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 June 30, 2022

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 August 11, 2022, the issuer had outstanding 4,976,344 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 - 25
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26-35
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35-37
Item 4.	Controls and Procedures	37
PART II
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	39
	Signature Page	40

1

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)	June 30,			December 31,
	2022			2021
		(Unaudited)
Assets
Cash and cash equivalents	$	30,413		$	189,213
Interest-bearing deposits at other banks		8,360			7,378
Investment securities available-for-sale, at fair value		486,633			380,717
Bank stocks, at cost		2,881			2,905
Loans, net of allowance for loans losses of $8,315 and $8,775		661,830			653,233
Loans held for sale, at fair value		6,264			4,795
Bank owned life insurance		32,483			32,106
Premises and equipment, net		20,679			20,803
Goodwill		17,532			17,532
Other intangible assets, net		52			84
Mortgage servicing rights		4,025			4,193
Real estate owned, net		1,288			2,551
Accrued interest and other assets		19,911			13,458
Total assets	$	1,292,351		$	1,328,968
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing demand	$	343,107		$	350,005
Money market and checking		520,056			536,868
Savings		170,419			155,501
Certificates of deposit		97,885			106,107
Total deposits		1,131,467			1,148,481
Subordinated debentures		21,651			21,651
Other borrowings		6,223			7,403
Accrued interest and other liabilities		15,708			15,790
Total liabilities		1,175,049			1,193,325
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; 4,997,459 and 4,997,459 shares issued at June 30, 2022 and December 31, 2021, respectively		50			50
Additional paid-in capital		79,284			79,120
Retained earnings		56,662			52,593
Treasury stock, at cost; 21,115 and 0 shares at June 30, 2022 and December 31, 2021, respectively		(538	)		-
Accumulated other comprehensive (loss) income		(18,156	)		3,880
Total stockholders’ equity		117,302			135,643
Total liabilities and stockholders’ equity	$	1,292,351		$	1,328,968

See accompanying notes to consolidated financial statements.

2

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

	Three months ended				Six months ended
(Dollars in thousands, except per share amounts)	June 30,				June 30,
	2022		2021		2022			2021
Interest income:
Loans	$	7,156	$	8,840	$	14,347		$	17,244
Investment securities:
Taxable		1,543		763		2,596			1,574
Tax-exempt		730		759		1,452			1,537
Total interest income		9,429		10,362		18,395			20,355
Interest expense:
Deposits		358		261		553			542
Borrowings		173		121		299			242
Total interest expense		531		382		852			784
Net interest income		8,898		9,980		17,543			19,571
Provision for (reversal of) loan losses		-		-		(500	)		500
Net interest income after provision for loan losses		8,898		9,980		18,043			19,071
Non-interest income:
Fees and service charges		2,380		2,153		4,568			4,186
Gains on sales of loans, net		1,073		2,864		1,978			6,004
Bank owned life insurance		190		153		377			301
Gains on sales of investment securities, net		-		33		-			1,108
Other		153		270		436			599
Total non-interest income		3,796		5,473		7,359			12,198
Non-interest expense:
Compensation and benefits		4,953		5,023		9,728			9,964
Occupancy and equipment		1,177		1,105		2,410			2,167
Data processing		362		492		702			993
Amortization of mortgage servicing rights and other intangibles		335		412		651			849
Professional fees		415		431		866			823
Acquisition costs		221		-		221			-
Other		1,559		1,727		3,282			3,467
Total non-interest expense		9,022		9,190		17,860			18,263
Earnings before income taxes		3,672		6,263		7,542			13,006
Income tax expense		639		1,283		1,376			2,659
Net earnings	$	3,033	$	4,980	$	6,166		$	10,347
Earnings per share:
Basic (1)	$	0.61	$	1.00	$	1.24		$	2.07
Diluted (1)	$	0.61	$	0.99	$	1.23		$	2.07
Dividends per share (1)	$	0.21	$	0.19	$	0.42		$	0.38

(1) Per share amounts for the periods ended June 30, 2021 have been adjusted to give effect to the 5% stock dividend paid during December 2021.

See accompanying notes to consolidated financial statements.

3

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three months ended						Six months ended
(Dollars in thousands)	June 30,						June 30,
	2022			2021			2022			2021
Net earnings	$	3,033		$	4,980		$	6,166		$	10,347
Net unrealized holding losses on available-for-sale securities		(10,247	)		(7	)		(29,186	)		(2,790	)
Reclassification adjustment for net gains included in earnings		-			(33	)		-			(1,108	)
Net unrealized losses		(10,247	)		(40	)		(29,186	)		(3,898	)
Income tax effect on net gains included in earnings		-			8			-			271
Income tax effect on net unrealized holding losses		2,511			2			7,150			684
Other comprehensive loss		(7,736	)		(30	)		(22,036	)		(2,943	)
Total comprehensive (loss) income	$	(4,703	)	$	4,950		$	(15,870	)	$	7,404

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 (loss)			Total
Balance at April 1, 2021	$	48	$	72,336	$	49,363		$	-		$	6,534		$	128,281
Net earnings		-		-		4,980			-			-			4,980
Other comprehensive loss		-		-		-			-			(30	)		(30	)
Dividends paid ($0.19 per share)		-		-		(952	)		-			-			(952	)
Stock-based compensation		-		77		-			-			-			77
Balance at June 30, 2021	$	48	$	72,413	$	53,391		$	-		$	6,504		$	132,356
Balance at April 1, 2022	$	50	$	79,206	$	54,677		$	-		$	(10,420	)	$	123,513
Net earnings		-		-		3,033						-			3,033
Other comprehensive loss		-		-		-						(7,736	)		(7,736	)
Dividends paid ($0.21 per share)		-		-		(1,048	)					-			(1,048	)
Stock-based compensation		-		78		-			-			-			78
Purchase of 21,115 treasury shares		-		-		-			(538	)		-			(538	)
Balance at June 30, 2022	$	50	$	79,284	$	56,662		$	(538	)	$	(18,156	)	$	117,302

See accompanying notes to consolidated financial statements.

