LANDMARK BANCORP INC

PRESIDENT’S LETTER TO OUR STOCKHOLDERS, CUSTOMERS AND FRIENDS

Landmark Bancorp, Inc.’s (Landmark) financial results in 2023 were strong. Net income for the twelve months ending December 31, 2023, totaled over $12 million, or an increase of 24% from the prior year, while the book value of our stock grew 14%. The increase in net income was achieved through solid growth in net interest income, well controlled expenses, and excellent credit quality in our loan portfolio. Further, we realized significant benefits from the integration of both people and systems as a result of our acquisition of Freedom Bank in the fourth quarter of 2022.

While in the beginning of the year, the Federal Reserve continued to increase short-term interest rates putting continued stress on the banking system, since mid-year, these rates began to stabilize, and long-term rates declined in the fourth quarter. At year-end 2023, unemployment remained low, while inflation has come down. Existing home sales declined throughout the year resulting from low inventories and higher mortgage rates. While uncertainty remains, many economists believe the economy will not face a major recession but rather achieve a “soft landing” sometime next year.

With this backdrop, Landmark navigated these economic challenges very well and grew our organization in a number of key areas. In 2023, loans grew 12% through a combination of increases in residential mortgages and commercial type loans. We reduced the balance of our lower yielding investment securities portfolio to help fund loans and we also grew our deposits. In the second half of the year, we began to reduce our reliance on high cost borrowed funds that were originally entered into as part of our Freedom Bank acquisition. Net interest income grew $4.4 million this year while non-interest expense went up only slightly. Credit quality remained excellent all year long.