Landmark Bancorp (LARK): The Cheapest NIM in the Peer Group
A Kansas community bank with above-peer NIM, below-peer credit quality, and a valuation that may be pricing in more risk than actually exists.
Introduction
Landmark Bancorp, Inc. (NASDAQ: LARK) is a $1.6 billion community bank holding company headquartered in Manhattan, Kansas, operating through its subsidiary Landmark National Bank. The bank runs 30 branches across Kansas and Missouri, serving a mix of commercial, agricultural, and retail customers in smaller markets where it has built a stable, core-funded deposit franchise over decades.
The most striking feature of Landmark’s financials is its net interest margin. At 4.23% in the most recent six-month period (Jun 2026), the bank’s NIM sits well above the peer range of 3.36%–3.68% — a gap driven by two structural advantages working together. First, 26% of its deposit base is non-interest bearing, well above the peer median of 19.7%, meaning a meaningful share of its funding costs nothing. Second, its loan yields run above peer range at 6.35%, reflecting a mix weighted toward higher-rate commercial and agricultural credits. The combination produces a cost of funds of just 2.03% while peers pay 2.53%–2.90%. The result: ROA of 1.30% and an ROE of 13%, both above the peer range.
There are three risks that explain why the stock trades at an earnings yield of 10.76% — nearly 300 basis points above the peer range of 7.46%–8.71%. Credit quality is elevated: classified loans, non-accruals, and past dues are each roughly double the peer median, and the allowance for credit losses covers only about half of peer-group coverage ratios. The bank is also liability-sensitive, with a one-year repricing ratio of 31.4% versus the peer range of 42%–53%, creating NIM compression risk if rates rise. And liquidity, while supported by a stable core deposit base, runs below peer-group levels on most measures. The question this analysis addresses is not whether these risks exist — they clearly do — but whether a price-to-tangible-fair-value of 1.34× (peer range: 1.56×–1.93×) and a 10.76% earnings yield represent adequate — or perhaps excessive — compensation for them.
Full Analysis
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