||||||||||||||
| Liability: | ||||||||||||||||
| Derivative financial instruments | ( | ) | - | ( | ) | - | ||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| As of December 31, 2024 | ||||||||||||||||
| Fair value hierarchy | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Available-for-sale investment securities: | ||||||||||||||||
| U. S. treasury securities | $ | $ | $ | - | $ | - | ||||||||||
| Municipal obligations, tax exempt | - | - | ||||||||||||||
| Municipal obligations, taxable | - | - | ||||||||||||||
| Agency mortgage-backed securities | - | - | ||||||||||||||
| Loans held for sale | - | - | ||||||||||||||
| Derivative financial instruments | - | - | ||||||||||||||
The Company’s investment securities classified as available-for-sale include U.S. treasury securities, municipal obligations, and agency mortgage-backed securities. Quoted exchange prices are available for the Company’s U.S. treasury securities, which are classified as Level 1. U.S. federal agency mortgage-backed securities 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. These measurements are classified as Level 2. Municipal obligations are valued using a type of matrix, or grid, pricing in which securities are benchmarked against U.S. treasury rates based on credit rating. These model and matrix measurements are classified as Level 2 in the fair value hierarchy.
Changes in the fair value of available-for-sale securities are included in other comprehensive income to the extent the changes are not considered to be credit related which would instead result in a credit loss reserve. The Company evaluates any potential credit losses on available-for-sale securities on a quarterly basis and credit losses identified on individual securities result in a write-down of the relevant security’s cost basis.
Mortgage loans originated and intended for sale in the secondary market are carried at fair value. The mortgage loan valuations are based on quoted secondary market prices for similar loans and are classified as Level 2. Changes in the fair value of mortgage loans originated and intended for sale in the secondary market and derivative financial instruments are included in gains on sales of loans.
| 24 |
The aggregate fair value, contractual balance (including accrued interest), and gains on loans held for sale as of June 30, 2025 and December 31, 2024 were as follows:
Schedule of Fair Value Contractual Balance and Gain Loss On Loans Held for Sale
| As of | As of | |||||||
| June 30, | December 31, | |||||||
| (Dollars in thousands) | 2025 | 2024 | ||||||
| Aggregate fair value | $ | $ | ||||||
| Contractual balance | ||||||||
| Gain | $ | $ | ||||||
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 accrued interest and other assets or accrued interest and other liabilities on the consolidated balance sheets and gains on sales of loans, net in the consolidated statements of earnings. The total amount of gains from changes in fair value of derivative financial instruments included in earnings for the periods indicated were as follows:
Schedule of Gains from Changes in Fair Value of Derivative Financial Instruments
| (Dollars in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Total change in fair value | $ | ( | ) | $ | $ | $ | ||||||||||
Valuation Methods for Instruments Measured at Fair Value on a Nonrecurring Basis
The
Company does not record its loan portfolio at fair value. Collateral-dependent loans are generally carried at the lower of cost or fair
value of the collateral, less estimated selling costs. Collateral values are determined based on appraisals performed by qualified licensed
appraisers hired by the Company and then further adjusted if warranted based on relevant facts and circumstances. The appraisals may
utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are
routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available.
Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Individually
evaluated loans are reviewed at least quarterly for additional allowance and adjusted accordingly, based on the same factors identified
above. The carrying value of the Company’s individually evaluated loans was $
Real estate held-for-sale includes premises and equipment that were previously used as a bank branch facility and is included in other assets on the balance sheet. Real estate held-for-sale 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. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Real estate held-for-sale is reviewed and evaluated at least annually for additional allowance and adjusted accordingly, based on the same factors identified above.
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. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Real estate owned is reviewed and evaluated at least annually for additional allowance and adjusted accordingly, based on the same factors identified above.
| 25 |
The following table presents quantitative information about Level 3 fair value measurements measured at fair value on a nonrecurring basis as of June 30, 2025 and December 31, 2024:
Schedule of Fair Value Measurements On Nonrecurring, Valuation Techniques
| (Dollars in thousands) | Fair value | Valuation technique | Unobservable inputs | Range | ||||||||
| As of June 30, 2025 | ||||||||||||
| Individual evaluated loans: | ||||||||||||
| Commercial | $ | |||||||||||
| As of December 31, 2024 | ||||||||||||
| Individual evaluated loans: | ||||||||||||
| Commercial | $ | |||||||||||
| 11. | Regulatory Capital Requirements |
Banks and bank holding companies, such as the Company, are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believed that as of June 30, 2025 and December 31, 2024, the Company and the Bank met all capital adequacy requirements to which they were subject at that time.
Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.
Banking
organizations are required to maintain minimum capital levels as follows: a ratio of common equity Tier 1 capital equal to
As of June 30, 2025 and December 31, 2024, the most recent regulatory notifications categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action then in effect. There are no conditions or events since that notification that management believes have changed the institution’s category.
