A Letter From Our CEO
November 14, 2013
The interest rate environment continues to drive margin compression for both Landmark Community Bank and the banking industry as loans and investments continue to reprice at much lower rates. For the nine months ended September 30, 2013, Landmark Bancorp, Inc’s earnings are lower than the same period in 2012; however the year over year gap has declined each quarter. The primary driver is a reduction in our net interest margin of .25% which equates to approximately $452 thousand of revenue for the nine months ended September 30, 2013. Expenses have increased due to rising costs of compliance, regulation, FDIC insurance and other expenses including personnel expense due to increased staffing levels driven by growth in prior years and the regulatory environment. Please note, although expenses have increased, Landmark’s noninterest expense is 2.96% of assets and compares favorably to our national peer group’s ratio of 3.26%.
Landmark’s net income after tax through September 30, 2013 was $1.22 million compared to $1.57 million for the same period of 2012. As discussed above, this is driven in large part by margin compression and increased expenses. Earnings per share were $.62 compared to $.89 cents for the same period of 2012. Book value per share was $12.01 compared to $12.86 as of September 30, 2012. Nearly $.74 of this reduction in book value was driven by a change in the value of securities available for sale. As long term rates have risen during the period, potential gains have declined. Return on assets was .63% for the period compared to .86% during the same period of 2012. Return on equity was 6.74% for the period compared to 9.42% during the same period in 2012. Landmark’s net interest margin declined to 3.64% compared to 3.89% during the same period of 2012.
Assets have declined 1.75% compared to the same period of 2012 but you will notice that the decline is centered in cash and due from banks which earns only .25%. The loan portfolio was flat compared to the same period of 2012, but is up from the second quarter of this year. The investment portfolio is down 4.62% compared to the same period of 2012 and the yield has declined as well. The deposit portfolio grew almost 2% to $222.8 million compared to the same period in 2012.
Landmark remains well capitalized with a tier 1 leverage ratio of 9.48%. Stockholder’s equity, increased from the prior quarter, however it is down 6.27% on a year over year basis due primarily to the charge off of the Scranton Parking Authority at year end 2012. That case continues to work its way through the court system and we would expect it to come to a conclusion in 2014.
On November 14, 2013 the Board of Directors of Landmark Bancorp, Inc. declared a dividend of $.06 per share, payable on December 10, 2013 to stockholders of record on November 29, 2013.
Landmark Community Bank’s staff, management, Board of Directors and Advisory Board members are committed to building a strong community bank and providing unparalleled service to our clients, as well as, delivering long term value to our shareholders. We appreciate your support and we encourage you to continue to use Landmark Community Bank for all your banking needs and request that you refer prospective clients to your bank.
Very Truly Yours,
Daniel R. Nulton
President & CEO
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.