Toggle SGML Header (+)


Section 1: 8-K

 

 

 

United States

Securities And Exchange Commission
Washington, D.C. 20549

 

FORM 8-K

 

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 1, 2017

 

Landmark Bancorp, Inc.
(Exact name of registrant as specified in its charter)

 

Delaware   0-33203   43-1930755
(State or other jurisdiction of incorporation)   (Commission
File Number)
 

(I.R.S. Employer

Identification No.)

 

701 Poyntz Avenue
Manhattan, Kansas 66502
(Address of principal executive offices) (Zip code)

 

(785) 565-2000
(Registrant’s telephone number, including area code)

 

N/A

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

  [  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     
  [  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     
  [  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     
  [  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

 

 

 

 

 

Item 2.02. Results of Operations.

 

On November 1, 2017, Landmark Bancorp, Inc. (the “Company”) issued a press release announcing results for the quarter and nine months ended September 30, 2017. The press release is attached hereto as Exhibit 99.1.

 

Item 8.01. Other Events.

 

The Company also announced in the press release that its Board of Directors approved a cash dividend of $0.20 per share and a 5% stock dividend. The cash dividend will be paid to all stockholders of record as of the close of business on November 15, 2017 and payable on November 29, 2017. The 5% stock dividend will be issued December 15, 2017, to common stockholders of record on December 1, 2017. A copy of the press release is attached hereto as Exhibit 99.1.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

99.1 Press Release dated November 1, 2017

 

 

 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: November 1, 2017 LANDMARK BANCORP, INC.
       
    By: /s/ Mark A. Herpich
    Name: Mark A. Herpich
    Title: Vice President, Secretary, Treasurer and
Chief Financial Officer

 

 

 

 

(Back To Top)

Section 2: EX-99.1

 

 

PRESS RELEASE

 

FOR IMMEDIATE RELEASE Contacts:
November 1, 2017 Michael E. Scheopner
  President and Chief Executive Officer
  Mark A. Herpich
  Chief Financial Officer
  (785) 565-2000

 

Landmark Bancorp, Inc. Announces Earnings for the Third Quarter of 2017

Declares Cash Dividend of $0.20 per Share and 5% Stock Dividend for Landmark Stockholders

 

(Manhattan, KS, November 1, 2017) – Landmark Bancorp, Inc. (Nasdaq: LARK), a bank holding company serving 23 communities across Kansas, reported a net loss of $2.7 million ($0.67 per diluted share) for the quarter ended September 30, 2017, compared to net earnings of $2.2 million ($0.55 per diluted share) for the third quarter of 2016. The third quarter of 2017 includes an after-tax loss of $5.1 million on a deposit account after checks deposited by a Landmark customer from a third party were returned by another financial institution due to uncollected funds related to the third party. For the nine months ended September 30, 2017, Landmark reported net earnings of $1.9 million ($0.49 per diluted share), compared to $6.9 million ($1.78 per diluted share) in the first nine months of 2016. Management will host a conference call to discuss these results at 10:00 a.m. (Central time) on Thursday, November 2, 2017. Investors may participate via telephone by dialing (877) 510-0473. A replay of the call will be available through December 2, 2017, by dialing (877) 344-7529 and using conference number 10113579.

 

Additionally, Landmark’s Board of Directors declared a cash dividend of $0.20 per share, to be paid November 29, 2017, to common stockholders of record as of the close of business on November 15, 2017. The Board of Directors also declared a 5% stock dividend issuable December 15, 2017, to common stockholders of record on December 1, 2017. This is the 17th consecutive year that the Board has declared a 5% stock dividend.

 

Michael E. Scheopner, President and Chief Executive Officer of Landmark, commented: “Landmark’s net earnings of $1.9 million in the first nine months of 2017 were impacted by a deposit-related loss after a Landmark customer deposited checks from a third party which were returned by another financial institution. This loss reduced net earnings by $5.1 million during the third quarter of 2017. Excluding the substantial deposit loss, Landmark delivered a strong core performance in the nine-month period. When the deposit problem was discovered in August, immediate steps by the Bank led to a partial recovery. The Company continues to pursue all available options to protect its rights, including legal and equitable remedies aimed at recovering more funds if possible. During the first nine months of 2017, return on average assets was 0.28% compared to 1.03% in the first nine months of 2016. Return on average equity was 2.93% compared to 10.64% for the same period a year earlier. We continued to increase our capital and book value per share in the first nine months of 2017. We strengthened Landmark’s risk management practices during the third quarter, which along with our capital strength, continues to position us well for long-term growth. Landmark’s commitment to community banking – meeting the financial needs of families and businesses with service that is both personal and high-tech – continues to build our presence across Kansas.”

