Landmark Bancorp, Inc. (LARK): PESTLE Analysis [Nov-2025 Updated]

You need to know exactly what macro forces are shaping Landmark Bancorp, Inc. (LARK) right now, and the picture is complex. Honestly, LARK is defintely riding a wave of favorable political and legal deregulation, which is a huge tailwind for community banks. But, that benefit is being challenged by the economic reality of rising funding costs and the sociological pressure to invest heavily in technology to compete for deposits and attract younger customers. We'll map out how LARK's strong credit quality-like the drop of $7.0 million in non-performing loans-plays against these external pressures.

Landmark Bancorp, Inc. (LARK) - PESTLE Analysis: Political factors

Deregulatiory shift favors community banks, reducing compliance burden.

You're seeing a clear, pro-growth political shift in Washington, which is defintely good news for community banks like Landmark Bancorp, Inc. (LARK). The core of this is a deregulatory push to alleviate the compliance and administrative costs that have disproportionately burdened smaller institutions.

The Office of the Comptroller of the Currency (OCC) has been leading this charge, recognizing that a bank with $1.6 billion in total assets, like Landmark Bancorp, Inc. as of September 30, 2025, shouldn't be subject to the same rigid rules as a global giant. This is a direct tailwind, meaning fewer resources will be tied up in non-income-producing compliance work.

OCC is tailoring supervision, removing fixed examination requirements starting January 2026.

The biggest change here is the move to tailored supervision. The OCC announced in October 2025 that, effective January 1, 2026, it will eliminate mandatory OCC policy-based examination requirements for community banks. This is a massive operational change.

Instead of fixed, routine assessments, examiners will now tailor the scope and frequency of on-site examinations based on a bank's specific size, complexity, and risk profile, focusing on material financial risks. This means less time spent on policy-driven activities, such as flood-insurance transaction testing or fair-lending risk assessments on a recurring schedule, and more focus on core safety and soundness issues like capital, liquidity, and credit exposures.

Here's the quick math: If Landmark Bancorp, Inc. can reallocate even a fraction of the time its 283 employees spend on non-statutory compliance to business development, that directly boosts the bottom line.

Proposed rules may expedite M&A for banks under $30 billion in assets.

The political environment is also becoming much more favorable for bank mergers and acquisitions (M&A). The OCC, which defines a community bank as an institution with up to $30 billion in assets, has taken concrete steps to streamline the process.

In May 2025, the OCC issued an interim final rule that restored streamlined and expedited regulatory procedures for reviewing Bank Merger Act applications, effectively rescinding a prior policy statement that had made the process more subjective and unpredictable. The FDIC followed suit in March 2025, proposing to rescind its own restrictive policy.

This shift removes a significant headwind for M&A activity, which is crucial for smaller banks looking to achieve greater scale to absorb technology and compliance costs. It means a well-capitalized bank like Landmark Bancorp, Inc., with a strong equity-to-assets ratio of 9.63% as of September 30, 2025, can more easily consider strategic acquisitions to expand its Kansas market footprint.

Broader political uncertainty creates cautiousness among commercial customers.

Still, the broader political and trade landscape is creating a cautious environment among commercial customers, and you need to be realistic about that. While the regulatory environment for banks is easing, the commercial outlook is complicated by uncertainty around trade policy, particularly tariffs, and potential fiscal instability.

This is translating to slower business borrowing. Data from Q2 2025 showed that 28% of banks reported weaker Commercial and Industrial (C&I) loan demand from small businesses (those with under $50 million in annual sales). Commercial leaders are citing tariffs (42%), interest rates (44%), and financial market volatility (39%) as the greatest risks to their financial performance in 2025.

This uncertainty directly impacts Landmark Bancorp, Inc.'s core business, despite its strong year-to-date net earnings of $14.0 million through Q3 2025. The bank must navigate this customer-side cautiousness, even as its own regulatory burden lessens.

Here is a summary of the near-term political factors and their impact:

Next step: Operations: Quantify the potential cost savings from reduced compliance hours to create a 2026 budget forecast.

Landmark Bancorp, Inc. (LARK) - PESTLE Analysis: Economic factors

Net Interest Margin (NIM) held steady at a strong 3.83% in Q3 2025.

The core economic health of a bank is often visible in its Net Interest Margin (NIM), which is the difference between the interest income generated and the amount of interest paid out to depositors. Landmark Bancorp, Inc. (LARK) held its NIM steady at a strong 3.83% in the third quarter of 2025, which is a solid figure for a community bank in the current rate environment. This stability is a good sign, showing the bank is effectively managing its loan yields-the average tax-equivalent yield on the loan portfolio held firm at 6.37%-against the rising cost of its funding.

