Landmark Bancorp, Inc. (LARK): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at Landmark Bancorp, Inc. (LARK) right now, trying to map out where the real pressure points are after a year focused on deposit stability and loan growth. Honestly, the competitive landscape for a community bank in Kansas is tough; you see rivalry everywhere, and suppliers-your depositors-hold more cards now, especially with funding costs reflected in that $19.3 million interest expense year-to-date. We need a clear-eyed look at how their $1.3 billion in deposits, their 3.83% net interest margin for Q3 2025, and that 83.4% loan-to-deposits ratio hold up against the threat of fintechs and local rivals, especially when net earnings for the first nine months were $14.0 million. Below, I break down all five of Porter's forces so you can see exactly where the leverage sits for Landmark Bancorp, Inc. right now.

Landmark Bancorp, Inc. (LARK) - Porter's Five Forces: Bargaining power of suppliers

Suppliers to Landmark Bancorp, Inc. (LARK) are primarily its depositors, and their bargaining power is notably high in the current rate environment. This power stems from the competition for deposits, which forces Landmark Bancorp, Inc. to pay higher rates to retain or attract funding, directly impacting the cost of funds.

The scale of this funding base is significant. Deposit balances totaled $1.3 billion as of September 30, 2025. This figure represents a recovery from earlier in the year, but the pressure to maintain and grow this base remains a key supplier dynamic.

Management clearly signaled the importance of this supplier group following a period of deposit contraction. Specifically, management outlined intensified deposit gathering initiatives following a Q2 2025 decline of $61.9 million in period-end deposit balances. This necessitated alternative funding sources, which directly influences supplier power.

The temporary reliance on Federal Home Loan Bank (FHLB) borrowings increases funding costs and, by extension, supplier power. While the bank worked to reduce this reliance, the need for wholesale funding in times of deposit volatility elevates the cost structure. For instance, total period-end borrowings decreased $69.0 million during the third quarter of 2025, suggesting a strategic shift away from this more expensive source, though its availability underpins depositor leverage.

The financial impact of funding costs is evident in the income statement. Interest expense for the first nine months of 2025 was $19.3 million, showing the direct cost of funds Landmark Bancorp, Inc. incurred to support its balance sheet growth and operations. [cite: outline provided]

Here's a quick look at the funding mix dynamics around the period of highest pressure:

The bargaining power of depositors is further illustrated by the cost dynamics of their deposits:

• Average rate on interest-bearing deposits in Q3 2025 was 2.18%.
• The average rate on other borrowed funds in Q3 2025 was 5.09%.
• Total cost of funds for the quarter ended September 30, 2025, was 2.44%.
• The loan to deposits ratio improved to 83.4% at September 30, 2025, from 86.6% in the prior quarter, suggesting better liquidity management.

Landmark Bancorp, Inc. (LARK) - Porter's Five Forces: Bargaining power of customers

Customers have moderate-to-high power due to low switching costs in a competitive banking market. Honestly, for retail customers, the hassle of refiling direct deposits and automatic bill pay keeps many in place, even with online options available. Still, for commercial clients, the calculus changes; they are definitely more willing to shop for the best rates on their lending products.

Landmark Bancorp's community bank model fosters loyalty, slightly lowering individual customer power. You see this in their focus on relationship banking, which is a key defense against pure price competition. However, the market dynamics show this loyalty isn't absolute.

Commercial and agricultural loan customers often shop for the best rates, increasing their leverage. This is a constant pressure point for Landmark Bancorp, Inc. The search for optimal loan pricing means you have to stay competitive on your offerings to retain this segment.

The bank's loan-to-deposits ratio of 83.4% (Q3 2025) indicates a healthy, but competitive, lending environment. This ratio, down from 86.6% in the prior quarter, suggests Landmark Bancorp, Inc. has ample liquidity, but the deposit base is actively being managed, which speaks to the competitive environment for funding.

Here's a quick look at how Landmark Bancorp, Inc.'s liquidity and balance sheet metrics stood at the end of the third quarter of 2025, showing the context of their funding position:

You need to keep an eye on the competitive landscape, especially for commercial clients who have more options to move funds or seek loans elsewhere. For instance, industry data suggests that for commercial banking, nearly a quarter of middle market companies planned to seek funding from non-traditional lenders in 2025.