 

Third Quarter Financial Highlights

 

Net interest income was $6.6 million for the quarter ended September 30, 2017, an increase of $50,000, or 0.8%, from the third quarter of 2016. The increase was a result of a 2.0% increase in average interest-earning assets, from $809.9 million in the third quarter of 2016 to $826.2 million for the same period of 2017. Partially offsetting the higher average interest-earning assets were lower average balances of loans and higher rates on interest-bearing deposits, which contributed to a decrease in net interest margin, on a tax equivalent basis, from 3.45% in the third quarter of 2016 to 3.42% in the same period of 2017. Landmark recorded a provision for loan losses of $100,000 during the third quarter of 2017 compared to $150,000 during the same period of 2016.

 

Total non-interest income was $3.9 million in the third quarter of 2017, an increase of $194,000, or 5.2%, compared to the same period of 2016. This change was primarily the result of a $389,000 increase in bank owned life insurance income in the third quarter of 2017 as compared to the same period of 2016. Partially offsetting the increase in bank owned life insurance income was a decline in gains on sales of investment securities to $39,000 during the third quarter of 2017, compared to $261,000 in the same period of 2016.

 

Non-interest expense totaled $15.6 million for the third quarter of 2017, an increase of $8.2 million from $7.4 million for the third quarter of 2016. The increase was primarily due to the pre-tax, deposit-related loss of $8.1 million. Also contributing to the increase in non-interest expense was an increase of $220,000 in professional fees, primarily related to the costs associated with an audit of internal control over financial reporting which will be required for 2017 as a result of exceeding a regulatory market capitalization threshold at June 30, 2017. Landmark recorded an income tax benefit of $2.5 million in the third quarter of 2017 compared to income tax expense of $594,000 in the same period of 2016. The income tax benefit in the third quarter of 2017 was primarily the result of the $8.1 million deposit-related loss compared to an effective tax rate of 23.9% in the third quarter of 2016. Income tax expense was recast for the third quarter of 2016 to reflect the early adoption of Accounting Standards Update (“ASU”) 2016-09 Stock Compensation (Topic 718), which reduced income tax expense by $62,000 as a result of including the impact of excess tax benefits from the exercise of stock options.

 

 
 

 

Year-to-Date Financial Highlights

 

Net interest income was $19.5 million for the nine months ended September 30, 2017, an increase of $28,000, or 0.1%, from the first nine months of 2016. The increase was the result of a 2.6% increase in average interest-earning assets, from $805.7 million in the first nine months of 2016 to $826.8 million for the same period of 2017. Partially offsetting the higher average interest-earning assets were lower average balances of loans and higher rates on interest-bearing deposits and borrowings, which contributed to a decrease in our net interest margin, on a tax equivalent basis, from 3.46% in the first nine months of 2016 to 3.40% in the same period of 2017. Landmark recorded a provision for loan losses of $250,000 during the first nine months of 2017 compared to $500,000 during the same period of 2016.

 

Total non-interest income was $11.8 million in the first nine months of 2017, an increase of $181,000, or 1.6%, compared to the same period of 2016. This change was primarily the result of a $360,000 increase in bank owned life insurance income in the first nine months of 2017 as compared to the same period of 2016. Partially offsetting the increase in bank owned life insurance income was a decline in gains on sales of investment securities to $363,000 during the first nine months of 2017, compared to $558,000 in the same period of 2016.

 

Non-interest expense totaled $30.2 million for the first nine months of 2017, an increase of $8.5 million from $21.8 million for the same period of 2016. The increase was primarily due to the $8.1 million deposit-related loss. Also contributing to higher non-interest expense was an increase of $485,000 in professional fees related to costs associated with forming our captive insurance subsidiary and an audit of internal controls related to financial reporting in the first nine months of 2017 as compared to the same period of 2016. Landmark recorded an income tax benefit of $1.1 million in the first nine months of 2017 compared to income tax expense of $2.0 million in the same period of 2016. The income tax benefit recorded in the first nine months of 2017 was primarily the result of the $8.1 million deposit-related loss compared to an effective tax rate of 22.2% in the same period of 2016. Income tax expense was reduced by $24,000 in the first nine months of 2017 compared to $259,000 in the same period of 2016 as a result of the recognition of excess tax benefits from the exercise of stock options. Income tax expense was recast for the first nine months of 2016 to reflect the early adoption of ASU 2016-09.

