Landmark Bancorp, Inc. (NASDAQ:LARK) is a financial holding company that operates through its wholly-owned subsidiary, Landmark National Bank. The company has a long history of serving the local communities in Kansas, providing a range of banking and financial services to its customers. With a focus on relationship-based banking, Landmark has built a stable and conservative deposit portfolio, positioning itself well to navigate the current economic landscape.
Financials
In the fiscal year 2023, Landmark reported annual net income of $12,236,000, annual revenue of $64,683,000, annual operating cash flow of $9,124,000, and annual free cash flow of $8,032,000. The company's consistent financial performance is a testament to its prudent risk management and disciplined approach to growth.
During the first quarter of 2024, Landmark reported net earnings of $2,778,000, a decrease of 17.3% from the $3,357,000 recorded in the same period of 2023. This decline was primarily due to an increase in interest expense as the cost of the company's interest-bearing liabilities increased faster than the yield on its interest-earning assets. The company's net interest margin, on a tax-equivalent basis, decreased from 3.31% in the first quarter of 2023 to 3.12% in the same period of 2024.
Loan Growth and Credit Quality
Despite the pressure on the net interest margin, Landmark's first quarter results included solid loan growth, lower expenses, and continued good credit quality. Total gross loans increased by $15.4 million, or 6.5% on an annualized basis, during the quarter, while average interest-bearing deposits increased by $24.8 million. The company's focus on operational efficiencies kept its noninterest expenses well-controlled, with a 2% increase compared to the same period last year.
Landmark's credit quality has remained strong, with net loan charge-offs of $7,000 during the first quarter of 2024, compared to $47,000 in the same period of 2023. The allowance for credit losses remained robust, totaling $10.9 million at both March 31, 2024, and December 31, 2023, representing 1.13% of gross loans.
Liquidity
The company's capital and liquidity measures are also strong, with the Bank's leverage ratio at 8.8% and the total risk-based capital ratio at 13.8% as of March 31, 2024. Landmark maintains a stable, conservative deposit portfolio, with over 92% of its total deposits considered core deposits from retail, commercial, and public fund customers.
Business Overview
Landmark's geographic footprint is primarily focused in the state of Kansas, with 30 branch locations across 24 communities. The company's management team is actively evaluating its branch network to ensure it continues to meet the needs of its customers and communities. While the company does not provide specific guidance on future loan growth, its first quarter results of 6.5% annualized growth provide a good indication of the company's potential performance.
The agricultural sector is an important part of Landmark's business, and the company closely monitors the impact of any legislative changes that could affect its agricultural customers. The management team remains optimistic about the opportunities in this segment and is committed to supporting its agricultural clients.
Risks and Challenges
In terms of risks, Landmark is exposed to the broader economic conditions in Kansas and the surrounding region, including the potential impact of inflationary pressures and supply chain constraints. The company is also subject to interest rate risk, as changes in interest rates can affect its net interest margin and the value of its investment securities portfolio.
Conclusion
Overall, Landmark Bancorp, Inc. is a well-managed community bank that has demonstrated its ability to deliver consistent financial performance and maintain a strong credit profile. The company's focus on relationship-based banking, prudent risk management, and disciplined growth strategy position it well to navigate the current economic environment and continue serving its local communities in Kansas.