Landmark Bancorp Reports Q2 2026 Results: Full Earnings Call Transcript

On Thursday, Landmark Bancorp (NASDAQ: LARK ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit View the webcast at Summary Landmark Bancorp Inc.

88, driven by higher net interest income and gains on sale revenue. 7 million due to a reduction in broker deposits. 17% of average loans. Strategic initiatives include expanding talent acquisition and leadership roles, especially in key regions like Kansas City, to drive future growth.

21 per share cash dividend, marking its 100th consecutive quarterly dividend, reflecting a strong commitment to shareholder value. Management expressed cautious optimism about future growth, emphasizing disciplined growth strategies and strong underwriting standards. Full Transcript Carly, Operator Thank you for standing by. My name is Carly and I will be your conference operator today.

At this time, I would like to welcome everyone to the Landmark Bancorp Inc. second quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session.

If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the conference over to Shelly Reed, Head of Investor Relations.

You may begin. Shelley Reed, EVP, Corporate Strategy & Development and Investor Relations Thanks, Carly. Good morning everyone and welcome to Landmark Bancorp second quarter earnings conference call. My name is Shelley Reed.

I'm the Head of Corporate Strategy and Development and Investor Relations. Joining me today are several members of our executive leadership team, including our President and CEO Abby Lindell, Chief Financial Officer Mark Herpich and Chief Credit Officer Raymond McLanahan. During today's call, we may make statements that constitute projections, plans, objectives, future performance, beliefs, expectations or similar forward-looking statements. These statements involve risks and uncertainties which should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

We caution that such statements are predictions only and that actual results may differ materially. We include more information on these factors in our earnings release furnished with our Form 8-K yesterday, as well as our Form 10-K and Form 10-Q filings and subsequent filings with the SEC. Additionally, all statements, including forward-looking statements, speak only as of the date they're made and Landmark undertakes no obligation to update any statement in light of new information or future events. Also, our remarks may reference certain non-GAAP financial metrics we believe provide useful information to investors.

com. We caution that these non-GAAP financial metrics should not be viewed as a substitute for operating results determined in accordance with GAAP as contained in our earnings release and other filings with the SEC. A replay of this call will be available through August 6, 2026. Access information can be found in our earnings release.

I will now turn the conference call over to our President and Chief Executive Officer, Abby Lindell. Abby Lindell, President & CEO Thanks, Shelley. Good morning everyone and thank you for joining us today. I am pleased to report that Landmark delivered strong second quarter 2026 financial results.

Highlights from these results included record revenue and increased profitability driven by continued execution of our disciplined growth strategy. 2 million driven by higher net interest income and increased gain on sale revenue. 23%. I am pleased with these results which reflect the strength of our relationship-based banking model, disciplined pricing strategies and prudent balance sheet management.

Landmark's commercial lending teams found opportunities to win new and expand existing customer relationships within markets we serve in the second quarter. Their efforts resulted in positive loan growth in commercial and agricultural loan portfolios compared to the first quarter of 2026. Commercial loan payoffs moderated during the second quarter, also contributing to the quarter-over-quarter growth in these portfolios. We remain cautiously optimistic, however, about our growth outlook for the second half of the year.

Competition remains strong across the markets we serve, not only for customer relationships but also for talent. As part of our growth initiatives, we are investing in practices to acquire, develop and retain exceptional talent to strengthen our portfolio management capabilities and drive future relationship-based growth. During the quarter, for example, we elevated an internal candidate to lead commercial banking in our central, western and southeastern Kansas region who's reporting directly to me. These regions represent important markets for Landmark and this investment reinforces our long-term commitment to the customers and communities we serve.

These investments in leadership and talent are supporting growth across our footprint including in larger metro areas like the Kansas City metropolitan market where we continue to successfully expand our customer base. 7 million reduction in broker deposits. 4%. 3% reflecting the benefits of our disciplined adjustments to our funding strategy.

Growing our core deposit franchise remains a strategic priority and we are focused on acquiring new customers and expanding full-service banking relationships across all business lines. 13% of average loans in the first quarter of 2026. As we monitor our loan portfolio, we are doing so with a bias toward action and proactively addressing deteriorating credits. As we elevate expectations across the board, we are strengthening our credit culture.

Simultaneously, we are proactively addressing credits that no longer meet our credit risk profile and strengthening the overall quality of the loan portfolio. Before turning the call over to Mark, I would also like to highlight the continued strength of our balance sheet and the growth in our tangible equity during the quarter. 44%. 21 per share payable on August 27, 2026 to shareholders of record as of August 13, 2026.

This dividend marks the Company's 100th consecutive quarterly cash dividend since the formation of the holding company in 2001, underscoring our long-standing commitment to delivering value to shareholders. I will now turn the call over to Mark Herpich, our Chief Financial Officer, who will discuss our financial results in greater detail. Mark Herpich, Chief Financial Officer Thanks Abby and good morning to everyone. While Abby has just provided a highlight of our overall strong financial performance this year, I'll provide some further detail on our second quarter results.