Regulations
include a capital conservation buffer of
| 26 |
The following is a comparison of the Company’s regulatory capital ratios to minimum capital ratio requirements as of June 30, 2025 and December 31, 2024:
Schedule of Compliance with Regulatory Capital Requirements for Mortgage Companies
| For capital | ||||||||||||||||
| Actual | adequacy purposes | |||||||||||||||
| (Dollars in thousands) | Amount | Ratio | Amount | Ratio (1) | ||||||||||||
| As of June 30, 2025 | ||||||||||||||||
| Leverage | $ | % | $ | % | ||||||||||||
| Common Equity Tier 1 Capital | % | % | ||||||||||||||
| Tier 1 Capital | % | % | ||||||||||||||
| Total Risk Based Capital | % | % | ||||||||||||||
| As of December 31, 2024 | ||||||||||||||||
| Leverage | $ | % | $ | % | ||||||||||||
| Common Equity Tier 1 Capital | % | % | ||||||||||||||
| Tier 1 Capital | % | % | ||||||||||||||
| Total Risk Based Capital | % | % | ||||||||||||||
| (1) |
The following is a comparison of the Bank’s regulatory capital to minimum capital requirements as of June 30, 2025 and December 31, 2024:
Schedule of Compliance with Regulatory Capital Requirements Under Banking Regulations
| To be well-capitalized | ||||||||||||||||||||||||
| under prompt | ||||||||||||||||||||||||
| For capital | corrective | |||||||||||||||||||||||
| Actual | adequacy purposes | action provisions | ||||||||||||||||||||||
| (Dollars in thousands) | Amount | Ratio | Amount | Ratio (1) | Amount | Ratio | ||||||||||||||||||
| As of June 30, 2025 | ||||||||||||||||||||||||
| Leverage | $ | % | $ | % | $ | % | ||||||||||||||||||
| Common Equity Tier 1 Capital | % | % | % | |||||||||||||||||||||
| Tier 1 Capital | % | % | % | |||||||||||||||||||||
| Total Risk Based Capital | % | % | % | |||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||
| Leverage | $ | % | $ | % | $ | % | ||||||||||||||||||
| Common Equity Tier 1 Capital | % | % | % | |||||||||||||||||||||
| Tier 1 Capital | % | % | % | |||||||||||||||||||||
| Total Risk Based Capital | % | % | % | |||||||||||||||||||||
| (1) |
| 27 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview. Landmark Bancorp, Inc. is a financial 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, and in the insurance business through its wholly owned subsidiary, Landmark Risk Management, Inc. References to the “Company,” “we,” “us,” and “our” refer collectively to Landmark Bancorp, Inc., Landmark National Bank and Landmark Risk Management, Inc. The Company is listed on the Nasdaq Global Market under the symbol “LARK.” The Bank is dedicated to providing quality financial and banking services to its local communities. Our strategy includes continuing a tradition of holding and acquiring quality assets while growing our commercial, commercial real estate (“CRE”) and agriculture loan portfolios. We are committed to developing relationships with our borrowers and providing a total banking service.
The 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, CRE, commercial, agriculture, municipal and consumer loans. Although not our primary business function, we invest in certain investment and mortgage-related securities using deposits and other borrowings as funding sources.
Landmark Risk Management, Inc., which was formed and began operations in 2017, is a Nevada-based captive insurance company which provides property and casualty insurance coverage to the Company and the Bank for which insurance may not be currently available or economically feasible in the current insurance marketplace. Landmark Risk Management, Inc. is subject to the regulations of the State of Nevada and undergoes periodic examinations by the Nevada Division of Insurance.
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, gains from the sale of newly originated loans, gains or losses on investments and certain other non-interest related items. Our principal operating expenses, aside from interest expense, consist of compensation and employee benefits, occupancy costs, professional fees, data processing expenses and provision for credit 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 the interest rate pricing competition from other lending institutions.
Currently, our business consists of ownership of the Bank, with its main office in Manhattan, Kansas and twenty eight additional branch offices in central, eastern, southeast and southwest Kansas, one loan production office in Kansas City, Missouri and our ownership of Landmark Risk Management, Inc. On October 1, 2022, the Company completed its acquisition of Freedom Bancshares, Inc., the holding company of Freedom Bank. Freedom Bank was founded in 2006 and operated out of a single location in Overland Park, Kansas.
In July 2025, we declared our 96th consecutive quarterly dividend, and we currently have no plans to change our dividend strategy given our current capital and liquidity position. However, while we have achieved a strong capital base and expect to continue operating profitably, our future dividend practice is dependent upon the performance of the economy and the Company’s overall performance. In addition, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, we will not be permitted to make capital distributions (including for dividends and repurchases of stock) or pay discretionary bonuses to executive officers without restriction if we do not maintain 2.5% in Common Equity Tier 1 Capital attributable to a capital conservation buffer, a standard we exceeded at June 30, 2025.
| 28 |
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 credit losses and the accounting for business combinations, each of which involve significant judgment by our management. There have been no material changes to the critical accounting policies 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, 2024, filed with the Securities and Exchange Commission on March 25, 2025.
Summary of Results. During the second quarter of 2025, we recorded net earnings of $4.4 million, which was an increase of $1.4 million, or 46.2%, from net earnings of $3.0 million in the second quarter of 2024. During the first six months of 2025, we recorded net earnings of $9.1 million, which was an increase of $3.3 million, or 57.3%, from the $5.8 million in the first six months of 2024. The increase in net earnings during both periods in 2025 was primarily related to an increase in net interest income which was driven by growth in interest income on loans due to increased average loan balances and lower interest expense due to lower short-term interest rates.
The following table summarizes earnings and key performance measures as of or for the periods presented:
| As of or for the | As of or for the | |||||||||||||||
| three months ended June 30, | six months ended June 30, | |||||||||||||||
| (Dollars in thousands, except per share amounts) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Net earnings: | ||||||||||||||||
| Net earnings | $ | 4,404 | $ | 3,012 | $ | 9,105 | $ | 5,790 | ||||||||
| Basic earnings per share (1) | $ | 0.76 | $ | 0.52 | $ | 1.58 | $ | 1.01 | ||||||||
| Diluted earnings per share (1) | $ | 0.75 | $ | 0.52 | $ | 1.56 | $ | 1.01 | ||||||||
| Earnings ratios: | ||||||||||||||||
| Return on average assets (2) | 1.11 | % | 0.78 | % | 1.16 | % | 0.75 | % | ||||||||
| Return on average equity (2) | 12.25 | % | 9.72 | % | 12.96 | % | 9.30 | % | ||||||||
| Equity to total assets | 9.13 | % | 8.22 | % | 9.13 | % | 8.22 | % | ||||||||
| Net interest margin (2) (3) | 3.83 | % | 3.21 | % | 3.80 | % | 3.16 | % | ||||||||
| Dividend payout ratio | 28.00 | % | 38.18 | % | 26.92 | % | 39.62 | % | ||||||||
| (1) | Per share values for the periods ended June 30, 2024 have been adjusted to give effect to the 5% dividend paid during 2024. | ||
| (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 21% federal tax rate. |
Interest Income. Interest income of $20.1 million for the quarter ended June 30, 2025 represented an increase of $1.9 million, or 10.6%, compared to the same period of 2024. Interest income on loans increased $2.2 million, or 14.4%, to $17.2 million for the quarter ended June 30, 2025, compared to the same period of 2024 due to higher yields and average balances. Our yields on loans increased from 6.33% in the second quarter of 2024 to 6.37% in the second quarter of 2025. The increase in interest income on loans was also driven by an increase in average loan balances, which increased from $955.1 million in the second quarter of 2024 to $1.1 billion in the second quarter of 2025. Interest income on investment securities decreased $254,000, or 8.2%, to $2.9 million for the second quarter of 2025, as compared to $3.1 million in the same period of 2024. The decrease in interest income on investment securities was primarily the result of a decrease in the average balances of investment securities which decreased from $437.1 million in the second quarter of 2024 to $363.9 million in the second quarter of 2025. Partially offsetting the lower average balances was an increase in yields, which increased from 3.04% in the second quarter of 2024 to 3.34% in the second quarter of 2025.
