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A Message to the Shareholders

Landmark Community Bank’s board of directors has recently decided to suspend dividend payments, according to Sandy Insalaco, Chairman of the Board.

“The nation, our Commonwealth, and our community are currently facing a critical health crisis and economic crisis,” said Mr. Insalaco. “I know we will overcome these challenges together and emerge stronger as a bank and a nation. With that thought we must continue to be proactive and forward looking in our actions.”

Over the past two years, Landmark Community Bank has undergone a strategic transformation that has strengthened its balance sheet and placed Landmark Community Bank in the top tier of most financial measures of security and strength. These results have positioned it well to support its customers.

Thomas V. Amico, President/CEO stated, “To continue this momentum during these times, the board of directors of Landmark Community Bank has taken a bold step to suspend our quarterly dividend payments. This will allow us to retain capital and redirect it into the communities we serve. We believe this action is in line with our commitment to grow and strengthen our bank as we support one another through this pandemic and challenging economic environment.”

Landmark Community Bank was founded in 2001 to provide local, personalized service and a full range of banking products to residents of Northeastern Pennsylvania. Today, Landmark Community Bank has branches in six locations and assets in excess of $325 million.

The Landmark Community Bank Annual Meeting of Shareholders was held virtually on April 16, 2020 at 4:00pm. Listen to the meeting below.

A Letter from the President & CEO

Dear Shareholders

In a very short amount of time, the COVID‐19 pandemic has changed the manner in which business is conducted. Landmark’s remarkable asset quality improvement enabled us to act decisively and immediately to meet the needs of our employees, customers and communities. We continue to take significant and proactive steps to prepare for the economic fallout that is likely yet to come as a result of this worldwide pandemic. The favorable financial trends for the Bancorp continued to improve in the first quarter of 2020, despite this economic turmoil. An analysis of Landmark’s core bank net income clearly reveals the significant improvement compared to last year at this time after adjusting for nonrecurring items such as the $200 thousand gain on the sale of credit cards last year and the $100 thousand contribution to reserve for loan losses related to the pandemic. Although the duration and magnitude of this pandemic is still highly uncertain, management believes the financial position of the bank is better than ever, with high levels of capital, liquidity and asset quality metrics, which will allow us to endure this uncertain economic time. The board strengthened the bank further by authorizing a $1.0 million dividend from the Bancorp to the bank and suspending the quarterly dividend payments enabling the Bank to continue to meet the immediate needs of our Landmark community. We are here to support our customers, staff, shareholders, and everyone in our communities through this pandemic and beyond.

The provision for credit losses was $136 thousand in the first quarter of 2020, compared with an expense of $109 thousand in the year earlier and a reduction of expense of $81 thousand in the fourth quarter of 2019. The first quarter provision of $136 thousand includes $100 thousand which is directly related to the COVID‐19 epidemic and the uncertainty as to when and how long it will take for the economy to recover from this nationwide shutdown and the potential effect it may have on our borrowers. Management applied forbearance measures across the bank’s loan portfolios and continues to work with consumers and businesses that have been negatively impacted by this pandemic. While we don’t currently see forbearance measures as an indication that our portfolio will experience a sharp rise in credit losses, there is still a great deal of uncertainty on the timing and the true impact that this pandemic has caused to our overall economy and our existing portfolio.

Net charge offs in the loan portfolio during the recent quarter continue to subside. Expressed as a percentage of average loans outstanding, net charge offs were 0.01% of the average loans for 2020 and 0.03% of the average loans for 2019.

Loans classified as nonaccrual totaled $587 thousand or 0.23% of total loans outstanding at March 31, 2020, compared with $2 million or 0.81% a year earlier and $784 thousand or 0.32% of total loans outstanding at December 31, 2019. Other real estate and foreclosed assets owned was reduced to $886 thousand in the most recent quarter compared to $1.5 million a year earlier and $1.1 million in the previous quarter. Remedying these troubled assets has been a top priority for management and as a result of this focus; non‐performing assets have declined over 60% from the same period one year ago. This resolution of non‐performing assets has been recognized as a matter of paramount importance for restoring significant and sustainable growth.

Management regularly performs detailed analyses of individual borrowers and portfolios for purposes of assessing the adequacy of the allowance for credit losses. The allowance expressed, as a percentage of outstanding loans, was 1.25% at March 31, 2020 compared with 1.32% a year earlier and 1.22% in the prior quarter. Management believes the current level of ALLLR is commensurate with the overall risks associated with the loan portfolio; however, management will continue monitoring the impact of the pandemic and increase the reserve as needed.

Non‐interest income was $544 thousand in the first quarter of 2020, or a 10.1% increase or $50 thousand when compared to $494 thousand in the year‐earlier quarter. Investment securities were sold throughout the quarter and net gains on the sale totaling $87 thousand were recognized in 2020 or an increase of $71 thousand from the previous year. Mortgage banking revenues increased $78 thousand or 219% from a year earlier; Service charges on deposit accounts have increased $17 thousand or 31% from last year; LCB Advisor income decreased $17 thousand; and, most importantly, there was an additional $130 thousand increase in other commercial income resulting from a new product line. In February 2019, the bank sold the remaining credit card loans, which resulted in a $200 thousand gain on the sale. Notably, total other noninterest income increased from $278 thousand to $457 thousand, a growth of $178 thousand or 64.1%.

