About Landmark Bancorp

Landmark Bancorp, Inc. operates as the bank holding company for Landmark National Bank that provides financial products and services to small- and medium-sized businesses and to consumers in each market area it serves. On October 1, 2022, the company completed its acquisition of Freedom Bancshares, Inc. (Freedom), the holding company of Freedom Bank. The company continues to explore opportunities to expand its banking markets through mergers and acquisitions, as well as branching opportunities. The company has continued to focus on increasing its originations of commercial, commercial real estate and agricultural loans, which management believes will be more profitable and provide more growth for it than traditional one-to-four family residential real estate lending. Additionally, greater emphasis has been placed on diversification of the deposit mix through the expansion of core deposit accounts, such as checking, savings, and money market accounts. The company has also diversified its geographical markets as a result of its acquisitions and branching opportunities. The company’s main office is in Manhattan, Kansas. The company has branch offices in 24 communities across the state of Kansas. Landmark Risk Management, Inc., which is a Nevada-based captive insurance company which provides property and casualty insurance coverage to the company and the bank. Landmark Risk Management, Inc. is subject to the regulations of the State of Nevada and undergoes periodic examinations by the Nevada Division of Insurance. Deposits of the bank are insured by the Deposit Insurance Fund (the DIF) of the Federal Deposit Insurance Corporation (the FDIC) up to the maximum amount allowable under applicable federal laws and regulations. The bank is regulated by the Office of the Comptroller of the Currency (the OCC), as the chartering authority for national banks, and the FDIC, as the administrator of the DIF. The bank is also subject to regulation by the Board of Governors of the Federal Reserve System (the Federal Reserve) with respect to reserves required to be maintained against deposits and certain other matters. The bank is a member of the Federal Reserve Bank of Kansas City and the Federal Home Loan Bank (the FHLB) of Topeka. Market Areas The bank’s primary deposit gathering and lending markets are geographically diversified throughout central, eastern, southeast, and southwest Kansas. The primary industries within these respective markets are also diverse and dependent upon a wide array of industry and governmental activity for their economic base. The central region of the company’s market area consists of its locations in Auburn, Junction City, Manhattan, Osage City, Topeka and Wamego, Kansas and includes the counties of Riley, Geary, Osage, Pottawatomie and Shawnee. The company’s eastern Kansas branches are located in the communities of Lawrence, Lenexa, Louisburg, Osawatomie, Overland Park, Paola, Prairie Village and Wellsville, Kansas. The company’s Lawrence locations are located in Douglas County and are significantly impacted by the University of Kansas, the largest university in Kansas. The eastern region is strongly influenced by the Kansas City metropolitan market, which is the highest growth area in the state of Kansas. The acquisition of Freedom bank in 2022 expanded the company’s presence in Overland Park and contributed to the growth in loans and deposits. The southeast region of the company’s market area consists of its locations in Fort Scott, Iola, Kincaid, Mound City and Pittsburg, Kansas. Agriculture, oil, and gas are the predominant industries in the southeast Kansas region. Both Fort Scott and Pittsburg are recognized as regional commercial centers within the southeast region of the state, which attracts small retail businesses to the region. Additionally, Pittsburg State University and Fort Scott Community College attract a number of individuals from the surrounding area to live within the communities to participate in educational programs and pursue a degree. Additionally, manufacturing and service industries play a key role within the southeast Kansas market. The company’s southwest Kansas branches are located in the communities of Dodge City, Garden City, Great Bend, Hoisington and LaCrosse, Kansas. Agriculture, oil, and gas are the predominant industries in the southwest Kansas region. Predominant activities involve crop production, feed lot operations, and food processing. Lending Activities The company strives to provide a full range of financial products and services to small- and medium-sized businesses and to consumers in each market area it serves. The company targets owner-operated businesses and utilizes Small Business Administration (SBA) lending as a part of its product mix. The comopany has a loan committee for each of its markets, which has authority to approve credits within established guidelines. The following is a brief description of each major category of the company’s lending activity. One-to-Four Family Residential Real Estate Lending: The company originates one-to-four family residential real estate loans with both fixed and variable rates. One-to-four family residential real estate loans are typically priced and originated following underwriting standards that are consistent with guidelines established by the major buyers in the secondary market. Generally, residential real estate loans retained in the company’s loan portfolio have fixed or variable rates with adjustment periods of seven years or less and amortization periods of typically either 15 or 30 years. A significant portion of these loans prepay prior to maturity. While the origination of fixed-rate, one-to-four family residential loans continues to be a key component of the company’s business, the majority of these loans are sold in the secondary market. One-to-four family