 

Balance Sheet Highlights

 

Total assets increased $18.8 million, or 2.1%, to $930.1 million at September 30, 2017, from $911.4 million at December 31, 2016. Net loans increased $8.0 million, or 1.9%, to $428.4 million at September 30, 2017, compared to $420.5 million at year-end 2016. Investment securities increased $3.9 million, or 1.0%, to $394.8 million at September 30, 2017, from $390.9 million at December 31, 2016. Deposits decreased $8.5 million, or 1.2%, to $733.0 million at September 30, 2017, compared to $741.5 million at December 31, 2016. Stockholders’ equity increased to $87.0 million (book value of $22.46 per share) at September 30, 2017, from $85.0 million (book value of $21.96 per share) at December 31, 2016. The ratio of equity to total assets increased to 9.35% at September 30, 2017, from 9.32% at December 31, 2016, and the ratio of tangible equity to tangible assets, a non-GAAP financial ratio, increased to 7.23% from 7.13% as of the same dates.

 

The allowance for loan losses totaled $5.4 million, or 1.24% of gross loans outstanding, at September 30, 2017, compared to $5.3 million, or 1.26% of gross loans outstanding, at December 31, 2016. Non-performing loans increased to $5.5 million, or 1.26% of gross loans, at September 30, 2017, from $2.7 million, or 0.64% of gross loans, at December 31, 2016. The increase in non-accrual loans was primarily related to a $3.1 million loan relationship consisting of a $1.3 million commercial loan and a $1.8 million commercial real estate loan. Landmark recorded net loan charge-offs of $215,000 during the first nine months of 2017 compared to $915,000 during the same period of 2016.

 

About Landmark

 

Landmark Bancorp, Inc., the holding company for Landmark National Bank, is listed on the NASDAQ Global Market under the symbol “LARK.” Headquartered in Manhattan, Kansas, Landmark National Bank is a community banking organization dedicated to providing quality financial and banking services. Landmark National Bank has 29 locations in 23 communities across Kansas: Manhattan (2), Auburn, Dodge City (2), Fort Scott (2), Garden City, Great Bend (2), Hoisington, Iola, Junction City, Kincaid, LaCrosse, Lawrence (2), Lenexa, Louisburg, Mound City, Osage City, Osawatomie, Overland Park, Paola, Pittsburg, Topeka (2), Wamego and Wellsville, Kansas. Visit www.banklandmark.com for more information.

 

Special Note Concerning Forward-Looking Statements

 

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of Landmark Bancorp, Inc. (the “Company”). Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this press release, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond our ability to control or predict, could cause actual results to differ materially from those in our forward-looking statements. These factors include, among others, the following: (i) the strength of the local, national and international economy; (ii) changes in state and federal laws, regulations and governmental policies concerning our general business; (iii) changes in interest rates and prepayment rates of our assets; (iv) increased competition in the financial services sector and the inability to attract new customers; (v) timely development and acceptance of new products and services; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the loss of key executives or employees; (viii) changes in consumer spending; (ix) integration of acquired businesses; (x) unexpected outcomes of existing or new litigation; (xi) changes in accounting policies and practices; (xii) the economic impact of armed conflict or terrorist acts involving the United States; (xiii) the ability to manage credit risk, forecast loan losses and maintain an adequate allowance for loan losses; (xiv) declines in the value of our investment portfolio; (xv) the ability to raise additional capital; (xvi) cyber-attacks; and (xvii) declines in real estate values. 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 the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in our filings with the Securities and Exchange Commission.

 

 
 

 

Financial Highlights

(Dollars in thousands, except per share data)

 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited):        
   September 30,   December 31, 
   2017   2016 
ASSETS:          
Cash and cash equivalents  $18,772   $19,996 
Investment securities   394,772    390,862 
Loans, net   428,439    420,461 
Loans held for sale   8,583    5,517 
Premises and equipment, net   20,999    20,407 
Bank owned life insurance   23,536    18,314 
Goodwill   17,532    17,532 
Other intangible assets, net   3,742    3,986 
Other assets   13,754    14,307 
TOTAL ASSETS  $930,129   $911,382 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY:          
Deposits  $733,010   $741,521 
Federal Home Loan Bank and other borrowings   97,321    72,867 
Other liabilities   12,795    12,043 
Total liabilities   843,126    826,431 
Stockholders’ equity   87,003    84,951 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $930,129   $911,382 
           
LOANS (unaudited):          
           
One-to-four family residential real estate  $136,829   $136,847 
Construction and land   15,898    13,737 
Commercial real estate   120,818    118,201 
Commercial   50,944    54,506 
Agriculture   84,101    78,324 
Municipal   3,479    3,883 
Consumer   21,985    20,271 
Net deferred loan costs and loans in process   (236)   36 
Allowance for loan losses   (5,379)   (5,344)
Loans, net  $428,439   $420,461 
           
NON-PERFORMING ASSETS (unaudited):          
           