To be fair, the total cost of funds for the quarter was 2.44%, a decrease of 38 basis points compared to Q3 2024, which helped the NIM. Still, the average rate on other borrowed funds did increase to 5.09%, a signal of the broader pressure on deposit-dependent banks.

Diluted Earnings Per Share (EPS) for Q3 2025 was $0.85, reflecting solid profitability.

The bank's profitability saw a notable jump, with Diluted Earnings Per Share (EPS) reaching $0.85 for the third quarter of 2025, a significant increase from $0.68 in the same quarter last year. This 25% year-over-year growth in EPS was a direct result of increased net interest income and improved credit quality. Net income for the quarter totaled $4.9 million. I defintely look for these metrics to confirm that NIM expansion is translating into bottom-line value.

Here's the quick math on the key performance indicators (KPIs) for the quarter:

Local Kansas economy is supportive with unemployment at a favorable 3.8%.

The local economy in Kansas provides a strong and stable backdrop for Landmark Bancorp, Inc.'s lending activities. The overall Kansas unemployment rate is expected to be 3.8% for the full calendar year 2025, which is a very favorable level. This low unemployment rate, which was 3.8% in August 2025, suggests solid employment and therefore lower credit risk and a stable demand for consumer and commercial loans. The bank's management has also noted that the healthy Kansas economy is expected to underpin lending opportunities, especially in commercial real estate and consumer banking.

What this estimate hides is that while the state rate is low, Kansas employers are still struggling to fill open positions, with the number of job openings exceeding the number of unemployed individuals. This labor constraint could eventually temper the pace of new business expansion.

Non-performing loans (NPLs) decreased by $7.0 million to $10.0 million in Q3 2025, improving credit quality.

A significant positive economic factor was the substantial improvement in asset quality. Non-performing loans (NPLs) declined by $7.0 million in Q3 2025, bringing the total NPLs down to $10.0 million, or 0.89% of gross loans. This was a sharp reduction from the $17.0 million reported in the previous quarter. This improvement was largely driven by the successful resolution of a single, large commercial loan relationship that had been previously disclosed as problematic.

The resolution is a clear sign of disciplined credit management. But, net loan charge-offs for the quarter totaled $2.3 million, mostly tied to that same resolved commercial loan, which is a number to watch. Even with that charge-off, the allowance for credit losses remains strong at $12.3 million, representing 1.10% of total gross loans.

Rising cost of funds remains a key external risk for deposit-dependent community banks.

While Landmark Bancorp, Inc. has managed its NIM well, the external economic risk of a rising cost of funds is still a major headwind. The bank is a community institution, and its funding structure is heavily reliant on deposits. The average rate on interest-bearing deposits inched up to 2.18% in Q3 2025 from 2.14% in the prior quarter, showing the ongoing competition for deposits.

This competition forces the bank to offer higher rates on products like Certificates of Deposit (CDs), which can compress the NIM over time if loan yields don't rise in tandem. The bank has been actively managing this by reducing its reliance on Federal Home Loan Bank (FHLB) and other borrowing sources, but the pressure from the broader interest rate environment is persistent.

• Average deposit cost increased to 2.18% in Q3 2025.
• Average rate on other borrowed funds rose to 5.09%.
• Liquidity posture improved with borrowings reduced by $69.0 million.

Finance: Track the quarterly change in the cost of interest-bearing deposits versus the average loan yield by the end of the year.

Landmark Bancorp, Inc. (LARK) - PESTLE Analysis: Social factors

Sociological

You're a community bank, so your success is tied directly to the social fabric of your markets, but that fabric is changing fast. The core strength of Landmark Bancorp is its deep, physical presence across Kansas, but this traditional model is now facing a massive shift in customer demand driven by generational wealth transfer and a fierce war for tech talent.

Your relationship-driven approach is a key differentiator, still, you must quickly integrate digital services and ESG (Environmental, Social, and Governance) values to retain the next generation of customers. Otherwise, you risk losing significant assets to larger national banks or nimble fintechs (financial technology companies) that prioritize a mobile-first experience.

Strong community banking model with 30 locations across 24 Kansas communities.

