Landmark Bancorp : Announces First Quarter Earnings Per Share of $0.62 Declares Cash Dividend of $0.21 per Share







PRESS RELEASE

FOR IMMEDIATE RELEASE

Contacts:

April 27, 2022

Michael E. Scheopner

President and Chief Executive Officer

Mark A. Herpich Chief Financial Officer

(785) 565-2000

Landmark Bancorp, Inc. Announces First Quarter Earnings Per Share of $0.62

Declares Cash Dividend of $0.21 per Share

(Manhattan, KS, April 27, 2022) – Landmark Bancorp, Inc. (“Landmark”; Nasdaq: LARK) reported diluted earnings per share of $0.62 for the three months ended March 31, 2022, compared to $1.08 per share in the same quarter last year and $0.63 per share in the fourth quarter of 2021. Net earnings for the first quarter of 2022 amounted to $3.1 million, compared to $5.4 million for the first quarter of 2021 and $3.1 million in the fourth quarter of 2021. For the three months ended March 31, 2022, the return on average assets was 0.97%, the return on average equity was 9.59%, and the efficiency ratio was 71.9%.

In making this announcement, Michael E. Scheopner, President and Chief Executive Officer of Landmark, said, “Net earnings declined in the first quarter of 2022 compared to the same period last year due to decreased mortgage banking revenue, lower interest income on loans mainly from a decline in Paycheck Protection Program (PPP) loans and lower gains on sales of investment securities. Gains on sales of one-to-four family residential real estate loans this quarter declined $2.2 million from the same quarter last year, due to tight housing supplies and lower refinancing activities; however, fees and service charge income grew by 7.6% compared to the first quarter of 2021. Non-interest expense decreased by $235,000, or 2.6% this quarter compared to the same quarter last year. During the first quarter of 2022, total gross loans declined $28.8 million or 4.4% mainly due to lower PPP loans coupled with declines in agricultural and other commercial related loans. Total deposits declined slightly this quarter but have increased by $68.3 million, or 6.4%, as compared to March 31, 2021. Overall, deposit costs remain low.”

Mr. Scheopner continued, “Credit quality continued to remain strong as Landmark recorded net loan recoveries of $82,000 in the first quarter of 2022 compared to net loan charge-offs of $4,000 in the first quarter of 2021 and net loan recoveries of $9,000 in the prior quarter. Non-accrual loans declined to $4.7 million in the first quarter of 2022 compared to $5.2 million in the prior quarter. These strong credit results coupled with a decline in loans (exclusive of PPP loans) resulted in the recording of a reverse provision for loan losses of $500,000 in the first quarter of 2022. The allowance for loan losses totaled $8.4 million at March 31, 2022, or 1.33% of period end loans, excluding PPP loans for which no loan loss reserve has been provided. Our equity to assets ratio totaled 9.45% while loans to deposits totaled 54.9%. We believe Landmark’s risk management practices, liquidity and capital strength continue to position us well for future growth and to meet the financial needs of families and businesses in our markets.”

Landmark’s Board of Directors declared a cash dividend of $0.21 per share, to be paid May 25, 2022, to common stockholders of record as of the close of business on May 11, 2022. Management will host a conference call to discuss the Company’s financial results at 10:00 a.m. (Central time) on Thursday, April 28, 2022. Investors may participate via telephone by dialing (844) 200-6205 and using access code 721310. A replay of the call will be available through May 29, 2022, by dialing (866) 813-9403 and using access code 066994.

SUMMARY OF FIRST QUARTER RESULTS

Net Interest Income

Net interest income amounted to $8.6 million for the three months ended March 31, 2022, compared to $9.6 million in the same period last year and $9.1 million in the fourth quarter of 2021. The decrease of $946,000, or 9.9%, from the first quarter of 2021 was primarily the result of a decrease in interest on loans, which declined $1.2 million or 14.4%. Compared to the same period last year, the decrease in loan interest income was partly due to lower interest and fees earned on PPP loans coupled with a decline in interest earned on other commercial related loans. Interest and fees recognized on PPP loans in the first quarter of 2022 totaled $480,000 compared to $1.1 million in the same period last year and $661,000 million in the fourth quarter of 2021. The average tax-equivalent yield on the loan portfolio was 4.59% in the first quarter of 2022 compared to 4.67% in the same quarter last year and 4.81% in the prior quarter. Interest costs on interest-bearing deposits totaled 0.10% in the first quarter of 2022, 0.15%in the first quarter of 2021 and 0.12% in the prior quarter. On a tax-equivalent basis, the net interest margin totaled 2.99% in the first quarter of 2022, compared to 3.17% in the prior quarter and 3.51% in the first quarter of 2021.