Non-accrual loans  $5,489   $2,746 
Accruing loans over 90 days past due   -    - 
Non-performing investment securities   -    - 
Real estate owned   677    1,279 
Total non-performing assets  $6,166   $4,025 
           
RATIOS (unaudited):          
           
Loans 30-89 days delinquent and still accruing to gross loans outstanding   0.67%   0.18%
Total non-performing loans to gross loans outstanding   1.26%   0.64%
Total non-performing assets to total assets   0.66%   0.44%
Allowance for loan losses to gross loans outstanding   1.24%   1.26%
Allowance for loan losses to total non-performing loans   98.00%   194.61%
Equity to total assets   9.35%   9.32%
Tangible equity to tangible assets (1)   7.23%   7.13%
Book value per share  $22.46   $21.96 

 

(1) Tangible equity to tangible assets is a non-GAAP financial ratio calculated as stockholders’ equity reduced by goodwill and other intangible assets, net divided by total assets reduced by goodwill and other intangible assets, net.

 

 
 

 

Financial Highlights (continued)

(Dollars in thousands, except per share data)

 

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited):
 
   Three months ended
September 30,
   Nine months ended
September 30,
 
   2017   2016   2017   2016 
Interest income:                    
Loans  $5,392   $5,392   $15,726   $15,939 
Investment securities and other   2,129    1,958    6,439    5,957 
Total interest income   7,521    7,350    22,165    21,896 
                     
Interest expense:                    
Deposits   418    285    1,150    849 
Borrowed funds   501    513    1,469    1,529 
Total interest expense   919    798    2,619    2,378 
                     
Net interest income   6,602    6,552    19,546    19,518 
Provision for loan losses   100    150    250    500 
Net interest income after provision for loan losses   6,502    6,402    19,296    19,018 
                     
Non-interest income:                    
Fees and service charges   1,896    1,873    5,528    5,449 
Gains on sales of loans, net   1,220    1,219    4,301    4,418 
Bank owned life insurance   514    125    750    390 
Gains on sales of investment securities, net   39    261    363    558 
Other   267    264    823    769 
Total non-interest income   3,936    3,742    11,765    11,584 
                     
Non-interest expense:                    
Compensation and benefits   3,933    3,903    11,608    11,481 
Occupancy and equipment   1,107    1,131    3,228    3,242 
Data processing   360    373    1,027    1,041 
Amortization of intangibles   320    369    946    1,026 
Professional fees   478    258    1,244    759 
Advertising   166    166    498    498 
Federal deposit insurance premiums   74    75    219    295 
Foreclosure and real estate owned expense   (18)   60    83    176 
Other   9,202    1,059    11,369    3,249 
Total non-interest expense   15,622    7,394    30,222    21,767 
                     
(Loss) earnings before income taxes   (5,184)   2,750    839    8,835 
Income tax (benefit) expense (1)   (2,523)   594    (1,088)   1,960 
Net (loss) earnings (1)  $(2,661)  $2,156   $1,927   $6,875 
                     
Net (loss) earnings per share (1) (2)                    
Basic  $(0.69)  $0.56   $0.50   $1.82 
Diluted   (0.67)   0.55    0.49    1.78 
                     
Shares outstanding at end of period (2)   3,873,781    3,844,423    3,873,781    3,844,423 
                     
Weighted average common shares outstanding - basic (2)   3,872,829    3,827,899    3,871,075    3,785,784 
Weighted average common shares outstanding - diluted (1) (2)   3,945,076    3,900,522    3,945,209    3,856,270 
                     
OTHER DATA (unaudited):                    
                     
Return on average assets (3)   -1.15%   0.96%   0.28%   1.03%
Return on average equity (3)   -11.77%   9.56%   2.93%   10.64%
Return on average tangible equity (3) (4)   -15.45%   12.62%   3.87%   14.23%
Net interest margin (3) (5)   3.42%   3.45%   3.40%   3.46%

 

(1) Income tax expense, net earnings, diluted weighted average common shares outstanding and earnings per share for the periods ended September 30, 2016 have been recast to reflect the early adoption of Accounting Standards Update 2016-09 in the fourth quarter of 2016.

 

(2) Share and per share values at or for the periods ended September 30, 2016 have been adjusted to give effect to the 5% stock dividend paid during December 2016.

 

(3) Information for the three and nine months ended September 30 is annualized.

 

(4) Return on average tangible equity is a non-GAAP financial ratio calculated as net earnings divided by average stockholders’ equity reduced by average goodwill and average other intangible assets, net.

 

(5) Net interest margin is presented on a fully tax equivalent basis, using a 34% federal tax rate.

 

 
 

 

(Back To Top)