The power of the customer base is shaped by several factors you must track:

• Low switching friction for digital-savvy customers.
• Commercial clients actively rate-shop for loans.
• Trust erosion for smaller banks post-2023 turmoil.
• Ability of large banks to pay lower deposit rates.
• Average interest paid on small savings accounts at peer banks: 0.2 percent (20 bps).

The cost of funds is a direct lever customers can pull. Landmark Bancorp, Inc.'s average rate on interest-bearing deposits ticked up to 2.18% in Q3 2025 from 2.14% the quarter before, showing the pressure to keep deposit pricing competitive to maintain that $1.3 billion deposit base.

Finance: draft a sensitivity analysis on deposit cost changes versus NIM impact by next Tuesday.

Landmark Bancorp, Inc. (LARK) - Porter's Five Forces: Competitive rivalry

Rivalry is high due to a fragmented market of regional and national banks operating in Kansas. Landmark Bancorp, Inc. competes directly with numerous local institutions and larger, well-capitalized national players for deposits and loan volume.

Landmark Bancorp operates 30 community banking locations across 24 communities in Kansas, facing many local and larger competitors across its footprint. This widespread, yet localized, presence means Landmark must constantly defend market share against both community-focused rivals and banks with deeper pockets.

The bank's performance shows it is navigating this tight environment effectively. Net earnings for the first nine months of 2025 were $14.0 million, showing strong performance but in a tight market where every basis point of margin matters.

Valuation metrics reflect this competitive pressure. The Price-to-Earnings (P/E) ratio of 9.2x is lower than the US Banks industry average of 11x, suggesting a competitive valuation where the market prices in the ongoing rivalry.

The bank's net interest margin of 3.83% in the third quarter of 2025 is a key competitive battleground. Maintaining this margin against deposit competition and loan pricing pressure is central to profitability.

Here are key metrics illustrating the competitive landscape:

The competitive dynamics are further defined by the operational scale and financial positioning:

• Landmark National Bank operates 30 community banking locations.
• These locations span 24 distinct communities within Kansas.
• The P/E ratio of 9.2x suggests a discount relative to the industry.
• Net interest income for Q3 2025 was $14.1 million.
• Tangible book value per share was $20.96 as of September 30, 2025.

Landmark Bancorp, Inc. (LARK) - Porter's Five Forces: Threat of substitutes

You're analyzing Landmark Bancorp, Inc. (LARK) in late 2025, and the threat of substitutes is a major factor shaping its funding costs and loan origination pipeline. This force isn't about direct competitors; it's about alternative ways customers can meet their financial needs without using a traditional bank product from Landmark National Bank.

Non-bank financial technology (Fintech) firms offer substitute services like lending and payments with lower overhead. The sheer scale of this segment is significant. The U.S. digital lending market reached a valuation of $303.07 billion in 2025, with projections showing it climbing to $560.97 billion by 2030. To put this in perspective for business clients, approximately 60% of Small and Medium-sized Enterprises (SMEs) now leverage fintech lending platforms for faster financing. For consumer lending, more than 60% of U.S. personal loan originations are completed online in 2025. This digital efficiency puts pressure on Landmark Bancorp, Inc. (LARK) to maintain competitive speed in its own digital offerings.

Mortgage brokers and online lenders are substitutes for the bank's residential real estate and consumer loans. While Landmark Bancorp, Inc. (LARK) saw its gross loans increase by $42.9 million in Q2 2025, the broader mortgage market is being shaped by digital-first buyers. The Loan Origination Software market, which underpins these digital competitors, was valued at $6,416 million in 2025. We see this generational shift clearly: Gen Z buyers accounted for roughly one in four First-Time Homebuyer (FTHB) mortgage originations in Q1 2025, and this demographic strongly favors streamlined digital processes over traditional bank applications.

