A Letter From Our CEO

Landmark Bank CEO Letter

Dear Shareholder:

The fourth quarter of 2017 was the culmination of our efforts to establish Landmark Community Bank as a well-run and prudently managed community bank. The cornerstone of this philosophy and strategy is to maintain exceptional asset quality, driven by disciplined risk management and underwriting. Our goal is to protect the interests of the bank and ultimately enhance shareholder value. This process began with the focus on documenting and analyzing our entire loan portfolio to ensure superior balance sheet quality. Consequently, we have minimized our loan delinquencies and significantly reduced our nonaccruals from $8,300,000 to $6,500,000 during 2017. Management believes nonperforming loans will continue to decrease by an additional $3,000,000 in 2018, an overall reduction of 58% since 12/31/2016, without compromising our current balance sheet capital position.

Revenue diversification plays an important part in our strategy to build long-term and sustainable shareholder value. As a traditional community bank, we are now structured to competitively deliver residential mortgage lending, auto lending, consumer lending as well as commercial lending. With our branches now fully staffed to meet our clients’ needs and demands, core deposits are anticipated to continually increase while we reinvest those funds in the local communities that we serve. The focus on retail banking coupled with commercial and industrial lending will provide opportunities to reduce the cost of our capital and gradually improve our profitability.

The Tax Cuts and Jobs Act was signed by President Trump on December 22, 2017 reducing corporate tax rates from a maximum 35% to 21%, among other changes. Accounting rules required the bank to reduce the value of net deferred tax assets to reflect the new 21% tax rate when the legislation was enacted. The value of our assets was reduced by $574,000 and recorded as additional tax expense in the fourth quarter. This is a one-time nonrecurring event that will not affect our efforts to accelerate long term profitability. Landmark expects lower taxes to augment profitability in 2018 and beyond. The significant tax rate reduction in the future will aid in our strategy of measured growth.

Balance sheet integrity is essential to reinforce the core competency and long-term financial performance of our bank. Management intends to continue to shed high-risk assets to reduce the exposure to significant charge-offs and related legal expenses. We are also evaluating capital raising options and alternatives with a view to the third or fourth quarter of 2018 to enhance our capital position. Landmark Community Bank intends to be on a more deliberate growth pattern as we market and promote our innovative banking capabilities. We continue to evaluate opportunities to grow our bank and we look forward to reporting on our progress in 2018.

We recently welcomed two new members to our Board of Directors, Mr. Richard Rose and Mr. John McCarthy. Mr. Rose is the President/CEO of Petroleum Service Company in Wilkes-Barre and Mr. McCarthy is the President of McCarthy Tire in Wilkes-Barre. Both gentlemen bring a wealth of experience to our Board and their business expertise will be of great value to the Bank as we move forward.

In summary, the past nine months have been internally centered and spent on our employees, the true champions of our bank. We held our first ever Town Hall meeting, provided new employee shirts, opened the lines of communication, relaxed the dress code, introduced new corporate social responsibility activities, and implemented enhancements to our benefits program. A change in the culture within our Bank has taken hold and the future looks bright, indeed. This is an exciting time at Landmark Community Bank as we continue the execution of our strategic plan to enhance shareholder value in a methodical business driven, employee and customer focused manner.

A Warning About Forward-Looking Statements

In addition to historical information, this document may contain forward-looking statements. Examples of forward-looking statements include, but are not limited to, (a) projections or statements regarding future earnings, expenses, net interest income, other income, earnings or loss per share, asset mix and quality, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of management or the Board of Directors, and (c) statements of assumptions, such as economic conditions in the Corporation’s market areas. Such forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “intends”, “will”, “should”, “anticipates”, or the negative of any of the foregoing or other variations thereon or comparable terminology, or by discussion of strategy. Forward-looking statements are subject to certain risks and uncertainties such as local economic conditions, competitive factors, and regulatory limitations. Actual results may differ materially from those projected in the forward-looking statements. We caution readers not to place undue reliance on these forward-looking statements. They only reflect management’s analysis as of this date. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: the effects of new laws and regulations, including the impact of the Tax Cut and Jobs Act and Dodd-Frank Wall Street Reform and Consumer Protection Act; effects of short- and long-term federal budget and tax negotiations and their effect on economic and business conditions; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet; technological changes; the interruption or breach in security of our information systems and other technological risks and attacks resulting in failures or disruptions in customer account management, general ledger processing and loan or deposit updates and potential impacts resulting therefrom including additional costs, reputational damage, regulatory penalties, and financial losses; ineffectiveness of the business strategy due to changes in current or future market conditions; the effects of economic deterioration on current customers, specifically the effect of the economy on loan customers’ ability to repay loans; the effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; interest rate movements; difficulties in integrating distinct business operations, including information technology difficulties; disruption from the transaction making it more difficult to maintain relationships with customers and employees, and challenges in establishing and maintaining operations in new markets; volatilities in the securities markets; slow economic conditions; and acts of war or terrorism. The Corporation does not revise or update these forward-looking statements to reflect events or changed circumstances.

Respectively Yours,

Thomas V. Amico

Landmark Bank

Banking Services

Savings, Money Market & Club Accounts Landmark Community Bank offers traditional savings accounts, money market accounts, certificates of deposit, club accounts and IRA accounts.

Checking Deposit accounts to meet all of your personal and business needs.

Online Banking Services Landmark Community Bank’s Net Teller allows you to bank from your personal computer, giving access to your bank accounts 24 hours a day.

Loans Landmark Community Bank offers a variety of home equity, personal and business loans.

At Landmark Community Bank our goal is to offer the highest customer service while establishing a long lasting relationship with you. We provide you with a high level of technology with experienced, responsive bankers to compliment and maximize your business. Landmark Community Bank offers a full range of services to accommodate all businesses. Please click on a link above to find out more about how Landmark can be "Better Business Banking" for you.
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