Landmark Bancorp: Record Revenue, Core Deposit Push, and the Cost of a Fraud Scandal

A 100-dividend-streak community bank posts record revenue and margin, but pays up for fraud-related fees while NPLs tick higher.

LARK · Earnings Call · 2026-07-30

A Record Quarter With a Built‑In Asterisk

Landmark Bancorp delivered a headline that any community bank would envy: “Second quarter revenue increased to a record $19.2 million, driven by higher net interest income and increased gain on sale revenue.” — Abigail Wendel, President and CEO · 2026-07-30 Earnings per share climbed to $0.88, and the bank earned a 13.23% return on average equity. The engine was net interest income, which grew to $15.1 million, while the tax‑equivalent net interest margin held at 4.22%. The balance sheet is rolling off low‑yielding investments into higher ones, and CFO Mark Herpich was direct about the benefit: “Net interest income also grew $1.4 million compared to the same period of the prior year.” — Mark Herpich, Chief Financial Officer · 2026-07-30 Yet the efficiency ratio deteriorated year‑over‑year to 49.6%—a reminder that this quarter’s earnings come with a noticeable drag from legal and talent costs.

Funding: Brokered Out, Core and FHLB In

Deposits fell $17.7 million, but the story is in the mix. The bank deliberately cut broker deposits by $28.7 million and leaned on Federal Home Loan Bank borrowings to fund the balance sheet. Core deposits grew $11 million, with noninterest‑bearing deposits up $12.8 million and total cost of deposits down to 1.30%. Management framed this as a disciplined shift, and analysts pressed on whether the margin can stay around 420 basis points. Herpich said,

I am cautiously optimistic that we can stay in that 420 range.
Mark Herpich, Chief Financial Officer · 2026-07-30

This is a direct continuation of a strategy that has been building for quarters, with the core deposit franchise now taking center stage. But the shift comes with a trade‑off: the bank is paying higher short‑term borrowing costs even as it saves on brokered CDs. The deliberate reduction in broker deposits echoes an earlier remark from the July 2025 call, when Mark Herpich noted, “we still have around $150 million of capacity” — Mark A. Herpich, Unknown - likely a senior executive involved in financial performance or treasury · 2025-07-25—a flexibility the company is now using.

Credit: Two Relationships, One Story

The most watched item this quarter was credit. Nonperforming loans jumped to $13.1 million, or 1.18% of gross loans, from $10.4 million. Chief Credit Officer Raymond McLanahan was specific: “The increase was largely attributed to two borrower relationships that migrated to nonaccrual status during the quarter.” — Raymond McLanahan, Chief Credit Officer · 2026-07-30 One is an ag relationship; the other is commercial. Both had been on management’s radar, and net charge‑offs remain low at 0.17% annualized. The 30–89 day delinquency bucket actually declined to 0.57%, a sign of stabilization. This is a recurring theme for the bank—in the previous Q&A (July 2025), CEO Abby Wendel said of asset quality, “I do think that we are adequately provisioned” — Abigail M. Wendel, President and Chief Executive Officer · 2025-07-25—and the provisioning approach has not changed. The $500,000 provision kept the allowance at 1.15% of gross loans, but the uptick in NPLs is worth watching as the bank balances growth with credit discipline.

The Cost of Trust and the Market’s Answer

What makes this quarter company‑unique is the professional fee line. Noninterest expense rose partly due to forensic accounting and legal costs tied to a previously disclosed fraud by a nonexecutive officer, plus significant investment in talent recruitment and development. The bank is also expanding its footprint in the Kansas City metro and elevating an internal candidate to lead commercial banking in several regions. Management struck a measured tone on growth, with Abby Wendel saying, “We just want to be steady. We want to be prudent. We want to work through the things that we have right in front of us.” — Abigail Wendel, President and CEO · 2026-07-30 Investors, however, are voting with their feet: the stock is up roughly 20% over the last 90 days, trading at 0.9x tangible book and 8.1x trailing earnings. The 100th consecutive quarterly dividend and tangible common equity to assets at 8.44% underscore the bank’s durability. The market seems to be rewarding the core deposit momentum and margin resilience, while shrugging off the one‑off costs and manageable credit blip.