10q10k10q10k.net
LANDMARK BANCORP INC

LANDMARK BANCORP INCLARKEarnings & Financial Report

Nasdaq · Financials · National Commercial Banks

Landmark Bancorp Inc is a U.S.-based bank holding company operating Landmark National Bank, primarily serving communities across Kansas. It provides a full range of personal and commercial banking services including deposit accounts, residential mortgages, commercial loans, and wealth management solutions, catering to individual consumers, small businesses and local mid-sized enterprises.

What changed in LANDMARK BANCORP INC's 10-K — 2024 vs 2025

Top changes in LANDMARK BANCORP INC's 2025 10-K

168 paragraphs added · 178 removed · 151 edited across 5 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

72 edited+9 added−16 removed131 unchanged
Accordingly, we cannot provide you with assurance that we will be able to effectively implement new technology-driven products and services or be successful in marketing such products and services to our customers. 35 Issues with the use of artificial intelligence in our marketplace may result in reputational harm or liability, or could otherwise adversely affect the Company’s business.
Accordingly, we cannot provide you with assurance that we will be able to effectively implement new technology-driven products and services or be successful in marketing such products and services to our customers. Issues with the use of artificial intelligence in our marketplace may result in reputational harm or liability or could otherwise adversely affect the Company’s business.
Any such events could have a material adverse effect on our business, financial condition, results of operations and growth prospects. 37 Our operations rely heavily on the secure processing, storage and transmission of information and the monitoring of a large number of transactions on a minute-by-minute basis, and even a short interruption in service could have significant consequences.
Any such events could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Our operations rely heavily on the secure processing, storage and transmission of information and the monitoring of a large number of transactions on a minute-by-minute basis, and even a short interruption in service could have significant consequences.
If we are not able to borrow funds on terms that are acceptable to us, our liquidity may be impacted which could, in turn, affect the Company’s ability to pay dividends, its results of operations, and its ability to take advantage of strategic opportunities. Failure to pay interest on our debt may adversely impact our ability to pay dividends.
If we are not able to borrow funds on terms that are acceptable to us, our liquidity may be impacted which could, in turn, affect the Company’s ability to pay dividends, its results of operations, and its ability to take advantage of strategic opportunities. 35 Failure to pay interest on our debt may adversely impact our ability to pay dividends.
Accordingly, adverse circumstances affecting wheat, corn and soybean crops could have an adverse effect on our agricultural real estate loan portfolio. 30 Our business is concentrated in and dependent upon the continued growth and welfare of the markets in which we operate, including eastern, central, southeast and southwest Kansas.
Accordingly, adverse circumstances affecting wheat, corn and soybean crops could have an adverse effect on our agricultural real estate loan portfolio. Our business is concentrated in and dependent upon the continued growth and welfare of the markets in which we operate, including eastern, central, southeast and southwest Kansas.
The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business, financial condition and results of operations. Labor shortages and failure to attract and retain qualified employees could negatively impact our business, results of operations and financial condition.
The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business, financial condition and results of operations. 32 Labor shortages and failure to attract and retain qualified employees could negatively impact our business, results of operations and financial condition.
Furthermore, our failure to comply with the minimum capital requirements could result in our regulators taking formal or informal actions against us, which could restrict our future growth or operations. We may be required to pay higher FDIC insurance premiums in the future.
Furthermore, our failure to comply with the minimum capital requirements could result in our regulators taking formal or informal actions against us, which could restrict our future growth or operations. 29 We may be required to pay higher FDIC insurance premiums in the future.
These broad market fluctuations, as well as general economic, systemic, political and market conditions, such as recessions, loss of investor confidence, interest rate changes, tariffs, government shutdowns, Brexit, or international currency fluctuations, may negatively affect the market price of our common stock.
These broad market fluctuations, as well as general economic, systemic, political and market conditions, such as recessions, loss of investor confidence, interest rate changes, tariffs, government shutdowns, or international currency fluctuations, may negatively affect the market price of our common stock.
We cannot assure you that volume of trading in our common shares will increase in the future. 39 The stock market can be volatile, and fluctuations in our operating results and other factors could cause our stock price to decline.
We cannot assure you that volume of trading in our common shares will increase in the future. The stock market can be volatile, and fluctuations in our operating results and other factors could cause our stock price to decline.
If our risk management framework proves ineffective, we could suffer unexpected losses and could be materially adversely affected. Financial services companies depend on the accuracy and completeness of information about customers and counterparties.
If our risk management framework proves ineffective, we could suffer unexpected losses and could be materially adversely affected. 34 Financial services companies depend on the accuracy and completeness of information about customers and counterparties.
These residential mortgage loans are generally made on the basis of the borrower’s ability to make repayments from his or her employment and the value of the property securing the loan. Thus, as a result, repayment of these loans is also subject to general economic and employment conditions within the communities and surrounding areas where the property is located.
Residential mortgage loans are generally made on the basis of the borrower’s ability to make repayments from his or her employment and the value of the property securing the loan. As a result, repayment is also subject to general economic and employment conditions within the communities and surrounding areas where the property is located.
Adverse changes affecting real estate values, including decreases in office occupancy due to the shift to remote working environments following the COVID-19 pandemic, and the liquidity of real estate in one or more of the Company’s markets could increase the credit risk associated with the Company’s loan portfolio, significantly impair the value of property pledged as collateral on loans and affect the Company’s ability to sell the collateral upon foreclosure without a loss or additional losses or the Company’s ability to sell those loans on the secondary market.
Adverse changes affecting real estate values, including decreases in office occupancy due to the shift to remote working environments and the liquidity of real estate in one or more of the Company’s markets could increase the credit risk associated with the Company’s loan portfolio, significantly impair the value of property pledged as collateral on loans and affect the Company’s ability to sell the collateral upon foreclosure without a loss or additional losses or the Company’s ability to sell those loans on the secondary market.
It is also possible that governmental responses to the current inflation environment could adversely affect our business, such as changes to monetary and fiscal policy that are too strict, or the imposition or threatened imposition of price controls. The duration and severity of the current inflationary period cannot be estimated with precision.
It is possible that governmental responses to the current inflation environment such as changes to monetary and fiscal policy that are too strict, or the imposition or threatened imposition of price controls, could adversely affect the Company’s business. The duration and severity of the current inflationary period cannot be estimated with precision.
As of December 31, 2024, the unemployment rate in Kansas was 3.6%. A sustained labor shortage or increased turnover rates within our employee base could lead to increased costs, such as increased compensation expense to attract and retain employees.
As of December 31, 2025, the unemployment rate in Kansas was 3.8%. A sustained labor shortage or increased turnover rates within our employee base could lead to increased costs, such as increased compensation expense to attract and retain employees.
Economic events, including decreases in office occupancy due to the shift to remote working environments following the COVID-19 pandemic, or governmental regulations outside of the control of the borrower or lender could negatively impact the future cash flow and market values of the affected properties.
Economic events, including decreases in office occupancy due to the shift to remote working environments or governmental regulations outside of the control of the borrower or lender could negatively impact the future cash flow and market values of the affected properties.
A decline in residential real estate market prices or home sales has the potential to adversely affect our one-to-four family residential mortgage portfolio in several ways, such as a decrease in collateral values and an increase in non-performing loans, each of which could adversely affect our operating results and/or financial condition. 28 Our loan portfolio has a large concentration of real estate loans, which involve risks specific to real estate value.
A decline in residential real estate market prices or home sales has the potential to adversely affect our one-to-four family residential mortgage portfolio in several ways, such as a decrease in collateral values and an increase in non-performing loans, each of which could adversely affect our operating results and/or financial condition.
Any future changes in the calculation or assessment of FDIC insurance premiums may have a material adverse effect on the Bank’s results of operations, financial condition, and the ability to continue to pay dividends on common stock at the current rate or at all.
Any future changes in the calculation or assessment of FDIC insurance premiums may have a material adverse effect on the Bank’s results of operations, financial condition, and the ability to continue to pay dividends on common stock at the current rate or at all. We are subject to changes in accounting principles, policies or guidelines.
Nevertheless, the risk of non-payment is inherent in all types of loans, and if we are unable to collect amounts owed, it may materially affect our operations and financial performance. For a more complete discussion of our lending activities see “Item 1. Business” of this Annual Report on Form 10-K.
Nevertheless, the risk of non-payment is inherent in all types of loans, and if we are unable to collect amounts owed, it may materially affect our operations and financial performance. For a more complete discussion of our lending activities see “Item 1.
Our risk management framework seeks to mitigate risk and loss to us. We have established processes and procedures intended to identify, measure, monitor, report and analyze the types of risk to which we are subject, including liquidity risk, credit risk, market risk, interest rate risk, operational risk, compensation risk, legal and compliance risk, cyber risk, and reputational risk, among others.
We have established processes and procedures intended to identify, measure, monitor, report and analyze the types of risk to which we are subject, including liquidity risk, credit risk, market risk, interest rate risk, operational risk, compensation risk, legal and compliance risk, cyber risk, and reputational risk, among others.
At December 31, 2024 and 2023, agricultural real estate loans totaled $48.7 million and $40.1 million, or 4.6% and 4.2% of our total loan portfolio, respectively. Agricultural real estate lending involves a greater degree of risk and typically involves larger loans to single borrowers than lending on single-family residences.
At December 31, 2025 and 2024, agricultural real estate loans totaled $38.7 million and $48.7 million, or 3.5% and 4.6% of our total loan portfolio, respectively. Agricultural real estate lending involves a greater degree of risk and typically involves larger loans to single borrowers than lending on single-family residences.
In addition, we had $6.2 million in accruing loans that were 30-89 days delinquent as of December 31, 2024. Our non-performing assets adversely affect our net income in various ways.
In addition, we had $4.3 million in accruing loans that were 30-89 days delinquent as of December 31, 2025. Our non-performing assets adversely affect our net income in various ways.
From time to time, the FASB and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our financial statements. In addition, trends in financial and business reporting, including environmental social and governance (ESG) related disclosures, could require us to incur additional reporting expense.
From time to time, the FASB and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our financial statements. In addition, trends in financial and business reporting, could require us to incur additional reporting expense.
Our ability to raise additional capital is particularly important to our strategy of growth through acquisitions. Our ability to raise additional capital depends on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions regarding the banking industry, market conditions and governmental activities, and on our financial condition and performance.
Our ability to raise additional capital depends on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions regarding the banking industry, market conditions and governmental activities, and on our financial condition and performance.
Legal, Accounting and Compliance Risks Legislative and regulatory reforms applicable to the financial services industry may have a significant impact on our business, financial condition and results of operations.