Noninterest expense in the first quarter of 2020 totaled $2.5 million compared with $2.7 million in the same quarter of 2019. Salaries and employee benefits increased $19 thousand in the current year. Professional fees have declined $70 thousand from previous quarter end and are a result of lower legal fees related to improved asset credit quality. The reduction in FDIC insurance is related to credits received by all small, federally insured banks due to the FDIC fund reaching and exceeding its statutorily required minimum reserve ratio. The bank’s improved asset quality metrics also contributed to the reduction. Other operating expenses include $128 thousand of expenses associated with the sale of the remaining manufactured housing loans owned by the bank and still declined $108 thousand year over year. The sale of the credit card portfolio resulted in a $24.7 thousand expense reduction by eliminating the revenue sharing and rewards related expenses.

Landmark Bancorp Inc. had total assets of $325.1 million at March 31, 2020, compared with $330.9 million a year earlier. Investment securities finished the quarter at $57.6 million, an increase of almost $6 million from the same quarter in 2019. Net loans fell $781 thousand to $246.8 million at March 31, 2020 from $247.6 million a year earlier. In June 2019, the bank sold $10.3 million in high yielding but high‐risk purchased manufactured home loans. Total deposits were $270.9 million for the recent quarter‐end, a decline of 4.2% from the same quarter ending 2019. This decline is a result of a reduction in assets as well as a restructuring of the portfolio to reduce the amount of time deposits, which have been reduced by 11.9% from the prior year quarter end.

Total shareholders’ equity was $33.7 million at March 31, 2020, an increase of $1.3 million from $32.4 million at March 31, 2019, representing 10.37% and 9.79% of total assets, respectively. The net unrealized gain on the company’s investment portfolio increased from a $190 thousand loss in 2019 to a $567 thousand gain in 2020, which represents a $757 thousand increase in capital from the same period last year. These unrealized gains and losses are excluded from the bank’s regulatory capital ratios and the bank remains well capitalized at March 31, 2020.

Thank you once again for the opportunity to provide highlights of our most recent accomplishments and significant progress. Please continue to follow us on Facebook, Instagram, Twitter and YouTube for all the latest news at Landmark. We invite you to take a close look at what we have to offer and discover the difference at Landmark Community Bank.

Please refer to the bank’s website, www.lcbbbank.com, for additional metrics and information on 2019’s financial results.

Thank you for your continued support,

Tom
Thomas V Amico
President & CEO

Landmark Bancorp, Inc. Reports Completion of Private Placement Stock Offering

Pittston, PA (December 19, 2018) Landmark Bancorp, Inc., the parent company of Landmark Community Bank, announced that, as of December 17, 2018, it has completed the private placement offering of approximately $6 million of its common stock. Landmark commenced the common stock offering on October 1, 2018, at $15.44 per share. All shares of common stock offered in the private placement were sold out.

Thomas V. Amico, President and Chief Executive Officer of Landmark, stated, “We are very pleased with the overwhelming demand we experienced for our common stock offering and the validation of our community bank business model. The fact that all of the shares of common stock were sold is a testament to the community’s faith in our Board, management team, business plan and the long-term goals of the bank.”

The net proceeds, after deducting offering expense, will be used for general corporate purposes including, but not limited to, continuing to meet regulatory capital requirements, increasing the regulatory lending ability of the bank, and redeeming the 1,500 shares of issued and outstanding Series A Preferred Stock for $1.5 million upon receipt of regulatory approval.

“On behalf of Landmark, I want to thank everyone who purchased common stock in the private placement, which includes both longtime shareholders and new investors,” Mr. Amico continued. “The new capital will assist us to execute on our strategic rebranding and provide us with a solid foundation to grow.”

Computershare is the transfer agent and registrar for Landmark Community Bank and maintains shareholder records for the company.

Please contact Computershare at:

Computershare
C/O Shareholder Services
P.O. Box 505000
Louisville, KY 40233-5000

By Overnight Delivery
462 South 4th Street
Suite 1600
Louisville, KY 40202

PH: 800-368-5948
Website

Your account may be managed online via Investor Relations at info@rtco.com, a cost-free web tool for shareholders, where you will be able to view your account details, update your account information and process various transactions.

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.

Dear Loyal Landmark Customers,

In an effort to protect our customers and employees by participating in the recommended social distancing, effective Tuesday, March 17, 2020 all banking transactions will be handled through our drive-through facilities or by appointment. Our hours of operations remain the same for the convenience of our customers.

Customers are also strongly encouraged to take advantage of our self-service banking options, including Online Banking, Mobile Banking and Telephone Banking (1-866-255-4188). These 24/7 services allow you to view account information, transfer funds, pay bills, deposit checks (mobile), as well as, find the nearest ATM.

We will continue to refer to the Centers for Disease Control and Prevention, the World Health Organization, and other public health agencies to determine the safest course of action as the situation evolves.

Sincerely,

Thomas V. Amico, President/CEO