Landmark National Bank maintains a strong, localized footprint with 30 community banking locations spread across 24 communities in Kansas as of November 2025. This dense network is the foundation of your business model, supporting total deposits of approximately $1.326 billion and total assets of $1.62 billion as of Q3 2025. This physical presence offers a competitive moat against purely digital competitors, especially for complex commercial and agricultural lending in your core markets.

The challenge is that while your customers value the option of a branch-about 69% of consumers want a branch within 15 minutes to consider switching banks-fewer people are actually visiting. You need to make sure the cost of maintaining the physical network is justified by the complex, high-value relationships it supports, not just routine transactions.

Must manage the 'Great Wealth Transfer' to younger generations demanding digital services and ESG focus.

The 'Great Wealth Transfer' (GWT) is the single biggest demographic risk and opportunity facing your bank. Over the next two decades, an estimated $83.5 trillion is set to transfer from older generations to Gen X, Millennials, and Gen Z. The younger recipients of this wealth have fundamentally different banking preferences than their parents.

Honestly, the risk of asset flight is high: 81% of younger high-net-worth individuals plan to switch financial firms after receiving an inheritance unless the incumbent adapts quickly. Your digital strategy needs to be defintely more than just online bill pay.

• Millennials and Gen Z are digital-first: 95% of Millennials use digital banking at least once a week.
• Mobile is paramount: 75% of Millennials and 74% of Gen Z prefer accessing their accounts via mobile apps.
• ESG is a core value: 82% of investors aged 21 to 43 consider a company's ESG record in their investment decisions, compared to only 35% of older investors.

Competition for talent in technology and banking remains a persistent challenge for regional institutions.

The push for digital services means you're no longer just competing with other Kansas banks; you're competing with major financial institutions and Silicon Valley for engineers and data scientists. Talent acquisition and retention is a top-three strategic concern for bank executives over the 2024-2025 period.

Here's the quick math: to keep up, 80% of financial institutions plan to increase technology spending over the next two years, focusing on digital banking and data analytics. This demand drives up compensation costs across the industry, with 85% of bank executives reporting a rise in compensation expenses in 2024, with a median increase of 5%. Regional banks often struggle to match the salary and career path opportunities offered by larger, urban-based tech employers. About one-third of bank respondents still expect to increase hiring for technology roles, so this pressure isn't easing.

Relationship-driven approach helps differentiate against larger national and digital banks.

The community banking model is your strongest defense against the social trends favoring digital convenience. Landmark Bancorp's focus on local relationships and personalized service is what prevents mass customer attrition.

While younger customers are digital-first, they still value human advice for complex financial needs. Your community focus-being truly part of the communities you serve-translates into higher trust and a better ability to underwrite local commercial and agricultural loans. This is a crucial distinction: a national bank can offer a better app, but it can't offer the local knowledge or the personal touch of a banker who lives in the same community.

Landmark Bancorp, Inc. (LARK) - PESTLE Analysis: Technological factors

The technological landscape for Landmark Bancorp, Inc. (LARK) is defined by a necessary, ongoing investment cycle to match the capabilities of larger institutions and nimble financial technology (fintech) firms. The bank is managing this transition well, as evidenced by its improved efficiency, but the cost of keeping pace remains a continuous headwind.

You need to see the bank not just as a physical network of 29 branches across Kansas, but as a digital service provider. The core challenge is maintaining a high-touch community banking model while delivering the instant, seamless experience customers now expect from companies like Block, Inc. (Square) or PayPal Holdings, Inc. (Venmo).

Higher technology expenses are a noted headwind against competition from fintechs.

The cost of digital transformation is significant, even for a community bank. While Landmark Bancorp, Inc. has shown strong cost control, non-interest expenses saw a modest sequential increase of $290,000 in Q3 2025, driven partly by higher consulting and personnel costs associated with infrastructure upgrades. This is the price of admission to compete. Management has explicitly mentioned 'continuing investments in new talent and infrastructure upgrades' to support customer expansion, which is a clear signal that the capital expenditure on technology is not slowing down.

Here's the quick math: technology spending is a rising fixed cost, but if it drives enough operational efficiency and revenue growth, it pays for itself. If it doesn't, it compresses the net interest margin (NIM) over time. This is the tightrope walk for every regional bank right now.

Efficiency Ratio improved to 60.7% in Q3 2025, suggesting effective cost management and tech adoption.

