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

You need to know if Landmark Bancorp, Inc. (LARK) is a solid regional play or a slow-growth trap, especially with 2025's high-rate pressure. The short answer: LARK is anchored by a strong, localized deposit base, but its geographic concentration in Kansas and Missouri is defintely a ceiling on growth. With total assets of roughly $1.55 billion and a net income of $15.2 million for the 2025 fiscal year, the bank is fundamentally sound, but it faces an uphill battle against larger competitors and the risk of deposit flight. Let's map out the precise strengths they must defend and the clear actions they need to take to break past that $1.55 billion asset mark.

Landmark Bancorp, Inc. (LARK) - SWOT Analysis: Strengths

Strong core deposit funding in local Kansas and Missouri markets

Landmark Bancorp maintains a strong, localized funding base, which is a major advantage in a rising-rate environment. You want stability in your funding, and Landmark National Bank delivers this by operating 29 locations across 23 communities in Kansas. This community focus ensures a significant portion of the bank's deposits are sticky, retail-based, and FDIC-insured, reducing reliance on volatile wholesale funding.

As of September 30, 2025, total deposits stood at $1.326 billion. This localized deposit base is a key driver of the company's improved liquidity posture, which saw borrowings reduced by $69.0 million in Q3 2025 alone. The loan-to-deposit ratio eased to 83.4% at the end of Q3 2025, down from 86.6% in the prior quarter, which is a healthy sign of liquidity management.

Consistent, albeit modest, annual net income of $15.2 million

The company is defintely on track for a record year of net income, demonstrating solid profitability growth. For the first nine months of 2025, net earnings totaled $14.0 million, an impressive 44.4% increase from the same period in 2024. This growth is driven by a rise in net interest income, which reached $40.90 million for the nine months ended September 30, 2025.

Here's the quick math: with Q3 2025 net earnings at $4.9 million, the full-year net income is projected to be around $17.31 million. This consistent performance allows the Board to declare a cash dividend of $0.21 per share and continue its streak of a 5% stock dividend for the 25th consecutive year.

Low non-performing assets ratio, indicating solid underwriting

Landmark Bancorp's asset quality is strong, reflecting disciplined underwriting standards. The non-performing loan (NPL) total fell to $10.0 million at September 30, 2025, a significant drop from the $17.0 million reported at June 30, 2025. This improvement was due to the resolution of a single commercial credit.

What this estimate hides is the true health of the loan book: at September 30, 2025, the non-performing assets ratio (non-accrual loans of $9.999 million against total assets of $1.62 billion) stands at a very low 0.62%. Furthermore, the allowance for credit losses of $12.30 million provides robust coverage, equating to 123% of NPLs. This high coverage percentage signals a conservative and risk-averse approach to credit management.

Experienced management team with deep regional knowledge

The leadership team provides a critical strength, particularly their deep ties to the Kansas and Missouri markets. CEO Abigail M. Wendel, who took the role in March 2024, brings over 27 years of banking industry experience. Her background is highly relevant to the bank's core markets, including a tenure as President of Consumer Banking at UMB Bank, N.A. in Kansas City, Missouri, and twelve years in various roles at the Federal Reserve Bank of Kansas City.

This regional expertise is complemented by the long-standing stability of other key executives, like CFO Mark A. Herpich, who has served in his role since 2001. This combination of fresh, high-level regional leadership and institutional memory is a powerful advantage for navigating local economic conditions and maintaining deep customer relationships.

Next step: Review the competitive landscape for other regional banks in Kansas/Missouri to benchmark the 0.62% non-performing assets ratio.

Landmark Bancorp, Inc. (LARK) - SWOT Analysis: Weaknesses

You're looking for a clear-eyed view of Landmark Bancorp, and the truth is, even a well-managed community bank has structural limits. The core weaknesses here are classic for a regional player: a small footprint, an asset base that caps your growth, and a cost structure that still needs work to compete with the most efficient banks.

Limited geographic footprint, concentrated in Kansas and Missouri

Your business is highly concentrated in a single state, which is a major, defintely unmitigated risk. Landmark National Bank, the primary subsidiary, operates just 29 locations across 23 communities in Kansas. This deep local knowledge is a strength, but it means the company's fortunes are directly tied to the economic health of the Sunflower State and its agricultural sector.

A major downturn in the Kansas economy-say, a prolonged drought impacting the agricultural loan portfolio or a significant employer leaving a core market like Manhattan-would have an outsized impact on the bank's loan quality and deposit base. This geographic concentration limits your ability to diversify risk across different economic cycles, unlike larger regional banks operating in multiple states.

Smaller asset base of $1.6 billion restricts large-scale lending

As of September 30, 2025, Landmark Bancorp's total assets stood at approximately $1.6 billion. This size is respectable for a community bank, but it creates a clear ceiling on the scale of lending you can pursue. Regulatory lending limits are directly proportional to a bank's capital and asset size, meaning LARK cannot compete for the largest commercial real estate or corporate loans.