Such downgrade could adversely affect our liquidity, financial condition and results of operations. Legal, Accounting and Compliance Risks Legislative and regulatory reforms applicable to the financial services industry may have a significant impact on our business, financial condition and results of operations.
Banking institutions that do not maintain capital in excess of the Basel III Rule standards including the capital conservation buffer face constraints on the payment of dividends, equity repurchases and compensation based on the amount of the shortfall.
Banking institutions that do not maintain capital in excess of such requirements, including the capital conservation buffer, face constraints on the payment of dividends, equity repurchases and compensation based on the amount of the shortfall.
At December 31, 2024 and 2023, our allowance for credit losses as a percentage of total loans, was 1.22% and 1.12%, respectively, and as a percentage of total non-performing loans was 97.79% and 443.66%, respectively.
At December 31, 2025 and 2024, our allowance for credit losses as a percentage of total loans, was 1.12% and 1.22%, respectively, and as a percentage of total non-performing loans was 124.65% and 97.79%, respectively.
These regulations and legislation may be impacted by the political ideologies of the executive and legislative branches of the U.S. government as well as the heads of regulatory and administrative agencies, which may change as a result of elections. The Company and the Bank are subject to stringent capital and liquidity requirements .
These regulations and legislation may be impacted by the political ideologies of the executive and legislative branches of the U.S. government as well as the heads of regulatory and administrative agencies. The Company and the Bank are subject to stringent capital and liquidity requirements . Bank holding companies and banks are subject to stringent capital requirements.
Our concentration of these loans results in lower yields relative to other loan categories within our loan portfolio. While these loans generally possess higher yields than investment securities, their repayment characteristics are not as well defined, and they generally possess a higher degree of interest rate risk versus other loans and investment securities within our portfolio.
While these loans generally possess higher yields than investment securities, their repayment characteristics are not as well defined, and they generally possess a higher degree of interest rate risk versus other loans and investment securities within our portfolio.
Commercial loans make up a significant portion of our loan portfolio. Commercial loans comprised $192.3 million and $180.9 million, or 18.3% and 19.1%, of our loan portfolio at December 31, 2024 and 2023, respectively. Our commercial loans are made based primarily on the identified cash flow of the borrower and secondarily on the underlying collateral provided by the borrower.
Commercial loans make up a significant portion of our loan portfolio. Commercial loans comprised $178.2 million and $192.3 million, or 16.0% and 18.3%, of our loan portfolio at December 31, 2025 and 2024, respectively. Our commercial loans are made based primarily on the identified cash flow of the borrower and secondarily on the underlying collateral provided by the borrower.
As of December 31, 2024, our non-performing loans (which consist of non-accrual loans and loans past due 90 days or more and still accruing interest) totaled $13.1 million, or 1.25% of our loan portfolio, and our non-performing assets (which include non-performing loans plus real estate owned) totaled $13.3 million, or 0.84% of total assets.
As of December 31, 2025, our non-performing loans (which consist of non-accrual loans and loans past due 90 days or more and still accruing interest) totaled $10.0 million, or 0.90% of our loan portfolio, and our non-performing assets (which include non-performing loans plus real estate owned) totaled $10.0 million, or 0.62% of total assets.
Our business is subject to domestic and, to a lesser extent, international economic conditions and other factors, many of which are beyond our control and could materially and adversely affect us.
Business” of this Annual Report on Form 10-K. 23 Our business is subject to domestic and, to a lesser extent, international economic conditions and other factors, many of which are beyond our control and could materially and adversely affect us.
Some of these policies require the use of estimates and assumptions that may affect the value of our assets or liabilities and financial results.
Our financial performance is impacted by accounting principles, policies and guidelines. Some of these policies require the use of estimates and assumptions that may affect the value of our assets or liabilities and financial results.
Unfavorable or uncertain economic and market conditions can be caused by: declines in economic growth, business activity or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; increases in inflation or interest rates; high unemployment; uncertainty in U.S. trade policies, legislation, treaties and tariffs; natural disasters; acts of war or terrorism, including the current conflict in Ukraine; widespread disease or pandemics; or a combination of these or other factors.
Unfavorable or uncertain economic and market conditions can be caused by: declines in economic growth, business activity or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; increases in inflation or interest rates; high unemployment; uncertainty in U.S. trade policies, legislation, treaties and tariffs; natural disasters; acts of war or terrorism, including ongoing conflicts in the Middle East, the Russian invasion of Ukraine and recent military actions in Venezuela, or threats thereof, and the response of the United States to any such threats and attacks; widespread disease or pandemics; or a combination of these or other factors.
Acquiring other banks and businesses will involve risks commonly associated with acquisitions, including: ● potential exposure to unknown or contingent liabilities of banks and businesses we acquire; ● exposure to potential asset quality issues of the acquired bank or related business; ● difficulty and expense of integrating the operations and personnel of banks and businesses we acquire; ● potential disruption to our business; ● potential diversion of our management’s time and attention; and ● the possible loss of key employees and customers of the banks and businesses we acquire. 34 In addition to acquisitions, we may expand into additional communities or attempt to strengthen our position in our current markets by undertaking additional branch openings.
Acquiring other banks and businesses will involve risks commonly associated with acquisitions, including: ● potential exposure to unknown or contingent liabilities of banks and businesses we acquire; 30 ● exposure to potential asset quality issues of the acquired bank or related business; ● difficulty and expense of integrating the operations and personnel of banks and businesses we acquire; ● potential disruption to our business; ● potential diversion of our management’s time and attention; and ● the possible loss of key employees and customers of the banks and businesses we acquire.
It may be difficult for us to replace some of our third party vendors, particularly vendors providing our core banking and information services, in a timely manner if they are unwilling or unable to provide us with these services in the future for any reason and even if we are able to replace them, it may be at higher cost or result in the loss of customers.
In addition, failures of third parties to comply with applicable laws and regulations, or fraud or misconduct on the part of employees of any of these third parties, could disrupt our operations or adversely affect our reputation. 33 It may be difficult for us to replace some of our third party vendors, particularly vendors providing our core banking and information services, in a timely manner if they are unwilling or unable to provide us with these services in the future for any reason and even if we are able to replace them, it may be at higher cost or result in the loss of customers.
Due to the larger average size of each commercial loan as compared with other loans such as residential loans, as well as collateral that is generally less readily marketable, losses incurred on a small number of commercial loans could have a material adverse impact on our financial condition and results of operations. 29 The success of our SBA lending program is dependent upon the continued availability of SBA loan programs, our status as a Preferred Lender under the SBA loan programs and our ability to comply with applicable SBA lending requirements.
Due to the larger average size of each commercial loan as compared with other loans such as residential loans, as well as collateral that is generally less readily marketable, losses incurred on a small number of commercial loans could have a material adverse impact on our financial condition and results of operations.
If we experience increases in non-performing loans and non-performing assets, our net interest income may be negatively impacted and our loan administration costs could increase, each of which could have an adverse effect on our net income and related ratios, such as return on assets and equity.
If we experience increases in non-performing loans and non-performing assets, our net interest income may be negatively impacted and our loan administration costs could increase, each of which could have an adverse effect on our net income and related ratios, such as return on assets and equity. 27 Interest Rate Risks Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations.
The loss of these revenue streams and the lower cost of deposits as a source of funds could have a material adverse effect on our financial condition and results of operations. Potential partnerships with digital asset companies, moreover, could also entail significant investment.
The loss of these revenue streams and the lower cost of deposits as a source of funds could have a material adverse effect on our financial condition and results of operations.
We generally secure agricultural operating loans with a blanket lien on livestock, equipment, food, hay, grain and crops. Nevertheless, any repossessed collateral for a defaulted loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation. We also originate agriculture real estate loans.
Nevertheless, any repossessed collateral for a defaulted loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation. We also originate agriculture real estate loans.
An overall labor shortage, lack of skilled labor, increased turnover or labor inflation, could have a material adverse impact on our operations, results of operations, liquidity or cash flows. 36 The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
Interest Rate Risks Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations. In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve. An important function of the Federal Reserve is to regulate the money supply and credit conditions.
In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve. An important function of the Federal Reserve is to regulate the money supply and credit conditions.
The repayment of agriculture operating loans is dependent on the successful operation or management of the farm property. Likewise, agricultural operating loans involve a greater degree of risk than lending on residential properties, particularly in the case of loans that are unsecured or secured by rapidly depreciating assets such as farm equipment, livestock or crops.
Likewise, agricultural operating loans involve a greater degree of risk than lending on residential properties, particularly in the case of loans that are unsecured or secured by rapidly depreciating assets such as farm equipment, livestock or crops. We generally secure agricultural operating loans with a blanket lien on livestock, equipment, food, hay, grain and crops.
CRE loans represented 35.2% of the Company’s total loan portfolio and 272% of the Bank’s total capital at December 31, 2024.
CRE loans represented 37.3% of the Company’s total loan portfolio and 258% of the Bank’s total capital at December 31, 2025.
In addition, if interest rates continue to remain elevated, the value of our securities portfolio would be negatively impacted. Continued elevated levels of inflation could also cause increased volatility and uncertainty in the business environment, which could adversely affect loan demand and our clients’ ability to repay indebtedness.
Continued elevated levels of inflation could also cause increased volatility and uncertainty in the business environment, which could adversely affect loan demand and the Company’s clients’ ability to repay indebtedness.
As of December 31, 2024, the Company had $370.5 million of CRE loans, consisting of $110.7 million of non-owner occupied loans, $197.2 million of owner occupied loans, $37.3 million of loans secured by multifamily residential properties and $25.3 million of construction and land development loans.
As of December 31, 2025, the Company had $414.9 million of CRE loans, consisting of $138.6 million of non-owner occupied loans, $218.3 million of owner occupied loans, $37.4 million of loans secured by multifamily residential properties and $20.5 million of construction and land development loans.
In light of the uncertainty that exists in the economy and credit markets nationally, there can be no guarantee that we will not experience additional deterioration in credit performance by our real estate loan customers.
In light of the uncertainty that exists in the economy and credit markets nationally, there can be no guarantee that we will not experience additional deterioration in credit performance by our real estate loan customers. 25 The Company’s loan portfolio has a large concentration of CRE loans, which involve risks specific to real estate values and the health of the real estate market generally.
We believe that it generally takes several years for new banking facilities to first achieve operational profitability, due to the impact of organization and overhead expenses and the start-up phase of generating loans and deposits.
In addition to acquisitions, we may expand into additional communities or attempt to strengthen our position in our current markets by undertaking additional branch openings. We believe that it generally takes several years for new banking facilities to first achieve operational profitability, due to the impact of organization and overhead expenses and the start-up phase of generating loans and deposits.
