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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): July 24, 2018

 

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 July 24, 2018, Landmark Bancorp, Inc. (the “Company”) issued a press release announcing results for the three and six months ended June 30, 2018. 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. The cash dividend will be paid to all stockholders of record as of the close of business on August 8, 2018 and payable on August 22, 2018. 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 July 24, 2018

 

 

 

 

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: July 24, 2018 LANDMARK BANCORP, INC.
   
  By: /s/ Mark A. Herpich
  Name: Mark A. Herpich
  Title: Vice President, Secretary, Treasurer and
    Chief Financial Officer

 

 

 

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Section 2: EX-99.1

 

 

PRESS RELEASE

 

FOR IMMEDIATE RELEASE Contacts:
July 24, 2018 Michael E. Scheopner
  President and Chief Executive Officer
  Mark A. Herpich
  Chief Financial Officer
  (785) 565-2000

 

Landmark Bancorp, Inc. Announces Earnings for the Second Quarter of 2018

Declares Cash Dividend of $0.20 per Share

 

(Manhattan, KS, July 24, 2018) – Landmark Bancorp, Inc. (Nasdaq: LARK), a bank holding company serving 23 communities across Kansas, reported net earnings of $2.8 million ($0.68 per diluted share) for the quarter ended June 30, 2018, compared to $2.4 million ($0.58 per diluted share) for the second quarter of 2017. For the six months ended June 30, 2018, Landmark reported net earnings of $4.9 million ($1.19 per diluted share), compared to $4.6 million ($1.11 per diluted share) in the first half of 2017. Management will host a conference call to discuss these results at 10:00 a.m. (Central time) on Wednesday, July 25, 2018. Investors may participate via telephone by dialing (877) 510-0473. A replay of the call will be available through August 25, 2018, by dialing (877) 344-7529 and using conference number 10122375.

 

Additionally, Landmark’s Board of Directors declared a cash dividend of $0.20 per share, to be paid August 22, 2018, to common stockholders of record as of the close of business on August 8, 2018.

 

Michael E. Scheopner, President and Chief Executive Officer of Landmark, commented: “Landmark’s net earnings of $4.9 million in the first half of 2018 reflect strong core earnings and the continued growth of our community banking relationships across Kansas. Net earnings in the first six months of 2018 increased $356,000, or 7.8%, from the first six months a year earlier. Solid loan growth drove an increase in our net interest income during the first half of 2018. In addition, our continued collection efforts resulted in the recovery of an additional $525,000 during the second quarter of 2018 in connection with the deposit-related loss incurred in 2017. We also benefited from lower income tax expense due to the decrease in federal corporate income tax rates in 2018 compared to 2017. During the first six months of 2018, return on average assets was 1.06% compared to 1.01% in the same period of 2017. Return on average equity was 11.69% in the first half of 2018 compared to 10.62% in the same period of 2017. We are pleased to deliver another strong core performance year-to-date. We believe Landmark’s risk management practices and capital strength continue 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.”

 

Second Quarter Financial Highlights

 

Net interest income was $6.8 million for the quarter ended June 30, 2018, an increase of $260,000, or 4.0%, from the second quarter of 2017. The increase was primarily a result of a 2.9% increase in average interest-earning assets, from $831.3 million in the second quarter of 2017 to $855.4 million in the second quarter of 2018. Net interest margin, on a tax-equivalent basis, decreased from 3.41% in the second quarter of 2017 to 3.33% in the same period of 2018. The decrease in net interest margin was primarily a result of the reduction of federal corporate income tax rates from 34% in 2017 to 21% in 2018 following the enactment of the federal tax reform legislation in December 2017, which is used in the calculation of the tax-equivalent interest income and yields on tax-exempt loans and investment securities. Landmark recorded a provision for loan losses of $250,000 during the second quarter of 2018 compared to a provision for loan losses of $100,000 during the second quarter of 2017.

 

Total non-interest income was $4.3 million in the second quarter of 2018, an increase of $52,000, or 1.2%, compared to the same period of 2017. This was primarily the result of an increase of $519,000 in other non-interest income, which reflects $525,000 of recoveries on a deposit-related loss that occurred in the third quarter of 2017. Partially offsetting those recoveries were decreases of $224,000 in gains on sales of loans, $177,000 of gains on sales of investment securities and $109,000 in fees and service charges. Our gains on sales of loans were impacted by lower volumes of one-to-four family residential real estate loans originated for sale while a decline in overdraft fees impacted our fees and service charges.

