# LANDMARK BANCORP INC (LARK)

Informational only - not investment advice.

CIK: 0001141688
SIC: 6021 National Commercial Banks
SIC breadcrumb: [Finance, Insurance, And Real Estate](/division/H/) > [Depository Institutions](/major-group/60/) > [SIC 6021 National Commercial Banks](/industry/6021/)
Latest 10-K filed: 2026-04-14
SEC page: https://www.sec.gov/edgar/browse/?CIK=1141688
Filing source: https://www.sec.gov/Archives/edgar/data/1141688/000149315226016495/form10-k.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 81016000 | USD | 2025 | 2026-04-14 |
| Net income | 18775000 | USD | 2025 | 2026-04-14 |
| Assets | 1606642000 | USD | 2025 | 2026-04-14 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-14. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001141688.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2009 | 2010 | 2011 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue |  |  |  | 29,230,000 | 29,700,000 | 33,153,000 | 37,111,000 | 39,253,000 | 39,826,000 | 43,226,000 | 64,683,000 | 73,899,000 | 81,016,000 |
| Net income |  |  |  | 8,961,000 | 4,369,000 | 10,426,000 | 10,662,000 | 19,493,000 | 18,011,000 | 9,878,000 | 12,236,000 | 13,003,000 | 18,775,000 |
| Diluted EPS |  |  |  | 2.10 | 0.96 | 2.17 | 2.10 | 3.72 | 3.26 | 1.71 | 2.03 | 2.15 | 3.07 |
| Operating cash flow |  |  |  | 19,017,000 | 3,056,000 | 21,238,000 | 9,107,000 | 14,810,000 | 31,159,000 | 24,780,000 | 12,604,000 | 14,236,000 | 21,634,000 |
| Capital expenditures |  |  |  | 596,000 | 1,449,000 | 1,308,000 | 1,038,000 | 359,000 | 1,324,000 | 876,000 | 995,000 | 2,320,000 | 605,000 |
| Dividends paid |  |  |  | 2,912,000 | 3,108,000 | 3,325,000 | 3,508,000 | 3,633,000 | 3,818,000 | 4,198,000 | 4,390,000 | 4,612,000 | 4,861,000 |
| Share buybacks | 12,000 | 0.00 | 0.00 |  |  |  |  | 2,349,000 |  | 1,239,000 | 75,000 | 338,000 |  |
| Assets |  |  |  | 911,382,000 | 929,454,000 | 985,784,000 | 998,465,000 | 1,188,027,000 | 1,328,968,000 | 1,502,867,000 | 1,561,672,000 | 1,574,142,000 | 1,606,642,000 |
| Liabilities |  |  |  | 826,431,000 | 841,832,000 | 893,883,000 | 889,858,000 | 1,061,355,000 | 1,193,325,000 | 1,391,434,000 | 1,434,758,000 | 1,437,927,000 | 1,446,011,000 |
| Stockholders' equity |  |  |  | 84,951,000 | 87,622,000 | 91,901,000 | 108,607,000 | 126,672,000 | 135,643,000 | 110,229,000 | 126,914,000 | 136,215,000 | 160,631,000 |
| Free cash flow |  |  |  | 18,421,000 | 1,607,000 | 19,930,000 | 8,069,000 | 14,451,000 | 29,835,000 | 23,904,000 | 11,609,000 | 11,916,000 | 21,029,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2009 | 2010 | 2011 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin |  |  |  | 30.66% | 14.71% | 31.45% | 28.73% | 49.66% | 45.22% | 22.85% | 18.92% | 17.60% | 23.17% |
| Return on equity |  |  |  | 10.55% | 4.99% | 11.34% | 9.82% | 15.39% | 13.28% | 8.96% | 9.64% | 9.55% | 11.69% |
| Return on assets |  |  |  | 0.98% | 0.47% | 1.06% | 1.07% | 1.64% | 1.36% | 0.66% | 0.78% | 0.83% | 1.17% |
| Liabilities / equity |  |  |  | 9.73 | 9.61 | 9.73 | 8.19 | 8.38 | 8.80 | 12.62 | 11.30 | 10.56 | 9.00 |

## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001141688.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q2 | 2022-06-30 |  |  | 0.61 | reported discrete quarter |
| 2022-Q3 | 2022-09-30 |  |  | 0.50 | reported discrete quarter |
| 2023-Q1 | 2023-03-31 |  |  | 0.64 | reported discrete quarter |
| 2023-Q2 | 2023-06-30 | 15,826,000 | 3,362,000 | 0.64 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 16,794,000 | 2,878,000 | 0.55 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 17,486,000 | 2,639,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-31 | 17,745,000 | 2,778,000 | 0.51 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 18,180,000 | 3,012,000 | 0.55 | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 19,022,000 | 3,931,000 | 0.72 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 18,952,000 | 3,282,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 | 19,342,000 | 4,701,000 | 0.81 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 20,098,000 | 4,404,000 | 0.75 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 20,739,000 | 4,930,000 | 0.85 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 20,837,000 | 4,740,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 20,248,000 | 5,066,000 | 0.83 | reported discrete quarter |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance
- [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States
- [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States
- [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States
- [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States
- [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States
- [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized
- [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized
- [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks
- [GDP](/indicator/GDP/): Gross Domestic Product
- [GPDI](/indicator/GPDI/): Gross Private Domestic Investment
- [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment
- [PCEC](/indicator/PCEC/): Personal Consumption Expenditures
- [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services
- [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt
- [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit
- [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts
- [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures
- [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing
- [USCONS](/indicator/USCONS/): All Employees, Construction
- [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade
- [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities
- [USGOVT](/indicator/USGOVT/): All Employees, Government
- [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private
- [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods
- [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- [BUSINV](/indicator/BUSINV/): Total Business Inventories
- [EXPGS](/indicator/EXPGS/): Exports of Goods and Services
- [IMPGS](/indicator/IMPGS/): Imports of Goods and Services
- [IR](/indicator/IR/): Import Price Index (End Use): All Commodities
- [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1141688/000149315226021454/form10-q.htm