The effects of a prolonged period of a weakened agricultural economy could have a material adverse effect on our business, financial condition and results of operations. 27 Continued elevated levels of inflation could adversely impact our business and results of operations. The U.S. has recently experienced elevated levels of inflation, with the consumer price index climbing approximately 2.9% in 2024.
The effects of a prolonged period of a weakened agricultural economy could have a material adverse effect on our business, financial condition and results of operations. Elevated levels of inflation could adversely impact our business and results of operations.
Should our internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of operations. Our framework for managing risks may not be effective in mitigating risk and loss to us.
Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, resulted in immaterial financial losses. Should our internal controls fail to prevent or detect any subsequent occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of operations.
Management has estimated losses inherent in the outstanding guaranteed portion of SBA loans and recorded a recourse reserve at a level determined to be appropriate. Significant increases to the recourse reserve may materially decrease our net income, which may adversely affect our business, results of operations and financial condition.
Management has estimated losses inherent in the outstanding guaranteed portion of SBA loans and recorded a recourse reserve at a level determined to be appropriate.
In addition, we may determine to sell securities in our available-for-sale investment securities portfolio, and any such sale could cause us to realize currently unrealized losses that resulted from the recent increases in the prevailing interest rates. 32 Downgrades in the credit rating of one or more insurers that provide credit enhancement for our state and municipal securities portfolio may have an adverse impact on the market for and valuation of these types of securities.
In addition, we may determine to sell securities in our available-for-sale investment securities portfolio, and any such sale could cause us to realize currently unrealized losses that resulted from the recent increases in the prevailing interest rates.
If the credit quality of the securities in our investment portfolio deteriorates, we may also experience a loss in interest income from the suspension of either interest or dividend payments.
We may be required to record impairment charges on our investment securities if they suffer declines in value that are considered other-than-temporary. If the credit quality of the securities in our investment portfolio deteriorates, we may also experience a loss in interest income from the suspension of either interest or dividend payments.
Given the interconnectedness of the global financial system, these vulnerabilities could impact the Company’s business operations and financial condition. 31 Interest rates and other conditions impact our results of operations. Our profitability is in part a function of the spread between the interest rates earned on investments and loans and the interest rates paid on deposits and other interest-bearing liabilities.
Our profitability is in part a function of the spread between the interest rates earned on investments and loans and the interest rates paid on deposits and other interest-bearing liabilities.
We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. We anticipate that our existing capital resources will satisfy our capital requirements for the foreseeable future. However, we may at some point need to raise additional capital to support continuing growth.
We anticipate that our existing capital resources will satisfy our capital requirements for the foreseeable future. However, we may at some point need to raise additional capital to support continuing growth. Our ability to raise additional capital is particularly important to our strategy of growth through acquisitions.
We may also rely on representations of those customers, counterparties or other third parties, such as independent auditors, as to the accuracy and completeness of that information.
We may also rely on representations of those customers, counterparties or other third parties, such as independent auditors, as to the accuracy and completeness of that information. Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on our business, financial condition and results of operations.
We maintain a system of internal controls and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud.
We maintain a system of internal controls, including internal controls over financial reporting, and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud. A recently discovered instance of employee fraud, as described in Note 24 (Subsequent Event) to the Company’s consolidated financial statements in “Item 8.
The Company’s loan portfolio has a large concentration of CRE loans, which involve risks specific to real estate values and the health of the real estate market generally.
Our loan portfolio has a large concentration of real estate loans, which involve risks specific to real estate value. Real estate lending (including CRE, construction and land and residential real estate) comprises the largest portion of our loan portfolio.
Even though management generally purchases municipal securities on the overall credit strength of the issuer, the reduction in the credit rating of an insurer may negatively impact the market for and valuation of our investment securities. Such downgrade could adversely affect our liquidity, financial condition and results of operations.
As of December 31, 2025, we had $178.4 million of municipal securities, which represented 51.2% of our total securities portfolio. Even though management generally purchases municipal securities on the overall credit strength of the issuer, the reduction in the credit rating of an insurer may negatively impact the market for and valuation of our investment securities.
Unrealized losses do not negatively impact our regulatory capital ratios; however, tangible common equity and the associated ratios would be reduced. If debt securities in an unrealized loss position are sold, such losses become realized and will reduce our regulatory capital ratios.
The unrealized losses resulting from holding these securities would be recognized in other comprehensive income and reduce total stockholders’ equity. Unrealized losses do not negatively impact our regulatory capital ratios; however, tangible common equity and the associated ratios would be reduced.
The financial services industry continues to undergo rapid technological changes with frequent introductions of new technology-driven products and services, including internet services, cryptocurrencies and payment systems. In addition to better serving customers, the effective use of technology increases efficiency as well as enables financial institutions to reduce costs.
In addition to better serving customers, the effective use of technology increases efficiency as well as enables financial institutions to reduce costs.
It is currently expected that during 2025, and perhaps beyond, the Federal Open Market Committee of the Federal Reserve, (“ FOMC”) will continue to monitor interest rates, in part to reduce the rate of inflation to its preferred level.
At any given time, our assets and liabilities will be such that they are affected differently by a given change in interest rates. It is currently expected that, during 2026, the Federal Open Market Committee of the Federal Reserve (“FOMC”) will continue to closely monitor interest rates, in part to manage the rate of inflation to its preferred level.
Our concentration of one-to-four family residential mortgage loans may result in lower yields and profitability. One-to-four family residential mortgage loans comprised $352.2 million and $302.5 million, or 33.5% and 31.9%, of our loan portfolio at December 31, 2024 and 2023, respectively. These loans are secured primarily by properties located in the state of Kansas.
Credit losses in excess of our reserves will adversely affect our business, financial condition and results of operations. 24 Our concentration of one-to-four family residential mortgage loans may result in lower yields and profitability. One-to-four family residential mortgage loans comprised $375.3 million and $352.2 million, or 33.8% and 33.5%, of our loan portfolio at December 31, 2025 and 2024, respectively.
Declines in value may adversely impact the carrying amount of our investment portfolio and result in other-than-temporary impairment charges. We may be required to record impairment charges on our investment securities if they suffer declines in value that are considered other-than-temporary.
If debt securities in an unrealized loss position are sold, such losses become realized and will reduce our regulatory capital ratios. 28 Declines in value may adversely impact the carrying amount of our investment portfolio and result in other-than-temporary impairment charges.
Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on our business, financial condition and results of operations. 38 Liquidity and Capital Risks Our growth or future losses may require us to raise additional capital in the future, but that capital may not be available when it is needed.
Liquidity and Capital Risks Our growth or future losses may require us to raise additional capital in the future, but that capital may not be available when it is needed. We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations.
Real estate lending (including CRE, construction and land and residential real estate) comprises the largest portion of our loan portfolio. These categories were $722.7 million, or approximately 68.7% of our total loan portfolio, as of December 31, 2024, as compared to $644.6 million, or approximately 67.9% of our total loan portfolio, as of December 31, 2023.
These categories were $790.2 million, or approximately 71.1% of our total loan portfolio, as of December 31, 2025, as compared to $722.7 million, or approximately 68.7% of our total loan portfolio, as of December 31, 2024.
Such fraudulent activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts. Information security breaches and cybersecurity-related incidents may include fraudulent or unauthorized access to systems used by us or our clients, denial or degradation of service attacks and malware or other cyber-attacks.
Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, the Company experienced an instance of employee fraud which resulted in immaterial financial losses. Information security breaches and cybersecurity-related incidents may include fraudulent or unauthorized access to systems used by us or our clients, denial or degradation of service attacks and malware or other cyber-attacks.
Our agriculture loans involve a greater degree of risk than other loans, and the ability of the borrower to repay may be affected by many factors outside of the borrower’s control. Agriculture operating loans comprised $51.9 million and $49.6 million, or 4.9% and 5.3%, of our loan portfolio at December 31, 2024 and 2023, respectively.
Significant increases to the recourse reserve may materially decrease our net income, which may adversely affect our business, results of operations and financial condition. 26 Our agriculture loans involve a greater degree of risk than other loans, and the ability of the borrower to repay may be affected by many factors outside of the borrower’s control.
The outlook is for commodity prices to continue to decline modestly over the next few years before stabilizing, but are subject to global economic and market conditions. The agricultural economy in the Midwest, including Kansas, has been stable over the previous several years.
The agricultural economy in the Midwest, including Kansas, has been stable over the previous several years.
We invest in tax-exempt and taxable state and local municipal investment securities, some of which are insured by monoline insurers. As of December 31, 2024, we had $178.8 million of municipal securities, which represented 48.0% of our total securities portfolio.
Downgrades in the credit rating of one or more insurers that provide credit enhancement for our state and municipal securities portfolio may have an adverse impact on the market for and valuation of these types of securities. We invest in tax-exempt and taxable state and local municipal investment securities, some of which are insured by monoline insurers.
If the FOMC further increases or decreases the targeted federal funds rates, overall interest rates likely will also rise or fall, which may negatively impact the entire national economy.
In the fourth quarter of 2025, the FOMC decreased the target range for the federal funds rate to a range of 3.50% to 3.75%, following a series of significant increases beginning in 2023. If the FOMC further alters the targeted federal funds rates, overall interest rates likely will continue to change, which may impact the entire national economy.
Furthermore, asset liquidation pressures can be amplified by liquidity mismatches and the leverage of certain nonbank financial intermediaries such as hedge funds. The financial crisis in March 2020 also demonstrated that pressures on dealer intermediation can limit the availability of liquidity during times of market stress.
Furthermore, asset liquidation pressures can be amplified by liquidity mismatches and the leverage of certain nonbank financial intermediaries such as hedge funds. Given the interconnectedness of the global financial system, these vulnerabilities could impact the Company’s business operations and financial condition. Interest rates and other conditions impact our results of operations.
Thus, an increase in the amount of non-performing assets would have an adverse impact on net interest income. Continued high interest rates may result in a further decline in value of our fixed-rate debt securities. The unrealized losses resulting from holding these securities would be recognized in other comprehensive income and reduce total stockholders’ equity.
These effects from interest rate changes or from other sustained economic stress or a recession, among other matters, could have a material adverse effect on the Company’s business, financial condition, liquidity and results of operations. Continued elevated interest rates may result in a further decline in value of our fixed-rate debt securities.
Continued levels of inflation could have complex effects on our business and results of operations, some of which could be materially adverse. For example, elevated inflation harms consumer purchasing power, which could negatively affect our retail customers and the economic environment and, ultimately, many of our business customers, and could also negatively affect our levels of non-interest expense.
