What Landmark Bancorp (LARK) Said on Its Q3 Earnings Call

Key Points

• Landmark Bancorp’s third-quarter earnings improved: Net income rose to $5.5 million, or $0.89 per diluted share, while revenue reached a record $19.2 million. Growth was driven by higher net interest income and a 13-basis-point sequential increase in tax-equivalent net interest margin to 4.35%.
• Loans declined $22.2 million and deposits fell $59 million, largely because of seasonal public-fund outflows, while borrowings increased $49.5 million through favorable Federal Home Loan Bank funding. Management expects public-fund deposits to rebound in the fourth quarter and remains optimistic about organic loan growth.
• Credit quality remained stable: Nonperforming loans and net charge-offs decreased, although 30-to-89-day delinquencies rose due primarily to one commercial real estate borrower. The board declared a $0.21 quarterly dividend and a 5% stock dividend.

Landmark Bancorp NASDAQ: LARK reported third-quarter 2026 net income of $5.5 million, or $0.89 per diluted share, as net interest income and margin expanded despite lower loan balances and seasonal public-fund deposit outflows.

Net income rose from $5.4 million, or $0.87 per diluted share, in the second quarter and from $4.9 million in the third quarter of 2025. For the first nine months of 2026, net income totaled $15.9 million, or $2.59 per diluted share, compared with $14 million, or $2.29 per diluted share, a year earlier.

President and CEO Abby Wendel said the quarter reflected “net interest margin expansion, stable credit quality, and a strong balance sheet” supported by the company’s relationship-focused banking strategy. Revenue reached a record $19.2 million, according to Wendel.

Margin Expansion Supported Earnings

Net interest income totaled $15.6 million in the third quarter, increasing $562,000 from the prior quarter and $1.5 million from the prior-year period. Chief Financial Officer Mark Herpich said the sequential increase was driven by higher earning-asset yields, partly offset by higher funding costs.

Landmark’s tax-equivalent net interest margin increased 13 basis points from the second quarter to 4.35%. The margin was up 52 basis points from the third quarter of 2025. The yield on average loans increased to 6.46%, while the average yield on the securities portfolio rose to 3.80% from 3.66% in the preceding quarter.

Wendel said new loan originations carried yields above those of loans that matured or paid off. In response to an analyst question, Herpich said the quarter’s margin expansion was “core” and did not benefit from early termination penalties or other unusual payoff-related income.

Deposit costs also declined. The cost of deposits fell to 1.29%, while the average rate on interest-bearing deposits decreased one basis point sequentially to 1.81%. Non-interest-bearing deposits represented about 29% of total deposits.

Loans and Deposits Declined, While Borrowings Increased

Gross loans decreased $22.2 million from the previous quarter to $1.1 billion at Sept. 30. The decline included decreases of $12.5 million in commercial real estate loans, $10.6 million in residential real estate loans and $6.4 million in commercial loans. Those declines were partially offset by a $9.3 million increase in construction and land development loans.

Wendel said loan payoffs exceeded new production during the quarter, though she characterized the payoffs as “lumpy” rather than indicative of a broader trend. She said management remains optimistic that the bank can generate organic loan growth, including potentially regaining participation in a credit that was consolidated by a larger bank.

Deposits fell $59 million during the quarter to $1.2 billion, primarily because public-fund deposits declined $61.7 million on a seasonal basis. Management expects the seasonal trend to reverse in the fourth quarter. Excluding public-fund and brokered deposits, core customer deposits increased $4.9 million.

Landmark increased total borrowings by $49.5 million, primarily using Federal Home Loan Bank funding. Herpich said the company elected to rely more heavily on its FHLB borrowing line because of favorable funding costs. The loan-to-deposit ratio was 85.6% at quarter-end.

In response to a question about interest-rate sensitivity, Herpich said Landmark is slightly asset-sensitive over the next year and believes it is positioned for some margin improvement.

Fee Income Fell as Mortgage Sales Slowed

Non-interest income was $3.6 million, down $493,000 sequentially and $466,000 from a year earlier. The sequential decline was primarily tied to a $593,000 reduction in gains on loan sales as fewer loans were sold in the secondary market. Wendel said higher interest rates during the quarter slowed mortgage production.

Non-interest expense increased $292,000 from the second quarter to $12.3 million. Compensation and benefits expense increased $238,000, occupancy and equipment expense rose $178,000, and other expense increased $148,000. Those increases were partly offset by a $313,000 decline in professional fees.

Wendel said the company continued to invest in talent, technology, credit and risk-management capabilities, as well as digital tools and operational efficiency.

Credit Metrics Remained Stable

Nonperforming loans decreased $572,000 during the quarter to $12.5 million, or 1.16% of gross loans, from $13.1 million, or 1.18% of gross loans, at June 30. Net charge-offs were $14,000, representing an annualized 0.01% of average loans, compared with 0.17% in the prior quarter.

Loans delinquent 30 to 89 days while still accruing interest increased to $8.3 million, or 0.77% of gross loans, from $6.3 million, or 0.57%. Herpich said the increase was primarily attributable to one commercial real estate borrower that the bank continues to monitor.

The allowance for credit losses totaled $12.9 million, or 1.19% of gross loans. Landmark recorded a $250,000 provision for credit losses on portfolio loans and reversed $45,000 of provision related to loan commitments.

Separately, the board declared a quarterly cash dividend of $0.21 per share, payable Nov. 27 to shareholders of record Nov. 12. The board also declared a 5% stock dividend, to be issued Dec. 16 to shareholders of record Dec. 2.

About Landmark Bancorp (NASDAQ:LARK)

Landmark Bancorp, Inc is a bank holding company headquartered in Manhattan, Kansas. Through its principal subsidiary, Landmark National Bank, the company provides community banking services to individuals, families, farmers, and businesses.

Landmark National Bank offers a range of financial products, including checking and savings accounts, certificates of deposit, consumer loans, residential and commercial real estate loans, agricultural lending, and business financing. The bank also provides online and mobile banking, treasury management, wealth management, and other services designed to support personal and commercial financial needs.

The company serves communities primarily across Kansas through a network of banking locations and electronic delivery channels.

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