Extracted from Part I Item 2 to the first post-MD&A boundary after HTML sanitization.
Confidence: high
Filing date: 2026-05-06
Report date: 2026-03-31

ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview.
Landmark Bancorp, Inc. is a financial holding company incorporated under the laws of the State of Delaware and is engaged in the banking
business through its wholly owned subsidiary, Landmark National Bank, and in the insurance business through its wholly owned subsidiary,
Landmark Risk Management, Inc. References to the “Company,” “we,” “us,” and “our” refer
collectively to Landmark Bancorp, Inc., Landmark National Bank and Landmark Risk Management, Inc. The Company is listed on the Nasdaq
Global Market under the symbol “LARK.” The Bank is dedicated to providing quality financial and banking services to its local
communities. Our strategy includes growing our commercial, commercial
real estate (“CRE”) and agriculture loan portfolios, while continuing to emphasize and maintain high quality assets. We are committed to developing relationships with our borrowers and
providing a total banking service.

The
Bank is principally engaged in the business of attracting deposits from the general public and using such deposits, together with borrowings
and other funds, to originate one-to-four family residential real estate, construction and land, CRE, commercial, agriculture, municipal
and consumer loans. Although not our primary business function, we invest in certain investment and mortgage-related securities using
deposits and other borrowings as funding sources.

Landmark
Risk Management, Inc., which was formed and began operations in 2017, is a Nevada-based captive insurance company which provides property
and casualty insurance coverage to the Company and the Bank for which insurance may not be currently available or economically feasible
in the current insurance marketplace. Landmark Risk Management, Inc. is subject to the regulations of the State of Nevada and undergoes
periodic examinations by the Nevada Division of Insurance.

Our
results of operations depend generally on net interest income, which is the difference between interest income from interest-earning
assets and interest expense on interest-bearing liabilities. Net interest income is affected by regulatory, economic and competitive
factors that influence interest rates, loan demand and deposit flows. In addition, we are subject to interest rate risk to the degree
that our interest-earning assets mature or reprice at different times, or at different speeds, than our interest-bearing liabilities.
Our results of operations are also affected by non-interest income, such as service charges, loan fees, gains from the sale of newly
originated loans, gains or losses on investments and certain other non-interest related items. Our principal operating expenses, aside
from interest expense, consist of compensation and employee benefits, occupancy costs, professional fees, data processing expenses and
provision for credit losses.

We
are significantly impacted by prevailing economic conditions, including federal monetary and fiscal policies, and federal regulations
of financial institutions. Deposit balances are influenced by numerous factors such as competing investments, the level of income and
the personal rate of savings within our market areas. Factors influencing lending activities include the demand for housing, the interest
rate pricing competition from other lending institutions, and rates of inflation.

Currently,
our business consists of ownership of the Bank, with its main office in Manhattan, Kansas and 28 additional branch offices in central,
eastern, southeast and southwest Kansas, one loan production office in Kansas City, Missouri and our ownership of Landmark Risk Management,
Inc.

In
April 2026, we declared our 99th consecutive quarterly dividend, and we currently have no plans to change our dividend strategy
given our current capital and liquidity position. However, while we have achieved a strong capital base and expect to continue operating
profitably, our future dividend practice is dependent upon the performance of the economy and the Company’s overall performance.
In addition, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, we will not be permitted to make capital
distributions (including for dividends and repurchases of stock) or pay discretionary bonuses to executive officers without restriction
if we do not maintain 2.5% in Common Equity Tier 1 Capital attributable to a capital conservation buffer, a standard we exceeded at March
31, 2026.

Critical
Accounting Policies. Critical accounting policies are those which are both most important to the portrayal of our financial
condition and results of operations and require our management’s most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies relate to the
allowance for credit losses and the accounting for business combinations, each of which involve significant judgment by our management.
There have been no material changes to the critical accounting policies included under Item 7 “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025,
filed with the Securities and Exchange Commission on April 14, 2026.

Summary
of Results. During the first quarter of 2026, we recorded net earnings of $5.1 million, an increase of $365,000, or 7.8%, from
net earnings of $4.7 million in the first quarter of 2025.The increase in net earnings during the first quarter of 2026 was primarily
related to an increase in net interest income and non-interest income.

27

The
following table summarizes earnings and key performance measures as of or for the periods presented:

As of or for the

(Dollars in thousands, except per share amounts)

three months ended March 31,

2026

2025

Net earnings:

Net earnings

$

5,066

$

4,701

Basic earnings per share (1)

$

0.83

$

0.77

Diluted earnings per share (1)

$

0.83

$

0.77

Earnings ratios:

Return on average assets (2)

1.29

%

1.21

%

Return on average equity (2)

12.65

%

13.71

%

Equity to total assets

10.06

%

9.04

%

Net interest margin (2) (3)

4.24

%

3.76

%

Dividend payout ratio

25.30

%

25.97

%

(1)
Per share values for the period ending March 31, 2025 have been adjusted to give effect to the 5% dividend paid during 2025.