The United States has experienced elevated levels of inflation in recent years, with the consumer price index climbing approximately 2.7% in 2025 before seasonal adjustment. Continued elevated levels of inflation could have complex effects on the Company’s business, results of operations and financial condition, some of which could be materially adverse.
Removed
Economic conditions in the state of Kansas are generally impacted by commodity prices, which may adversely impact the Kansas economy, specifically the agriculture sector. Declines in commodity prices could materially and adversely affect our results of operations. During 2024, commodity prices declined from near record highs experienced in 2023.
Added
For example, While the Company generally expects any inflation-related increases in the Company’s interest expense to be offset by increases in interest income, inflation-driven increases in the Company’s levels of noninterest expense could negatively impact results of operations.
Removed
Credit losses in excess of our reserves will adversely affect our business, financial condition and results of operations. Also, as of January 1, 2023, the Company was required to adopt accounting standard update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326).
Added
These loans are secured primarily by properties located in the state of Kansas. Our concentration of these loans results in lower yields relative to other loan categories within our loan portfolio.
Removed
CECL changed how the Company calculates its allowance for credit losses by requiring the Company to determine periodic estimates of lifetime expected credit losses on loans and recognize the expected credit losses as allowances for credit losses. This is a change from the previous method of providing allowances for credit losses that are incurred.
Added
The success of our SBA lending program is dependent upon the continued availability of SBA loan programs, our status as a Preferred Lender under the SBA loan programs and our ability to comply with applicable SBA lending requirements.
Removed
At any given time, our assets and liabilities will be such that they are affected differently by a given change in interest rates.
Added
Agriculture operating loans comprised $64.1 million and $51.9 million, or 5.8% and 4.9%, of our loan portfolio at December 31, 2025 and 2024, respectively. The repayment of agriculture operating loans is dependent on the successful operation or management of the farm property.

… 17 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−0 removed7 unchanged
The Company employs monitoring tools that can detect and help respond to cybersecurity threats in real-time. ● Integration with Overall Risk Management : Cybersecurity risks are seamlessly integrated into the Company’s broader risk management framework, ensuring a holistic view and prioritized mitigation strategies. ● Management of Third-Party Risk : The Company’s comprehensive third-party management process includes rigorous due diligence, oversight and identification of cybersecurity risks associated with vendors and service providers. ● Team : The Company has an internal committee that is responsible for conducting regular assessments of its information systems, existing controls, vulnerabilities and potential improvements. ● Engagement of Expert Assistance : The Company leverages the expertise of independent consultants, legal advisors, and audit firms to evaluate the effectiveness of our risk management systems and address potential cybersecurity incidents efficiently. ● Training : The Company conducts periodic cybersecurity training for its workforce.
The Company employs monitoring tools that can detect and help respond to cybersecurity threats in real-time. ● Integration with Overall Risk Management : Cybersecurity risks are seamlessly integrated into the Company’s broader risk management framework, ensuring a holistic view and prioritized mitigation strategies. 36 ● Management of Third-Party Risk : The Company’s comprehensive third-party management process includes rigorous due diligence, oversight and identification of cybersecurity risks associated with vendors and service providers. ● Team : The Company has an internal committee that is responsible for conducting regular assessments of its information systems, existing controls, vulnerabilities and potential improvements. ● Engagement of Expert Assistance : The Company leverages the expertise of independent consultants, legal advisors, and audit firms to evaluate the effectiveness of our risk management systems and address potential cybersecurity incidents efficiently. ● Training : The Company conducts periodic cybersecurity training for its workforce.
This information security program is a key part of the Company’s overall risk management system. The program includes administrative, technical and physical safeguards to help protect the security and confidentiality of customer records and information.
This information security program is a key part of the Company’s overall risk management system. The program includes administrative, technical and physical safeguards to help protect the security and confidentiality of customer records and information. These security and privacy policies and procedures are in effect across all of the Company’s businesses and geographic locations.
These security and privacy policies and procedures are in effect across all of the Company’s businesses and geographic locations. 40 From time-to-time, the Company has identified cybersecurity threats and cybersecurity incidents that require the Company to make changes to its processes and to implement additional safeguards.
From time-to-time, the Company has identified cybersecurity threats and cybersecurity incidents that require the Company to make changes to its processes and to implement additional safeguards.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed0 unchanged
We currently have no plans to change our dividend strategy given our current capital and liquidity positions. In March 2020, our Board of Directors approved a stock repurchase plan, permitting us to repurchase up to 225,890 shares (“March 2020 Repurchase Program”). As of December 31, 2024, there were 157,456 shares remaining to repurchase under the March 2020 Repurchase Program.
We currently have no plans to change our dividend strategy given our current capital and liquidity positions. In March 2020, our Board of Directors approved a stock repurchase plan, permitting us to repurchase up to 225,890 shares (“March 2020 Repurchase Program”). As of December 31, 2025, there were 157,456 shares remaining to repurchase under the March 2020 Repurchase Program.
In January 2025, we declared our 94 th consecutive cash quarterly dividend of $0.21 per share. We also distributed a 5% stock dividend for the 24 th consecutive year in December 2024. As adjusted for the stock dividend, the quarterly cash dividends were $0.20 per share in 2024.
In January 2026, we declared our 98 th consecutive cash quarterly dividend of $0.21 per share. We also distributed a 5% stock dividend for the 25 th consecutive year in December 2025. As adjusted for the stock dividend, the quarterly cash dividends were $0.20 per share in 2025.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock has traded on the Nasdaq Global Market under the symbol “LARK” since 2001. At March 20, 2025, the Company had approximately 267 common shareholders of record and approximately 2,120 beneficial owners of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock has traded on the Nasdaq Global Market under the symbol “LARK” since 2001. At April 10, 2026, the Company had approximately 256 common shareholders of record and approximately 2,835 beneficial owners of our common stock.
Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans Maximum number of shares that may yet be purchased under the plans October 1-31, 2024 861 $ 20.02 861 157,456 November 1-30, 2024 - - - 157,456 December 1-31, 2024 - - - 157,456 Total 861 $ 20.02 861 157,456 ITEM 6. [RESERVED]
The following table sets forth information about the Company’s purchases of its common stock during the fourth quarter of 2025: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans Maximum number of shares that may yet be purchased under the plans October 1-31, 2025 - $ - - 157,456 November 1-30, 2025 - - - 157,456 December 1-31, 2025 - - - 157,456 Total - $ - - 157,456 ITEM 6. [RESERVED]
Unless terminated earlier by resolution of the Board of Directors, the March 2020 Repurchase Program will expire when we have repurchased all shares authorized for repurchase thereunder. The following table sets forth information about the Company’s purchases of its common stock during the fourth quarter of 2024.
Unless terminated earlier by resolution of the Board of Directors, the March 2020 Repurchase Program will expire when we have repurchased all shares authorized for repurchase thereunder.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

66 edited+7 added−9 removed27 unchanged
Our principal operating expenses, aside from interest expense, consist of, among others, compensation and employee benefits, occupancy costs, professional fees, amortization of intangibles expense, federal deposit insurance costs, data processing expenses and provision for credit losses. We are significantly impacted by prevailing economic conditions including federal monetary and fiscal policies and federal regulations of financial institutions.
Our principal operating expenses, aside from interest expense, consist of, among others, compensation and employee benefits, occupancy costs, data processing expenses, professional fees, amortization of intangibles expense, federal deposit insurance costs, and provision for credit losses. We are significantly impacted by prevailing economic conditions including federal monetary and fiscal policies and federal regulations of financial institutions.
We are committed to developing relationships with our borrowers and providing a total banking service. 43 The Bank is principally engaged in the business of attracting deposits from the general public and using such deposits, together with borrowings and other funds, to originate one-to-four family residential real estate, construction and land, CRE, commercial, agriculture, municipal and consumer loans.
We are committed to developing relationships with our borrowers and providing a total banking service. The Bank is principally engaged in the business of attracting deposits from the general public and using such deposits, together with borrowings and other funds, to originate one-to-four family residential real estate, construction and land, CRE, commercial, agriculture, municipal and consumer loans.
Lower interest rates may not result in a higher net interest margin as a result of increased competition for loans and deposits and the slope of the yield curve also impacts our net interest margin. Additionally, deposit balances may decline resulting in the need for higher cost funding. Provision for credit Losses.
Lower interest rates may not result in a higher net interest margin as a result of increased competition for loans and deposits. The slope of the yield curve also impacts our net interest margin. Additionally, deposit balances may decline resulting in the need for higher cost funding. 41 Provision for credit Losses.
While further increases in problem assets may arise, management believes its efforts to run a high quality financial institution with a sound asset base will continue to create a strong foundation for continued growth and profitability in the future. Asset Quality and Distribution.
While further increases in problem assets may arise, management believes its efforts to run a high quality financial institution with a sound asset base will continue to create a strong foundation for continued growth and profitability in the future. 42 Asset Quality and Distribution.
The impact of inflation can be found in the increased cost of our operations because our assets and liabilities are primarily monetary, and interest rates have a greater impact on our performance than do the effects of inflation.
The impact of inflation can be found in the increased cost of our operations because our assets and liabilities are primarily monetary, and interest rates have a greater impact on our performance than do the effects of inflation. 45
Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and we undertake no obligation to update any statement in light of new information or future events. 42 Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.
Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and we undertake no obligation to update any statement in light of new information or future events. 38 Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.
There are no conditions or events that management believes have changed the Company’s and the Bank’s category as of the date of this report. We have $21.7 million in trust preferred securities which, in accordance with current capital guidelines, have been included in total risk-based capital as of December 31, 2024.
There are no conditions or events that management believes have changed the Company’s and the Bank’s category as of the date of this report. We have $21.7 million in trust preferred securities which, in accordance with current capital guidelines, have been included in total risk-based capital as of December 31, 2025.
The Company is listed on the Nasdaq Global Market under the symbol “LARK.” The Bank is dedicated to providing quality financial and banking services to its local communities. Our strategy includes growing our commercial, CRE and agriculture loan portfolios, while continuing to emphasize and maintaining high quality assets.
The Company is listed on the Nasdaq Global Market under the symbol “LARK.” The Bank is dedicated to providing quality financial and banking services to its local communities. Our strategy includes growing our commercial, CRE and agriculture loan portfolios, while continuing to emphasize and maintain high quality assets.
Our primary investing activities are the origination of one-to-four family residential real estate, construction and land, CRE, commercial, agriculture, municipal and consumer loans and the purchase of investment securities. Total assets were $1.6 billion at both December 31, 2024 and December 31, 2023.
Our primary investing activities are the origination of one-to-four family residential real estate, construction and land, CRE, commercial, agriculture, municipal and consumer loans and the purchase of investment securities. Total assets were $1.6 billion at both December 31, 2025 and 2024.
