Landmark Bancorp NASDAQ: LARK reported what management called a strong start to 2026, highlighted by record quarterly revenue, improved profitability, and an expansion in net interest margin despite modest balance sheet contraction.
Record revenue and higher profitability
President and CEO Abby Wendel said total revenue reached a record $18.8 million in the first quarter. Earnings per share were $0.83, up 6.7% from the fourth quarter of 2025 and up 7.2% from the first quarter of 2025. Return on assets increased to 1.29%, up 12 basis points from the prior quarter and 7 basis points year-over-year.
Net interest income rose 1.6% sequentially to $15.0 million, and the net interest margin expanded to 4.24%, up 21 basis points from the fourth quarter of 2025. Wendel attributed the margin performance to Landmark’s “solid core customer base and disciplined pricing approach.”
Net interest income growth supported by lower funding costs
Chief Financial Officer Mark Herpich said net income totaled $5.1 million for the first quarter of 2026, compared with $4.7 million in the first quarter of 2025, “mainly due to continued growth in net interest income.” Herpich said net interest income increased $234,000 from the fourth quarter of 2025, driven by increased investment portfolio yields and lower funding costs, and grew $1.9 million from the year-ago quarter.
Herpich said investment yields improved, with total interest income on investments rising to $2.9 million and investment yields increasing to 3.55% from 3.39% in the prior quarter. Average loans declined $12.8 million, while the tax-equivalent yield on the loan portfolio remained flat at 6.4%.
On the funding side, interest expense on deposits decreased $527,000 from the prior quarter, which Herpich said resulted from a lower cost of deposits. He said the average rate on interest-bearing deposits fell 16 basis points to 1.90%. Interest expense on borrowed funds decreased $296,000 due to lower average balances and lower borrowing rates, and the average rate on other borrowed funds declined 8 basis points to 4.85%, which Herpich attributed to a lower short-term fed funds rate.
Fees dipped sequentially; expenses lowered as fraud losses weighed on other expense
Non-interest income totaled $3.8 million, down $135,000 from the prior quarter but up $406,000 from the first quarter of 2025, according to Herpich. The sequential decline was driven primarily by a $308,000 decrease in fees and service charges due to a seasonal decline in interchange income and lower overdraft income. The decline was partially offset by higher gains on sales of investment securities—helped by $101,000 of losses recognized in the fourth quarter tied to a portfolio repositioning strategy—and an $87,000 increase in bank-owned life insurance income.
Non-interest expense was $11.9 million, down $362,000 from the fourth quarter of 2025. Herpich attributed the decline primarily to lower compensation and benefits expense and the absence of an impairment loss recorded in the prior quarter on repurchased assets held for sale. Compensation and benefits fell $492,000 due to lower incentive compensation. These decreases were partially offset by a $472,000 increase in other expense.
Herpich said other expense increased mainly because Landmark recognized $433,000 of fraud losses “related to previously disclosed fraudulent activity by a non-executive officer of the bank,” along with higher insurance loss reserves at its captive insurance subsidiary. He added that the recorded fraud loss excludes potential insurance recoveries.
The company recorded tax expense of $1.3 million, producing an effective tax rate of 19.8%, compared with an effective tax rate of 20.0% in the fourth quarter of 2025, Herpich said.
Loans and deposits declined; core deposits rose
Wendel said loans ended the quarter at $1.1 billion, down $13.5 million from year-end 2025 but up $23.3 million from a year earlier. She said commercial real estate growth offset reductions in agriculture, while the residential mortgage portfolio declined as more originations were sold into the secondary market rather than retained.
Wendel said selling more originations, coupled with payoffs and paydowns, accounted for “slightly more than $7 million” of the quarterly decline in loan balances. She added that mortgage originations were up 9% from the first quarter of 2025, contributing to higher gain-on-sale income as more loans were sold into the secondary market.
Herpich detailed the loan mix changes, noting decreases of $16.2 million in the agricultural portfolio and $7.0 million in residential real estate, partially offset by a $13.6 million increase in commercial real estate.
On deposits, Wendel said the quarterly reduction was largely driven by seasonal public fund outflows, along with a strategic decision to replace some brokered funding with Federal Home Loan Bank (FHLB) borrowing. She emphasized growth in core customer deposits, which increased 1.6% from the prior quarter.
Herpich said deposits totaled $1.3 billion at March 31, 2026, and declined $66.2 million from the prior quarter. He cited decreases of $61.6 million in interest checking and money market deposits and a $10.8 million decline in certificates of deposit. The company reduced broker deposits and used other borrowing sources, including the FHLB, as part of its funding mix strategy, he said. Herpich also said total borrowings increased $57.3 million during the quarter.
Landmark’s loan-to-deposit ratio was 82.1% at quarter-end, which Herpich said “continues to provide sufficient liquidity to fund future loan growth.”
Credit trends: modest increases in non-performers and delinquencies
Chief Credit Officer Raymond McLanahan said overall loan balances declined modestly as the bank focused on “disciplined growth and active balance sheet management,” including working down select relationships that no longer align with its risk appetite.
McLanahan said non-performing loans totaled $10.4 million, or 0.94% of gross loans, up slightly from 0.90% at year-end. He attributed the increase primarily to a single $1.3 million commercial relationship that “ceased operations shortly after quarter end.” While no specific impairment was identified at quarter-end, McLanahan said the bank moved the relationship to non-accrual and that the borrower is working with the bank to self-liquidate. He added that subsequent to quarter-end, the outstanding balance was reduced by about $500,000.
Loans delinquent 30 to 89 days and still accruing interest rose to $7.4 million, or 0.68% of gross loans, from $4.3 million, or 0.38% at December 31. McLanahan said the increase was primarily tied to a $2.2 million agricultural relationship and a $1.8 million loan secured by several 1-4 family residential properties, describing the drivers as borrower-specific and “manageable.”
Net charge-offs were $349,000 in the quarter, similar to $341,000 in the fourth quarter of 2025, McLanahan said. On an annualized basis, net charge-offs were about 0.13% of average loans. The allowance for credit losses increased to $12.6 million, or 1.15% of gross loans, from 1.12% at year-end, and the company recorded a $500,000 provision for credit losses, which McLanahan said reflected portfolio mix changes, updated economic assumptions, and “continued prudence in reserving practices.”
McLanahan said conditions across Kansas remained “generally stable,” with employment supporting borrower cash flows, though some sectors face pressure from higher operating costs and interest rates. He said management had not observed “systemic stress” within the portfolio.
Wendel also highlighted capital and shareholder returns, stating tangible common equity to assets increased to 8.11% and tangible book value per share ended the quarter at $20.89. She said the board declared a cash dividend of $0.21 per share payable May 28 to shareholders of record May 14, marking the company’s 99th consecutive quarterly cash dividend since the parent company’s formation in 2001.
Looking ahead, Wendel said Landmark plans to make “targeted investments in revenue generating activities” while evaluating opportunities to improve efficiency and modernize how it delivers banking services across its footprint.
About Landmark Bancorp NASDAQ: LARK
Landmark Bancorp, Inc is the bank holding company for Landmark Community Bank, a community‐focused financial institution. The company provides a full range of deposit and lending products through its subsidiary, including checking and savings accounts, certificates of deposit, residential mortgages, home equity lines of credit and small business loans. Landmark Bancorp emphasizes personalized service, leveraging local decision-making to meet the unique needs of individuals and local enterprises.
In addition to traditional deposit and lending services, Landmark Bancorp offers comprehensive cash-management and treasury solutions for commercial clients.
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