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 September 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 November 09, 2022, the issuer had outstanding 4,966,884 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
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
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)	September 30,			December 31,
	2022			2021
	(Unaudited)
Assets
Cash and cash equivalents	$	49,234		$	189,213
Interest-bearing deposits at other banks		8,844			7,378
Investment securities available-for-sale, at fair value		484,106			380,717
Bank stocks, at cost		6,641			2,905
Loans, net of allowance for loans losses of $8,858 and $8,775		702,138			653,233
Loans held for sale, at fair value		2,741			4,795
Bank owned life insurance		32,672			32,106
Premises and equipment, net		20,628			20,803
Goodwill		17,532			17,532
Other intangible assets, net		36			84
Mortgage servicing rights		3,980			4,193
Real estate owned, net		1,288			2,551
Accrued interest and other assets		25,456			13,458
Total assets	$	1,355,296		$	1,328,968
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing demand	$	347,942		$	350,005
Money market and checking		504,973			536,868
Savings		170,988			155,501
Certificates of deposit		93,234			106,107
Total deposits		1,117,137			1,148,481
Federal Home Loan Bank borrowings		74,900			-
Subordinated debentures		21,651			21,651
Other borrowings		16,349			7,403
Accrued interest and other liabilities		19,775			15,790
Total liabilities		1,249,812			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; 5,015,122 and 4,997,459 shares issued at September 30, 2022 and December 31, 2021, respectively		50			50
Additional paid-in capital		79,329			79,120
Retained earnings		58,114			52,593
Treasury stock, at cost; 41,821 and 0 shares at September 30, 2022 and December 31, 2021, respectively		(1,040	)		-
Accumulated other comprehensive (loss) income		(30,969	)		3,880
Total stockholders’ equity		105,484			135,643
Total liabilities and stockholders’ equity	$	1,355,296		$	1,328,968

See accompanying notes to consolidated financial statements.

2

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

	Three months ended					Nine months ended
(Dollars in thousands, except per share amounts)	September 30,					September 30,
	2022			2021		2022			2021
Interest income:
Loans	$	8,025		$	8,461	$	22,372		$	25,705
Investment securities:
Taxable		1,783			782		4,379			2,356
Tax-exempt		780			748		2,232			2,285
Total interest income		10,588			9,991		28,983			30,346
Interest expense:
Deposits		771			258		1,324			800
Borrowings		366			120		665			362
Total interest expense		1,137			378		1,989			1,162
Net interest income		9,451			9,613		26,994			29,184
Provision for loan losses		500			-		-			500
Net interest income after provision for loan losses		8,951			9,613		26,994			28,684
Non-interest income:
Fees and service charges		2,511			2,268		7,079			6,454
Gains on sales of loans, net		1,049			2,660		3,027			8,664
Bank owned life insurance		189			193		566			494
(Losses) gains on sales of investment securities, net		(353	)		30		(353	)		1,138
Other		133			314		569			913
Total non-interest income		3,529			5,465		10,888			17,663
Non-interest expense:
Compensation and benefits		5,051			5,132		14,779			15,096
Occupancy and equipment		1,335			1,101		3,745			3,268
Data processing		383			498		1,085			1,491
Amortization of mortgage servicing rights and other intangibles		314			376		965			1,225
Professional fees		472			413		1,338			1,236
Acquisition costs		134			-		355			-
Other		1,769			1,923		5,051			5,390
Total non-interest expense		9,458			9,443		27,318			27,706
Earnings before income taxes		3,022			5,635		10,564			18,641
Income tax expense		522			1,118		1,898			3,777
Net earnings	$	2,500		$	4,517	$	8,666		$	14,864
Earnings per share:
Basic (1)	$	0.50		$	0.90	$	1.74		$	2.98
Diluted (1)	$	0.50		$	0.90	$	1.73		$	2.97
Dividends per share (1)	$	0.21		$	0.19	$	0.63		$	0.57

(1) Per share amounts for the periods ended September 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						Nine months ended
(Dollars in thousands)	September 30,						September 30,
	2022			2021			2022			2021
Net earnings	$	2,500		$	4,517		$	8,666		$	14,864
Net unrealized holding losses on available-for-sale securities		(17,324	)		(754	)		(46,510	)		(3,544	)
Reclassification adjustment for net losses (gains) included in earnings		353			(30	)		353			(1,138	)
Net unrealized losses		(16,971	)		(784	)		(46,157	)		(4,682	)
Income tax effect on net (losses) gains included in earnings		(86	)		8			(87	)		279
Income tax effect on net unrealized holding losses		4,244			184			11,395			868
Other comprehensive loss		(12,813	)		(592	)		(34,849	)		(3,535	)
Total comprehensive (loss) income	$	(10,313	)	$	3,925		$	(26,183	)	$	11,329

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 July 1, 2021	$	48	$	72,413	$	53,391		$	-		$	6,504		$	132,356
Net earnings		-		-		4,517			-			-			4,517
Other comprehensive loss		-		-		-			-			(592	)		(592	)
Dividends paid ($0.19 per share)		-		-		(951	)		-			-			(951	)
Issuance of Restricted common stock, 2,880 shares		-		-		-			-			-			-
Stock-based compensation		-		76		-			-			-			76
Exercise of stock options, 152 shares		-		-		-			-			-			-
Balance at September 30, 2021	$	48	$	72,489	$	56,957		$	-		$	5,912		$	135,406
Balance at July 1, 2022	$	50	$	79,284	$	56,662		$	(538	)	$	(18,156	)	$	117,302
Net earnings		-		-		2,500						-			2,500
Other comprehensive loss		-		-		-						(12,813	)		(12,813	)
Dividends paid ($0.21 per share)		-		-		(1,048	)					-			(1,048	)
Issuance of Restricted common stock, 17,551 shares		-		-		-			-			-			-
Stock-based compensation		-		45		-			-			-			45
Exercise of stock options, 112 shares		-		-		-			-			-			-
Purchase of 19,691 treasury shares		-		-		-			(502	)		-			(502	)
Balance at September 30, 2022	$	50	$	79,329	$	58,114		$	(1,040	)	$	(30,969	)	$	105,484