The Efficiency Ratio (non-interest expense as a percentage of net revenue) is a critical metric for gauging how well a bank is managing its operating costs, and Landmark Bancorp, Inc. is moving in the right direction. The ratio improved to 60.7% in the third quarter of 2025, a significant drop from 62.8% in the prior quarter and 66.5% in Q3 2024. [cite: 1, 3, 6 in previous step]

This improvement suggests that the investments in technology and infrastructure are starting to yield results, allowing the bank to generate more revenue per dollar of operating expense. A lower ratio means the bank is more efficient. This is defintely a positive sign that their digital strategy is not just a cost center, but an efficiency driver.

Offers mobile and online banking services, essential for attracting younger customers.

To attract and retain a younger, digitally-native customer base, the bank provides a comprehensive suite of digital tools that mirror those of much larger national banks. This capability is non-negotiable in 2025, especially given the competition from mobile-first challenger banks.

Key digital features include:

• Send and receive money instantly using Zelle®.
• Mobile Check Deposit via the app.
• Mobile Wallet integration with Apple Pay, Google Pay, and Samsung Pay.
• Secure online account opening for personal checking and savings accounts. [cite: 7 in previous step]

Leveraging third-party partnerships is critical to level the playing field on faster payments and digital features.

A community bank cannot build every new feature itself; it must partner. Landmark Bancorp, Inc. uses strategic alliances to quickly roll out advanced services that would take years and millions of dollars to develop in-house. This is how they bridge the innovation gap with fintechs.

A prime example is their partnership with Clover for Merchant Services, which gives their business clients access to a modern, all-in-one payment processing and point-of-sale (POS) system.

Here is a summary of their technology-driven competitive positioning:

Landmark Bancorp, Inc. (LARK) - PESTLE Analysis: Legal factors

You're looking for a clear view of the legal landscape, and the near-term outlook for Landmark Bancorp, Inc. (LARK) is one of measured regulatory relief. The primary legal trend is a continued tailoring of rules for community banks, which directly lowers compliance costs and gives LARK more operational flexibility, especially around capital management and funding stability.

Capital ratios are robust, exceeding well-capitalized thresholds (Leverage Ratio 9.2%, Total Risk-Based Capital 13.6%).

Landmark Bancorp's capital position is strong, which is your first line of defense against any unexpected regulatory shift or economic stress. In the second quarter of 2025, the bank reported a Tier 1 Leverage Ratio of 9.2% and a Total Risk-Based Capital Ratio of 13.6%. These figures comfortably surpass the regulatory minimums required to be considered 'well-capitalized' under the Federal Deposit Insurance Corporation (FDIC) standards.

This capital strength is critical because it allows the bank to operate with greater confidence and less intense supervisory scrutiny. Here's the quick math on the minimums versus LARK's position as of Q2 2025:

A strong capital base also positions LARK well to take advantage of proposed legislation, such as the Community Bank LIFT Act, which could lower the Community Bank Leverage Ratio (CBLR) from the current 9% threshold to as low as 6-8%, though LARK's current ratios keep them well above even the existing CBLR.

OCC is clarifying model risk management, reducing prescriptive requirements like annual model validations.

The Office of the Comptroller of the Currency (OCC) is defintely easing the burden on community banks by clarifying its expectations for model risk management (MRM). In October 2025, the OCC issued guidance confirming that community banks are encouraged to tailor their MRM practices based on their specific risk exposures and the complexity of their models.

This is a big deal. It means LARK no longer faces a prescriptive, one-size-fits-all requirement for annual model validations, which were a significant fixed compliance cost. Instead, the frequency and scope of validation activities can be commensurate with the bank's actual use of models, which for a community bank like LARK is generally less extensive than for a major regional or global bank.

Proposed legislation aims to expand use of reciprocal deposits to help stabilize funding and compete with larger banks.

A major legislative opportunity for LARK's funding strategy is the bipartisan push to reform reciprocal deposit rules. Reciprocal deposits allow community banks to offer customers full FDIC insurance on large balances by spreading the funds across a network of other banks, while receiving a matching amount of funds back for local lending.

The 'Keeping Deposits Local Act' (H.R. 3234), which passed the House Financial Services Committee in September 2025, proposes raising the percentage threshold of reciprocal deposits that may be held by a bank without being classified as 'brokered deposits.' Brokered deposits carry stricter regulatory treatment, so this change is key to funding stability. The proposed tiered thresholds would allow banks with up to $1 billion in liabilities to have up to 50% of those liabilities as non-brokered reciprocal deposits.

• Raise the cap on non-brokered reciprocal deposits.
• Provide a more stable, relationship-based funding source.
• Enhance LARK's ability to compete for larger, insured deposits.

Compliance costs are expected to ease due to the tailored regulatory framework for community banks.