(2)
Ratios have been annualized and are not necessarily indicative of the results for the entire year.

(3)
Net interest margin is presented on a fully tax equivalent basis, using a 21% federal tax rate.

Interest
Income. Interest income of $20.2 million for the quarter ended March 31, 2026 represented an increase of $906,000, or 4.7%, compared
to the same period of 2025. Interest income on loans increased $865,000, or 5.3%, to $17.3 million for the quarter ended March 31, 2026,
compared to the same period of 2025 due to higher yields and average balances. Yield on loans increased from 6.34% in the first quarter
of 2025 to 6.40% in the first quarter of 2026. The increase in interest income on loans was also driven by an increase of $45.0 million
in average loan balances, which increased from $1.0 billion in the first quarter of 2025 to $1.1 billion in the first quarter of 2026.
Interest income on investment securities increased $30,000, or 1.0%, to $2.9 million for the first quarter of 2026. The increase in interest
income on investment securities was primarily the result of higher yields, partially offset by a decrease in average balances of investment
securities. The yield on investment securities increased 26 basis points to 3.55% in the first quarter of 2026. The average balance of
investment securities decreased $27.0 million, or 7.2%, to $350.8 million in the first quarter of 2026.

Interest
Expense. Interest expense during the quarter ended March 31, 2026 decreased $998,000 to $5.2 million, as compared to the same
period of 2025. Interest expense on interest-bearing deposits decreased $625,000 to $4.6 million for the quarter ended March 31, 2026,
as compared to the same period of 2025. The total cost of interest-bearing deposits decreased from 2.17% in the first quarter of 2025
to 1.90% in the first quarter of 2026 as a result of lower rates on our deposits. Partially offsetting the lower rates was an increase
in average interest-bearing deposit balances, which increased from $979.8 million in the first quarter of 2025 to $983.1 million in the
first quarter of 2026. For the first quarter of 2026, interest expense on borrowings decreased $373,000 to $614,000, as compared to the
same period of 2025 due to a decrease in our average borrowings and repurchase agreements which decreased $20.6 million from the first
quarter of 2025 to the first quarter of 2026. Also contributing to lower interest expense was a decrease in rates, which decreased from
5.09% in the first quarter of 2025 to 4.85% in the same period of 2026.

Net
Interest Income. Net interest income increased $1.9 million, or 14.5%, to $15.0 million for the first quarter of 2026, as compared
to the first quarter of 2025. The increase in net interest income was primarily a result of an increase in interest income on loans and
investment securities, and lower interest expense. The accretion of purchase accounting adjustments increased net interest income by
$184,000 in the first quarter of 2025 compared to an increase of $149,000 in the first quarter of 2026, and was primarily related to
fair value adjustments on loans acquired in the Freedom Bank transaction. Compared to the same period last year, higher yields on earning
assets and growth in average loans increased interest income while lower deposit costs decreased interest expense. Net interest margin,
on a tax-equivalent basis, was 3.76% in the first quarter of 2025, compared to 4.24% in the first quarter of 2026.

28

Average
Assets/Liabilities. The following table reflects the tax-equivalent yields earned on average interest-earning assets and costs
of average interest-bearing liabilities (derived by dividing income or expense by the monthly average balance of assets or liabilities,
respectively) as well as “net interest margin” (which reflects the effect of the net earnings balance) for the periods shown:

Three months ended

Three months ended

March 31, 2026

March 31, 2025

Average balance

Income/ expense

Average yield/cost

Average balance

Income/ expense

Average yield/cost

(Dollars in thousands)

Assets

Interest-earning assets:

Interest-bearing deposits at banks

$

7,994

$

59

2.99

%

$

5,494

$

48

3.54

%

Investment securities (1)

350,802

3,073

3.55

%

377,845

3,068

3.29

%

Loans receivable, net (2)

1,093,593

17,263

6.40

%

1,048,585

16,398

6.34

%

Total interest-earning assets

1,452,389

20,395

5.69

%

1,431,924

19,514

5.53

%

Non-interest-earning assets

142,223

142,371

Total

$

1,594,612

$

1,574,295

Liabilities and Stockholders’ Equity

Interest-bearing liabilities:

Money market and checking

$

609,444

$

2,664

1.77

%

$

630,194

$

3,250

2.09

%

Savings accounts

151,567

42

0.11

%

147,135

43

0.12

%

Certificates of deposit

222,137

1,905

3.48

%

202,458

1,943

3.89

%

Total interest-bearing deposits

983,148

4,611

1.90

%

979,787

5,236

2.17

%

FHLB advances and other borrowings

27,851

277

4.03

%

48,428

565

4.73

%

Subordinated debentures

21,651

322

6.03

%

21,651

357

6.69

%

Repurchase agreements

1,871

15

3.25

%

8,634

65

3.05

%

Total borrowings

51,373

614

4.85

%

78,713

987

5.09

%

Total interest-bearing liabilities

1,034,521

5,225

2.05

%

1,058,500

6,223

2.38

%

Non-interest-bearing liabilities

397,628

376,727

Stockholders’ equity

162,463

139,068

Total

$

1,594,612

$

1,574,295

Interest rate spread (3)

3.64

%

2.92

%

Net interest margin (4)

$

15,170

4.24

%

$

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization.
Confidence: high

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Safe
Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Forward-Looking
Statements

This
document (including information incorporated by reference) contains, and future oral and written statements by us and our management
may contain, forward-looking statements, within the meaning of such term in the Private Securities Litigation Reform Act of 1995, with
respect to our financial condition, results of operations, plans, objectives, future performance and business. Forward-looking statements,
which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management,
are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,”
“intend,” “estimate,” “may,” “will,” “would,” “could,” “should”
or other similar expressions, including the negatives of such expressions. Additionally, all statements in this document, including forward-looking
statements, speak only as of the date they are made, and we undertake no obligation to update any statement in light of new information
or future events.