Interest income of $39.4 million for the six months ended June 30, 2025 represented an increase of $3.5 million, or 9.8%, compared to the same period of 2024. Interest income on loans increased $4.1 million, or 13.8%, to $33.6 million for the six months ended June 30, 2025, compared to the same period of 2024 due to an increase in our average loan balances, which increased from $950.4 million during the first six months of 2024 to $1.1 billion during the first six months of 2025. Also contributing to higher interest income were higher yields on loans, which increased from 6.25% in the six months ended June 30, 2024 to 6.36% during the six months ended June 30, 2025. Interest income on investment securities decreased $547,000, or 8.7%, to $5.8 million for the first six months of 2025, as compared to $6.3 million in the same period of 2024. The decrease in interest income on investment securities was primarily the result of a decrease in the average balances of investment securities which decreased from $447.0 million in the first six months of 2024 to $370.5 million in the first six months of 2025. Partially offsetting the lower average balances was an increase in yields, which increased from 2.99% in the first six months of 2024 to 3.32% in the first six months of 2025.
| 29 |
Interest Expense. Interest expense during the quarter ended June 30, 2025 decreased $791,000 to $6.4 million, as compared to the same period of 2024. Interest expense on interest-bearing deposits decreased $529,000 to $5.1 million for the quarter ended June 30, 2025, as compared to the same period of 2024. Our total cost of interest-bearing deposits decreased from 2.44% in the second quarter of 2024 to 2.14% in the second quarter of 2025 as a result of lower rates on our deposits. Partially offsetting the lower rates was an increase in average interest-bearing deposit balances, which increased from $936.2 million in the second quarter of 2024 to $965.2 million in the second quarter of 2025. For the second quarter of 2025, interest expense on borrowings decreased $262,000 to $1.3 million, as compared to the same period of 2024 due to a decrease in our average borrowings and repurchase agreements which decreased $3.7 million from the second quarter of 2024 to the second quarter of 2025. Also contributing to lower interest expense was a decrease in rates, which decreased from 5.81% in the second quarter of 2024 to 4.98% in the same period of 2025.
Interest expense during the six months ended June 30, 2025 decreased $1.6 million to $12.6 million, as compared to the same period of 2024. Interest expense on interest-bearing deposits decreased $750,000 to $10.4 million for the six months ended June 30, 2025 compared to the same period of 2024. Our total cost of interest-bearing deposits decreased from 2.39% in the first six months of 2024 to 2.15% in the first six months of 2025 as a result of lower rates on our deposits. Partially offsetting the lower rates was an increase in average interest-bearing deposit balances, which increased from $935.8 million in the first six months of 2024 to $972.5 million in the first six months of 2025. For the first six months of 2025, interest expense on borrowings decreased $816,000 to $2.3 million, as compared to the same period of 2024 due to a decrease in our average borrowings and repurchase agreements which decreased $16.8 million from the first six months of 2024 to the first six months of 2025. Also contributing to lower interest expense was a decrease in rates, which decreased from 5.76% in the first six months of 2024 to 5.03% in the same period of 2025.
Net Interest Income. Net interest income increased $2.7 million, or 24.7%, to $13.7 million for the second quarter of 2025, as compared to the second quarter of 2024. The increase in net interest income was primarily a result of an increase in interest income on loans and lower interest expense. The accretion of purchase accounting adjustments increased net interest income by $274,000 in the second quarter of 2024 compared to an increase of $196,000 in the second quarter of 2025, and was primarily related to fair value adjustments on loans acquired in the Freedom Bank transaction. Compared to the same period last year, growth in average loans increased interest income while lower rates decreased interest expense. Net interest margin, on a tax-equivalent basis, was 3.21% in the second quarter of 2024, compared to 3.83% in the second quarter of 2025.
Net interest income increased $5.1 million, or 23.4%, to $26.8 million for the six months ended June 30, 2025, as compared to the same period of 2024. The increase in net interest income was primarily a result of an increase in interest income on loans and lower interest expense. The accretion of purchase accounting adjustments increased net interest income by $483,000 in the first six months of 2024 compared to an increase of $380,000 in the first six months of 2025, and was primarily related to fair value adjustments on loans acquired in the Freedom Bank transaction. Compared to the same period last year, growth in average loans increased interest income while lower rates decreased interest expense. Net interest margin, on a tax-equivalent basis, was 3.18% in the first six months of 2024, compared to 3.80% in the first six months of 2025.