The payment of dividends by any financial institution or its holding company is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of December 31, 2024.
The payment of dividends by any financial institution or its holding company is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of December 31, 2025.
See Note 1 (Summary of Significant Accounting Policies) to the Company’s consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for a more detailed description methodology and impact of adoption. We have completed several business and asset acquisitions since 2002, which have generated significant amounts of goodwill.
See Note 1 (Summary of Significant Accounting Policies) to the Company’s consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for a more detailed description methodology. 40 We have completed several business and asset acquisitions since 2002, which have generated significant amounts of goodwill.
Additionally, the Company considers changes in economic and business conditions, changes in policies, procedures and underwriting, changes in management or staff and their related experience, changes in nature and volume of the portfolio, changes in loan review, changes in collateral values, changes in past due and nonaccrual loans, changes in competition, legal and regulatory issues, changes in concentrations and other qualitative factors, which impacts the estimate of future credit losses.
Additionally, the Company considers changes in economic and business conditions, changes in policies, procedures and underwriting, changes in management or staff and their related experience, changes in nature and volume of the portfolio, changes in loan review, changes in collateral values, changes in past due and non-accrual loans, changes in competition, legal and regulatory issues, changes in concentrations and other qualitative factors, which impacts the estimate of future credit losses.
Currently, our business consists of its ownership of the Bank, with its main office in Manhattan, Kansas and thirty additional offices in central, eastern, southeast and southwest Kansas and Missouri, and our ownership of the Captive, a Nevada-based captive insurance company.
Currently, our business consists of its ownership of the Bank, with its main office in Manhattan, Kansas and 28 additional offices in central, eastern, southeast and southwest Kansas and Missouri, and our ownership of the Captive, a Nevada-based captive insurance company.
The Company performed a qualitative assessment of factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount as of December 31, 2024.
The Company performed a qualitative assessment of factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount as of December 31, 2025.
The Company’s qualitative impairment test indicated that its goodwill was not impaired. The Company can make no assurances that future impairment tests will not result in goodwill impairments. 44 COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND DECEMBER 31, 2023 SUMMARY OF PERFORMANCE.
The Company’s qualitative impairment test indicated that its goodwill was not impaired. The Company can make no assurances that future impairment tests will not result in goodwill impairments. COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024 SUMMARY OF PERFORMANCE.
At December 31, 2024, we had subordinated debentures totaling $21.7 million and $13.8 million of repurchase agreements. At December 31, 2024, the Company had no borrowings against a $5.0 million line of credit from an unrelated financial institution maturing on November 1, 2025, with an interest rate that adjusts daily based on the prime rate less 0.50%.
At December 31, 2025, we had subordinated debentures totaling $21.7 million and $1.5 million of repurchase agreements. At December 31, 2025, the Company had no borrowings against a $5.0 million line of credit from an unrelated financial institution maturing on November 1, 2026, with an interest rate that adjusts daily based on the prime rate less 0.50%.
There were no loans 90 days delinquent and accruing interest at December 31, 2024 and 2023. As part of our credit risk management, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis on commercial CRE and construction and land relationships.
There were no loans 90 days delinquent and accruing interest at either December 31, 2025 or 2024. As part of our credit risk management, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis on commercial CRE and construction and land relationships.
At December 31, 2024, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the Federal Reserve was $50.5 million. We also have various other federal funds agreements, both secured and unsecured, with correspondent banks totaling approximately $35.0 million in available credit under which we had no outstanding borrowings at December 31, 2024.
At December 31, 2025, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the Federal Reserve was $42.0 million. We also have various other federal funds agreements, both secured and unsecured, with correspondent banks totaling approximately $35.0 million in available credit under which we had no outstanding borrowings at December 31, 2025.
At December 31, 2024, $13.1 million of loans were on non-accrual status, or 1.25% of gross loans, compared to $2.4 million, or 0.25% of gross loans, at December 31, 2023. Past due loans are determined in accordance with the contractual repayment terms. Non-accrual loans consist of loans 90 or more days past due and certain individually evaluated loans.
At December 31, 2025, $10.0 million of loans were on non-accrual status, or 0.90% of gross loans, compared to $13.1 million, or 1.25% of gross loans, at December 31, 2024. Past due loans are determined in accordance with the contractual repayment terms. Non-accrual loans consist of loans 90 or more days past due and certain individually evaluated loans.
The contract amount of these standby letters of credit, which represents the maximum potential future payments guaranteed by us, was $1.9 million at December 31, 2024 as compared to $1.6 million at December 31, 2023.
The contract amount of these standby letters of credit, which represents the maximum potential future payments guaranteed by us, was $2.2 million at December 31, 2025 as compared to $1.9 million at December 31, 2024.
As of December 31, 2024, $4.9 million was available to be paid as dividends to the Company by the Bank without prior regulatory approval. Additionally, our ability to pay dividends is limited by the subordinated debentures associated with the trust preferred securities that are held by three business trusts that we control.
As of December 31, 2025, $3.0 million was available to be paid as dividends to the Company by the Bank without prior regulatory approval. Additionally, our ability to pay dividends is limited by the subordinated debentures associated with the trust preferred securities that are held by three business trusts that we control.
The historical loss rates are adjusted to reflect reasonable and supportable forecasts to estimate expected credit losses over the life of the financial asset. During 2024, we recorded a $2.3 million provision for credit losses compared to a $349,000 provision for credit losses in 2023.
The historical loss rates are adjusted to reflect reasonable and supportable forecasts to estimate expected credit losses over the life of the financial asset. During 2025, we recorded a $2.4 million provision for credit losses compared to a $2.3 million provision for credit losses in 2024.
DIVIDENDS During the year ended December 31, 2024, we paid quarterly cash dividends of $0.20 per share to our stockholders, as adjusted to give effect to 5% stock dividends, which we distributed for the 24th consecutive year in December 2024. The 2023 quarterly cash dividends were $0.19 per share as adjusted to give effect to 5% stock dividends.
DIVIDENDS During the year ended December 31, 2025, we paid quarterly cash dividends of $0.20 per share to our stockholders, as adjusted to give effect to 5% stock dividends, which we distributed for the 25 th consecutive year in December 2025. The 2024 quarterly cash dividends were $0.19 per share as adjusted to give effect to 5% stock dividends.
At December 31, 2024, we had outstanding loan commitments, excluding standby letters of credit, of $201.2 million, as compared to $211.8 million at December 31, 2023. We anticipate that sufficient funds will be available to meet current loan commitments. These commitments consist of unfunded lines of credit and commitments to finance real estate loans. CAPITAL.
At December 31, 2025, we had outstanding loan commitments, excluding standby letters of credit, of $203.5 million, as compared to $201.2 million at December 31, 2024. We anticipate that sufficient funds will be available to meet current loan commitments. These commitments consist of unfunded lines of credit and commitments to finance real estate loans. CAPITAL.
The allowance for credit losses is established through a provision for credit losses based on our economic projections. At December 31, 2024, our allowance for credit losses on loans totaled $12.8 million, or 1.22% of gross loans outstanding, compared to $10.6 million, or 1.12% of gross loans outstanding, at December 31, 2023.
The allowance for credit losses is established through a provision for credit losses based on our economic projections. At December 31, 2025, our allowance for credit losses on loans totaled $12.5 million, or 1.12% of gross loans outstanding, compared to $12.8 million, or 1.22% of gross loans outstanding, at December 31, 2024.
Our operating activities provided net cash of $14.2 million in 2024, compared to $12.6 million in 2023, which is primarily the result of net earnings and sales of one-to-four family residential mortgage loans. Our investing activities used net cash of $18.1 million during 2024, compared to $50.6 million in 2023, primarily to fund loan growth.
Our operating activities provided net cash of $21.6 million in 2025, compared to $14.2 million in 2024, which is primarily the result of increased net earnings and sales of one-to-four family residential mortgage loans. Our investing activities used net cash of $21.4 million during 2025, compared to $18.1 million in 2024, primarily to fund loan growth.
The increase in our allowance for credit losses on loans as a percentage of gross loans outstanding was primarily due to an increase in the reserves on individually evaluated loans. As of December 31, 2024 and 2023, approximately $26.1 million and $7.5 million, respectively, of loans were considered classified and assigned a risk rating of special mention, substandard or doubtful.
The decrease in our allowance for credit losses on loans as a percentage of gross loans outstanding was primarily due to a decrease in the reserves on individually evaluated loans. As of December 31, 2025 and 2024, approximately $22.9 million and $26.1 million, respectively, of loans were considered classified and assigned a risk rating of special mention, substandard or doubtful.
Historically, maturing deposits have generally remained with the Bank, and we believe that a significant portion of the deposits maturing in one year or less will remain with us upon maturity in some type of deposit account. CASH FLOWS. During 2024, our cash and cash equivalents decreased by $6.8 million as compared to 2023.
Historically, maturing deposits have generally remained with the Bank, and we believe that a significant portion of the deposits maturing in one year or less will remain with us upon maturity in some type of deposit account. CASH FLOWS. During 2025, our cash and cash equivalents increased by $707,000 as compared to 2024.
These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. Additional information concerning us and our business, including other factors that could materially affect our financial results, is included in “Item 1A. Risk Factors” of this Annual Report on Form 10-K.
These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. Additional information concerning us and our business, including other factors that could materially affect our financial results, is included in “Item 1A.
At December 31, 2024, we had an outstanding balance of $48.8 million against our line of credit with the FHLB. At December 31, 2024, we had collateral pledged to the FHLB that would allow us to borrow $171.0 million, subject to FHLB credit requirements and policies.
At December 31, 2025, we had an outstanding balance of $8.9 million against our line of credit with the FHLB. At December 31, 2025, we had collateral pledged to the FHLB that would allow us to borrow $239.1 million, subject to FHLB credit requirements and policies.
CORPORATE PROFILE AND OVERVIEW Landmark Bancorp, Inc. is a financial holding company incorporated under the laws of the State of Delaware and is engaged in the banking business through its wholly-owned subsidiary, Landmark National Bank, and in the insurance business through its wholly-owned subsidiary, Landmark Risk Management, Inc.
Risk Factors” of this Annual Report on Form 10-K. 39 CORPORATE PROFILE AND OVERVIEW Landmark Bancorp, Inc. is a financial holding company incorporated under the laws of the State of Delaware and is engaged in the banking business through its wholly-owned subsidiary, Landmark National Bank, and in the insurance business through its wholly-owned subsidiary, Landmark Risk Management, Inc.
