UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

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 0-33203

LANDMARK BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware	43-1930755
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

701 Poyntz Avenue, Manhattan, Kansas 66502

(Address of principal executive offices) (Zip code)

(785) 565-2000

(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:
Common Stock, par value $0.01 per share	LARK	Nasdaq Global Market

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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 ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: as of May 14, 2021, the issuer had outstanding 4,756,604 shares of its common stock, $0.01 par value per share.

LANDMARK BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

		Page Number
	PART I
Item 1.	Financial Statements	2 – 24
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25 – 33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34 – 35
Item 4.	Controls and Procedures	36
	PART II
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	36
	Signature Page	37

1

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31,		December 31,
(Dollars in thousands, except per share amounts)	2021		2020
	(Unaudited)
Assets
Cash and cash equivalents	$	109,151	$	84,818
Investment securities available-for-sale, at fair value		320,905		297,270
Bank stocks, at cost		4,062		4,473
Loans, net of allowance for loans losses of $9,271 at March 31, 2021 and $8,775 at December 31, 2020		717,809		702,782
Loans held for sale, at fair value		13,995		15,533
Bank owned life insurance		25,568		25,420
Premises and equipment, net		20,320		20,493
Goodwill		17,532		17,532
Other intangible assets, net		168		206
Mortgage servicing rights		3,966		3,726
Real estate owned, net		1,474		1,774
Accrued interest and other assets		13,925		14,000
Total assets	$	1,248,875	$	1,188,027
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing demand	$	314,616	$	264,878
Money market and checking		490,634		491,275
Savings		142,507		126,124
Certificates of deposit		123,489		133,750
Total deposits		1,071,246		1,016,027
Subordinated debentures		21,651		21,651
Other borrowings		4,165		6,371
Accrued interest, taxes, and other liabilities		23,532		17,306
Total liabilities		1,120,594		1,061,355
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value per share, 200,000 shares authorized; none issued		-		-
Common stock, $0.01 par value per share, 7,500,000 shares authorized; 4,756,604 and 4,750,838 shares issued at March 31, 2021 and December 31, 2020, respectively		48		48
Additional paid-in capital		72,336		72,230
Retained earnings		49,363		44,947
Accumulated other comprehensive income		6,534		9,447
Total stockholders’ equity		128,281		126,672
Total liabilities and stockholders’ equity	$	1,248,875	$	1,188,027

See accompanying notes to consolidated financial statements.

2

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

	Three months ended
(Dollars in thousands, except per share amounts)	March 31,
	2021		2020
Interest income:
Loans	$	8,404	$	7,126
Investment securities:
Taxable		811		1,344
Tax-exempt		778		848
Total interest income		9,993		9,318
Interest expense:
Deposits		281		983
Borrowings		121		233
Total interest expense		402		1,216
Net interest income		9,591		8,102
Provision for loan losses		500		1,200
Net interest income after provision for loan losses		9,091		6,902
Non-interest income:
Fees and service charges		2,033		1,962
Gains on sales of loans, net		3,140		1,193
Bank owned life insurance		148		154
Gains on sales of investment securities, net		1,075		1,770
Other		329		274
Total non-interest income		6,725		5,353
Non-interest expense:
Compensation and benefits		4,941		4,582
Occupancy and equipment		1,062		1,079
Data processing		501		425
Amortization of mortage servicing rights and intangibles		437		277
Professional fees		392		363
Other		1,740		1,381
Total non-interest expense		9,073		8,107
Earnings before income taxes		6,743		4,148
Income tax expense		1,376		785
Net earnings	$	5,367	$	3,363
Earnings per share (1):
Basic (1)	$	1.13	$	0.70
Diluted (1)	$	1.13	$	0.70
Dividends per share (1)	$	0.20	$	0.19

(1) Per share amounts for the period ended March 31, 2020 have been adjusted to give effect to the 5% stock dividend paid during December 2020.

See accompanying notes to consolidated financial statements.