38

Our
ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material
adverse effect on operations and future prospects by us and our subsidiaries include, but are not limited to, the following:

●

The
strength of the local, state, national and international economies and financial markets,
including the effects of inflationary pressures and future monetary policies of the Federal
Reserve in response thereto;

●

Effects
on the U.S. economy resulting from actions taken by the federal government, including the
threat or implementation of tariffs, immigration enforcement and changes in foreign policy;

●

Changes
in interest rates and prepayment rates of our assets;

●

Increased
competition in the financial services sector and the inability to attract new customers,
including from non-bank competitors such as credit unions and “fintech” companies;

●

Timely
development and acceptance of new products and services;

●

Rapid
and expensive technological changes implemented by us and other parties in the financial
services industry, including third-party vendors, which may be more difficult to implement
or more expensive than anticipated or which may have unforeseen consequence to us and our
customers, including the development and implementation of tools incorporating artificial
intelligence;

●

Our
risk management framework;

●

Interruptions
in information technology and telecommunications systems and third-party services;

●

The
economic effects of severe weather, natural disasters, widespread disease or pandemics, or
other external events;

●

The
loss of key executives or employees;

●

Changes
in consumer spending;

●

Integration
of acquired businesses;

●

The
commencement, cost and outcome of litigation and other legal proceedings and regulatory actions
against us or to which the Company may become subject;

●

Changes
in accounting policies and practices, such as the implementation of the current expected
credit losses accounting standard;

●

The
economic impact of past and any future terrorist attacks, military conflicts, acts of war,
including ongoing conflicts in the Middle East, the Russian invasion of Ukraine and other international conflicts, or threats thereof, and the response of the United States
to any such threats and attacks;

●

The
ability to manage credit risk, forecast loan losses and maintain an adequate allowance for
loan losses;

●

Fluctuations
in the value of securities held in our securities portfolio;

●

Concentrations
within our loan portfolio and large loans to certain borrowers (including commercial real
estate loans);

●

The
concentration of large deposits from certain clients who have balances above current FDIC
insurance limits and may withdraw deposits to diversify their exposure;

●

The
level of non-performing assets on our balance sheets;

●

The
ability to raise additional capital;

●

The
occurrence of fraudulent activity, breaches or failures of our or our third-party vendors’
information security controls or cybersecurity-related incidents, including as a result of
sophisticated attacks using artificial intelligence and similar tools or as a result of insider
fraud;

●

Declines
in real estate values;

●

The
effects of fraud on the part of our employees, customers, vendors or counterparties; and

●

Our
success at managing and responding to the risks involved in the foregoing items.

These
risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such
statements. Additional information concerning us and our business, including other factors that could materially affect our financial
results, is included in “Item 1A. Risk Factors” of this Annual Report on Form 10-K.

39

CORPORATE
PROFILE AND OVERVIEW

Landmark
Bancorp, Inc. is a financial holding company incorporated under the laws of the State of Delaware and is engaged in the banking business
through its wholly-owned subsidiary, Landmark National Bank, and in the insurance business through its wholly-owned subsidiary, Landmark
Risk Management, Inc. The Company is listed on the Nasdaq Global Market under the symbol “LARK.” The Bank is dedicated to
providing quality financial and banking services to its local communities. Our strategy includes growing our commercial, CRE and agriculture
loan portfolios, while continuing to emphasize and maintain high quality assets. We are committed to developing relationships with
our borrowers and providing a total banking service.

The
Bank is principally engaged in the business of attracting deposits from the general public and using such deposits, together with borrowings
and other funds, to originate one-to-four family residential real estate, construction and land, CRE, commercial, agriculture, municipal
and consumer loans. Although not our primary business function, we do invest in certain investment and mortgage-related securities using
deposits and other borrowings as funding sources.

Our
results of operations depend generally on net interest income, which is the difference between interest income from interest-earning
assets and interest expense on interest-bearing liabilities. Net interest income is affected by regulatory, economic and competitive
factors that influence interest rates, loan demand and deposit flows. In addition, we are subject to interest rate risk to the degree
that our interest-earning assets mature or reprice at different times, or at different speeds, than our interest-bearing liabilities.
Our results of operations are also affected by non-interest income, such as service charges, loan fees, gains from the sale of newly
originated loans and gains or losses on investments, and certain other non-interest related items. Our principal operating expenses,
aside from interest expense, consist of, among others, compensation and employee benefits, occupancy costs, data processing expenses,
professional fees, amortization of intangibles expense, federal deposit insurance costs, and provision for credit losses.