Interest expense on borrowings decreased $272,000 to $5.9 million during 2024, as compared to 2023, due to a decrease in our average borrowings, which decreased from $114.2 million in 2023 to $104.1 million in 2024. Net Interest Income. Net interest income represents the difference between income derived from interest-earning assets and the expense incurred on interest-bearing liabilities.
Interest expense on borrowings decreased $1.5 million to $4.4 million during 2025, as compared to 2024, due to a decrease in our average borrowings, which decreased from $104.1 million in 2024 to $87.7 million in 2025. Net Interest Income. Net interest income represents the difference between income derived from interest-earning assets and the expense incurred on interest-bearing liabilities.
This borrowing matures on September 1, 2027 and requires quarterly principal and interest payments. The original balance of this borrowing was $10.0 million and was used to fund part of the acquisition of Freedom. OFF-BALANCE SHEET ARRANGEMENTS. As a provider of financial services, we routinely issue financial guarantees in the form of financial and performance standby letters of credit.
The original balance of this borrowing was $10.0 million and was used to fund part of the acquisition of Freedom. OFF-BALANCE SHEET ARRANGEMENTS. As a provider of financial services, we routinely issue financial guarantees in the form of financial and performance standby letters of credit.
Non-interest-bearing deposits at December 31, 2024 were $351.6 million, or 26.5% of deposits, compared to $367.1 million, or 27.9% of deposits, at December 31, 2023. Money market and checking accounts were 47.9% of our deposit portfolio and totaled $637.0 million at December 31, 2024, compared to 46.6% of our deposit portfolio totaling $613.6 million, at December 31, 2023.
Non-interest-bearing deposits at December 31, 2025 were $364.7 million, or 26.3% of deposits, compared to $351.6 million, or 26.5% of deposits, at December 31, 2024. Money market and checking accounts were 46.9% of our deposit portfolio and totaled $651.0 million at December 31, 2025, compared to 47.9% of our deposit portfolio totaling $637.0 million, at December 31, 2024.
Based on a sensitivity analysis of all collectively evaluated loan pools, a five basis point change in the qualitative risk factors across all loan categories would result in an increase or decrease of $520,000, or 4.1%, in the allowance for credit losses as of December 31, 2024.
These qualitative factors comprise a significant portion of the Company’s allowance for credit losses. Based on a sensitivity analysis of all collectively evaluated loan pools, a five basis point change in the qualitative risk factors across all loan categories would result in an increase or decrease of $551,000 in the allowance for credit losses as of December 31, 2025.
The increase in classified loans was primarily due to commercial loan relationships that moved to classified status during 2024. These ratings indicate that the loans identified as potential problem loans have more than normal risk which raised doubts as to the ability of the borrower to comply with present loan repayment terms.
The decrease in classified loans was primarily due to a commercial loan relationship that was charged off during 2025. These ratings indicate that the loans identified as potential problem loans have more than normal risk which raised doubts as to the ability of the borrower to comply with present loan repayment terms.
We are working to resolve the remaining problem credits or move the non-performing credits out of the loan portfolio. At December 31, 2024, we had $167,000 of real estate owned compared to $928,000 at December 31, 2023.
We are working to resolve or remove non-performing credits out of the loan portfolio. At December 31, 2025, we had no real estate owned compared to $167,000 of real estate owned at December 31, 2024.
The increase in net interest income was primarily a result of an increase in interest income on loans, partially offset by higher interest expense. The accretion of purchase accounting adjustments increased net interest income by $1.0 million in 2024 compared to $993,000 in 2023.
The increase in net interest income was primarily a result of an increase in interest income on loans, coupled with lower interest expense, partially offset by lower interest income on investment securities. The accretion of purchase accounting adjustments increased net interest income by $794,000 in 2025 compared to $1.0 million in 2024.
Net interest income is affected by both the difference between the rates of interest earned on interest-earnings assets and the rates paid on interest-bearing liabilities (“interest rate spread”) as well as the relative amounts of interest-earning assets and interest-bearing liabilities. During 2024, net interest income increased $2.4 million, or 5.6%, to $45.7 million compared to $43.3 million in 2023.
Net interest income is affected by both the difference between the rates of interest earned on interest-earnings assets and the rates paid on interest-bearing liabilities (“interest rate spread”) as well as the relative amounts of interest-earning assets and interest-bearing liabilities. During 2025, net interest income increased $10.0 million, or 21.8%, to $55.7 million compared to $45.7 million in 2024.
The increase in interest income on loans was also driven by an increase in average loan balances, which increased from $891.5 million in 2023 to $974.3 million in 2024. Interest income on investment securities decreased $382,000, or 3.1%, to $12.3 million during 2024, as compared to 2023.
The increase in interest income on loans was also driven by an increase in average loan balances, which increased from $974.3 million in 2024 to $1.1 billion in 2025. Interest income on investment securities decreased $737,000, or 6.0%, to $11.6 million during 2025, as compared to 2024.
Our critical accounting policies relate to the allowance for credit losses and goodwill, both of which involve significant judgment by our management. On January 1, 2023, we adopted CECL, which changed our allowance for credit losses from an incurred loss methodology to an expected loss methodology.
Our critical accounting policies relate to the allowance for credit losses and goodwill, both of which involve significant judgment by our management. On January 1, 2023, we adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), commonly referred to as “CECL”, which changed our allowance for credit losses from an incurred loss methodology to an expected loss methodology.
We distributed a 5% stock dividend for the 24 th consecutive year in December 2024. All per share and average share data in this section reflect the 2024 and 2023 stock dividends. Interest Income. Interest income for 2024 increased $9.2 million, or 14.2%, to $73.9 million, as compared to 2023.
We distributed a 5% stock dividend for the 25 th consecutive year in December 2025. All per share and average share data in this section reflect the 2025 and 2024 stock dividends. Interest Income. Interest income for 2025 increased $7.1 million, or 9.6%, to $81.0 million, as compared to 2024.
The decrease in interest income on investment securities was primarily the result of a decrease in the average balances of investment securities in 2024, which decreased from $486.3 million in 2023 to $432.9 million in 2024. Interest Expense. Interest expense during 2024 increased $6.8 million, or 31.5%, to $28.2 million as compared to 2023.
The decrease in interest income on investment securities was primarily the result of a decrease in the average balances of investment securities in 2025, which decreased from $432.9 million in 2024 to $365.8 million in 2025. Interest Expense. Interest expense during 2025 decreased $2.8 million, or 10.1%, to $25.3 million as compared to 2024.
The Basel III Rule is applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $3.0 billion).
The Basel III Rule is applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $3.0 billion). 44 At December 31, 2025, the Bank maintained a leverage ratio of 9.67% and a total risk-based capital ratio of 13.96%.
Factors which could have a material adverse effect on operations and future prospects by us and our subsidiaries include, but are not limited to, the following: ● The strength of the local, national and international economies, including the effects of changing inflationary pressures and supply chain constraints on such economies; ● Changes to U.S. or state tax laws, regulations and governmental policies concerning the Company’s general business, including changes in interpretation or prioritization and changes in response to prior bank failures; ● Changes in interest rates and prepayment rates of our assets; ● Increased competition in the financial services sector and the inability to attract new customers, including from non-bank competitors such as credit unions and fintech companies; ● Timely development and acceptance of new products and services; ● Our risk management framework; ● Interruptions in information technology and telecommunications systems and third-party services; ● Changes and uncertainty in benchmark interest rates, including the timing of additional rate changes, if any, by the Federal Reserve; ● The economic effects of severe weather, natural disasters, widespread disease or pandemics, or other external events; ● The composition of our executive management team and our ability to attract and retain key personnel; ● Changes in consumer spending; ● Integration of acquired businesses; ● The commencement, cost and outcome of litigation and other legal proceedings and regulatory actions against us or to which we may become subject; ● Changes in accounting policies and practices, such as the implementation of the current expected credit losses accounting standard; ● The economic impact of past and any future terrorist attacks, acts of war, including ongoing conflicts in the Middle East and the conflict in Ukraine, or threats thereof, and the response of the United States to any such threats and attacks; ● The ability to manage credit risk, forecast loan losses and maintain an adequate allowance for loan losses; ● Fluctuations in the value of securities held in our securities portfolio; ● Concentrations within our loan portfolio, large loans to certain borrowers, and large deposits from certain clients; ● The concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; ● The level of non-performing assets on our balance sheets; ● The ability to raise additional capital; ● Fluctuations in the values of the securities held in our securities portfolio, including as a result of changes in interest rates; ● The extensive regulatory framework that applies to the Company; ● The impact of recent and future legislative and regulatory changes, including in response to prior bank failures; ● Governmental monetary, trade and fiscal policies; ● The occurrence of fraudulent activity, breaches or failures of our or our third party vendors’ information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools or as a result of insider fraud; and ● Declines in real estate values.
Factors which could have a material adverse effect on operations and future prospects by us and our subsidiaries include, but are not limited to, the following: ● The strength of the local, state, national and international economies and financial markets, including the effects of inflationary pressures and future monetary policies of the Federal Reserve in response thereto; ● Effects on the U.S. economy resulting from actions taken by the federal government, including the threat or implementation of tariffs, immigration enforcement and changes in foreign policy; ● Changes in interest rates and prepayment rates of our assets; ● Increased competition in the financial services sector and the inability to attract new customers, including from non-bank competitors such as credit unions and “fintech” companies; ● Timely development and acceptance of new products and services; ● Rapid and expensive technological changes implemented by us and other parties in the financial services industry, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequence to us and our customers, including the development and implementation of tools incorporating artificial intelligence; ● Our risk management framework; ● Interruptions in information technology and telecommunications systems and third-party services; ● The economic effects of severe weather, natural disasters, widespread disease or pandemics, or other external events; ● The loss of key executives or employees; ● Changes in consumer spending; ● Integration of acquired businesses; ● The commencement, cost and outcome of litigation and other legal proceedings and regulatory actions against us or to which the Company may become subject; ● Changes in accounting policies and practices, such as the implementation of the current expected credit losses accounting standard; ● The economic impact of past and any future terrorist attacks, military conflicts, acts of war, including ongoing conflicts in the Middle East, the Russian invasion of Ukraine and other international conflicts, or threats thereof, and the response of the United States to any such threats and attacks; ● The ability to manage credit risk, forecast loan losses and maintain an adequate allowance for loan losses; ● Fluctuations in the value of securities held in our securities portfolio; ● Concentrations within our loan portfolio and large loans to certain borrowers (including commercial real estate loans); ● The concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; ● The level of non-performing assets on our balance sheets; ● The ability to raise additional capital; ● The occurrence of fraudulent activity, breaches or failures of our or our third-party vendors’ information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools or as a result of insider fraud; ● Declines in real estate values; ● The effects of fraud on the part of our employees, customers, vendors or counterparties; and ● Our success at managing and responding to the risks involved in the foregoing items.