| 30 |
Average Assets/Liabilities. The following table reflects the tax-equivalent yields earned on average interest-earning assets and costs of average interest-bearing liabilities (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:
| Three months ended | Three months ended | |||||||||||||||||||||||
| June 30, 2025 | June 30, 2024 | |||||||||||||||||||||||
| (Dollars in thousands) | Average balance | Income/ expense | Average yield/cost | Average balance | Income/ expense | Average yield/cost | ||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Interest-bearing deposits at banks | $ | 6,168 | $ | 48 | 3.12 | % | $ | 5,700 | $ | 40 | 2.82 | % | ||||||||||||
| Investment securities (1) | 363,878 | 3,029 | 3.34 | % | 437,136 | 3,307 | 3.04 | % | ||||||||||||||||
| Loans receivable, net (2) | 1,081,865 | 17,189 | 6.37 | % | 955,104 | 15,026 | 6.33 | % | ||||||||||||||||
| Total interest-earning assets | 1,451,911 | 20,266 | 5.60 | % | 1,397,940 | 18,373 | 5.29 | % | ||||||||||||||||
| Non-interest-earning assets | 141,028 | 147,876 | ||||||||||||||||||||||
| Total | $ | 1,592,939 | $ | 1,545,816 | ||||||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Money market and checking | $ | 611,109 | $ | 3,191 | 2.09 | % | $ | 585,300 | $ | 3,477 | 2.39 | % | ||||||||||||
| Savings accounts | 148,220 | 43 | 0.12 | % | 151,696 | 48 | 0.13 | % | ||||||||||||||||
| Certificates of deposit | 205,885 | 1,910 | 3.72 | % | 199,241 | 2,148 | 4.34 | % | ||||||||||||||||
| Total interest-bearing deposits | 965,214 | 5,144 | 2.14 | % | 936,237 | 5,673 | 2.44 | % | ||||||||||||||||
| FHLB advances and other borrowings | 74,007 | 861 | 4.67 | % | 72,875 | 1,027 | 5.67 | % | ||||||||||||||||
| Subordinated debentures | 21,651 | 358 | 6.63 | % | 21,651 | 418 | 7.76 | % | ||||||||||||||||
| Repurchase agreements | 6,683 | 52 | 3.12 | % | 11,524 | 88 | 3.06 | % | ||||||||||||||||
| Total borrowings | 102,341 | 1,271 | 4.98 | % | 106,050 | 1,533 | 5.81 | % | ||||||||||||||||
| Total interest-bearing liabilities | 1,067,555 | 6,415 | 2.41 | % | 1,042,287 | 7,206 | 2.78 | % | ||||||||||||||||
| Non-interest-bearing liabilities | 381,233 | 378,905 | ||||||||||||||||||||||
| Stockholders’ equity | 144,151 | 124,624 | ||||||||||||||||||||||
| Total | $ | 1,592,939 | $ | 1,545,816 | ||||||||||||||||||||
| Interest rate spread (3) | 3.19 | % | 2.51 | % | ||||||||||||||||||||
| Net interest margin (4) | $ | 13,851 | 3.83 | % | $ | 11,167 | 3.21 | % | ||||||||||||||||
| Tax-equivalent interest - imputed | 168 | 193 | ||||||||||||||||||||||
| Net interest income | $ | 13,683 | $ | 10,974 | ||||||||||||||||||||
| Ratio of average interest-earning assets to average interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
136.0 |
% |
|
|
|
|
|
|
|
|
|
|
134.1 |
% |
| (1) | Income on tax exempt securities is presented on a fully tax-equivalent basis, using a 21% 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 21% federal tax rate. | |
| (3) | Interest rate spread represents the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities. | |
| (4) | Net interest margin represents annualized, tax-equivalent net interest income divided by average interest-earning assets. |
| 31 |
| Six months ended | Six months ended | |||||||||||||||||||||||
| June 30, 2025 | June 30, 2024 | |||||||||||||||||||||||
| (Dollars in thousands) | Average balance | Income/ expense | Average yield/cost | Average balance | Income/ expense | Average yield/cost | ||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Interest-bearing deposits at banks | $ | 5,833 | $ | 96 | 3.32 | % | $ | 6,607 | $ | 103 | 3.14 | % | ||||||||||||
| Investment securities (1) | 370,823 | 6,096 | 3.32 | % | 447,034 | 6,657 | 2.99 | % | ||||||||||||||||
| Loans receivable, net (2) | 1,065,317 | 33,588 | 6.36 | % | 950,420 | 29,519 | 6.25 | % | ||||||||||||||||
| Total interest-earning assets | 1,441,973 | 39,780 | 5.56 | % | 1,404,061 | 36,279 | 5.20 | % | ||||||||||||||||
| Non-interest-earning assets | 141,696 | 146,678 | ||||||||||||||||||||||
| Total | $ | 1,583,669 | $ | 1,550,739 | ||||||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Money market and checking | $ | 620,598 | $ | 6,441 | 2.09 | % | $ | 590,372 | $ | 6,930 | 2.36 | % | ||||||||||||
| Savings accounts | 147,681 | 86 | 0.12 | % | 152,020 | 91 | 0.12 | % | ||||||||||||||||
| Certificates of deposit | 204,181 | 3,853 | 3.81 | % | 193,435 | 4,109 | 4.27 | % | ||||||||||||||||
| Total interest-bearing deposits | 972,460 | 10,380 | 2.15 | % | 935,827 | 11,130 | 2.39 | % | ||||||||||||||||
| FHLB advances and other borrowings | 61,288 | 1,426 | 4.69 | % | 72,747 | 2,049 | 5.66 | % | ||||||||||||||||
| Subordinated debentures | 21,651 | 715 | 6.66 | % | 21,651 | 830 | 7.71 | % | ||||||||||||||||
| Repurchase agreements | 7,653 | 117 | 3.08 | % | 12,947 | 195 | 3.03 | % | ||||||||||||||||
| Total borrowings | 90,592 | 2,258 | 5.03 | % | 107,345 | 3,074 | 5.76 | % | ||||||||||||||||
| Total interest-bearing liabilities | 1,063,052 | 12,638 | 2.40 | % | 1,043,172 | 14,204 | 2.74 | % | ||||||||||||||||
| Non-interest-bearing liabilities | 378,994 | 382,332 | ||||||||||||||||||||||
| Stockholders’ equity | 141,623 | 125,235 | ||||||||||||||||||||||
| Total | $ | 1,583,669 | $ | 1,550,739 | ||||||||||||||||||||
| Interest rate spread (3) | 3.16 | % | 2.46 | % | ||||||||||||||||||||
| Net interest margin (4) | $ | 27,142 | 3.80 | % | $ | 22,075 | 3.16 | % | ||||||||||||||||
| Tax-equivalent interest - imputed | 340 | 354 | ||||||||||||||||||||||
| Net interest income | $ | 26,802 | $ | 21,721 | ||||||||||||||||||||
| Ratio of average interest-earning assets | ||||||||||||||||||||||||
| to average interest-bearing liabilities | 135.6 | % | 134.6 | % | ||||||||||||||||||||
| (1) | Income on tax exempt securities is presented on a fully tax-equivalent basis, using a 21% 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 21% federal tax rate. | |
| (3) | Interest rate spread represents the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities. | |