We
are significantly impacted by prevailing economic conditions including federal monetary and fiscal policies and federal regulations of
financial institutions. Deposit balances are influenced by numerous factors such as competing investments, the level of income and the
personal rate of savings within our market areas. Factors influencing lending activities include the demand for housing, the interest
rate pricing competition from other lending institutions, and rates of inflation.

Currently,
our business consists of its ownership of the Bank, with its main office in Manhattan, Kansas and 28 additional offices in central,
eastern, southeast and southwest Kansas and Missouri, and our ownership of the Captive, a Nevada-based captive insurance company.

CRITICAL
ACCOUNTING POLICIES

Critical
accounting policies are those that are both most important to the portrayal of our financial condition and results of operations, and
require our management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about
the effect of matters that are inherently uncertain. Our critical accounting policies relate to the allowance for credit losses and goodwill,
both of which involve significant judgment by our management.

On
January 1, 2023, we adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), commonly referred to as “CECL”,
which changed our allowance for credit losses from an incurred loss methodology to an expected loss methodology. The CECL model is subject
to changes in our economic forecast, which can impact the calculation of our allowance for credit losses substantially. Our most significant
critical accounting estimates relate to the allowance for credit losses on loans, which involve significant judgment by our management.
The analysis is updated on a quarterly basis based on historical loss information adjusted for current conditions and reasonable and
supportable forecasts. Additionally, the Company considers changes in economic and business conditions, changes in policies, procedures
and underwriting, changes in management or staff and their related experience, changes in nature and volume of the portfolio, changes
in loan review, changes in collateral values, changes in past due and non-accrual loans, changes in competition, legal and regulatory
issues, changes in concentrations and other qualitative factors, which impacts the estimate of future credit losses. These qualitative
factors comprise a significant portion of the Company’s allowance for credit losses. Based on a sensitivity analysis of all collectively
evaluated loan pools, a five basis point change in the qualitative risk factors across all loan categories would result in an increase
or decrease of $551,000 in the allowance for credit losses as of December 31, 2025. See Note 1 (Summary of Significant Accounting Policies)
to the Company’s consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of this
Annual Report on Form 10-K for a more detailed description methodology.

40

We
have completed several business and asset acquisitions since 2002, which have generated significant amounts of goodwill. The initial
value assigned to goodwill is the residual of the purchase price over the fair value of all identifiable tangible and intangible assets
acquired and liabilities assumed. Goodwill is not amortized; however, it is tested for impairment at each calendar year end or more frequently
when events or circumstances dictate. The Company performed a qualitative assessment of factors to determine if it is more likely than
not that the fair value of a reporting unit is less than its carrying amount as of December 31, 2025. This assessment included a review
of macroeconomic conditions, industry and market specific considerations and other relevant factors including the Company’s market
capitalization, with control premiums and valuation multiples, compared to recent financial industry acquisition multiples for similar
institutions to estimate the fair value of the Company’s single reporting unit. The Company’s qualitative impairment test
indicated that its goodwill was not impaired. The Company can make no assurances that future impairment tests will not result in goodwill
impairments.

COMPARISON
OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024

SUMMARY
OF PERFORMANCE. Net earnings for 2025 increased $5.8 million, or 44.4%, to $18.8 million as compared to $13.0 million for 2024. The
increase in net earnings during 2025 was primarily related to an increase in net interest income due primarily to an increase in loan
balances and higher yields on interest-earning assets.

We
distributed a 5% stock dividend for the 25th consecutive year in December 2025. All per share and average share data in this
section reflect the 2025 and 2024 stock dividends.

Interest
Income. Interest income for 2025 increased $7.1
million, or 9.6%, to $81.0 million, as compared to 2024. Interest income on loans increased $7.8 million, or 12.7%, to $69.2 million
for 2025, as compared to 2024 due to higher yields and average balances. Our yields increased from 6.30% in 2024 to 6.37% in 2025. The
increase in interest income on loans was also driven by an increase in average loan balances, which increased from $974.3 million in
2024 to $1.1 billion in 2025. Interest income on investment securities decreased $737,000, or 6.0%, to $11.6 million during 2025, as
compared to 2024. The decrease in interest income on investment securities was primarily the result of a decrease in the average balances
of investment securities in 2025, which decreased from $432.9 million in 2024 to $365.8 million in 2025.

Interest
Expense. Interest expense during 2025 decreased
$2.8 million, or 10.1%, to $25.3 million as compared to 2024. Interest expense on interest-bearing deposits decreased $1.4 million to
$20.9 million for 2025 as compared to $22.3 million in 2024. Our total cost of interest-bearing deposits decreased from 2.38% during
2024 to 2.14% during 2025 as a result of lower interest rates. Offsetting the decrease in interest expense due to lower cost of interest-bearing
deposits was an increase in average interest-bearing deposit balances, which increased from $938.2 million in 2024 to $979.4 million
in 2025. Interest expense on borrowings decreased $1.5 million to $4.4 million during 2025, as compared to 2024, due to a decrease in
our average borrowings, which decreased from $104.1 million in 2024 to $87.7 million in 2025.

Net
Interest Income. Net interest income represents
the difference between income derived from interest-earning assets and the expense incurred on interest-bearing liabilities. Net interest
income is affected by both the difference between the rates of interest earned on interest-earnings assets and the rates paid on interest-bearing
liabilities (“interest rate spread”) as well as the relative amounts of interest-earning assets and interest-bearing liabilities.