3

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three months ended
(Dollars in thousands)	March 31,
	2021			2020
Net earnings	$	5,367		$	3,363
Net unrealized holding (losses) gains on available-for-sale securities		(2,783	)		4,405
Less reclassification adjustment for net gains included in earnings		(1,075	)		(1,770	)
Net unrealized (losses) gains		(3,858	)		2,635
Income tax effect on net gains included in earnings		263			434
Income tax effect on net unrealized holding losses (gains)		682			(1,080	)
Other comprehensive (loss) income		(2,913	)		1,989
Total comprehensive income	$	2,454		$	5,352

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			Total
Balance at January 1, 2020	$	46	$	69,029	$	34,293		$	-		$	5,239		$	108,607
Net earnings		-		-		3,363			-			-			3,363
Other comprehensive income		-		-		-			-			1,989			1,989
Dividends paid ($0.19 per share)		-		-		(920	)		-			-			(920	)
Stock-based compensation		-		85		-			-			-			85
Exercise of stock options, 3,136 shares		-		33		-			-			-			33
Purchase of 91,137 treasury shares		-		-		-			(2,023	)		-			(2,023	)
Balance at March 31, 2020	$	46	$	69,147	$	36,736		$	(2,023	)	$	7,228		$	111,134
Balance at January 1, 2021	$	48	$	72,230	$	44,947		$	-		$	9,447		$	126,672
Net earnings		-		-		5,367						-			5,367
Other comprehensive loss		-		-		-						(2,913	)		(2,913	)
Dividends paid ($0.20 per share)		-		-		(951	)					-			(951	)
Stock-based compensation		-		84		-						-			84
Exercise of stock options, 5,766 shares		-		22		-			-			-			22
Balance at March 31, 2021	$	48	$	72,336	$	49,363		$	-		$	6,534		$	128,281

See accompanying notes to consolidated financial statements.

5

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three months ended
(Dollars in thousands)	March 31,
	2021			2020
Cash flows from operating activities:
Net earnings	$	5,367		$	3,363
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for loan losses		500			1,200
Amortization of investment security premiums, net		397			366
Amortization of purchase accounting adjustment on loans		(8	)		(5	)
Amortization of mortgage servicing rights and other intangibles		437			277
Depreciation		245			250
Increase in cash surrender value of bank owned life insurance		(148	)		(154	)
Stock-based compensation		84			85
Deferred income taxes		628			403
Net gains on sales of investment securities		(1,075	)		(1,770	)
Net (gain) losses on sales of foreclosed assets		(5	)		1
Net gains on sales of loans		(3,140	)		(1,193	)
Proceeds from sales of loans		100,687			45,830
Origination of loans held for sale		(96,648	)		(45,893	)
Changes in assets and liabilities:
Accrued interest and other assets		75			(968	)
Accrued expenses, taxes, and other liabilities		(484	)		2,948
Net cash provided by operating activities		6,912			4,740
Cash flows from investing activities:
Net increase in loans		(15,519	)		(23,065	)
Maturities and prepayments of investment securities		7,720			18,948
Purchases of investment securities		(40,854	)		(10,909	)
Proceeds from sales of investment securities		13,346			44,508
Redemption of bank stocks		1,017			680
Purchase of bank stocks		(606	)		(915	)
Proceeds from sales of premises and equipment and foreclosed assets		305			45
Purchases of premises and equipment, net		(72	)		(120	)
Net cash (used in) provided by investing activities		(34,663	)		29,172
Cash flows from financing activities:
Net increase (decrease) in deposits		55,219			(4,568	)
Federal Home Loan Bank advance borrowings		-			101,768
Federal Home Loan Bank advance repayments		-			(104,768	)
Proceeds from other borrowings		-			1,000
Repayments on other borrowings		(2,206	)		(9,346	)
Proceeds from exercise of stock options		22			33
Payment of dividends		(951	)		(920	)
Purchase of treasury stock		-			(2,023	)
Net cash provided by (used in) financing activities		52,084			(18,824	)
Net increase in cash and cash equivalents		24,333			15,088
Cash and cash equivalents at beginning of period		84,818			13,694
Cash and cash equivalents at end of period	$	109,151		$	28,782
(Continued)

6

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

(Unaudited)

	Three months ended
(Dollars in thousands)	March 31,
	2021		2020
Supplemental disclosure of cash flow information:
Cash paid for interest	$	419	$	1,258
Cash paid for operating leases		32		44
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to real estate owned		-		314
Investment securities purchases not yet settled		7,028		-

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 22, 2021, 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 three-month interim period ended March 31, 2021 are not necessarily indicative of the results expected for the year ending December 31, 2021 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.

