Landmark Bancorp Posts Sharply Higher Net Income

Landmark Bancorp, fighting Southern California’s persistent recession and falling real estate values, posted annual net income of $273,000, or 15 cents a share.

Earnings for the parent company of Landmark Bank in La Habra were well ahead of the modest $38,000 profit, or 3 cents a share, posted for the previous year when unauthorized loans caused a fourth-quarter loss. Revenue rose slightly to $19.6 million from $19.4 million.

Landmark took a number of steps last year “to cushion the bank from further economic problems in the economy,” said Craig D. Collette, the company’s president.

Among those steps were a reworking of internal controls to guard against any future unauthorized loans, which caused the bank to set aside $2 million in late 1991. The employee who made the loans was fired.

The bank also hired Fred R. Weideman for the new position of chief operating officer to handle day-to-day operations, giving Collette more time to devote to planning, business development and other matters. Collette said the job had become too big for one person to handle.

At the end of last year, the bank added $1.5 million to its reserve for possible loans losses, causing the company to post a fourth-quarter loss of $199,000, or 11 cents a share. The company lost $1.4 million, or 91 cents a share, in 1991’s final quarter. Revenue for the three-month period slid 8% to $4.6 million from $5 million.

Landmark’s assets grew sharply from two acquisitions in late 1991, but with softened loan demand, it let its large, high-cost deposits go to other institutions. That resulted in Landmark’s assets dropping to $206.2 million at the end of December, from $240.6 million a year earlier.

The bank’s capital, its final cushion against losses, was 7.62% of its assets at the end of the year, well above the 6.5% level required by a cease-and-desist order issued by the Federal Deposit Insurance Corp. in mid-December.

Collette said all terms of the order, which focused on strengthening internal controls and adding to top management--already had been fulfilled. He said the bank hopes to get the order lifted after regulators complete their annual audit this spring.

An FDIC spokesman acknowledged that such orders--typically the strongest action that regulators can take short of seizing banks--have become much more common in California because of the recession and concerns about real estate-related assets at banks.

Most terms, such as requirements for 6.5% capital ratios, are boilerplate, he said, and most banks get the orders lifted and are never seized. He would not talk about any specific bank.

“The only thing regulators have indicated to us recently is that we’re doing fine,” Collette said.