During
2025, net interest income increased $10.0 million, or 21.8%, to $55.7 million compared to $45.7 million in 2024. The increase in net
interest income was primarily a result of an increase in interest income on loans, coupled with lower interest expense, partially offset
by lower interest income on investment securities. The accretion of purchase accounting adjustments increased net interest income by
$794,000 in 2025 compared to $1.0 million in 2024. Compared to the same period last year, net interest income was benefitted by higher
average balances and yields on loans, coupled with lower costs of interest-bearing liabilities. Our net interest margin, on a tax-equivalent
basis, increased to 3.86% during 2025 from 3.28% during 2024. Lower interest rates may not result in a higher net interest margin as
a result of increased competition for loans and deposits. The slope of the yield curve also impacts our net interest margin. Additionally,
deposit balances may decline resulting in the need for higher cost funding.

41

Provision
for credit Losses. On January 1, 2023, we adopted
CECL and established an ACL based on this framework. The ACL is based on the historical loss rates and the weighted average remaining
maturity for financial assets measured at amortized costs including loans, investment securities and unfunded loan commitments. The historical
loss rates are adjusted to reflect reasonable and supportable forecasts to estimate expected credit losses over the life of the financial
asset.

During
2025, we recorded a $2.4 million provision for credit losses compared to a $2.3 million provision for credit losses in 2024. We recorded
net loan charge-offs of $2.7 million during 2025 compared to net charge-offs of $183,000 during 2024. The increase in net charge-offs
during 2025 was primarily due to the charge-off of a single commercial credit during the third quarter.

Non-interest
Income. Total non-interest income was $15.0 million
in 2025, an increase of $207,000, or 1.4%, compared to 2024. The increase in non-interest income was primarily the result of a decrease
in losses on sales of investment securities of $928,000 and an increase of $789,000 in gains on sales of loans. A loss of $103,000 was
recorded on the sale of investment securities during 2025, a decrease from the $1.0 million loss recorded on the sale of investment securities
in 2024. These increases were partially offset by a decrease of $604,000 in bank owned life insurance due to death benefits recognized
in 2024 and a decrease of $547,000 in fees and service charges primarily due to lower fees to deposit accounts.

Non-interest
Expense. Non-interest expense increased $1.2 million,
or 2.6%, to $45.2 million in 2025 compared to $44.1 million in 2024. The increase in non-interest expense in 2025 was primarily driven
by an increase of $2.4 million in compensation and benefits expense due to an increase in the number of employees coupled with higher
incentive compensation costs tied to improved Company performance. This increase was partially offset by a decrease of $752,000 in valuation
allowances for assets held for sale and a decrease of $510,000 in occupancy and equipment expense.

INCOME
TAXES. We recorded income tax expense of $4.3 million in 2025 compared to $1.1 million in 2024. The effective tax rate increased
from 7.7% in 2024 to 18.6% in 2025, primarily due to decreased recognition of previously unrecognized tax benefits. During 2025, we recognized
$161,000 of previously unrecognized tax benefits compared to $1.0 million during 2024, which reduced the effective tax rates in both
years.

FINANCIAL
CONDITION. Economic conditions in the U.S. remained resilient during 2025 despite elevated inflation levels and economic uncertainty
over tariffs continuing to impact the economy. Rate cuts by the Federal Reserve Bank during 2025 have positively benefitted financial
institutions’ earnings and net interest margin. The Federal Reserve lowered interest rates by 75 basis points during 2025 due to
improvements in the inflation outlook, however, additional rate cuts are dependent upon further reductions in the inflation rate and
other economic factors. We maintain strong capital and liquidity, and a stable, conservative deposit portfolio with a significant majority
of our deposits being retail-based and insured by the FDIC. We spend significant time each month monitoring our interest rate and concentration
risks through our asset/liability management and lending strategies that involve a relationship-based banking model offering stability
and consistency. The State of Kansas and the geographic markets in which the Company operates have also been impacted by economic headwinds.
Supply chain constraints, labor shortages and geopolitical events have contributed to the rising inflation levels which are impacting
all areas of the economy both nationally and locally. The Company’s allowance for credit losses continues to factor in estimates
of the economic impact of these conditions and other qualitative factors on our loan portfolio. However, our loan portfolio is diversified
across various types of loans and collateral throughout the markets in which we operate. Aside from a few problem loans that management
is working to resolve, our asset quality has remained strong over the past few years. While further increases in problem assets may arise,
management believes its efforts to run a high quality financial institution with a sound asset base will continue to create a strong
foundation for continued growth and profitability in the future.

42

Asset
Quality and Distribution. Our primary investing activities
are the origination of one-to-four family residential real estate, construction and land, CRE, commercial, agriculture, municipal and
consumer loans and the purchase of investment securities. Total assets were $1.6 billion at both December 31, 2025 and 2024. Net loans,
excluding loans held for sale, increased $59.2 million, or 5.7%, to $1.1 billion at December 31, 2025, compared to $1.0 billion at December
31, 2024. Investment securities available-for-sale decreased $24.4 million, or 6.5%, from $372.5 million at December 31, 2024 to $348.2
million at December 31, 2025.

The
allowance for credit losses is established through a provision for credit losses based on our economic projections. At December 31, 2025,
our allowance for credit losses on loans totaled $12.5 million, or 1.12% of gross loans outstanding, compared to $12.8 million, or 1.22%
of gross loans outstanding, at December 31, 2024. The decrease in our allowance for credit losses on loans as a percentage of gross loans
outstanding was primarily due to a decrease in the reserves on individually evaluated loans.

