Zacks Investment Research has recently initiated coverage of Landmark Bancorp, Inc. (LARK Quick QuoteLARK - Free Report) with an “Outperform” recommendation, citing the company’s strong loan growth, consistent profitability and solid capital position as catalysts for shareholder value creation.

Landmark Bancorp’s second-quarter 2025 performance highlighted the strength of its business model. Gross loans rose $42.9 million, a 16% annualized increase, led by residential mortgages (+$21.5 million), commercial (+$13.4 million) and commercial real estate (+$10.9 million). This expansion hiked net interest income 24.7% year over year and lifted the net interest margin to 3.83%. Earnings per share advanced to 75 cents from 52 cents in the prior year, bringing the EPS for the first six months of 2025 to $1.56. Returns also improved, with ROAA at 1.11% and ROAE at 12.25%, while efficiency gains lowered the cost base, pushing the efficiency ratio to 62.8% from 67.9%.

The company reinforced its commitment to shareholders by declaring its 96th consecutive quarterly dividend of 21 cents per share. Book value per share climbed to $25.66 from $23.59 at the end of 2024, aided by reduced unrealized losses in the securities portfolio. Capital remains robust, with leverage and total risk-based ratios of 9.2% and 13.6%, respectively, comfortably above regulatory thresholds.

Although deposits fell $61.9 million sequentially, Landmark Bancorp is rolling out branch-based initiatives to expand customer relationships. Liquidity is supported by $150 million in borrowing capacity and $62 million in securities cash flows, ensuring flexibility to fund growth.

The research report highlights several key factors that can drive Landmark Bancorp's growth. Operating primarily in Kansas, Landmark Bancorp benefits from a favorable local economy, with unemployment at 3.8% and housing trends remaining supportive. Non-interest income grew to $3.6 million in the second quarter, supported by gains on mortgage loan sales and deposit-related fees, adding diversification to revenues.

However, potential investors should consider certain risks outlined in the report. Deposits fell $61.9 million sequentially in the quarter, reflecting pressure from brokered outflows and competition from alternative funding sources. To bridge this gap, Landmark Bancorp leaned more heavily on wholesale borrowings, which can add cost and liquidity risk.

Credit quality also warrants monitoring, as non-performing loans increased to $17 million, or 1.52% of gross loans, from 1.24% in the prior quarter due to stress in commercial real estate exposures. Rising competition from credit unions and fintechs, as well as higher technology expenses, present additional headwinds for a bank of Landmark Bancorp’s size.

Shares of Landmark Bancorp have gained 34.4% over the past year, well ahead of sector and sub-industry averages. Valuation remains compelling, with the stock trading at just 9.08X trailing earnings and 1.05X book value, well below broader market multiples. While risks include deposit outflows, rising non-performing loans and competitive pressures, Zacks believes Landmark Bancorp’s fundamentals outweigh these challenges.

For a comprehensive analysis of Landmark Bancorp's financial health, strategic initiatives and market positioning, you are encouraged to view the full Zacks research report. This in-depth report offers a comprehensive analysis of the company's operational strategies, financial performance, and the potential risks and opportunities that lie ahead.

Read the full Research Report on Landmark Bancorp here>>>

Note: Our initiation of coverage on Landmark Bancorp, which has a modest market capitalization of $156.4 million, aims to equip investors with the information needed to make informed decisions in this promising but inherently risky segment of the market.