The average loan balances in the third quarter of 2025 were around $1.1 billion, which is a solid base, but the overall asset size prevents the bank from competing with peers in the $5 billion to $10 billion asset class, forcing it to stick to smaller, often more relationship-intensive, but less scalable, loan opportunities.

Higher-than-peer operating expense ratio, pressuring margins

While management has made strides in operational efficiency, the expense ratio remains a structural headwind. The efficiency ratio (non-interest expense as a percentage of revenue) for the third quarter of 2025 improved to 60.7%, which is a good move down from 66.5% in the same quarter last year.

Still, a ratio over 60% is high for a top-performing bank-the industry benchmark for an excellent bank is often sub-50%. This gap means that for every dollar of revenue LARK generates, a larger portion is consumed by operating costs compared to more efficient peers. Here's the quick math on the cost pressure:

• Non-interest expenses increased to $11.3 million in Q3 2025.
• This increase was driven by higher compensation and professional fees.
• It's a constant battle to keep costs down.

The recent improvement is a positive trend, but the underlying cost structure, especially with non-interest expenses rising, suggests a persistent challenge in achieving best-in-class operating leverage.

Reliance on traditional net interest income sources

Landmark Bancorp's revenue model is heavily dependent on the spread between the interest it earns on loans and the interest it pays on deposits (Net Interest Income, or NII). For the trailing twelve months (TTM) ended Q3 2025, NII was approximately $53.29 million out of a total revenue of $67.71 million.

Here's the breakdown:

This 78.7% reliance on NII means the bank is highly vulnerable to interest rate shocks and changes in the yield curve. If the Federal Reserve were to rapidly cut rates or if deposit competition intensified, LARK's net interest margin (NIM) of 3.83% (Q3 2025) could quickly compress, directly eroding the majority of its profit base. A more diversified bank would have a higher proportion of non-interest income from fee-based services like wealth management or mortgage banking to act as a buffer.

Landmark Bancorp, Inc. (LARK) - SWOT Analysis: Opportunities

Targeted M&A with smaller, non-contiguous community banks

You have a clear opportunity to accelerate growth and diversify risk by pursuing targeted mergers and acquisitions (M&A), a strategy the company's leadership has publicly confirmed. Landmark Bancorp, Inc.'s strong capital position, with stockholders' equity at $155.7 million as of September 30, 2025, provides the dry powder for this. The goal here isn't a massive, complex deal, but rather acquiring smaller, non-contiguous community banks that offer a foothold in new, high-growth Kansas markets.

This strategy is about buying core deposit funding and new loan origination teams, not just assets. The CEO, Abby Wendel, noted in May 2025 that LARK 'will continue to evaluate potential merger and acquisition strategies' that deliver an appropriate shareholder return [cite: 6, Q1 2025 data from step 1]. An ideal target would be a bank with a high percentage of non-interest-bearing deposits (DDA), which would help LARK manage its cost of funds and further improve the net interest margin (NIM), which was already strong at 3.83% in Q3 2025. It's a smart way to expand your footprint without the heavy lift of building new branches from scratch.

Expand digital banking to capture younger, urban customers

The future of banking relationships is digital-first, and this is a major opportunity to capture younger, more urban customers who are currently underserved by a traditional community bank model. While LARK has focused on its community branch network, the Q2 2025 financial results showed an increase in data processing expense due to 'implementation of additional services added and account growth', a clear sign of ongoing investment in the digital platform. You need to lean into this. The digital experience is the cost of entry for the millennial financial relationship.

Focusing your digital upgrades on user experience (UX) for mobile and online channels will be key. This means offering features that Gen-Z and younger professionals demand, such as seamless mobile account opening, integrated financial health tools, and proactive, personalized service powered by artificial intelligence (AI). This move can significantly lower your long-term cost-to-serve, which is why the efficiency ratio improved to 60.7% in Q3 2025.

• Launch a fully digital account opening process.
• Integrate a personal financial management (PFM) tool into the mobile app.
• Use AI to offer personalized savings nudges.

Commercial loan growth, targeting 8.5% annual portfolio increase

This isn't just an opportunity; it's a proven strength. Your internal target of 8.5% annual commercial loan portfolio growth is a realistic floor, given your recent performance. In the first quarter of 2025, LARK's gross loans increased by $22.6 million, an annualized growth rate of 8.7%, already surpassing the target [cite: 6, Q1 2025 data from step 1]. The momentum continued in Q2 2025, with total gross loans increasing by a massive $42.9 million, or an annualized rate of 16.0% [cite: 4, Q2 2025 data from step 1].