As
of December 31, 2025 and 2024, approximately $22.9 million and $26.1 million, respectively, of loans were considered classified and assigned
a risk rating of special mention, substandard or doubtful. The decrease in classified loans was primarily due to a commercial loan relationship
that was charged off during 2025. These ratings indicate that the loans identified as potential problem loans have more than normal risk
which raised doubts as to the ability of the borrower to comply with present loan repayment terms. Management believed the general allowance
was sufficient to cover all expected future losses expected in the loan portfolio at the balance sheet date.

Loans
past due 30-89 days and still accruing interest totaled $4.3 million, or 0.38% of gross loans, at December 31, 2025, compared to $6.2
million, or 0.59% of gross loans, at December 31, 2024. At December 31, 2025, $10.0 million of loans were on non-accrual status, or 0.90%
of gross loans, compared to $13.1 million, or 1.25% of gross loans, at December 31, 2024. Past due loans are determined in accordance
with the contractual repayment terms. Non-accrual loans consist of loans 90 or more days past due and certain individually evaluated
loans. There were no loans 90 days delinquent and accruing interest at either December 31, 2025 or 2024.

As
part of our credit risk management, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis
on commercial CRE and construction and land relationships. We are working to resolve or remove non-performing
credits out of the loan portfolio. At December 31, 2025, we had no real estate owned compared to $167,000 of real estate owned at December
31, 2024. The decrease in real estate owned as of December 31, 2025 compared to December 31, 2024 was due to the sale of properties held
as other real estate owned.

Liability
Distribution. Our primary ongoing sources of funds
are deposits, FHLB borrowings, proceeds from principal and interest payments on loans and investment securities and proceeds from the
sale of mortgage loans and investment securities. While maturities and scheduled amortization of loans are a predictable source of funds,
deposit flows and mortgage prepayments are greatly influenced by general interest rates and economic conditions. We had a balance of
$1.4 billion in deposits at December 31, 2025 as compared to $1.3 billion at December 31, 2024.

Total
borrowings decreased $54.8 million, or 61.9%, to $33.7 million at December 31, 2025, from $88.5 million at December 31, 2024. The decrease
in borrowings was primarily due to deposit growth and the sale of investment securities.

Non-interest-bearing
deposits at December 31, 2025 were $364.7 million, or 26.3% of deposits, compared to $351.6 million, or 26.5% of deposits, at December
31, 2024. Money market and checking accounts were 46.9% of our deposit portfolio and totaled $651.0 million at December 31, 2025, compared
to 47.9% of our deposit portfolio totaling $637.0 million, at December 31, 2024. Savings accounts increased to $151.4 million, or 10.8%
of deposits, at December 31, 2025, from $145.5 million, or 10.9% of deposits, at December 31, 2024. Certificates of deposit totaled $221.8
million, or 16.0% of deposits, at December 31, 2025, compared to $194.7 million, or 14.7% of deposits, at December 31, 2024. Competition
for deposits may affect our ability to continue to increase deposit balances and could result in a decrease in our deposit balances in
future periods. Such decreases in deposit balances may cause us to secure funding through other borrowings which would likely result
in higher interest costs.

43

Certificates
of deposit at December 31, 2025, scheduled to mature in one year or less totaled $213.4 million. Historically, maturing deposits have
generally remained with the Bank, and we believe that a significant portion of the deposits maturing in one year or less will remain
with us upon maturity in some type of deposit account.

CASH
FLOWS. During 2025, our cash and cash equivalents increased by $707,000 as compared to 2024. Our operating activities provided net
cash of $21.6 million in 2025, compared to $14.2 million in 2024, which is primarily the result of increased net earnings and sales of
one-to-four family residential mortgage loans. Our investing activities used net cash of $21.4 million during 2025, compared to $18.1
million in 2024, primarily to fund loan growth. Our financing activities provided net cash of $441,000 during 2025, compared to using
$3.0 million in 2024, primarily as a result of an increase in deposits.

Liquidity.
Our most liquid assets are cash and cash equivalents
and investment securities available-for-sale. The levels of these assets are dependent on the operating, financing, lending and investing
activities during any given year. These liquid assets totaled $372.4 million at December 31, 2025 and $396.9 million at December 31,
2024. During periods in which we are not able to originate a sufficient amount of loans and/or periods of high principal prepayments,
we generally increase our liquid assets by investing in short-term, high-grade investments.

Liquidity
management is both a daily and long-term function of our strategy. Excess funds are generally invested in short-term investments. Excess
funds are typically generated as a result of increased deposit balances, while uses of excess funds are generally deposit withdrawals
and loan advances. In the event we require funds beyond our ability to generate them internally, additional funds are generally available
through the use of brokered deposits, FHLB advances, a line of credit with the FHLB, other borrowings or through sales of investment
securities. At December 31, 2025, we had an outstanding balance of $8.9 million against our line of credit with the FHLB. At December
31, 2025, we had collateral pledged to the FHLB that would allow us to borrow $239.1 million, subject to FHLB credit requirements and
policies. At December 31, 2025, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the
Federal Reserve was $42.0 million. We also have various other federal funds agreements, both secured and unsecured, with correspondent
banks totaling approximately $35.0 million in available credit under which we had no outstanding borrowings at December 31, 2025. At
December 31, 2025, we had subordinated debentures totaling $21.7 million and $1.5 million of repurchase agreements. At December 31, 2025,
the Company had no borrowings against a $5.0 million line of credit from an unrelated financial institution maturing on November 1, 2026,
with an interest rate that adjusts daily based on the prime rate less 0.50%. This line of credit has covenants specific to capital and
other financial ratios, which the Company was in compliance with at December 31, 2025. The Company also borrowed $1.7 million from the
same unrelated financial institution at a fixed rate of 6.15%. This borrowing matures on September 1, 2027 and requires quarterly principal
and interest payments. The original balance of this borrowing was $10.0 million and was used to fund part of the acquisition of Freedom.