1 million in the first quarter of 2026, mainly due to continued growth in net interest income and gain on sale of loans. 1 million, an increase of $57,000 compared to the first quarter of 2026, driven by increased investment portfolio yields and lower funding costs. 4 million compared to the same period of the prior year. 66%.

7 million increase in nonaccrual loans. 3 billion in the second quarter. The decline in deposits relates to a reduction in the level of broker deposits as we strategically elected to utilize our Federal Home Loan Bank borrowing line more heavily during the second quarter. 0 million.

82% compared to the prior quarter mainly due to lower rates on deposits. Interest expense on borrowed funds increased by $208,000 compared to the prior quarter due to higher average balances which were partially offset by lower borrowing rates. 54% in the second quarter as a result of the lower short-term rates. 22% in the second quarter of 2026 as compared to the first quarter of 2026 and improved 39 basis points as compared to the second quarter of 2025.

1 million this quarter, an increase of $331,000 compared to the prior quarter and an increase of $469,000 compared to the second quarter of 2025. The increase in comparison to the prior quarter resulted primarily from a $356,000 increase in gains on sale of loans due to an increase in the volume of loans sold in the secondary market during the second quarter of 2026. 0 million, an increase of $63,000 compared to the prior quarter.

This increase related primarily to increases of $487,000 in professional fees and $246,000 in compensation and benefits expense which were partially offset by decreases of $364,000 in other expense and $243,000 in occupancy and equipment expense. The increase in professional fees related primarily to forensic accounting and one-time legal costs associated with previously disclosed fraudulent activity by a non-executive officer along with an increase in talent recruitment and development costs. The decrease in other expense was primarily related to $433,000 of fraud losses recognized during the first quarter as previously disclosed.

The recorded fraud loss excludes any potential insurance recoveries. 8%. 1 billion at quarter end. 2 million in the current quarter as compared to the prior quarter.

0 million decrease in our residential real estate portfolio. 3 million during the second quarter of 2026 mainly due to maturities slightly exceeding our level of purchases. 6 million and a roll-off yield of less than 3% which is lower than current yields available on new investments purchased. 6 million as a result of lower interest rates.

7 million in the second quarter compared to the prior quarter. 8 million was related to lower brokered CDs as we were able to leverage slightly lower costs of funding from other borrowing sources like the Federal Home Loan Bank. 7 million growth in money market and checking account balances. 7 million during the quarter as we reduced our brokered deposit balances in connection with the previously discussed transition to less expensive short-term borrowing sources.

5% at June 30 and continues to provide sufficient liquidity to fund expected future loan growth. 50 at March 31. The increase in stockholders' equity this quarter mainly resulted from net earnings for the quarter along with a decrease in other comprehensive losses. Our consolidated and bank regulatory capital ratios as of June 30, 2026 are strong and exceed the regulatory levels required to be considered well capitalized.

Now let me turn the call over to Raymond to review highlights of our loan portfolio and credit risk outlook. Raymond McLanahan, Chief Credit Officer Thank you, Mark, and good morning to everyone. As discussed, overall loan balances grew modestly during the second quarter. 4 million from the prior quarter.

As you can see in our earnings release and as Mark mentioned earlier during this call, we enjoyed growth in construction and land, commercial and agricultural loans. Excluding the decline in one-to-four family residential real estate loan balances, the portfolio grew 4% annualized over the linked quarter. We continue to thrive in working with high-quality operators and remain focused on disciplined growth, strong underwriting standards and pursuit of opportunities that align with our long-term credit strategy. 94% of gross loans at the end of the first quarter.

The increase was largely attributed to two borrower relationships that migrated to nonaccrual status during the quarter. These credits continue to receive heightened attention from management as we work toward the resolution of each relationship. 68% at March 31. While we continue to monitor these relationships closely, the decline in early-stage delinquencies is an encouraging trend and reflects progress on several borrower-specific situations.

Net loan charge-offs during the second quarter totaled $452,000 compared to $349,000 during the first quarter. 13% of average loans during the prior quarter. Historically, we have enjoyed low net charge-off rates and while charge-offs increased modestly during the quarter, they remain manageable relative to the size of the portfolio. 15% of gross loans at June 30, consistent with the prior quarter.

We recorded a $500,000 provision for credit losses during the quarter and believe the allowance remains appropriate based on the composition of the portfolio, identified credit trends and our ongoing review process. While nonperforming loans increased during the quarter due to a limited number of borrower-specific situations that we have been actively monitoring and managing, the increases were partially offset by progress made on other credits. Our focus remains on timely identification of emerging issues, proactive portfolio management and working toward the resolution of challenged credits. With that, I thank you.

I'll turn the call back over to Abby. Abby Lindell, President & CEO Thank you, Raymond. We'll now pause for the Q&A session. Operator As a reminder, if you would like to ask a question at this time, please press star followed by the number one on your telephone keypad.