2. Investments

A summary of investment securities available-for-sale is as follows:

	As of March 31, 2021
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value
U. S. treasury securities	$	20,330	$	30	$	(1	)	$	20,359
U. S. federal agency obligations		18,748		123		(10	)		18,861
Municipal obligations, tax exempt		138,162		4,998		(55	)		143,105
Municipal obligations, taxable		39,866		1,376		(104	)		41,138
Agency mortgage-backed securities		89,690		2,456		(159	)		91,987
Certificates of deposit		5,455		-		-			5,455
Total available-for-sale	$	312,251	$	8,983	$	(329	)	$	320,905

	As of December 31, 2020
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value
U. S. treasury securities	$	2,000	$	37	$	-		$	2,037
U. S. federal agency obligations		18,804		138		(18	)		18,924
Municipal obligations, tax exempt		136,321		6,367		(12	)		142,676
Municipal obligations, taxable		46,643		2,892		-			49,535
Agency mortgage-backed securities		75,530		3,108		-			78,638
Certificates of deposit		5,460		-		-			5,460
Total available-for-sale	$	284,758	$	12,542	$	(30	)	$	297,270

The tables above show that some of the securities in the available-for-sale investment portfolio had unrealized losses, or were temporarily impaired, as of March 31, 2021 and December 31, 2020. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date. Securities which were temporarily impaired are shown below, along with the length of time in a continuous unrealized loss position.

			As of March 31, 2021
(Dollars in thousands)			Less than 12 months					12 months or longer				Total
	No. of		Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	securities		value		losses			value		losses		value		losses
U.S. treasury securities		2	$	5,308	$	(1	)	$	-	$	-	$	5,308	$	(1	)
U.S. federal agency obligations		3		8,712		(10	)		-		-		8,712		(10	)
Municipal obligations, tax exempt		24		9,541		(55	)		-		-		9,541		(55	)
Municipal obligations, taxable		8		5,345		(104	)		-		-		5,345		(104	)
Agency mortgage-backed securities		7		21,085		(159	)		-		-		21,085		(159	)
Total		44	$	49,991	$	(329	)	$	-	$	-	$	49,991	$	(329	)

			As of December 31, 2020
(Dollars in thousands)			Less than 12 months					12 months or longer				Total
	No. of		Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	securities		value		losses			value		losses		value		losses
U.S. federal agency obligations		4	$	11,772	$	(18	)	$	-	$	-	$	11,772	$	(18	)
Municipal obligations, tax exempt		12		4,191		(12	)		-		-		4,191		(12	)
Total		16	$	15,963	$	(30	)	$	-	$	-	$	15,963	$	(30	)

8

The Company’s U.S. treasury portfolio consists of securities issued by the United States Department of the 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 U.S. treasury securities identified in the table above were temporarily impaired as of March 31, 2021.

The Company’s U.S. federal agency portfolio consists of securities issued by the government-sponsored agencies of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Bank (“FHLB”). The receipt of principal and interest on U.S. federal agency obligations is guaranteed by the respective government-sponsored agency guarantor, such that the Company believes that its U.S. federal agency obligations do not expose the Company to credit-related losses. 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 their cost basis, the Company believed that the U.S. federal agency obligations identified in the tables above were temporarily impaired as of March 31, 2021 and December 31, 2020.

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. As of March 31, 2021, the Company did not intend to sell and it is more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of its cost. 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 March 31, 2021 and December 31, 2020.