OFF-BALANCE
SHEET ARRANGEMENTS. As a provider of financial services, we routinely issue financial guarantees in the form of financial and performance
standby letters of credit. Standby letters of credit are contingent commitments issued by us generally to guarantee the payment or performance
obligation of a customer to a third party. While these standby letters of credit represent a potential outlay by us, a significant amount
of the commitments may expire without being drawn upon. We have recourse against the customer for any amount the customer is required
to pay to a third party under a standby letter of credit. The letters of credit are subject to the same credit policies, underwriting
standards and approval process as loans made by us. Most of the standby letters of credit are secured, and in the event of nonperformance
by the customers, we have the right to the underlying collateral, which could include CRE, physical plant and property, inventory, receivables,
cash and marketable securities. The contract amount of these standby letters of credit, which represents the maximum potential future
payments guaranteed by us, was $2.2 million at December 31, 2025 as compared to $1.9 million at December 31, 2024.

At
December 31, 2025, we had outstanding loan commitments, excluding standby letters of credit, of $203.5 million, as compared to $201.2
million at December 31, 2024. We anticipate that sufficient funds will be available to meet current loan commitments. These commitments
consist of unfunded lines of credit and commitments to finance real estate loans.

CAPITAL.
As discussed in more detail in the “Supervision and Regulation” section of “Item 1. Business” of this Annual
Report on Form 10-K, current regulatory capital regulations require financial institutions (including banks and bank holding companies)
to meet certain regulatory capital requirements. The Company and the Bank are subject to the Basel III Rule that implemented the Basel
III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Act. The
Basel III Rule is applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan
holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated
assets of less than $3.0 billion).

44

At
December 31, 2025, the Bank maintained a leverage ratio of 9.67% and a total risk-based capital ratio of 13.96%. As shown by the following
table, the Bank’s capital exceeded the minimum capital requirements in effect at December 31, 2025, including the capital conservation
buffers.

Actual

Actual

Minimum

Minimum

(dollars in thousands)

amount

percent

amount

percent(1)

Leverage

$

152,915

9.67

%

$

63,223

4.00

%

Common Equity Tier 1 Capital

152,915

12.92

%

82,871

7.00

%

Tier 1 Capital

152,915

12.92

%

100,629

8.50

%

Total Risk-Based Capital

165,313

13.96

%

124,306

10.50

%

(1)
The minimum required percent includes a capital conservation buffer of 2.5%.

Banks
and bank holding companies are generally expected to operate at or above the minimum capital requirements. The Company’s and the
Bank’s ratios above are well in excess of regulatory minimums. As of December 31, 2025 and 2024, the Company and the Bank also
exceeded the “well capitalized” thresholds, which is the highest rating available. There are no conditions or events that
management believes have changed the Company’s and the Bank’s category as of the date of this report. We have $21.7 million
in trust preferred securities which, in accordance with current capital guidelines, have been included in total risk-based capital as
of December 31, 2025. Cash distributions on the securities are payable quarterly, are deductible for income tax purposes and are included
in interest expense in the consolidated financial statements.

DIVIDENDS

During
the year ended December 31, 2025, we paid quarterly cash dividends of $0.20 per share to our stockholders, as adjusted to give effect
to 5% stock dividends, which we distributed for the 25th consecutive year in December 2025. The 2024 quarterly cash dividends
were $0.19 per share as adjusted to give effect to 5% stock dividends.

The
payment of dividends by any financial institution or its holding company is affected by the requirement to maintain adequate capital
pursuant to applicable capital adequacy guidelines and regulations. As described above, the Bank exceeded its minimum capital requirements
under applicable guidelines as of December 31, 2025. The National Bank Act imposes limitations on the amount of dividends that a national
bank may pay without prior regulatory approval. Generally, the amount is limited to the bank’s current year’s net earnings
plus the adjusted retained earnings for the three preceding years. As of December 31, 2025, $3.0 million was available to be paid as
dividends to the Company by the Bank without prior regulatory approval.

Additionally,
our ability to pay dividends is limited by the subordinated debentures associated with the trust preferred securities that are held by
three business trusts that we control. Interest payments on the debentures must be paid before we pay dividends on our capital stock,
including our common stock. We have the right to defer interest payments on the debentures for up to 20 consecutive quarters. However,
if we elect to defer interest payments, all deferred interest must be paid before we may pay dividends on our capital stock.

EFFECTS
OF INFLATION

Our
consolidated financial statements and accompanying footnotes have been prepared in accordance with GAAP, which generally require the
measurement of financial position and operating results in terms of historical dollars without consideration for changes in the relative
purchasing power of money over time due to inflation. The impact of inflation can be found in the increased cost of our operations because
our assets and liabilities are primarily monetary, and interest rates have a greater impact on our performance than do the effects of
inflation.

45