| (4) | Net interest margin represents annualized, tax-equivalent net interest income divided by average interest-earning assets. |
| 32 |
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 the 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 (i) and (ii)). 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 June 30, | Six months ended June 30, | |||||||||||||||||||||||
| 2025 vs 2024 | 2025 vs 2024 | |||||||||||||||||||||||
| 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 | $ | 3 | $ | 5 | $ | 8 | $ | (14 | ) | $ | 7 | $ | (7 | ) | ||||||||||
| Investment securities | (677 | ) | 399 | (278 | ) | (1,591 | ) | 1,030 | (561 | ) | ||||||||||||||
| Loans | 2,065 | 98 | 2,163 | 3,552 | 517 | 4,069 | ||||||||||||||||||
| Total | 1,391 | 502 | 1,893 | 1,947 | 1,554 | 3,501 | ||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||
| Deposits | 178 | (707 | ) | (529 | ) | 479 | (1,229 | ) | (750 | ) | ||||||||||||||
| FHLB advances and other borrowings | 16 | (182 | ) | (166 | ) | (298 | ) | (325 | ) | (623 | ) | |||||||||||||
| Subordinated debentures and other borrowings | - | (60 | ) | (60 | ) | - | (115 | ) | (115 | ) | ||||||||||||||
| Repurchase agreements | (38 | ) | 2 | (36 | ) | (81 | ) | 3 | (78 | ) | ||||||||||||||
| Total | 156 | (947 | ) | (791 | ) | 100 | (1,666 | ) | (1,566 | ) | ||||||||||||||
| Net interest margin | $ | 1,235 | $ | 1,449 | $ | 2,684 | $ | 1,847 | $ | 3,220 | $ | 5,067 | ||||||||||||
Provision for Credit Losses. During the second quarter of 2025, a $1.0 million provision for credit losses on loans was recorded, compared to no provision for credit losses recorded in the same period of 2024. The provision for credit losses on loans recorded in the second quarter of 2025 was primarily due to growth in loans and higher reserves against individually evaluated loans on non-accrual. We recorded net loan charge-offs of $40,000 during the second quarter of 2025, compared to net loan recoveries of $52,000 during the second quarter of 2024.
During the first six months of 2025, we recorded a $1.0 million provision for credit losses on loans compared to a $300,000 provision for credit losses in the first six months of 2024. The provision for credit losses during the first six months of 2024 consisted of a $250,000 provision to allowance for credit losses on loans and a $50,000 provision to the allowance for unfunded loan commitments, both recorded in the first quarter of 2024. We recorded net loan charge-offs of $63,000 during the first six months of 2025 compared to net loan recoveries of $45,000 during the first six months of 2024.
For further discussion of the allowance for credit losses, refer to the “Asset Quality and Distribution” section below.
Non-interest Income. Total non-interest income was $3.6 million in the second quarter of 2025, a decrease of $94,000, or 2.5%, from the same period in 2024. The decrease in non-interest income during the second quarter of 2025 compared to the same period in the prior year was primarily due to a decrease in fees and service charges of $215,000 primarily due to lower fees related to deposit accounts. Partially offsetting the decrease in fees and service charges was increases of $92,000 in gain on sales of one-to-four family residential real estate loans and $30,000 in bank owned life insurance income.
Total non-interest income was $7.0 million in the first half of 2025, a decrease of $136,000, or 1.9%, from the same period in 2024. The decrease in non-interest income during the first six month of 2025 compared to the same period in the prior year was primarily due to a decrease in fees and service charges of $288,000 primarily due to lower fees related to deposit accounts. Partially offsetting the decrease in fees and service charges was increases of $142,000 in gain on sales of one-to-four family residential real estate loans and $57,000 in bank owned life insurance income.
Non-interest Expense. Non-interest expense totaled $11.0 million for the second quarter of 2025, a decrease of $134,000, or 1.2%, over the same quarter of 2024. The decrease in non-interest expense in the second quarter of 2025 compared to the same period last year was mainly due a $979,000 valuation allowance recorded against real estate held for sale in the second quarter of 2024. Partially offsetting that decrease was increases of $730,000 in compensation and benefits, $155,000 in other non-interest expense and $137,000 in data processing. The increase in compensation and benefits was due to additional staffing and higher benefit costs. Other non-interest expense increased primarily due to higher losses at our captive insurance subsidiary while data processing increased due to the implementation of additional services added and account growth.
| 33 |
Non-interest expense totaled $21.7 million for the first six months of 2025, an increase of $76,000, or 0.4%, over the same period of 2024. The increase in non-interest expense in the first six months of 2025 compared to the same period in the prior year was mainly due to an increase of $1.4 million in compensation and benefits due to additional staffing and higher benefit costs. Partially offsetting that increase was a $1.1 million valuation allowance recorded against real estate held for sale in the first six months of 2024.
Income Tax Expense. During the second quarter of 2025, we recorded income tax expense of $944,000, compared to income tax expense of $587,000 during the same period of 2024. Our effective tax rate increased from 16.3% in the second quarter of 2024 to 17.7% in the second quarter of 2025. The increase in the effective tax rate was due to higher earnings before taxes while tax exempt income was consistent.
During the first six months of 2025, we recorded income tax expense of $2.0 million, compared to income tax expense of $1.1 million during the same period of 2024. Our effective tax rate increased from 16.0% in the first six months of 2024 to 17.7% in the first six months of 2025. The increase in the effective tax rate was due to higher earnings before taxes while tax exempt income was consistent.
