Shares of Landmark Bancorp, Inc. LARK have risen 0.9% since reporting third-quarter 2025 earnings. This compares to the S&P 500 index’s 0.01% growth over the same period. However, over the past month, the stock has declined 3%, underperforming the S&P 500’s 3% rally.
Landmark Bancorp reported diluted earnings per share (EPS) of 85 cents for the third quarter of 2025, marking a 25% increase from 68 cents in the same quarter last year. Net income rose to $4.9 million from $3.9 million in the year-ago period, driven largely by higher net interest income and improved credit quality. Total revenues, including net interest and non-interest income, were $18.2 million, up from $15.9 million a year earlier. The company’s return on average assets improved to 1.21%, and return on equity climbed to 13% from 1.00% and 11.82%, respectively, in the third quarter of 2024.
Landmark Bancorp Inc. Price, Consensus and EPS Surprise
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Strong Net Interest Income & Efficiency Gains
Net interest income rose to $14.1 million, up 3% sequentially and 21.5% year over year, reflecting loan growth and margin stability. The net interest margin remained steady at 3.83%, an increase of 53 basis points from the prior-year quarter. Average loan balances grew by $26.7 million from the previous quarter, with strength in commercial real estate, residential real estate and consumer portfolios. Average loan yields held firm at 6.37%, while the average rate on interest-bearing deposits inched up to 2.18% from 2.14% in the previous quarter.
Landmark Bancorp’s efficiency ratio — a measure of cost effectiveness — improved to 60.7% from 66.5% a year earlier. This gain reflected disciplined expense management and a 12.2% sequential increase in non-interest income, driven by higher mortgage loan sales and service fees. Non-interest expenses rose modestly by $290,000 from the prior quarter due to increased consulting, occupancy and personnel costs, but remained well-contained overall.
Loan & Deposit Trends
Gross loans at the quarter-end stood at $1.1 billion, flat with the prior quarter, but average loans expanded nearly 10% on an annualized basis. Growth was concentrated in commercial real estate (up $19.1 million), residential mortgages (up $4.5 million) and consumer lending (up $1.4 million), partially offset by declines in commercial and construction loans.
Deposits increased $51.6 million sequentially to $1.3 billion, led by higher certificates of deposit and money market accounts, as well as growth in non-interest-bearing demand deposits. Management noted that brokered deposits were key sources of this growth, while borrowings declined by $69 million, reducing the reliance on higher-cost funding sources. The loan-to-deposit ratio improved to 83.4% from 86.6% in the previous quarter, providing ample liquidity for future loan expansion.
Credit Quality Strengthens
Credit quality showed a marked improvement in the quarter. Non-performing loans declined by $7 million to $10 million, or 0.89% of gross loans, from 1.52% in the previous quarter. The improvement stemmed primarily from the resolution of a single commercial loan previously disclosed as problematic. The bank recorded net charge-offs of $2.3 million, mostly tied to that same loan, and a provision for credit losses of $850,000, down from $1 million in the prior quarter. The allowance for credit losses ended the quarter at $12.3 million, representing 1.10% of the total loans.
Chief credit officer Raymond McLanahan emphasized the bank’s disciplined underwriting and proactive monitoring, adding that the broader Kansas economy remained healthy, with a 3.8% unemployment rate and modest growth in housing sales and prices.
Management Commentary
President and CEO Abby Wendel described the quarter as “another solid period of earnings and increased profitability,” crediting growth in both net interest and non-interest income, as well as progress in improving credit quality. She noted that solid non-interest-bearing deposit growth reinforced the company’s low-cost core funding base.
Wendel also highlighted the bank’s continuing investments in “new talent and infrastructure upgrades” to support customer expansion and long-term shareholder value. Management remains focused on efficiency, sound risk management and measured loan growth. CFO Mark Herpich underscored that the balance sheet remains well-capitalized, with an equity-to-assets ratio of 9.63% and tangible equity to tangible assets of 7.66% as of Sept. 30, 2025.
Factors Influencing Results
Landmark Bancorp’s quarterly performance benefited from a combination of loan-driven revenue growth, improved funding mix and reduced credit costs. The resolution of a large non-performing commercial credit materially improved asset quality ratios. Moreover, unrealized losses on the securities portfolio declined to $9.2 million from $13.9 million in the previous quarter. This improvement lifted tangible book value by 6.6% sequentially to $20.96 per share. On a year-over-year basis, tangible book value increased 15.7%.
The higher net interest income reflected volume and mix effects, while stable yields on loans and investment securities cushioned the impacts of slightly higher deposit costs. Expenses rose mainly from temporary consulting engagements and inflation-linked adjustments, but were offset by efficiency gains and stronger fee income.
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Management signaled confidence in sustaining its earnings momentum. Wendel reaffirmed Landmark Bancorp’s cautious approach to interest rate and credit risk management, indicating that investments in personnel and technology will continue to support growth. The company expects stable credit trends and a healthy Kansas economy to underpin lending opportunities, particularly in commercial real estate and consumer banking.
Other Developments
The board of directors declared a cash dividend of 21 cents per share, payable Nov. 26, 2025, to shareholders of record as of Nov. 12, 2025. It also announced a 5% stock dividend, payable Dec. 15, 2025, marking the 25th consecutive annual stock dividend and the 97th consecutive quarterly cash dividend since the company’s formation in 2001.
Landmark Bancorp Inc. (LARK): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).