Non-Interest Income

Non-interest income totaled $3.6 million for the first quarter of 2022, a decrease of $3.2 million, or 47.0%, compared to the same period last year and a decrease of $1.0 million, or 22.5% from the previous quarter. The decrease in non-interest income during the first quarter of 2022 compared to the same period last year was primarily due to a decrease of $2.2 million in gains on sales of mortgage loans as originations of residential real estate loans declined. Decreased loan originations mainly resulted from low housing inventories coupled with increasing mortgage interest rates during the first quarter of 2022, which reduced refinancing activity. The first quarter of 2021 included gains of $1.1 million on the sale of higher-coupon municipal investment securities. There were no investment securities sold in the first quarter of 2022. Fees and service charges increased $155,000, or 7.6%, compared to the same quarter last year.

Non-Interest Expense

During the first quarter of 2022, non-interest expense totaled $8.8 million, a decrease of $235,000, or 2.6% over the same period last year and a decrease of $712,000, or 7.5% from the prior quarter. The decrease in non-interest expense in the first quarter of 2022 compared to the same period of last year was primarily due to declines of $166,000 in compensation and benefits, $161,000 in data processing and $121,000 in amortization expense. The decrease in compensation and benefits expense was primarily due to lower commissions paid on residential real estate loans originated. The Company negotiated a new contract with its core technology provider resulting in a lower monthly data processing expense. Amortization of mortgage servicing rights and other intangibles also declined. Partially offsetting those declines was an increase of $171,000 in occupancy and equipment related to investments in new ATM equipment and higher occupancy costs.

Income Tax Expense

Landmark recorded income tax expense of $737,000 in the first quarter of 2022 compared to $1.4 million in the first quarter of 2021 and $1.0 million in the fourth quarter of 2021. The effective tax rate decreased to 19.0% in the first quarter of 2022 compared to 20.4% in the first quarter of 2021, primarily due to lower pretax earnings. The higher effective tax rate of 24.8% in the fourth quarter of 2021 included additional income tax expense of $162,000 related to the recognition of previously unrecognized tax benefits.

Balance Sheet Highlights

As of March 31, 2022, gross loans totaled $633.5 million, a decrease of $28.8 million since December 31, 2021. The decline was primarily due to a reduction of $12.0 million in PPP loans, which were paid off after forgiveness was approved by the Small Business Administration. The balance of PPP loans totaled $5.2 million at March 31, 2022 compared to $17.2 million at December 31, 2021. Excluding these loans, gross loans decreased $16.9 million, or 10.7% annualized, during the first quarter of 2022, primarily due to decreases of $11.8 million in agriculture loans and $4.9 million in commercial loans. Compared to December 31, 2021, investment securities increased $86.3 million to $467.0 million as of March 31, 2020, while deposits decreased $8.9 million to $1.1 billion.

Stockholders’ equity decreased to $123.5 million (book value of $24.72 per share) as of March 31, 2022, from $135.6 million (book value of $27.14 per share) as of December 31, 2021, as a result of an increase in unrealized losses on the Company’s investment securities portfolio, due to increasing interest rates this quarter. The ratio of equity to total assets decreased to 9.45% on March 31, 2022, from 10.21% at December 31, 2021.

The allowance for loan losses totaled $8.4 million, or 1.33% of total gross loans (excluding PPP loans) on March 31, 2022, compared to $8.8 million, or 1.36% of total gross loans (excluding PPP loans) on December 31, 2021. No allowance for loan losses has been allocated to PPP loans because they are guaranteed by the SBA. Net loan recoveries totaled $82,000 in the first quarter of 2022, compared to net loan charge-offs of $4,000 during the same quarter last year and net loan recoveries of $9,000 during the fourth quarter of 2021. The ratio of annualized net loan charge-offs to total average loans was -0.05% in the first quarter of 2022, -0.01% in the prior quarter and 0.00% in the first quarter of last year. A reverse provision for loan losses of $500,000 was made in the first quarter 2022 as a result of the decline in loan balances. This compares to no provision for loan losses in the prior quarter and $500,000 in the first quarter of 2021.