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		-		-		14,864			-			-			14,864
Other comprehensive loss		-		-		-			-			(3,535	)		(3,535	)
Dividends paid ($0.57 per share)		-		-		(2,854	)		-			-			(2,854	)
Issuance of Restricted common stock, 2,880 shares		-		-		-			-			-			-
Stock-based compensation		-		237		-			-			-			237
Exercise of stock options, 5,918 shares		-		22		-			-			-			22
Balance at September 30, 2021	$	48	$	72,489	$	56,957		$	-		$	5,912		$	135,406
Balance at January 1, 2022	$	50	$	79,120	$	52,593		$	-		$	3,880		$	135,643
Net earnings		-		-		8,666			-			-			8,666
Other comprehensive loss		-		-		-			-			(34,849	)		(34,849	)
Dividends paid ($0.63 per share)		-		-		(3,145	)		-			-			(3,145	)
Issuance of Restricted common stock,17,551 shares		-		-		-			-			-			-
Stock-based compensation		-		209		-			-			-			209
Exercise of stock options, 112 shares		-		-		-			-			-			-
Purchase of 40,806 treasury shares		-		-		-			(1,040	)		-			(1,040	)
Balance at September 30, 2022	$	50	$	79,329	$	58,114		$	(1,040	)	$	(30,969	)	$	105,484

See accompanying notes to consolidated financial statements.

5

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine months ended
(Dollars in thousands)	September 30,
	2022			2021
Cash flows from operating activities:
Net earnings	$	8,666		$	14,864
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for loan losses		-			500
Valuation allowance on real estate owned		-			48
Amortization of investment security premiums, net		1,272			1,481
Amortization of purchase accounting adjustment on loans		(22	)		(43	)
Amortization of mortgage servicing rights and other intangibles		965			1,225
Depreciation		836			742
Increase in cash surrender value of bank owned life insurance		(566	)		(494	)
Stock-based compensation		209			237
Deferred income taxes		139			105
Net losses (gains) on sales of investment securities		353			(1,138	)
Net gains on sales of premises and equipment and foreclosed assets		(114	)		(24	)
Net gains on sales of loans		(3,027	)		(8,664	)
Proceeds from sales of loans		124,886			277,635
Origination of loans held for sale		(120,509	)		(263,965	)
Changes in assets and liabilities:
Accrued interest and other assets		(828	)		906
Accrued expenses, taxes, and other liabilities		2,243			2,560
Net cash provided by operating activities		14,503			25,975
Cash flows from investing activities:
Net (increase) decrease in loans		(48,883	)		44,224
Net change in interest-bearing deposits at banks		(1,482	)		(2,185	)
Maturities and prepayments of investment securities		40,885			36,949
Purchases of investment securities		(201,511	)		(132,132	)
Proceeds from sales of investment securities		11,210			16,623
Redemption of bank stocks		185			2,277
Purchase of bank stocks		(3,921	)		(789	)
Purchase bank owned life insurance		-			(6,000	)
Proceeds from sales of premises and equipment and foreclosed assets		1,379			488
Purchases of premises and equipment, net		(661	)		(610	)
Net cash used in investing activities		(202,799	)		(41,155	)
Cash flows from financing activities:
Net (decrease) increase in deposits		(31,344	)		50,660
Federal Home Loan Bank advance borrowings		178,139			-
Federal Home Loan Bank advance repayments		(103,239	)		-
Proceeds from other borrowings		10,000			-
Repayments on other borrowings		(1,054	)		(152	)
Proceeds from exercise of stock options		-			22
Payment of dividends		(3,145	)		(2,854	)
Purchase of treasury stock		(1,040	)		-
Net cash provided by financing activities		48,317			47,676
Net (decrease) increase in cash and cash equivalents		(139,979	)		32,496
Cash and cash equivalents at beginning of period		189,213			84,818
Cash and cash equivalents at end of period	$	49,234		$	117,314

(Continued)

6

LANDMARK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

(Unaudited)

	Nine months ended
(Dollars in thousands)	September 30,
	2022		2021
Supplemental disclosure of cash flow information:
Cash payments for income taxes	$	320	$	4,390
Cash paid for interest		1,866		1,195
Cash paid for operating leases		128		108
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to real estate owned		-		1,193
Investment securities purchases not yet settled		1,740		5,528
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 nine-month interim period ended September 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 October 1, 2022, the Company completed its acquisition of 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 September 30, 2022, Freedom Bank reported total assets of $201.9 million, gross loans of $118.0 million, and total deposits of $150.4 million. The acquisition will be accounted for as a business combination under ASC 805.

3. Investments

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

	As of September 30, 2022
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
(Dollars in thousands)	cost		gains		losses			fair value
U. S. treasury securities	$	136,007	$	-	$	(8,562	)	$	127,445
U. S. federal agency obligations		5,013		-		(34	)		4,979
Municipal obligations, tax exempt		136,969		1		(8,578	)		128,392
Municipal obligations, taxable		68,007		3		(