Financial Condition. Economic conditions in the United States remained sluggish during the first six months of 2025 as elevated inflation levels and high interest rates continued to impact the economy. Although interest rates decreased slightly in the second half of 2024, sustained high interest rates have impacted financial institutions generally, resulting in continued higher costs of funding and lower fair values for investment securities. We maintain strong capital and liquidity, and a stable, conservative deposit portfolio with a significant majority of our deposits being retail-based and insured by the Federal Deposit Insurance Corporation (“FDIC”) insured. We spend significant time each month monitoring our interest rate and concentration risks through our asset/liability management and lending strategies that involve a relationship-based banking model offering stability and consistency. The State of Kansas and the geographic markets in which the Company operates have also been impacted by economic headwinds. Supply chain constraints, labor shortages and geopolitical events have contributed to the rising inflation levels which are impacting all areas of the economy both nationally and locally. The Company’s allowance for credit losses continues to factor in estimates of the economic impact of these conditions and other qualitative factors on our loan portfolio. However, our loan portfolio is diversified across various types of loans and collateral throughout the markets in which we operate. Aside from a few problem loans that management is working to resolve, our asset quality has remained strong over the past few years. While further increases in problem assets may arise, management believes 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 one-to-four family residential real estate, construction and land, CRE, commercial, agriculture, municipal and consumer loans and the purchase of investment securities. Total assets were $1.6 billion at both December 31, 2024 and June 30, 2025.
The allowance for credit losses is established through a provision for credit losses based on our economic projections. At June 30, 2025, our allowance for credit losses on loans totaled $13.8 million, or 1.23% of gross loans outstanding, compared to $12.8 million, or 1.22% of gross loans outstanding, at December 31, 2024. The increase in our allowance for credit losses on loans as a percentage of gross loans outstanding was primarily due to loan growth and higher reserves against individually evaluated loans on non-accrual. The balance of our allowance for credit losses reflects current and projected economic conditions and other qualitative factors.
As of June 30, 2025 and December 31, 2024, approximately $35.0 million and $26.1 million, respectively, of loans were considered classified and assigned a risk rating of special mention, substandard or doubtful. These ratings indicate that these loans were identified as potential problem loans having more than normal risk and raised doubts as to the ability of the borrowers to comply with present loan repayment terms. Even though borrowers were experiencing moderate cash flow problems as well as some deterioration in collateral value, management believed the allowance for credit losses was sufficient to cover expected losses related to such loans at June 30, 2025 and December 31, 2024, respectively.
Loans past due 30-89 days and still accruing interest totaled $4.3 million, or 0.39% of gross loans, at June 30, 2025, compared to $6.2 million, or 0.59% of gross loans, at December 31, 2024. The increase in such past due loans was primarily related to loans in our commercial and CRE portfolios. At June 30, 2025, $17.0 million in loans were on non-accrual status, or 1.52% of gross loans, compared to $13.1 million, or 1.25% of gross loans, at December 31, 2024. Non-accrual loans consist of loans 90 or more days past due and certain individually evaluated loans. There were no loans 90 days delinquent and accruing interest at either June 30, 2025 or December 31, 2024.
| 34 |
As part of our credit risk management strategy, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis on CRE and commercial loan relationships. We are working to resolve the remaining problem credits or move the non-performing credits out of the loan portfolio. At both June 30, 2025 and December 31, 2024, we had $167,000 of real estate owned. As of June 30, 2025, real estate owned consisted of a single parcel of undeveloped land. The Company is currently marketing the property.
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 decrease of $54.9 million, or 4.1% in total deposits during the first six months of 2025, to $1.3 billion at June 30, 2025. The decrease in deposits was primarily due to a seasonal decline in our deposit accounts due to public funds and a decline in brokered deposits on the last day of the second quarter.
Non-interest-bearing deposits at June 30, 2025 were $352.0 million, or 27.6% of deposits, compared to $351.6 million, or 26.5% of deposits, at December 31, 2024. Money market and checking deposit accounts were 44.2% of our deposit portfolio and totaled $562.9 million at June 30, 2025, compared to $637.0 million, or 47.9% of deposits, at December 31, 2024. The decrease in money market and checking deposit accounts included a decline of $39.4 million in brokered deposits from $39.5 million at December 31, 2024 to a balance of $95,000 at June 30, 2025. Savings accounts increased to $148.1 million, or 11.6% of deposits, at June 30, 2025, from $145.5 million, or 11.0% of deposits, at December 31, 2024. Certificates of deposit totaled $210.9 million, or 16.6% of deposits, at June 30, 2025, compared to $194.7 million, or 14.7% of deposits, at December 31, 2024. The increase in certificates of deposit was primarily related to higher brokered certificates of deposits, which increased from $41.0 million at December 31, 2024 to $53.4 million at June 30, 2025.
Overdraft deposits consist of non-interest-bearing deposits, money market and checking deposit accounts with negative balances. These overdraft balances totaled $279,000 as of June 30, 2025 and $316,000 as of December 31, 2024 and were presented as loans on the balance sheet.
Total deposits include estimated uninsured deposits of $418.2 million and $444.1 million as of June 30, 2025 and December 31, 2024, respectively. This represented approximately 32.8% of our total deposits at June 30, 2025 and 33.4% of our deposits at December 31, 2024. Approximately 94.9% of the Company’s total deposits were considered core deposits at June 30, 2025. These deposit balances are from retail, commercial and public fund customers located in the markets where the Company has bank branch locations.
Certificates of deposit at June 30, 2025 scheduled to mature in one year or less totaled $194.0 million. Historically, maturing deposits have generally remained with the Bank, and we believe that a significant portion of the deposits maturing in one year or less will remain with us upon maturity in some type of deposit account.
Total borrowings increased $94.1 million to $182.6 million at June 30, 2025, from $88.5 million at December 31, 2024. The increase in total borrowings was primarily due to an increase in FHLB line of credit borrowings.
Cash Flows. During the six months ended June 30, 2025, our cash and cash equivalents increased by $4.8 million. Our operating activities provided net cash of $8.5 million during the first six months of 2025 primarily as a result of net earnings. Our investing activities used net cash of $40.5 million during the first six months of 2025, primarily due to loan growth which was partially offset by maturities of investment securities. Financing activities provided net cash of $36.8 million during the first six months of 2025, primarily as a result of an increase in borrowings which was partially offset by a decrease in deposit balances.