During the first quarter of 2022, non-performing loans decreased $554,000 to $4.7 million, or 0.74% of gross loans, while loans 30-89 days delinquent decreased $1.1 million to $846,000, or 0.13% of gross loans, as of December 31, 2021. Real estateowned totaled $1.3 million at March 31, 2022, which was a decline of $1.3 million from December 31, 2021. The decline in real estate owned was primarily due to the sale of two commercial real estate properties.

About Landmark

Landmark Bancorp, Inc., the holding company for Landmark National Bank, is listed on the Nasdaq Global Market under the symbol “LARK.” Headquartered in Manhattan, Kansas, Landmark National Bank is a community banking organization dedicated to providing quality financial and banking services. Landmark National Bank has 30 locations in 24 communities across Kansas: Manhattan (2), Auburn, Dodge City (2), Fort Scott (2), Garden City, Great Bend (2), Hoisington, Iola, Junction City, Kincaid, La Crosse, Lawrence (2), Lenexa, Louisburg, Mound City, Osage City, Osawatomie, Overland Park, Paola, Pittsburg, Prairie Village, Topeka (2), Wamego and Wellsville, Kansas. Visitwww.banklandmark.comfor more information.

Special Note Concerning Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of Landmark. 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. Additionally, all statements in this press release, including forward-looking statements, speak only as of the date they are made, and Landmark undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond our ability to control or predict, could cause actual results to differ materially from those in our forward-looking statements. These factors include, among others, the following: (i) the effects of the COVID-19 pandemic, including its effects on the economic environment, our customers and operations, as well as changes to federal, state or local government laws, regulations or orders in connection with the pandemic; (ii) the strength of the local, national and international economies; (iii) changes in state and federal laws, regulations and governmental policies concerning banking, securities, consumer protection, insurance, monetary, trade and tax matters; (iv) changes in interest rates and prepayment rates of our assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) timely development and acceptance of new products and services; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) our risk management framework; (ix) interruptions in information technology and telecommunications systems and third-party services; (x) changes and uncertainty in benchmark interest rates, including the elimination of LIBOR and the development of a substitute; (xi) the effects of severe weather, natural disasters, widespread disease or pandemics, or other external events; (xii) the loss of key executives or employees; (xiii) changes in consumer spending; (xiv) integration of acquired businesses; (xv) unexpected outcomes of existing or new litigation; (xvi) changes in accounting policies and practices, such as the implementation of the current expected credit losses accounting standard; (xvii) the economic impact of armed conflict or terrorist acts involving the United States; (xviii) the ability to manage credit risk, forecast loan losses and maintain an adequate allowance for loan losses; (xix) declines in the value of our investment portfolio; (xx) the ability to raise additional capital; (xxi) cyber-attacks; (xxii) declines in real estate values; (xxiii) the effects of fraud on the part of our employees, customers, vendors or counterparties; and (xxiv) any other risks described in the “Risk Factors” sections of reports filed by Landmark with the Securities and Exchange Commission. 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 Landmark and its business, including additional risk factors that could materially affect Landmark’s financial results, is included in our filings with the Securities and Exchange Commission.

LANDMARK BANCORP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (unaudited)

(Dollars in thousands)

Assets

Cash and cash equivalents Interest-bearing deposits at other banks Investment securities:

U.S. treasury securities

U.S. federal agency obligations Municipal obligations, tax exempt Municipal obligations, taxable Agency mortgage-backed securities

Investment securities available-for-sale, at fair value Bank stocks, at cost

Loans:

One-to-four family residential real estate Construction and land

Commercial real estate Commercial

Paycheck Protection Program (PPP) Agriculture

Municipal Consumer

Total gross loans

Net deferred loan (fees) costs and loans in process Allowance for loan losses

Loans, net

Loans held for sale

Bank owned life insurance Premises and equipment, net Goodwill

Other intangible assets, net Mortgage servicing rights Real estate owned, net Other assets

Total assets

Liabilities and Stockholders’ Equity

Liabilities:

Deposits:

Non-interest-bearing demand Money market and checking Savings

Certificates of deposit

Total deposits Subordinated debentures Other borrowings

Accrued interest and other liabilities

Total liabilities

Stockholders’ equity:

Common stock Additional paid-in capital Retained earnings

Accumulated other comprehensive (loss) income

Total stockholders’ equity

Total liabilities and stockholders’ equity

March 31, 2022

December 31, September 30, 2021 2021

June 30, 2021

March 31, 2021

$

131,018 $ 109,151 5,205 5,455

119,882

42,675

40,314

36,646 20,359

17,013

17,196

17,297

22,852 18,861

130,915

137,983

140,788

140,526 143,105

45,586

40,046

38,988

38,779 41,138

153,587

142,817

133,502

99,936 91,987

466,983

380,717

370,889

338,739 315,450

2,856

2,905

2,985

3,220 4,062

169,514

166,081

161,120

162,606 159,798

25,408

27,644

26,658

27,092 26,591

196,736

198,472

193,455

189,093 179,781

127,226

132,154

135,790

127,672 126,998

5,218

17,179

28,671

61,236 117,297

82,484

94,267

91,305

89,667 92,486

2,212

2,050

2,115

2,178 2,183

24,751

24,541

25,624

25,676 25,557

633,549

662,388

664,738

685,220

730,691

(43)

(380)

936

(2,361) (3,611)

(8,357)

(8,775)

(8,766)

(9,163) (9,271)

625,149

653,233

656,908

673,696 717,809

5,424

4,795

8,929

10,952 13,995

32,293

32,106

31,914

31,722 25,568

20,919

20,803

20,361

20,137 20,320

17,532

17,532

17,532

17,532 17,532

67

84

104

132 168

4,128

4,193

4,201

4,143 3,966

1,288

2,551

2,578

1,385 1,474

17,095

13,458

13,190

12,545 13,925

$

1,306,434

$

1,328,968

$

1,254,534

$

1,250,426

$

1,248,875

350,342

350,005

317,827

  • 307,125 314,616

    517,936

    536,868

    488,213

  • 504,025 490,634

    167,823

    155,501

    151,380

  • 150,874 142,507

    103,464

    106,107

    109,267

  • 115,739 123,489

1,139,565

1,148,481

1,066,687

1,077,763 1,071,246

21,651

21,651

21,651

21,651 21,651

7,004

7,403

6,219

4,534 4,165

14,701

15,790

24,571

14,122 23,532

1,182,921

1,193,325

1,119,128

1,118,070

1,120,594

50

50

48

48

48

79,206

79,120

72,489

72,413 72,336

54,677

52,593

56,957

53,391 49,363

(10,420)

3,880

5,912

6,504 6,534

123,513

135,643

135,406

132,356

128,281

$ 1,306,434 $ 1,328,968

$ 1,254,534

$ 1,250,426

$ 1,248,875

LANDMARK BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Earnings (unaudited)

(Dollars in thousands, except per share amounts)

Interest income:

Loans

Investment securities:

Taxable Tax-exempt

Total interest income Interest expense:

Deposits

Borrowed funds

Total interest expense Net interest income

Provision for (reversal of) loan losses

Net interest income after provision for loan losses Non-interest income:

Fees and service charges

Gains on sales of loans, net

Bank owned life insurance

Gains 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

Other

Total non-interest expense Earnings before income taxes Income tax expense

Net earnings

Net earnings per share (1)

Basic

Diluted

Dividends per share (1)

Shares outstanding at end of period (1)

Weighted average common shares outstanding – basic (1)

Weighted average common shares outstanding – diluted (1)Three months ended,March 31, 2022

December 31, 2021

March 31, 2021

$

7,907 $ 8,404

836 811

737 778

9,480

9,993

195

223 281

126

121 121

9,145

8,645

(500)

321

344 9,136 – 9,136

402 9,591 500 9,091

2,188

2,403 2,033

905

1,823 3,140

187 –

192 148

– 1,075

283

180 329

3,563

4,598

6,725

4,775

5,061 4,941

1,233

1,214 1,062

340

525 501

316

376 437

451

595 392

1,723

1,779 1,740

8,838

3,870

737

9,550 4,184 1,037

9,073 6,743 1,376

$

3,133

$

3,147

$

5,367

$

0.63

$

0.63 $ 1.08

0.62

0.63 1.08

0.21

0.19 0.19

4,997,459

  • 4,997,459 4,994,434

    4,997,459

  • 4,997,423 4,990,507

    5,017,055

  • 5,016,327 4,997,473

Tax equivalent net interest income

$

8,840

$

9,335

$

9,801

(1) Share and per share values at or for the periods ended March 31, 2021 have been adjusted to give effect to the 5% stock dividend paid during December 2021.

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Sales

Net income

Net Debt

P/E ratio
Yield
Capitalization 130 M
130 M
EV / Sales -1
EV / Sales 0
Nbr of Employees 264
Free-Float 78,0%

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