 

Non-interest expense totaled $7.6 million for the second quarter of 2018, an increase of $14,000, or 0.2%, from the second quarter of 2017. Landmark recorded income tax expense of $428,000 in the second quarter of 2018 compared to $742,000 in the same period of 2017. The effective tax rate decreased from 23.7% in the second quarter of 2017 to 13.1% in the second quarter of 2018, primarily as a result of the reduction in 2018 federal corporate income tax rates.

 

   

 

First Half Financial Highlights

 

Net interest income was $13.4 million for the six months ended June 30, 2018, an increase of $486,000, or 3.8%, from the first half of 2017. The increase was primarily a result of a 2.1% increase in average interest-earning assets, from $827.1 million in the first six months of 2017 to $844.9 million in the first six months of 2018. Net interest margin, on a tax-equivalent basis, decreased from 3.40% in the first six months of 2017 to 3.33% in the same period of 2018. The decrease in net interest margin was primarily a result of the reduction of federal corporate income tax rates. Landmark recorded a provision for loan losses of $450,000 during the first six months of 2018, compared to $150,000 during the same period of 2017.

 

Total non-interest income was $7.7 million in the first six months of 2018, a decrease of $188,000, or 2.4%, compared to the same period of 2017. This change was primarily the result of a decline of $452,000 in gains on sales of loans, as the volume of one-to-four family residential real estate loans originated for sale in the first six months of 2018 was lower than in the same period of 2017. Also contributing to the decline in non-interest income were lower gains on sales of investment securities, which were $35,000 during the first six months of 2018 compared to $324,000 in the same period of 2017. Partially offsetting the declines was an increase of $536,000 in other non-interest income, which reflects $525,000 of recoveries on the deposit-related loss that occurred in 2017.

 

Non-interest expense totaled $15.0 million for the first six months of 2018, an increase of $393,000, or 2.7%, from $14.6 million for the same period of 2017. The increase was primarily related to an increase of $301,000 in other non-interest expense, which was impacted by the accrual of loss reserves at Landmark’s captive insurance subsidiary and increases in various other expense categories. Landmark recorded income tax expense of $684,000 in the first six months of 2018 compared to $1.4 million in the same period of 2017. The effective tax rate decreased from 23.8% in the first half of 2017 to 12.2% in the same period of 2018, primarily as a result of the reduction in 2018 federal corporate income tax rates.

 

Balance Sheet Highlights

 

Total assets increased $48.7 million, or 5.2%, to $978.2 million at June 30, 2018, from $929.5 million at December 31, 2017. Net loans increased $27.7 million, or 6.4%, to $461.4 million at June 30, 2018, compared to $433.7 million at year-end 2017. Investment securities increased $10.8 million, or 2.7%, to $404.2 million at June 30, 2018, from $393.4 million at December 31, 2017. Deposits decreased slightly to $765.3 million at June 30, 2018, compared to $765.6 million at December 31, 2017. Federal Home Loan Bank and other borrowings increased $49.0 million, or 73.6%, to $115.6 million at June 30, 2018, from $66.6 million at December 31, 2017. The growth in loans and investment securities during the first six months of 2018 was funded with Federal Home Loan Bank and other borrowings. Stockholders’ equity decreased to $86.4 million (book value of $20.83 per share) at June 30, 2018, from $87.6 million (book value of $21.47 per share) at December 31, 2017. The ratio of equity to total assets decreased to 8.83% at June 30, 2018, from 9.43% at December 31, 2017. Our stockholders’ equity declined during the first six months of 2018 as a result of a $5.1 million increase in the net unrealized losses on our investment portfolio, net of tax.

 

The allowance for loan losses totaled $5.8 million, or 1.25% of gross loans outstanding, at June 30, 2018, compared to $5.5 million, or 1.24% of gross loans outstanding, at December 31, 2017. Non-performing loans decreased to $5.3 million, or 1.13% of gross loans, at June 30, 2018, from $6.0 million, or 1.38% of gross loans, at December 31, 2017. Landmark recorded net loan charge-offs of $74,000 during the first six months of 2018, compared to $168,000 during the same period of 2017.