The Federal Reserve lowered interest rates by 1.00% in the second half of 2024 due to improvements in the inflation outlook, however, additional rate cuts are dependent upon further reductions in the inflation rate and other economic factors.
The Federal Reserve lowered interest rates by 75 basis points during 2025 due to improvements in the inflation outlook, however, additional rate cuts are dependent upon further reductions in the inflation rate and other economic factors.
We had a balance of $1.3 billion in deposits at December 31, 2024 and December 31, 2023. Total borrowings decreased $10.5 million, or 10.6%, to $88.5 million at December 31, 2024, from $99.0 million at December 31, 2023. The decrease in borrowings was primarily due to deposit growth and the sale of investment securities.
We had a balance of $1.4 billion in deposits at December 31, 2025 as compared to $1.3 billion at December 31, 2024. Total borrowings decreased $54.8 million, or 61.9%, to $33.7 million at December 31, 2025, from $88.5 million at December 31, 2024. The decrease in borrowings was primarily due to deposit growth and the sale of investment securities.
Our financing activities used net cash of $2.9 million during 2024, compared to providing $42.0 million in 2023, primarily as a result of funding dividend payments. Liquidity. Our most liquid assets are cash and cash equivalents and investment securities available-for-sale. The levels of these assets are dependent on the operating, financing, lending and investing activities during any given year.
Our financing activities provided net cash of $441,000 during 2025, compared to using $3.0 million in 2024, primarily as a result of an increase in deposits. Liquidity. Our most liquid assets are cash and cash equivalents and investment securities available-for-sale. The levels of these assets are dependent on the operating, financing, lending and investing activities during any given year.
The Company’s and the Bank’s ratios above are well in excess of regulatory minimums. As of December 31, 2024 and 2023, the Company and the Bank also exceeded the “well capitalized” thresholds, which is the highest rating available.
Banks and bank holding companies are generally expected to operate at or above the minimum capital requirements. The Company’s and the Bank’s ratios above are well in excess of regulatory minimums. As of December 31, 2025 and 2024, the Company and the Bank also exceeded the “well capitalized” thresholds, which is the highest rating available.
Net earnings for 2024 increased $767,000, or 6.3%, to $13.0 million as compared to $12.2 million for 2023. The increase in net earnings during 2024 was primarily related to an increase in net interest income due primarily to an increase in loans and higher yields on interest-earning assets.
Net earnings for 2025 increased $5.8 million, or 44.4%, to $18.8 million as compared to $13.0 million for 2024. The increase in net earnings during 2025 was primarily related to an increase in net interest income due primarily to an increase in loan balances and higher yields on interest-earning assets.
Net loans, excluding loans held for sale, increased $101.6 million, 10.8%, to $1.0 billion at December 31, 2024, compared to $937.6 million at December 31, 2023. Investment securities available-for-sale decreased $80.3 million, or 17.7%, from $452.8 million at December 31, 2023 to $372.5 million at December 31, 2024.
Net loans, excluding loans held for sale, increased $59.2 million, or 5.7%, to $1.1 billion at December 31, 2025, compared to $1.0 billion at December 31, 2024. Investment securities available-for-sale decreased $24.4 million, or 6.5%, from $372.5 million at December 31, 2024 to $348.2 million at December 31, 2025.
Even though these borrowers were experiencing moderate cash flow problems as well as some deterioration in collateral value, management believed the general allowance was sufficient to cover all expected future losses expected in the loan portfolio at the balance sheet date. 46 Loans past due 30-89 days and still accruing interest totaled $6.2 million, or 0.59% of gross loans, at December 31, 2024, compared to $1.6 million, or 0.17% of gross loans, at December 31, 2023.
Management believed the general allowance was sufficient to cover all expected future losses expected in the loan portfolio at the balance sheet date. Loans past due 30-89 days and still accruing interest totaled $4.3 million, or 0.38% of gross loans, at December 31, 2025, compared to $6.2 million, or 0.59% of gross loans, at December 31, 2024.
Interest expense on interest-bearing deposits increased $7.1 million to $22.3 million for 2024 as compared to $15.3 million in 2023. Our total cost of interest-bearing deposits increased from 1.71% during 2023 to 2.38% during 2024 as a result of higher rates and increased competition for deposits.
Interest expense on interest-bearing deposits decreased $1.4 million to $20.9 million for 2025 as compared to $22.3 million in 2024. Our total cost of interest-bearing deposits decreased from 2.38% during 2024 to 2.14% during 2025 as a result of lower interest rates.
Savings accounts decreased to $145.5 million, or 10.9% of deposits, at December 31, 2024, from $152.4 million, or 11.6% of deposits, at December 31, 2023. Certificates of deposit totaled $194.7 million, or 14.7% of deposits, at December 31, 2024, compared to $183.2 million, or 13.9% of deposits, at December 31, 2023.
Savings accounts increased to $151.4 million, or 10.8% of deposits, at December 31, 2025, from $145.5 million, or 10.9% of deposits, at December 31, 2024. Certificates of deposit totaled $221.8 million, or 16.0% of deposits, at December 31, 2025, compared to $194.7 million, or 14.7% of deposits, at December 31, 2024.
Also contributing to the increase in interest expense was an increase in average interest-bearing deposit balances, which increased from $892.4 million in 2023 to $938.2 million in 2024.
Offsetting the decrease in interest expense due to lower cost of interest-bearing deposits was an increase in average interest-bearing deposit balances, which increased from $938.2 million in 2024 to $979.4 million in 2025.
Compared to the same period last year, higher interest rates increased the yields on our interest-earning assets and the cost of our interest-bearing liabilities. Our net interest margin, on a tax-equivalent basis, increased to 3.28% during 2024 from 3.17% during 2023.
Compared to the same period last year, net interest income was benefitted by higher average balances and yields on loans, coupled with lower costs of interest-bearing liabilities. Our net interest margin, on a tax-equivalent basis, increased to 3.86% during 2025 from 3.28% during 2024.
Interest income on loans increased $9.6 million, or 18.6%, to $61.4 million for 2024, as compared to 2023 due to higher yields and average balances. Our yields increased from 5.81% in 2023 to 6.3% in 2024.
Interest income on loans increased $7.8 million, or 12.7%, to $69.2 million for 2025, as compared to 2024 due to higher yields and average balances. Our yields increased from 6.30% in 2024 to 6.37% in 2025.
Excess funds are typically generated as a result of increased deposit balances, while uses of excess funds are generally deposit withdrawals and loan advances.
Liquidity management is both a daily and long-term function of our strategy. Excess funds are generally invested in short-term investments. Excess funds are typically generated as a result of increased deposit balances, while uses of excess funds are generally deposit withdrawals and loan advances.
During periods in which we are not able to originate a sufficient amount of loans and/or periods of high principal prepayments, we generally increase our liquid assets by investing in short-term, high-grade investments. 47 Liquidity management is both a daily and long-term function of our strategy. Excess funds are generally invested in short-term investments.
These liquid assets totaled $372.4 million at December 31, 2025 and $396.9 million at December 31, 2024. During periods in which we are not able to originate a sufficient amount of loans and/or periods of high principal prepayments, we generally increase our liquid assets by investing in short-term, high-grade investments.
Competition for deposits may affect our ability to continue to increase deposit balances and could result in a decrease in our deposit balances in future periods. Certificates of deposit at December 31, 2024, scheduled to mature in one year or less totaled $181.0 million.
Competition for deposits may affect our ability to continue to increase deposit balances and could result in a decrease in our deposit balances in future periods.
The decrease in real estate owned as of December 31, 2024 compared to December 31, 2023 was primarily due to the sale of properties. As of December 31, 2024, real estate owned consisted of a single parcel of undeveloped land. The Company is currently marketing the property. Liability Distribution.
The decrease in real estate owned as of December 31, 2025 compared to December 31, 2024 was due to the sale of properties held as other real estate owned. Liability Distribution.
At December 31, 2024, the Bank maintained a leverage ratio of 9.10% and a total risk-based capital ratio of 13.5%. As shown by the following table, the Bank’s capital exceeded the minimum capital requirements in effect at December 31, 2024, including the capital conservation buffers.
As shown by the following table, the Bank’s capital exceeded the minimum capital requirements in effect at December 31, 2025, including the capital conservation buffers.
Actual Actual Minimum Minimum (dollars in thousands) amount percent amount percent(1) Leverage $ 140,523 9.10 % $ 61,770 4.00 % Common Equity Tier 1 Capital 140,523 12.43 % 79,146 7.00 % Tier 1 Capital 140,523 12.43 % 96,106 8.50 % Total risk-based Capital 152,987 13.53 % 118,719 10.50 % (1) The minimum required percent includes a capital conservation buffer of 2.5%. 48 Banks and bank holding companies are generally expected to operate at or above the minimum capital requirements.
Actual Actual Minimum Minimum (dollars in thousands) amount percent amount percent(1) Leverage $ 152,915 9.67 % $ 63,223 4.00 % Common Equity Tier 1 Capital 152,915 12.92 % 82,871 7.00 % Tier 1 Capital 152,915 12.92 % 100,629 8.50 % Total Risk-Based Capital 165,313 13.96 % 124,306 10.50 % (1) The minimum required percent includes a capital conservation buffer of 2.5%.
We recorded income tax expense of $1.1 million in 2024 compared to $2.0 million in 2023. The effective tax rate decreased from 13.8% in 2023 to 7.7% in 2024, primarily due to higher tax-exempt income and the recognition of previously unrecognized tax benefits.
The effective tax rate increased from 7.7% in 2024 to 18.6% in 2025, primarily due to decreased recognition of previously unrecognized tax benefits. During 2025, we recognized $161,000 of previously unrecognized tax benefits compared to $1.0 million during 2024, which reduced the effective tax rates in both years. FINANCIAL CONDITION.
Also contributing to the increase in non-interest income was an increase of $522,000 in fees and service charges primarily due to higher fees to deposit accounts. A loss of $1.0 million was recorded on the sale of investment securities during 2024, a decrease from the $1.2 million loss recorded on the sale of investment securities in 2023. Non-interest Expense.
A loss of $103,000 was recorded on the sale of investment securities during 2025, a decrease from the $1.0 million loss recorded on the sale of investment securities in 2024.
Total non-interest income was $14.7 million in 2024, an increase of $1.5 million, or 11.4%, compared to 2023. The increase in non-interest income was primarily the result of an increase of $810,000 in bank owned life insurance due to the accrual of death benefits in 2024.