residential real estate loans that exceed 80% of the appraised value of the real estate generally are required, by policy, to be supported by private mortgage insurance, although on occasion the company will retain non-conforming residential loans to known customers at premium pricing. While the company retains some of the new fixed rate mortgage loan originations, most of the new fixed rate mortgage loans continue to be sold. Construction and Land Lending. Loans in this category include loans to facilitate the development of both residential and commercial real estate. Construction and land loans generally have terms of less than 18 months, and the comopany will retain a security interest in the borrower’s real estate. Construction loans are generally limited, by policy, to 80% of the appraised value of the property. Land loans are generally limited, by policy, to 65% of the appraised value of the property. Commercial Real Estate Lending: Commercial real estate loans, including multi-family loans, generally have amortization periods of 15 or 20 years. Commercial real estate and multi-family loans are generally limited, by policy, to 80% of the appraised value of the property. Commercial real estate loans are also supported by an analysis demonstrating the borrower’s ability to repay. The company continues to focus on generating additional commercial real estate loan relationships. The company’s loan growth over the past few years has been driven in large part by commercial real estate loans. These loans are primarily made to customers with owner-occupied properties. Additionally, the acquisition of Freedom Bank increased the company’s commercial real estate loans. Commercial Lending: Commercial loans include loans to service, retail, wholesale and light manufacturing businesses. Commercial loans are made based on the financial strength and repayment ability of the borrower, as well as the collateral securing the loans. The company targets owner-operated businesses as its customers and makes lending decisions based upon a cash flow analysis of the borrower, as well as a collateral analysis. Accounts receivable loans and loans for inventory purchases are generally on a one-year renewable term, and loans for equipment generally have a term of seven years or less. The company generally takes a blanket security interest in all assets of the borrower. The comopany continues to focus its organic growth on generating additional commercial loan relationships, including SBA loans. The balances of commercial loans increased during 2022, due to the acquisition of Freedom Bank and organic growth. Paycheck Protection Program Lending: Starting in 2020, company participated as a lender in the SBA’s Paycheck Protection Program (PPP). PPP is a loan program administered through the SBA to help businesses impacted by COVID-19, with the loans guaranteed by the SBA. Through the first and second rounds of PPP lending, the company funded 2,195 loans. The company received an origination fee from the SBA as part of the lending process. The loans have an interest rate of 1.00% plus the amortization of the origination fee. The maturity date of these loans is two or five years unless the borrower’s loan is forgiven, in which case the loan may be repaid sooner. Agriculture Lending: Agricultural real estate loans generally have amortization periods of 20 years or less, during which time the company generally retains a security interest in the borrower’s real estate. The comopany also provides short-term credit for operating loans and intermediate-term loans for farm product, livestock and machinery purchases and other agricultural improvements. Farm product loans generally have a one-year term, and machinery, equipment and breeding livestock loans generally have five to seven year terms. Extension of credit is based upon the borrower’s ability to repay, as well as the existence of federal guarantees and crop insurance coverage. These loans are generally secured by a blanket lien on livestock, equipment, feed, hay, grain and growing crops. Equipment and breeding livestock loans are generally limited to 75% of appraised value. The company continues to focus on generating additional agriculture loan relationships in each of its market areas. Municipal Lending: Loans to municipalities are generally related to equipment leasing or general fund loans. Terms are generally limited to 5 years. Equipment leases are generally made for the purchase of municipal assets and are secured by the leased asset. The company is generally not active in the origination of municipal loans and leases; however, it may originate loans or leases for municipalities in its market area. Consumer and Other Lending: Loans classified as consumer and other loans include automobile, boat, home improvement and home equity loans. With the exception of home improvement loans and home equity loans, the company generally takes a purchase money security interest in collateral for which it provides the original financing. Home improvement loans and home equity loans are principally secured through second mortgages. The terms of the loans typically range from one to five years, depending upon the use of the proceeds, and generally range from 75% to 90% of the value of the collateral. The majority of these loans are installment loans with fixed interest rates. Home improvement and home equity loans are generally secured by a second mortgage on the borrower’s personal residence and, when combined with the first mortgage, limited to 80% of the value of the property unless further protected by private mortgage insurance. Home improvement loans are generally made for terms of five to seven years with fixed interest rates. Home equity loans are generally made for terms of ten years on a revolving basis with adjustable monthly interest rates tied to the national prime interest