8-K: Landmark Bancorp Reports 6.3% Increase in Net Earnings for 2024, Declares $0.21 Dividend

Landmark Bancorp, Inc. announces a 6.3% increase in net earnings for the year ended December 31, 2024, and declares a cash dividend of $0.21 per share.

Summary

• Landmark Bancorp, Inc. reported diluted earnings per share of $0.57 for the fourth quarter of 2024, compared to $0.68 in the previous quarter and $0.46 in the same quarter last year.
• Net income for the fourth quarter totaled $3.3 million, compared to $2.6 million in the fourth quarter of 2023 and $3.9 million in the prior quarter.
• The return on average assets for the fourth quarter was 0.83%, the return on average equity was 9.54%, and the efficiency ratio was 70.0%.
• For the year ended December 31, 2024, diluted earnings per share totaled $2.26 compared to $2.13 during 2023.
• Net earnings for 2024 totaled $13.0 million, compared to $12.2 million in 2023, representing a 6.3% increase.
• The return on average assets for the year was 0.83%, the return on average equity was 10.01%, and the efficiency ratio was 69.1%.
• Fourth quarter loan growth totaled $50.5 million, an annualized increase of 20.1% over the prior quarter, and for the year, gross loans grew $103.7 million or 10.9%.
• The net interest margin improved 21 basis points to 3.51% compared to 3.30% in the prior quarter.
• Deposits increased $53.3 million, or 16.6% annualized, from the prior quarter.
• Total borrowings decreased $34.7 million in the fourth quarter.
• A pre-tax loss of $1.0 million was realized in the fourth quarter to reposition a portion of the investment portfolio.
• Credit quality remained good with net charge-offs totaling $219,000 in the fourth quarter.
• The Board of Directors declared a cash dividend of $0.21 per share, payable on March 5, 2025, to stockholders of record as of February 19, 2025.
• The Company issued a 5% stock dividend to common stockholders on December 16, 2024, marking the 24th consecutive year of such dividends.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the increase in net earnings and loan growth, offset by some concerns about non-interest income and expenses.

Positives

• Net earnings increased by 6.3% for the year ended December 31, 2024.
• Diluted earnings per share increased to $2.26 for 2024.
• Net interest margin improved to 3.51% in the fourth quarter of 2024.
• Loan growth was strong in the fourth quarter, with an annualized increase of 20.1%.
• Deposits increased by $53.3 million in the fourth quarter.
• Credit quality remained good with net charge-offs totaling $219,000 in the fourth quarter.
• The company declared a cash dividend of $0.21 per share.
• Net interest income in the fourth quarter of 2024 amounted to $12.4 million representing an increase of $795,000, or 6.9%, compared to the previous quarter.

Negatives

• A pre-tax loss of $1.0 million was realized in the fourth quarter due to repositioning a portion of the investment portfolio.
• Non-interest income decreased by $882,000 from the previous quarter, primarily due to the loss on sales of investment securities.
• Non-interest expense increased by $1.3 million compared to the prior quarter, mainly due to higher professional fees and compensation costs.
• Pre-tax unrealized net losses on the investment securities portfolio increased from $13.3 million at September 30, 2024 to $20.9 million at December 31, 2024 mainly due to higher market rates for these securities at year end.
• Stockholders equity decreased to $136.2 million (book value of $23.59 per share) as of December 31, 2024, from $139.7 million (book value of $24.18 per share) as of September 30, 2024.

Risks

• The press release contains forward-looking statements that are subject to various economic, regulatory, and competitive risks.
• Factors such as changes in interest rates, increased competition, and economic conditions could affect future performance.
• The company's ability to manage credit risk and maintain an adequate allowance for loan losses is crucial.
• Fluctuations in the value of securities held in the investment portfolio could impact financial results.
• Cyber-attacks and declines in real estate values pose potential risks to the company.
• Concentrations within the loan portfolio, large loans to certain borrowers, and large deposits from certain clients could create vulnerabilities.

Future Outlook

The press release contains forward-looking statements regarding the company's financial condition, results of operations, plans, and future performance, which are subject to various risks and uncertainties.

Management Comments

• Abby Wendel, President and Chief Executive Officer of Landmark, commented, 'During 2024, we experienced strong loan demand, especially for residential mortgages and commercial real estate loans.'
• Abby Wendel also stated, 'In the fourth quarter 2024, we saw strong growth in virtually all loan categories, with total gross loans increasing by $51 million or 20% (annualized).'
• Abby Wendel noted, 'Total deposits also increased in the fourth quarter by more than $53 million, mostly due to seasonal growth in money market and interest checking accounts.'
• Abby Wendel added, 'For the year, net interest income grew 5.6% over the previous year while in the fourth quarter 2024 our net interest margin improved to 3.51%.'
• Abby Wendel concluded, 'Strategic investments in our people and product offerings resulted in higher non-interest expenses, particularly in the fourth quarter. Credit quality remained solid overall.'

Industry Context

The announcement reflects the performance of a community banking organization in a changing economic environment, with factors such as interest rate changes and competition impacting results.

Comparison to Industry Standards

• Landmark Bancorp's return on average assets (ROAA) of 0.83% for 2024 is slightly above the median ROAA for US banks, which typically ranges between 0.7% and 0.8%.
• The return on average equity (ROAE) of 10.01% is within the typical range for well-performing community banks, which often target ROAEs between 9% and 12%.
• The efficiency ratio of 69.1% indicates that Landmark Bancorp is managing its non-interest expenses reasonably well, as an efficiency ratio below 70% is generally considered favorable in the banking industry.
• Compared to regional peers like Commerce Bancshares (CBSH) and UMB Financial Corporation (UMBF), Landmark's loan growth of 10.9% for the year is competitive, as these banks often report loan growth in the high single-digit to low double-digit percentages.
• The net interest margin (NIM) of 3.51% in Q4 2024 is in line with the industry average, as many banks have seen NIMs compress due to the rising interest rate environment.
• The cash dividend yield of Landmark Bancorp is comparable to other community banks, which typically offer dividend yields between 2% and 4%.

Stakeholder Impact

• Shareholders will benefit from the increased earnings and the declared cash dividend.
• Employees may see increased compensation and benefits due to the company's strategic investments.
• Customers will continue to receive quality financial and banking services from Landmark National Bank.
• The company's performance impacts the communities it serves through its banking operations and community involvement.

Next Steps

• Management will host a conference call on February 5, 2025, to discuss the financial results.
• The cash dividend of $0.21 per share will be paid on March 5, 2025, to stockholders of record as of February 19, 2025.

Key Dates