The Company’s agency mortgage-backed securities portfolio consists of securities underwritten to the standards of and guaranteed by the government-sponsored agencies of FHLMC, FNMA 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 March 31, 2021.

The table below sets forth amortized cost and fair value of investment securities at March 31, 2021. 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.

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Due in less than one year	$	28,023	$	28,100
Due after one year but within five years		167,223		170,860
Due after five years but within ten years		58,457		60,891
Due after ten years		58,548		61,054
Total	$	312,251	$	320,905

Sales proceeds and gross realized gains and losses on sales of available-for-sale securities were as follows for the periods indicated:

(Dollars in thousands)	Three months ended March 31,
	2021		2020
Sales proceeds	$	13,346	$	44,508
Realized gains	$	1,075	$	1,772
Realized losses		0		(2	)
Net realized gains	$	1,075	$	1,770

Securities with carrying values of $285.0 million and $282.2 million were pledged to secure public funds on deposit, repurchase agreements and as collateral for borrowings at March 31, 2021 and December 31, 2020, respectively. Except for U.S. federal agency obligations, no investment in a single issuer exceeded 10% of consolidated stockholders’ equity.

9

3. Loans and Allowance for Loan Losses

Loans consisted of the following as of the dates indicated below:

	March 31,			December 31,
(Dollars in thousands)	2021			2020
One-to-four family residential real estate loans	$	159,798		$	157,984
Construction and land loans		26,591			26,106
Commercial real estate loans		179,781			172,307
Commercial loans		126,998			134,047
Paycheck protection program loans		117,297			100,084
Agriculture loans		92,486			96,532
Municipal loans		2,183			2,332
Consumer loans		25,557			24,122
Total gross loans		730,691			713,514
Net deferred loan (fees) costs and loans in process		(3,611	)		(1,957	)
Allowance for loan losses		(9,271	)		(8,775	)
Loans, net	$	717,809		$	702,782

The following tables provide information on the Company’s allowance for loan losses by loan class and allowance methodology:

	Three months ended March 31, 2021
(Dollars in thousands)	One-to-four family residential real estate loans			Construction and land loans		Commercial real estate loans		Commercial loans			Paycheck protection program loans		Agriculture loans			Municipal loans			Consumer loans			Total
Allowance for loan losses:
Balance at January 1, 2021	$	859		$	181	$	2,482	$	2,388		$	-	$	2,690		$	6		$	169		$	8,775
Charge-offs		(23	)		-		-		-			-		-			-			(41	)		(64	)
Recoveries		1			1		-		1			-		-			6			51			60
Provision for loan losses		60			4		775		(143	)		-		(187	)		(6	)		(3	)		500
Balance at March 31, 2021	$	897		$	186	$	3,257	$	2,246		$	-	$	2,503		$	6		$	176		$	9,271

	Three months ended March 31, 2020
(Dollars in thousands)	One-to-four family residential real estate loans		Construction and land loans			Commercial real estate loans		Commercial loans			Paycheck protection program loans		Agriculture loans		Municipal loans			Consumer loans			Total
Allowance for loan losses:
Balance at January 1, 2020	$	501	$	271		$	1,386	$	1,815		$	-	$	2,347	$	7		$	140		$	6,467
Charge-offs		-		(100	)		-		(33	)		-		-		-			(87	)		(220	)
Recoveries		-		-			-		1			-		-		6			25			32
Provision for loan losses		152		54			242		642			-		34		(6	)		82			1,200
Balance at March 31, 2020	$	653	$	225		$	1,628	$	2,425		$	-	$	2,381	$	7		$	160		$	7,479