Money market funds (MMFs) and Treasury securities substitute for traditional bank deposits, especially for large customers. This is where the funding side of the balance sheet feels the heat. As of November 25, 2025, total MMF assets stood at $7.57 trillion, with institutional funds alone accounting for $4.53 trillion. Compare that to Landmark Bancorp, Inc. (LARK)'s total deposits, which were around $1.3 billion at the end of Q2 2025. The substitution effect is real; one Federal Reserve analysis suggests that for every one-percentage-point increase in bank deposits, MMF assets decline by 0.2 percentage points over the long term, showing active reallocation by investors.

The bank's focus on commercial and agricultural loans provides some insulation from pure consumer substitutes. Landmark National Bank's community focus, rooted in Kansas, means its loan book is heavily weighted toward relationship-based lending, which is harder for pure-play online lenders to replicate. Still, the overall competitive environment for funding is tight. Here's a quick look at the scale of the deposit competition:

The pressure on deposit gathering is evident, as management outlined intensified deposit initiatives in mid-2025 following a sequential decline in deposits. Furthermore, the difference in interest paid on deposits between small and large banks highlights the incentive for large customers to seek alternatives; for instance, banks over $500 billion in assets pay as little as two basis points on small savings accounts, compared to 20 basis points at banks under $10 billion. While Landmark Bancorp, Inc. (LARK) is in the smaller cohort, large corporate clients have the sophistication to shop for better yields in MMFs.

You should keep a close eye on the following areas representing substitute risk:

• Fintech platforms capturing SME loan origination share.
• The increasing digital fluency of younger mortgage borrowers.
• Yield differentials driving large corporate cash to MMFs.
• The overall stability of core deposits, which fell sequentially in Q2 2025.

The bank's stock performance year-to-date, up 24.7% versus the industry average of 2.9%, suggests the market currently views its community focus as a mitigating factor.

Finance: draft 13-week cash view by Friday.

Landmark Bancorp, Inc. (LARK) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry for a community bank like Landmark Bancorp, Inc. in Kansas, and honestly, the hurdles are substantial, especially for traditional brick-and-mortar institutions.

Regulatory and capital requirements for new banks are a significant barrier to entry. Starting up requires navigating a maze of federal and state rules designed to protect depositors, which naturally slows down or stops less-prepared groups. For instance, the State Banking Board in Kansas can require capital in excess of the minimums if they feel the proposed management or business nature warrants it, adding an element of regulatory discretion to the financial hurdle.

Initial capital required for a new bank charter is extremely high, limiting traditional entry. In Kansas, the minimum capital to start a stock bank is set by statute as the greater of $3,000,000 or an amount equal to 8% of the proposed bank's estimated deposits five years out. This immediately screens out smaller, less-funded operations. Furthermore, once established, all banks must maintain a capital ratio of at least 5% of equity capital to total assets at all times to remain compliant.

Here's a quick look at what a new entrant faces compared to Landmark Bancorp, Inc.'s current standing:

Digital-only banks (neobanks) pose a threat by bypassing the need for a physical branch network in Kansas. They don't carry the overhead of maintaining physical structures, which allows them to potentially undercut on pricing or offer a more streamlined digital experience. Still, for a community-focused entity like Landmark Bancorp, Inc., the established physical presence remains a key differentiator against purely digital players.

Landmark Bancorp's established network of 30 community banking locations acts as a local barrier. This physical footprint, spread across numerous Kansas communities, builds deep local relationships and deposit bases that take years, if not decades, to replicate. It's about trust and proximity, things a new entrant can't just buy.

The increase in nonperforming loans to $17 million (Q2 2025) highlights the risk of lending in the current economic cycle, a deterrent for new, less-experienced entrants. When two commercial real estate credits went on nonaccrual in Q2 2025, it pushed NPLs to 1.52% of gross loans. That kind of credit event serves as a stark, real-world reminder of the downside risk in lending, which can spook potential organizers who haven't weathered a full economic cycle yet. New entrants might see that $17 million figure and decide the risk-adjusted return isn't worth the effort.

The barriers to entry can be summarized by the required investment in both capital and infrastructure:

• Minimum initial capital hurdle of at least $3,000,000.
• Need to establish a physical footprint across multiple communities.
• Demonstrating credit underwriting capability under economic stress.
• Navigating state-specific charter approval processes.