rate. While the company primarily provides consumer loans to its existing customers, consumer lending is not a category it targets for organic growth. Investment Portfolio As of December 31, 2022, the company’s investment portfolio included U. S. treasury securities; U. S. federal agency obligations; municipal obligations, tax exempt; municipal obligations, taxable; and agency mortgage-backed securities. Deposits The company has a diversified deposit base. The deposit base consists of retail, commercial and public fund customers located in the markets in which the company operates. The company is to is to provide a diverse financial suite of products to its deposit customers and seeks to be the primary financial service provider for these customers. The company considers these deposit relationships to be its core deposit base. In order for the company to attract and retain stable deposit relationships, the company offers business cash management solution services to help local companies better manage their cash flow. The deposit services of the company are generally consisting of demand deposits, savings deposits, money market deposits, time deposits and individual retirement accounts. As of December 31, 2022, the company’s deposits included non-interest bearing demand; money market and checking; savings accounts; and certificates of deposit. Supervision and Regulation The Federal Deposit Insurance Corporation (FDIC)-insured institutions, like the bank, their holding companies and their affiliates are extensively regulated under federal law. The requirements of applicable statutes and by the regulations and policies of various bank regulatory agencies, including the company’s primary regulator, the Federal Reserve, and the bank’s primary regulator, the OCC, as well as the FDIC, as the insurer of its deposits, and the Consumer Financial Protection Bureau (CFPB), as the regulator of consumer financial services and their providers. Furthermore, taxation laws administered by the Internal Revenue Service and state taxing authorities, accounting rules developed by the Financial Accounting Standards Board (FASB), securities laws administered by the Securities and Exchange Commission (SEC) and state securities authorities, and anti-money laundering laws enforced by the U.S. Department of the Treasury (Treasury) have an impact on the company’s business. The effect of these statutes, regulations, regulatory policies and accounting rules are significant to the company’s operations and results. As a bank holding company, the company is registered with, and subject to regulation, supervision and enforcement by, the Federal Reserve under the Bank Holding Company Act of 1956, as amended (the BHCA). Under the BHCA, the company is subject to periodic examination by the Federal Reserve and is required to file with the Federal Reserve periodic reports of its operations and such additional information regarding the company and the bank as the Federal Reserve may require. The bank is a national bank, chartered by the OCC under the National Bank Act. The deposit accounts of the bank are insured by the DIF to the maximum extent provided under federal law and FDIC regulations, $250,000 per insured depositor category, and the bank is a member of the Federal Reserve System. As a national bank, the bank is subject to the examination, supervision, reporting and enforcement requirements of the OCC, the chartering authority for national banks. The bank is subject to that authority and is examined by the OCC. The FDIC, as administrator of the DIF, also has regulatory authority over the bank. As an FDIC-insured institution, the bank is required to pay deposit insurance premium assessments to the FDIC. The FDIC has adopted a risk-based assessment system whereby FDIC-insured institutions pay insurance premiums at rates based on their risk classification. The total base assessment rates range from 1.5 basis points to 30 basis points. At least semi-annually, the FDIC updates its loss and income projections for the DIF and, if needed, increases or decreases the assessment rates, following notice and comment on proposed rulemaking. The CRA requires the bank to have a continuing and affirmative obligation in a safe and sound manner to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods. Federal regulators regularly assess the bank’s record of meeting the credit needs of its communities. Applications for additional acquisitions would be affected by the evaluation of the bank’s effectiveness in meeting its CRA obligations. National banks headquartered in Kansas, such as the bank, have the same branching rights in Kansas as banks chartered under Kansas law, subject to OCC approval. Kansas law grants Kansas-chartered banks the authority to establish branches anywhere in the state of Kansas, subject to receipt of all required regulatory approvals. The bank is subject to certain restrictions imposed by federal law on covered transactions between the bank and its affiliates. The company is an affiliate of the bank for purposes of these restrictions, and covered transactions subject to the restrictions include extensions of credit to the company, investments in the stock or other securities of the company and the acceptance of the stock or other securities of the company as collateral for loans made by the bank. The CRA requires the bank to have a continuing and affirmative obligation in a safe and sound manner to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods. Federal regulators regularly assess the bank’s record of meeting the credit needs of its communities. Applications for additional acquisitions would be affected by the evaluation of the bank’s effectiveness in meeting its CRA obligations. History Landmark Bancorp, Inc. was founded in 1885. The company was incorporated under the laws of the state of Delaware in 2001.