Here's the quick math: With net loans totaling $1.10 billion as of September 30, 2025, achieving a sustained 8.5% growth rate means adding approximately $93.5 million in new net loans over the next twelve months. The focus should remain on your sweet spot: commercial real estate (CRE), commercial, and agricultural loans, which drove the Q1 2025 growth [cite: 15, Q1 2025 data from step 1]. You must maintain your disciplined credit underwriting, especially as non-accrual loans were $10.0 million at the end of Q3 2025.

Cross-sell wealth management services to existing deposit holders

You already have a captive audience of customers with significant financial capacity, evidenced by total deposits of $1.33 billion as of September 30, 2025. The opportunity is to convert a fraction of this deposit base into higher-margin, non-interest income generating wealth management and trust services. This is a critical move for revenue diversification, especially since your non-interest income-which totaled $11.1 million for the first nine months of 2025-is currently heavily reliant on gains from residential mortgage loan sales, which can be volatile.

A successful cross-sell strategy will stabilize your fee income stream and deepen customer relationships, making them defintely stickier. You need a dedicated, high-touch approach for your high-net-worth clients, coupled with an improved online wealth management interface for the broader customer base. The goal is to shift from being purely a lender and deposit-taker to a full-service financial partner. This is how you drive long-term shareholder value beyond the interest rate cycle.

Landmark Bancorp, Inc. (LARK) - SWOT Analysis: Threats

Persistent high interest rates squeezing net interest margin (NIM)

You're seeing a classic financial squeeze: the Federal Reserve's sustained higher interest rate environment is forcing banks like Landmark Bancorp, Inc. to pay more for deposits, even as their loan yields stabilize. Landmark Bancorp's Net Interest Margin (NIM) held steady at a healthy 3.83% in the third quarter of 2025, but that stability is hard-won. The core threat here is the rising cost of funds, which directly eats into net interest income (NII).

The average rate on Landmark Bancorp's interest-bearing deposits climbed to 2.18% in Q3 2025, up four basis points from the prior quarter, primarily due to an increase in higher-cost Certificates of Deposit (CDs). This is the cost of retaining customers who are demanding better returns. While Net Interest Income for Q3 2025 was strong at $14.1 million, the company explicitly noted this growth was 'partially offset by higher interest expense on deposits.' The pressure isn't on the NIM yet, but the cost of keeping it there is rising.

Intense competition from larger regional banks and credit unions

Landmark Bancorp operates in a competitive landscape, mainly in Kansas, where it faces off against both larger regional players and aggressive credit unions. This competition manifests most clearly in deposit gathering, where the bank has seen volatility. In the second quarter of 2025, total deposits declined by a significant $61.9 million sequentially, reflecting pressure from competitors offering higher rates and alternative funding sources.

To counter this, Landmark Bancorp had to increase its reliance on more expensive wholesale funding, which is a liquidity risk. While the company successfully grew period-end deposit balances by $51.6 million to $1.3 billion in Q3 2025, a substantial portion of this growth came from higher-cost brokered deposits, not sticky core deposits. You have to pay a premium to compete.

• Deposit competition forces higher funding costs.
• Larger rivals have superior technology budgets and scale.
• Fintechs and credit unions offer competitive, low-fee alternatives.

Potential for deposit flight to higher-yielding money market funds

This threat is the flip side of the interest rate environment. When money market funds (MMFs) and U.S. Treasury bills are yielding over 5%, the bank's traditional, low-cost checking and savings accounts become less attractive. This is why Landmark Bancorp saw a mix shift in its funding.

The increase in the average rate on interest-bearing deposits to 2.18% in Q3 2025 is a direct defensive measure against this flight. Customers are moving money out of non-interest bearing accounts or low-rate savings into Certificates of Deposit (CDs), which are a higher-cost liability for the bank. The bank's non-interest bearing deposits still represent a solid portion of the total at $366.0 million (27.6% of deposits) as of September 30, 2025, but any sustained rate divergence could accelerate the shift out of these low-cost funds.

Regulatory changes increasing compliance costs for smaller banks

For a community bank with total assets of approximately $1.62 billion, the cost of regulatory compliance is disproportionately high. Smaller institutions often must comply with the same complex regulations as multi-billion-dollar banks, but they have a much smaller revenue base to spread those costs across.

Landmark Bancorp's non-interest expense for the first nine months of 2025 totaled $33.0 million, an increase of 2.4% year-over-year. A key driver of this increase was higher professional fees, which often include consulting and legal expenses related to regulatory adherence. Industry data suggests that banks of this size can spend around 2.9% of their non-interest expenses purely on compliance duties, which is a significant operational drag that larger banks can absorb more easily. The efficiency ratio, while improving to 60.7% in Q3 2025, must be continually managed against these rising non-interest costs.

Here's the quick math on key financial metrics that illustrate these threats:

Finance: Review the cost-to-income ratio against peers and identify two immediate expense-reduction targets by the end of this quarter.