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 year. These liquid assets totaled $380.9 million at June 30, 2025 and $396.9 million at December 31, 2024. During periods in which we are not able to originate a sufficient amount of loans and/or periods of high principal prepayments, we generally increase our liquid assets by investing in short-term, high-grade investments or holding higher balances of cash and cash equivalents.
| 35 |
Liquidity management is both a daily and long-term function of our strategy. Excess funds are generally invested in short-term investments. Excess funds are typically generated as a result of increased deposit balances, while uses of excess funds are generally deposit withdrawals and loan advances. 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 pledging or sales of investment securities. While the sale of available-for-sale investment securities would result in losses due to the current interest environment, pledging these securities as collateral would not result in a loss. At June 30, 2025, we had $151.6 million borrowed on our line of credit with the FHLB. At June 30, 2025, we had collateral pledged to the FHLB that would allow us to borrow $304.5 million, subject to FHLB credit requirements and policies. At June 30, 2025, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the Federal Reserve was $44.5 million. We also have various other federal funds agreements, both secured and unsecured, with correspondent banks totaling approximately $30.0 million in available credit under which we had no outstanding borrowings at June 30, 2025. At June 30, 2025, we had subordinated debentures totaling $21.7 million and $5.8 million of repurchase agreements. At June 30, 2025, the Company had no borrowings against a $5.0 million line of credit from an unrelated financial institution maturing on November 1, 2025, with an interest rate that adjusts daily based on the prime rate less 0.50%. This line of credit has covenants specific to capital and other financial ratios, which the Company was in compliance with at June 30, 2025. The Company also has outstanding borrowings of $3.5 million from the same unrelated financial institution at a fixed rate of 6.15%. This borrowing matures on September 1, 2027 and requires quarterly principal and interest payments. The original $10.0 million of borrowings was used to fund part of the acquisition of Freedom Bancshares, Inc.
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 CRE, 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 June 30, 2025.
At June 30, 2025, we had outstanding loan commitments, excluding standby letters of credit, of $202 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. The Company and the Bank are subject to various regulatory capital requirements administered by federal banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s business. Banking organizations are required to maintain minimum capital levels as follows: a ratio of common equity Tier 1 capital equal to 4.5% of risk-weighted assets, a ratio of Tier 1 capital equal to 6.0% of risk-weighted assets, a ratio of total capital equal to 8.0% of risk-weighted assets, and a leverage ratio of Tier 1 capital to total quarterly average assets equal to 4.0% in all circumstances. Regulations also include a capital conservation buffer of 2.5% that is added to these minimum requirements for capital adequacy purposes. A banking organization with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including the amount of dividends that it may pay without prior regulatory approval, stock repurchases and certain discretionary bonus payments to executive officers. Management believes that the Company and the Bank met all capital adequacy requirements to which they were subject as of June 30, 2025 and December 31, 2024, as discussed in more detail in Note 11 of the Consolidated Financial Statements.
Dividends. During the quarter ended June 30, 2025, we paid a quarterly cash dividend of $0.21 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 discussed above, banking organizations must maintain a capital conservation buffer of 2.5% that is added to certain regulatory minimum requirements for capital adequacy purposes in order to pay dividends and make other capital distributions. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of June 30, 2025. The National Bank Act also 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 net earnings plus the adjusted retained earnings for the three preceding years. As of June 30, 2025, approximately $16.2 million was available to be paid as dividends to the Company by the Bank without prior regulatory approval.
Additionally, our ability to pay dividends is limited by the subordinated debentures that are held by three 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.
| 36 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk is defined as the exposure of net interest income and fair value of financial instruments (interest-earning assets, deposits and borrowings) to movements in interest rates. Our results of operations depend to a large degree on our net interest income and ability to manage interest rate risk. Major sources of interest rate risk include timing differences in the maturity and re-pricing characteristics of assets and liabilities, changes in the shape of the yield curve, changes in customer behavior and changes in relationships between rate indices (basis risk). Our management measures these risks and their impacts in several ways, including through the use of income simulations and valuation analyses. Multiple interest rate scenarios are used in this analysis which include changes in interest rates, spread narrowing and widening, yield curve twists and changes in assumptions about customer behavior in various interest rate scenarios. A mismatch between maturities, interest rate sensitivities and prepayment characteristics of assets and liabilities results in interest-rate risk. Like most financial institutions, we have material interest-rate risk exposure to changes in both short-term and long-term interest rates, as well as variable interest rate indices. Interest rates in the financial markets affect our decisions relating to pricing our assets and liabilities, which impact 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 analyses. 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 interest rates as of the forecast date, and forecasting volumes for the twelve-month projection. This position is then subjected to a shift in interest rates of 100, 200 and 300 basis points with an impact to our net interest income on a one-year horizon as follows:
| As of June 30, 2025 | As of December 31, 2024 | |||||||||||||||
| Scenario | Dollar change in net interest income ($000’s) | Percent change in net interest income | Dollar change in net interest income ($000’s) | Percent change in net interest income | ||||||||||||
| 300 basis point rising | $ | (6,204 | ) | (11.8 | )% | $ | (6,831 | ) | (13.8 | )% | ||||||
| 200 basis point rising | $ | (4,190 | ) | (7.9 | )% | $ | (4,629 | ) | (9.4 | )% | ||||||
| 100 basis point rising | $ | (2,174 | ) | (4.1 | )% | $ | (2,434 | ) | (4.9 | )% | ||||||
| 100 basis point falling | $ | 38 | 0.1 | % | $ | 282 | 0.6 | % | ||||||||
| 200 basis point falling | $ | (1,007 | ) | (1.9 | )% | $ | (588 | ) | (1.2 | )% | ||||||
| 300 basis point falling | $ | (1,410 | ) | (2.7 | ) | $ | (1,774 | ) | (3.6 | )% | ||||||
The results of this simulation analysis are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted. For example, if the timing and magnitude of interest rate changes differ from those projected, net interest income might vary significantly. Non-parallel yield curve shifts such as a flattening or steepening of the yield curve or changes in interest rate spreads would also cause net interest income to be different from that depicted. An increasing interest rate environment could reduce projected net interest income if deposits and other short-term liabilities re-price faster than expected or re-price faster than the Company’s assets. Actual results could differ from those projected if the Company grows assets and liabilities faster or slower than estimated, if the Company experienced a net outflow of deposit liabilities, or if the mix of assets and liabilities otherwise changes. Actual results could also differ from those projected if the Company experienced substantially different repayment speeds in the loan portfolio than those assumed in the simulation model. Finally, these simulation results do not contemplate all the actions that the Company may undertake in response to potential or actual changes in interest rates, such as changes to the Company’s loan, investment, deposit, or funding strategies.