10

	As of March 31, 2021
(Dollars in thousands)	One-to-four family residential real estate loans		Construction and land loans		Commercial real estate loans		Commercial loans		Paycheck protection program loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for loan losses:
Individually evaluated for loss	$	-	$	-	$	424	$	28	$	-	$	40	$	-	$	-	$	492
Collectively evaluated for loss		897		186		2,833		2,218		-		2,463		6		176		8,779
Total	$	897	$	186	$	3,257	$	2,246	$	-	$	2,503	$	6	$	176	$	9,271
Loan balances:
Individually evaluated for loss	$	956	$	1,027	$	7,874	$	1,679	$	-	$	1,182	$	36	$	4	$	12,758
Collectively evaluated for loss		158,842		25,564		171,907		125,319		117,297		91,304		2,147		25,553		717,933
Total	$	159,798	$	26,591	$	179,781	$	126,998	$	117,297	$	92,486	$	2,183	$	25,557	$	730,691

	As of December 31, 2020
(Dollars in thousands)	One-to-four family residential real estate loan		Construction and land loans		Commercial real estate loans		Commercial loans		Paycheck protection program loans		Agriculture loans		Municipal loans		Consumer loans		Total
Allowance for loan losses:
Individually evaluated for loss	$	-	$	-	$	177	$	22	$	-	$	67	$	-	$	-	$	266
Collectively evaluated for loss		859		181		2,305		2,366		-		2,623		6		169		8,509
Total	$	859	$	181	$	2,482	$	2,388	$	-	$	2,690	$	6	$	169	$	8,775
Loan balances:
Individually evaluated for loss	$	914	$	1,137	$	8,119	$	1,639	$	-	$	614	$	36	$	3	$	12,462
Collectively evaluated for loss		157,070		24,969		164,188		132,408		100,084		95,918		2,296		24,119		701,052
Total	$	157,984	$	26,106	$	172,307	$	134,047	$	100,084	$	96,532	$	2,332	$	24,122	$	713,514

The Company recorded net loan charge-offs of $4,000 during the first quarter of 2021 compared to net loan charge-offs of $188,000 during the first quarter of 2020.

11

The Company’s impaired loans increased from $12.5 million at December 31, 2020 to $12.8 million at March 31, 2021. The difference between the unpaid contractual principal and the impaired loan balance is a result of charge-offs recorded against impaired loans. The difference in the Company’s non-accrual loan balances and impaired loan balances at March 31, 2021 and December 31, 2020, was related to troubled debt restructurings (“TDR”) that are current and accruing interest, but still classified as impaired. Interest income recognized on a cash basis was immaterial during the three months ended March 31, 2021 and 2020. The following tables present information on impaired loans:

(Dollars in thousands)	As of March 31, 2021
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	956	$	956	$	956	$	-	$	-	$	963	$	2
Construction and land		2,762		1,027		1,027		-		-		1,043		6
Commercial real estate		7,874		7,874		2,404		5,470		424		7,875		9
Commercial		2,030		1,679		1,561		118		28		1,705		10
Agriculture		1,397		1,182		1,131		51		40		1,237		16
Municipal		36		36		36		-		-		36		-
Consumer		4		4		4		-		-		5		-
Total impaired loans	$	15,059	$	12,758	$	7,119	$	5,639	$	492	$	12,864	$	43

(Dollars in thousands)	As of December 31, 2020
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	914	$	914	$	914	$	-	$	-	$	925	$	3
Construction and land		2,872		1,137		1,137		-		-		1,211		26
Commercial real estate		8,119		8,119		4,302		3,817		177		8,152		8
Commercial		1,990		1,639		1,543		96		22		1,984		43
Agriculture		829		614		538		76		67		618		67
Municipal		36		36		36		-		-		54		1
Consumer		3		3		3		-		-		4		-
Total impaired loans	$	14,763	$	12,462	$	8,473	$	3,989	$	266	$	12,948	$	148

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 March 31, 2021 or December 31, 2020.