(Dollars in thousands, except per share amounts)		Common stock		Additional paid-in capital		Retained earnings			Treasury stock			Accumulated other comprehensive income (loss)			Total
Balance at January 1, 2021	$	48	$	72,230	$	44,947		$	-		$	9,447		$	126,672
Net earnings		-		-		10,347			-			-			10,347
Other comprehensive loss		-		-		-			-			(2,943	)		(2,943	)
Dividends paid ($0.38 per share)		-		-		(1,903	)		-			-			(1,903	)
Stock-based compensation		-		161		-			-			-			161
Exercise of stock options, 6,054 shares		-		22		-			-			-			22
Balance at June 30, 2021	$	48	$	72,413	$	53,391		$	-		$	6,504		$	132,356
Balance at January 1, 2022	$	50	$	79,120	$	52,593		$	-		$	3,880		$	135,643
Net earnings		-		-		6,166						-			6,166
Other comprehensive loss		-		-		-						(22,036	)		(22,036	)
Dividends paid ($0.42 per share)		-		-		(2,097	)					-			(2,097	)
Stock-based compensation		-		164		-			-			-			164
Purchase of 21,115 treasury shares		-		-		-			(538	)		-			(538	)
Balance at June 30, 2022	$	50	$	79,284	$	56,662		$	(538	)	$	(18,156	)	$	117,302

See accompanying notes to consolidated financial statements.

5

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six months ended
(Dollars in thousands)	June 30,
	2022			2021
Cash flows from operating activities:
Net earnings	$	6,166		$	10,347
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for (reversal of) loan losses		(500	)		500
Valuation allowance on real estate owned		-			48
Amortization of investment security premiums, net		978			911
Amortization of purchase accounting adjustment on loans		(9	)		(23	)
Amortization of mortgage servicing rights and other intangibles		651			849
Depreciation		563			490
Increase in cash surrender value of bank owned life insurance		(377	)		(301	)
Stock-based compensation		164			161
Deferred income taxes		(70	)		(413	)
Net gains on sales of investment securities		-			(1,108	)
Net gains on sales of premises and equipment and foreclosed assets		(114	)		(5	)
Net gains on sales of loans		(1,978	)		(6,004	)
Proceeds from sales of loans		79,920			198,893
Origination of loans held for sale		(79,862	)		(189,500	)
Changes in assets and liabilities:
Accrued interest and other assets		767			1,673
Accrued expenses, taxes, and other liabilities		(769	)		(2,035	)
Net cash provided by operating activities		5,530			14,483
Cash flows from investing activities:
Net (increase) decrease in loans		(8,088	)		28,609
Net change in interest-bearing deposits at banks		(993	)		245
Maturities and prepayments of investment securities		24,097			21,978
Purchases of investment securities		(159,481	)		(87,822	)
Proceeds from sales of investment securities		-			15,224
Redemption of bank stocks		185			1,967
Purchase of bank stocks		(161	)		(714	)
Purchase bank owned life insurance		-			(6,000	)
Proceeds from sales of premises and equipment and foreclosed assets		1,379			346
Purchases of premises and equipment, net		(439	)		(134	)
Net cash used in investing activities		(143,501	)		(26,301	)
Cash flows from financing activities:
Net (decrease) increase in deposits		(17,014	)		61,736
Repayments on other borrowings		(1,180	)		(1,837	)
Proceeds from exercise of stock options		-			22
Payment of dividends		(2,097	)		(1,903	)
Purchase of treasury stock		(538	)		-
Net cash (used in) provided by financing activities		(20,829	)		58,018
Net (decrease) increase in cash and cash equivalents		(158,800	)		46,200
Cash and cash equivalents at beginning of period		189,213			84,818
Cash and cash equivalents at end of period	$	30,413		$	131,018

See accompanying notes to consolidated financial statements.

6

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

(Unaudited)

	Six months ended
(Dollars in thousands)	June 30,
	2022		2021
Supplemental disclosure of cash flow information:
Cash payments for income taxes	$	20	$	3,958
Cash paid for interest		845		804
Cash paid for operating leases		97		76
Supplemental schedule of noncash investing and financing activities:
Investment securities purchases not yet settled		685		-
Operating lease asset and related lease liability recorded		-		219

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, 2022, 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 six-month interim period ended June 30, 2022 are not necessarily indicative of the results expected for the year ending December 31, 2022 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. Acquisition

On June 28, 2022, the Company announced the execution of a definitive agreement to acquire Freedom Bancshares, Inc., the holding company of Freedom Bank. Freedom Bank was founded in 2006 and operates out of a single location in Overland Park, Kansas. As of June 30, 2022, Freedom Bank reported total assets of $216.2 million, net loans of $121.0 million, and total deposits of $162.4 million. The acquisition is expected to close in the fourth quarter of 2022 subject to regulatory approval, customary closing requirements and approval of the shareholders of Freedom Bancshares, Inc.

3. Investments

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

	As of June 30, 2022
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value
U. S. treasury securities	$	141,227	$	-	$	(5,768	)	$	135,459
U. S. federal agency obligations		15,072		-		(141	)		14,931
Municipal obligations, tax exempt		138,153		127		(3,286	)		134,994
Municipal obligations, taxable		52,569		18		(3,231	)		49,356
Agency mortgage-backed securities		163,660