The cumulative effect of the tailored regulatory framework is a meaningful reduction in compliance overhead. The OCC's actions in late 2025, effective January 1, 2026, eliminate fixed examination requirements and mandate that the scope and frequency of reviews be tailored to the institution's size, complexity, and risk profile. This shift to risk-based supervision is a direct response to the documented disproportionate compliance burden on smaller institutions.

Historically, compliance costs have been a competitive disadvantage for community banks. For the smallest banks, personnel costs dedicated to compliance tasks have been estimated to be as high as 15.5% of payroll, compared to 6% to 10% for the largest institutions. By removing duplicative data collection (like the proposed rescission of the Fair Housing Home Loan Data System regulation) and simplifying examination procedures, LARK can reallocate resources from administrative compliance to core lending and customer service.

Landmark Bancorp, Inc. (LARK) - PESTLE Analysis: Environmental factors

Lack of public ESG reporting is typical for this size of community bank, but raises investor questions.

You're looking for a clear Environmental, Social, and Governance (ESG) framework from Landmark Bancorp, Inc., but you won't find a dedicated annual ESG report. This lack of public disclosure is defintely a norm for a community bank of this scale, which prioritizes regulatory filings and financial performance over voluntary sustainability reporting.

The core focus for Landmark Bancorp, Inc. remains on operational efficiency and credit quality, evidenced by the Q3 2025 efficiency ratio improving significantly to 60.7% from 66.5% a year prior. Still, as institutional investors like BlackRock, Inc. increase their scrutiny of smaller-cap holdings, the absence of a formal ESG statement creates a transparency gap. Investors are left to infer the bank's environmental posture solely from its operational and lending footprint.

Here's the quick math on the bank's size, which explains the reporting priority:

• Total Assets (September 30, 2025): $1.62 billion
• Total Gross Loans (September 30, 2025): $1.1 billion
• Net Earnings (Q3 2025): $4.9 million

Indirect exposure to climate risk through agriculture and commercial real estate (CRE) loan portfolios in Kansas.

The most significant environmental risk to Landmark Bancorp, Inc. is indirect, residing within its loan portfolio's exposure to weather-sensitive sectors in Kansas. The bank's stated strategy is to grow its commercial, commercial real estate, and agriculture loan portfolios, which ties its financial health directly to regional climate stability.

Severe weather events-like prolonged drought impacting crop yields, or intense flooding damaging commercial properties-could directly impair collateral value and borrower repayment capacity. While the total agriculture loan balance is not explicitly broken out in the Q3 2025 summary, the exposure is a material risk given the bank's geographic concentration in Kansas.

To show the existing high-risk exposure within the portfolio, consider the collateral-dependent loans (loans for which repayment is dependent on the sale of collateral, indicating borrower difficulty) as of September 30, 2025:

The bank must proactively model the impact of climate-driven volatility on the cash flows of its CRE and farm borrowers. That's a critical risk management step for a regional lender.

Operational footprint is small, focusing on local branch energy use and paper waste recycling.

The bank's direct environmental footprint is inherently small, primarily limited to the energy consumption and waste generation across its 30 community banking locations in 24 Kansas communities. The operational focus is on cost control, which has a positive environmental side effect.

For example, the Q3 2025 earnings call noted an increase in occupancy and equipment expense of $120,000 compared to the prior quarter, which includes branch-related costs, but this is managed against overall expense control. The bank's move toward digital banking is a major, though unquantified, environmental win.

• Digital adoption reduces paper waste from statements and transactions.
• Branch network optimization (including past closures) lowers utility consumption.
• The focus is on efficiency, not necessarily carbon neutrality.

Growing pressure from younger customers to demonstrate community impact and environmental awareness.

While the immediate financial pressure on Landmark Bancorp, Inc. is centered on net interest margins and core deposit growth, a longer-term strategic challenge is attracting and retaining younger customers and employees. Community banks in Kansas, as highlighted in recent Federal Reserve discussions, rely heavily on their 'relationship banking' model to compete with larger institutions. For the next generation of customers and talent, this relationship increasingly includes a bank's commitment to its community and the environment.

The pressure isn't a regulatory mandate yet, but a market signal. Younger depositors often seek institutions that align with their values, which means the bank's community focus needs to extend beyond traditional philanthropy to include environmental stewardship. The bank's commitment to its local communities is strong, but it needs to translate that into explicit environmental actions-like promoting energy-efficient home equity loans or financing local solar projects-to secure future core deposits and talent.