| 37 |
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, including the negatives of such 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 of us and our subsidiaries include, but are not limited to, the following:
| ● | The strength of the local, state, national and international economies, and financial markets, including the effects of inflationary pressures and future monetary policies of the Federal Reserve in response thereto; | |
| ● | Effects on the U.S. economy resulting from the threat or implementation of new, or changes to, existing policies, regulations, regulatory and other governmental agencies and executive orders, including tariffs, immigration policy, regulatory and other governmental agencies, DEI and ESG initiatives, consumer protection, foreign policy and tax regulations; | |
| ● | Changes in interest rates and prepayment rates of our assets; | |
| ● | Increased competition in the financial services sector and the inability to attract new customers, including from non-bank competitors such as credit unions and fintech companies; | |
| ● | Timely development and acceptance of new products and services; | |
| ● | Rapid and expensive technological changes implemented by us and other parties in the financial services industry, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequence to us and our customers, including the development and implementation of tools incorporating artificial intelligence; | |
| ● | Our risk management framework; | |
| ● | Interruptions in information technology and telecommunications systems and third-party services; | |
| ● | The economic effects of severe weather, natural disasters, widespread disease or pandemics, or other external events; | |
| ● | The loss of key executives or employees; | |
| ● | Changes in consumer spending; | |
| ● | Integration of acquired businesses; | |
| ● | The commencement, cost and outcome of litigation and other legal proceedings and regulatory actions against us or to which we may become subject; | |
| ● | Changes in accounting policies and practices, such as the implementation of the current expected credit losses accounting standard; | |
| ● | The economic impact of past and any future terrorist attacks, acts of war, including ongoing conflicts in the Middle East and the Russian invasion of Ukraine, or threats thereof, and the response of the United States to any such threats and attacks; | |
| ● | The ability to manage credit risk, forecast loan losses and maintain an adequate allowance for loan losses; | |
| ● | Fluctuations in the value of securities held in our securities portfolio; | |
| ● | Concentrations within our loan portfolio and large loans to certain borrowers (including CRE loans); | |
| ● | The concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; | |
| ● | The level of non-performing assets on our balance sheets; | |
| ● | The ability to raise additional capital; | |
| ● | The occurrence of fraudulent activity, breaches or failures of our or our third party vendors’ information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools or as a result of insider fraud; | |
| ● | Declines in real estate values; | |
| ● | The effects of fraud on the part of our employees, customers, vendors or counterparties; and | |
| ● | Our success at managing and responding to the risks involved in the foregoing items. |
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 Annual Report on Form 10-K for the year ended December 31, 2024 filed on March 25, 2025.
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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 Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2025. 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 June 30, 2025 to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2025 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
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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 or which any of their property is subject, other than ordinary routine litigation incidental to their respective businesses.
ITEM 1A. RISK FACTORS
There have been no material changes in the risk factors set forth under Part I, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information about purchases by the Company during the quarter ended June 30, 2025 of the Company’s equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act:
| Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans | Maximum number of shares that may yet be purchased under the plans | ||||||||||||
| April 1-30, 2025 | - | $ | - | - | 157,456 | |||||||||||
| May 1-31, 2025 | - | - | - | 157,456 | ||||||||||||
| June 1-30, 2025 | - | - | - | 157,456 | ||||||||||||
| Total | - | $ | - | - | 157,456 | |||||||||||
| (1) | In March 2020, our Board of Directors approved a stock repurchase plan, permitting us to repurchase up to 225,890 shares (“March 2020 Repurchase Program”). As of June 30, 2025, there were 157,456 shares remaining available for repurchase under the March 2020 Repurchase Program. The March 2020 Repurchase Program does not obligate the Company to repurchase any shares of its common stock, and other than repurchases that have been completed to date, there is no assurance that the Company will do so or that the Company will repurchase shares at favorable prices. Unless terminated earlier by resolution of the Board of Directors, the March 2020 Repurchase Program will expire when we have repurchased all shares authorized for repurchase thereunder. The March 2020 Repurchase Program may be suspended or terminated at any time and, even if fully implemented, the March 2020 Repurchase Program may not enhance long-term stockholder value. |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During
the quarter ended June 30, 2025, none of the Company’s directors or executive officers
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ITEM 6. EXHIBITS
| Exhibit 3.1 | Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s transition report on Form 10-K filed with the SEC on March 29, 2002 (SEC file no. 000-33203)) | ||
| Exhibit 3.2 | Certificate of Amendment of the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.2 to the Company’s report on Form 10-K filed with the SEC on March 29, 2013 (SEC file no. 000-33203)) | ||
| Exhibit 3.3 | Bylaws (incorporated by reference to Exhibit 3.3 to the Company’s Form S-4 filed with the SEC on June 7, 2001 (SEC file no. 333-62466)) | ||
| 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 formatted in Inline XBRL: (i) Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024; (ii) Consolidated Statements of Earnings for three and six months ended June 30, 2025 and June 30, 2024; (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and June 30, 2024; (iv) Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2025 and June 30, 2024; (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and June 30 2024; and (vi) Notes to Consolidated Financial Statements | ||
| Exhibit 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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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: August 13, 2025 | /s/ Abigail M. Wendel |
| Abigail M. Wendel | |
| President and Chief Executive Officer | |
| (Principal Executive Officer) |
| Date: August 13, 2025 | /s/ Mark A. Herpich |
| Mark A. Herpich | |
| Vice President, Secretary, Treasurer | |
| and Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
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FAQ
What were Landmark Bancorp (LARK) net earnings for Q2 2025?
How did Landmark's net interest income and loan income perform in Q2 2025?
What is the size of Landmark's loan portfolio and deposits as of June 30, 2025?
Did Landmark record provisions for credit losses in Q2 2025?
What is Landmark's regulatory capital position?