 

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 banking, securities, insurance, monetary, trade and tax matters; (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):
 
   June 30,   December 31, 
   2018   2017 
ASSETS:                
Cash and cash equivalents  $19,883   $16,584 
Investment securities   404,171    393,406 
Loans, net   461,396    433,743 
Loans held for sale   11,764    6,535 
Premises and equipment, net   21,381    20,824 
Bank owned life insurance   24,019    23,698 
Goodwill   17,532    17,532 
Other intangible assets, net   3,358    3,659 
Other assets   14,676    13,473 
TOTAL ASSETS  $978,180   $929,454 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY:          
Deposits  $765,291   $765,558 
Federal Home Loan Bank and other borrowings   115,601    66,593 
Other liabilities   10,873    9,681 
Total liabilities   891,765    841,832 
Stockholders’ equity   86,415    87,622 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $978,180   $929,454 
           
LOANS (unaudited):          
           
One-to-four family residential real estate  $138,267   $136,215 
Construction and land   26,453    19,356 
Commercial real estate   121,946    120,624 
Commercial   66,531    54,591 
Agriculture   87,901    83,008 
Municipal   3,172    3,396 
Consumer   22,867    22,046 
Net deferred loan costs and loans in process   94    (34)
Allowance for loan losses   (5,835)   (5,459)
Loans, net  $461,396   $433,743 
           
NON-PERFORMING ASSETS (unaudited):          
           
Non-accrual loans  $5,285   $6,041 
Accruing loans over 90 days past due   -    - 
Non-performing investment securities   -    - 
Real estate owned   452    436 
Total non-performing assets  $5,737   $6,477 
           
RATIOS (unaudited):          
           
Loans 30-89 days delinquent and still accruing to gross loans outstanding   0.33%   0.31%
Total non-performing loans to gross loans outstanding   1.13%   1.38%
Total non-performing assets to total assets   0.59%   0.70%
Allowance for loan losses to gross loans outstanding   1.25%   1.24%
Allowance for loan losses to total non-performing loans   110.41%   90.37%
Equity to total assets   8.83%   9.43%
Book value per share  $20.83   $21.47 

 

   

 

Financial Highlights (continued)

(Dollars in thousands, except per share data)

 

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited):
                 
   Three months ended June 30,   Six months ended June 30,  
   2018   2017   2018   2017 
Interest income:                    
Loans  $5,744   $5,280   $11,123   $10,334 
Investment securities and other   2,339    2,176    4,561    4,310 
Total interest income   8,083    7,456    15,684    14,644 
                     
Interest expense:                    
Deposits   631    394    1,172    732 
Borrowed funds   616    486    1,082    968 
Total interest expense   1,247    880    2,254    1,700 
                     
Net interest income   6,836    6,576    13,430    12,944 
Provision for loan losses   250    100    450    150 
Net interest income after provision for loan losses   6,586    6,476    12,980    12,794 
                     
Non-interest income:                    
Fees and service charges   1,808    1,917    3,564    3,632 
Gains on sales of loans, net   1,468    1,692    2,629    3,081 
Bank owned life insurance   162    119    321    236 
Gains on sales of investment securities, net   -    177    35    324 
Other   815    296    1,105    569 
Total non-interest income   4,253    4,201    7,654    7,842 
                     
Non-interest expense:                    
Compensation and benefits   3,966    3,918    7,755    7,675 
Occupancy and equipment   1,072    1,097    2,150    2,121 
Professional fees   430    476    818    766 
Data processing   376    337    741    667 
Amortization of intangibles   283    328    560    626 
Advertising   165    166    332    332 
Federal deposit insurance premiums   72    73    144    145 
Foreclosure and real estate owned expense   12    49    25    101 
Other   1,190    1,108    2,481    2,180 
Total non-interest expense   7,566    7,552    15,006    14,613 
                     
Earnings before income taxes   3,273    3,125    5,628    6,023 
Income tax expense   428    742    684    1,435 
Net earnings  $2,845   $2,383   $4,944   $4,588 
                     
Net earnings per share (1)                    
Basic  $0.69   $0.59   $1.20   $1.13 
Diluted   0.68    0.58    1.19    1.11 
                     
Shares outstanding at end of period (1)   4,147,946    4,064,597    4,147,946    4,064,597 
                     
Weighted average common shares outstanding - basic (1)   4,141,894    4,064,092    4,124,947    4,063,692 
Weighted average common shares outstanding - diluted (1)   4,160,587    4,148,184    4,143,491    4,146,732 
                     
OTHER DATA (unaudited):                    
                     
Return on average assets (2)   1.20%   1.04%   1.06%   1.01%
Return on average equity (2)   13.49%   10.78%   11.69%   10.62%
Net interest margin (2)(3)   3.33%   3.41%   3.33%   3.40%

 

(1) Share and per share values at or for the periods ended June 30, 2017 have been adjusted to give effect to the 5% stock dividend paid during December 2017.

(2) Information for the three and six months ended June 30 is annualized.

(3) Net interest margin is presented on a fully tax equivalent basis, using a 21% federal tax rate for the three and six months ended June 30, 2018 and a 34% rate for the three and six months ended June 30, 2017.

 

   

 

 

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