We recorded net loan charge-offs of $2.7 million during 2025 compared to net charge-offs of $183,000 during 2024. The increase in net charge-offs during 2025 was primarily due to the charge-off of a single commercial credit during the third quarter. Non-interest Income. Total non-interest income was $15.0 million in 2025, an increase of $207,000, or 1.4%, compared to 2024.
Removed
These qualitative factors comprise a significant portion of the Company’s allowance for credit losses.
Added
The increase in non-interest income was primarily the result of a decrease in losses on sales of investment securities of $928,000 and an increase of $789,000 in gains on sales of loans.
Removed
The $2.3 million provision for credit losses during 2024 consisted of a $2.4 million provision to the allowance for credit losses on loans and a credit provision of $100,000 to unfunded loan commitments. We recorded net loan charge-offs of $183,000 during 2024 compared to net loan recoveries of $44,000 during 2023. 45 Non-interest Income.
Added
These increases were partially offset by a decrease of $604,000 in bank owned life insurance due to death benefits recognized in 2024 and a decrease of $547,000 in fees and service charges primarily due to lower fees to deposit accounts. Non-interest Expense. Non-interest expense increased $1.2 million, or 2.6%, to $45.2 million in 2025 compared to $44.1 million in 2024.
Removed
Non-interest expense increased $2.1 million, or 5.0%, to $44.1 million in 2024 compared to $42.0 million in 2023. The increase in non-interest expense in 2024 was mainly associated with a $1.1 million valuation allowance recorded against real estate held for sale.
Added
The increase in non-interest expense in 2025 was primarily driven by an increase of $2.4 million in compensation and benefits expense due to an increase in the number of employees coupled with higher incentive compensation costs tied to improved Company performance.
Removed
Also contributing to the increase in non-interest expense was a $460,000 increase in professional fees associated with increased legal and consulting costs and a $422,000 increase in compensation. Partially offsetting the increase in non-interest expense was a $680,000 decrease in amortization of mortgage serving rights and other intangibles. INCOME TAXES.
Added
This increase was partially offset by a decrease of $752,000 in valuation allowances for assets held for sale and a decrease of $510,000 in occupancy and equipment expense. INCOME TAXES. We recorded income tax expense of $4.3 million in 2025 compared to $1.1 million in 2024.
Removed
During 2024, we recognized $1.0 million of previously unrecognized tax benefits compared to $517,000 during 2023, which reduced the effective tax rates in both years. FINANCIAL CONDITION. Economic conditions in the U.S. remained sluggish during 2024 as elevated inflation levels and higher interest rates continued to impact the economy.
Added
Economic conditions in the U.S. remained resilient during 2025 despite elevated inflation levels and economic uncertainty over tariffs continuing to impact the economy. Rate cuts by the Federal Reserve Bank during 2025 have positively benefitted financial institutions’ earnings and net interest margin.
Removed
Elevated interest rates and a flat or negative sloping yield curve have impacted financial institutions generally, resulting in continued higher costs of funding and lower fair values for investment securities.
Added
Such decreases in deposit balances may cause us to secure funding through other borrowings which would likely result in higher interest costs. 43 Certificates of deposit at December 31, 2025, scheduled to mature in one year or less totaled $213.4 million.
Removed
These liquid assets totaled $396.9 million at December 31, 2024 and $484.8 million at December 31, 2023.
Added
This line of credit has covenants specific to capital and other financial ratios, which the Company was in compliance with at December 31, 2025. The Company also borrowed $1.7 million from the same unrelated financial institution at a fixed rate of 6.15%. This borrowing matures on September 1, 2027 and requires quarterly principal and interest payments.

… 2 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−2 removed8 unchanged
Conversely, the cost of funds for an institution with a positive gap would generally be expected to decline less quickly than the yield on its assets in a falling interest rate environment. Changes in interest rates generally have the opposite effect on an institution with a “negative” gap. The following is our “static gap” schedule.
Conversely, the cost of funds for an institution with a positive gap would generally be expected to decline less quickly than the yield on its assets in a falling interest rate environment. Changes in interest rates generally have the opposite effect on an institution with a “negative” gap. 46 The following is our “static gap” schedule.
This position is then subjected to a shift in interest rates of 100, 200 and 300 basis points rising and 100 basis points falling with an impact to our net interest income on a one-year horizon as follows: As of December 31, 2024 As of December 31, 2023 Scenario Dollar change in net interest income ($000’s) Percent change in net interest income Dollar change in net interest income ($000’s) Percent change in net interest income 300 basis point rising $ (6,831 ) (13.8 )% $ (5,924 ) (13.8 )% 200 basis point rising $ (4,629 ) (9.4 )% $ (4,012 ) (9.3 )% 100 basis point rising $ (2,434 ) (4.9 )% $ (2,122 ) (4.9 )% 100 basis point falling $ 282 0.6 % $ 17 0.0 % 200 basis point falling $ (588 ) (1.2 )% $ (909 ) (2.1 )% 300 basis point falling $ (1,774 ) (3.6 )% $ (2,037 ) (4.7 )% ASSET/LIABILITY MANAGEMENT Interest rate “gap” analysis is a common, though imperfect, measure of interest rate risk which measures the relative dollar amounts of interest-earning assets and interest-bearing liabilities which reprice within a specific time period, either through maturity or rate adjustment.
This position is then subjected to a shift in interest rates of 100, 200 and 300 basis points rising and 100 basis points falling with an impact to our net interest income on a one-year horizon as follows: As of December 31, 2025 As of December 31, 2024 Scenario Dollar change in net interest income ($000’s) Percent change in net interest income Dollar change in net interest income ($000’s) Percent change in net interest income 300 basis point rising $ (5,612 ) (7.1 )% $ (6,831 ) (13.8 )% 200 basis point rising (3,498 ) (4.5 )% (4,629 ) (9.4 )% 100 basis point rising (1,375 ) (1.8 )% (2,434 ) (4.9 )% 100 basis point falling (183 ) (0.2 )% 282 0.6 % 200 basis point falling (1,639 ) (2.1 )% (588 ) (1.2 )% 300 basis point falling (4,352 ) (5.5 )% (1,774 ) (3.6 )% ASSET/LIABILITY MANAGEMENT Interest rate “gap” analysis is a common, though imperfect, measure of interest rate risk which measures the relative dollar amounts of interest-earning assets and interest-bearing liabilities which reprice within a specific time period, either through maturity or rate adjustment.
Simulation models are prepared to determine the impact on net interest income for the coming twelve months, including using rates at December 31, 2024 and forecasting volumes for the twelve-month projection.
In the past, we have been successful in meeting the interest rate sensitivity objectives set forth in our policy. Simulation models are prepared to determine the impact on net interest income for the coming twelve months, including using rates at December 31, 2025 and forecasting volumes for the twelve-month projection.
We have set policy limits of interest rate risk to be assumed in the normal course of business and monitor such limits through our simulation process. 49 In the past, we have been successful in meeting the interest rate sensitivity objectives set forth in our policy.
Our Asset/Liability Management Committee monitors the interest rate sensitivity of our balance sheet using earnings simulation models and interest sensitivity “gap” analysis. We have set policy limits of interest rate risk to be assumed in the normal course of business and monitor such limits through our simulation process.
We have been successful in meeting the interest sensitivity objectives set forth in our policy.
We have been successful in meeting the interest sensitivity objectives set forth in our policy. This has been accomplished primarily by managing the assets and liabilities while maintaining our traditional high credit standards.
Removed
Our Asset/Liability Management Committee monitors the interest rate sensitivity of our balance sheet using earnings simulation models and interest sensitivity “gap” analysis.
Added
INTEREST-EARNING ASSETS AND INTEREST-BEARING LIABILITIES REPRICING SCHEDULE (“GAP” TABLE) As of December 31, 2025 3 months or less 3 to 12 months 1 to 5 years Over 5 years Total (Dollars in thousands) Interest-earning assets: Investment securities $ 28,664 $ 38,061 $ 156,516 $ 128,705 $ 351,946 Loans 320,788 177,663 511,747 106,666 1,116,864 Total interest-earning assets $ 349,452 $ 215,724 $ 668,263 $ 235,371 $ 1,468,810 Interest-bearing liabilities: Certificates of deposit $ 130,127 $ 83,275 $ 8,364 $ - $ 221,766 Money market and checking accounts 650,987 - - - 650,987 Savings accounts 151,406 - - - 151,406 Borrowed money 19,115 13,737 867 - 33,719 Total interest-bearing liabilities $ 951,635 $ 97,012 $ 9,231 $ - $ 1,057,878 Interest sensitivity gap per period $ (602,183 ) $ 118,712 $ 659,032 $ 235,371 $ 410,932 Cumulative interest sensitivity gap (602,183 ) (483,471 ) 175,561 410,932 Cumulative gap as a percent of total interest-earning assets (41.00 %) (32.92 %) 11.95 % 27.98 % Cumulative interest sensitive assets as a percent of cumulative interest sensitive liabilities 36.72 % 53.90 % 116.60 % 138.84 % 47
Removed
This has been accomplished primarily by managing the assets and liabilities while maintaining our traditional high credit standards. 50 INTEREST-EARNING ASSETS AND INTEREST-BEARING LIABILITIES REPRICING SCHEDULE (“GAP” TABLE) As of December 31, 2024 3 months or less 3 to 12 months 1 to 5 years Over 5 years Total (Dollars in thousands) Interest-earning assets: Investment securities $ 19,745 $ 32,959 $ 162,081 $ 161,399 $ 376,184 Loans 248,884 205,678 492,478 108,733 1,055,773 Total interest-earning assets $ 268,629 $ 238,637 $ 654,559 $ 270,132 $ 1,431,957 Interest-bearing liabilities: Certificates of deposit $ 101,825 $ 79,128 $ 13,739 $ 2 $ 194,694 Money market and checking accounts 636,963 - - - 636,963 Savings accounts 145,514 - - - 145,514 Borrowed money 71,102 14,003 3,400 - 88,505 Total interest-bearing liabilities $ 955,404 $ 93,131 $ 17,139 $ 2 $ 1,065,676 Interest sensitivity gap per period $ (686,775 ) $ 145,506 $ 637,420 $ 270,130 $ 366,281 Cumulative interest sensitivity gap (686,775 ) (541,269 ) 96,151 366,281 Cumulative gap as a percent of total interest-earning assets (47.96 %) (37.80 %) 6.71 % 25.58 % Cumulative interest sensitive assets as a percent of cumulative interest sensitive liabilities 28.12 % 48.38 % 109.02 % 134.37 % 51

Other LARK 10-K year-over-year comparisons