12

The following tables present information on the Company’s past due and non-accrual loans by loan class:

(Dollars in thousands)	As of March 31, 2021
	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	$	1,268		$	124		$	-		$	1,392		$	793		$	2,185		$	157,613
Construction and land loans		-			-			-			-			691			691			25,900
Commercial real estate loans		-			-			-			-			7,874			7,874			171,907
Commercial loans		1,587			-			-			1,587			947			2,534			124,464
Paycheck protection program loans		-			-			-			-			-			-			117,297
Agriculture loans		1,583			424			-			2,007			706			2,713			89,773
Municipal loans		-			-			-			-			-			-			2,183
Consumer loans		15			24			-			39			4			43			25,514
Total	$	4,453		$	572		$	-		$	5,025		$	11,015		$	16,040		$	714,651
Percent of gross loans		0.61	%		0.08	%		0.00	%		0.69	%		1.51	%		2.20	%		97.80	%

(Dollars in thousands)	As of December 31, 2020
	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	$	262		$	185		$	-		$	447		$	749		$	1,196		$	156,788
Construction and land loans		-			-			-			-			694			694			25,412
Commercial real estate loans		-			-			-			-			8,119			8,119			164,188
Commercial loans		832			-			-			832			874			1,706			132,341
Paycheck protection program loans		-			-			-			-			-			-			100,084
Agriculture loans		206			29			-			235			76			311			96,221
Municipal loans		-			-			-			-			-			-			2,332
Consumer loans		15			1			-			16			3			19			24,103
Total	$	1,315		$	215		$	-		$	1,530		$	10,515		$	12,045		$	701,469
Percent of gross loans		0.19	%		0.03	%		0.00	%		0.22	%		1.47	%		1.69	%		98.31	%

13

Under the original terms of the Company’s non-accrual loans, interest earned on such loans for the three months ended March 31, 2021 and 2020 would have increased interest income by $186,000 and $120,000, respectively. No interest income related to non-accrual loans was included in interest income for the three months ended March 31, 2021 and 2020.

The Company also categorizes loans into risk categories based on relevant information about the ability of the 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.

The following table provides information on the Company’s risk categories by loan class:

	As of March 31, 2021				As of December 31, 2020
(Dollars in thousands)	Nonclassified		Classified		Nonclassified		Classified
One-to-four family residential real estate loans	$	155,668	$	4,130	$	154,985	$	2,999
Construction and land loans		25,900		691		25,412		694
Commercial real estate loans		168,909		10,872		161,661		10,646
Commercial loans		125,069		1,929		132,023		2,024
Paycheck protection program loans		117,297		-		100,084		-
Agriculture loans		85,305		7,181		87,662		8,870
Municipal loan		2,183		-		2,332		-
Consumer loans		25,554		3		24,119		3
Total	$	705,885	$	24,806	$	688,278	$	25,236

At March 31, 2021, the Company had ten loan relationships consisting of 21 outstanding loans that were classified as TDRs. During the first quarter of 2021, one commercial loan totaling $47,000 was classified as a TDR after extending the maturity of the loan. The restructuring changed the payment terms to match the borrower’s cash flows. The Company had previously charged-off $100,000 of the loan due to a collateral shortfall. A construction and land loan previously classified as TDR in 2012 paid off during the first three months of 2021. There were no loans classified as TDRs during the first three months of 2020.

14

The Company evaluates each TDR individually and returns the loan to accrual status when a payment history is established after the restructuring and future payments are reasonably assured. There were no loans modified as TDRs for which there was a payment default within 12 months of modification as of March 31, 2021 and 2020. The Company did not record any charge-offs against loans classified as TDRs in the first quarter of 2021 or 2020. No credit provisions related to TDRs were recorded in the three months ended March 31, 2021 compared to a credit provision of $1,000 recorded in the three months ended March 31, 2020. The Company allocated $8,000 of the allowance for loan losses recorded against loans classified as TDRs at March 31, 2021 and December 31, 2020.

The following table presents information on loans that are classified as TDRs:

(Dollars in thousands)
	As of March 31, 2021						As of December 31, 2020
	Number of loans		Non-accrual balance		Accruing balance		Number of loans		Non-accrual balance		Accruing balance
One-to-four family residential real estate loans		2	$	-	$	163		2	$	-	$	165
Construction and land loans		4		691		336		5		693		443
Commercial real estate loans		2		1,227		-		2		1,227		-
Commercial loans		8		80		732		7		33		765
Agriculture loans		4		-		476		4		-		538
Municipal loan		1		-