LARK - Earnings call transcript Q3 2019

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Operator

Good morning, and welcome to the Landmark Bancorp Q3 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Michael Scheopner. Please go ahead.

Michael Scheopner

Thank you, and good morning. our operations to and for joining and Landmark's year-to-date for of results the you call discuss today earnings XXXX. Thank third quarter

of is call third Officer the with to company. various Joining me of the quarter Herpich, Mark aspects performance Chief Financial discuss our

of falls defined get some under Exchange for statements I as the the listeners started, will Securities Commission. we we like to guidelines information Before our be by and remind would that the providing today forward-looking

I guidelines, during results those forward-looking of point discuss out hopes, expressed. made part As our or could are statements any must from those the this our actual that materially statements, and future that presentation differ predictions beliefs, expectations of

our contacting XX-Q obtained XX-K can be Additional company the which and from on information factors in is filings, by these the included SEC. or time time to

$X.X or The XX.XX%. We per net the quarter $X.X on and of $X.XX XXXX. equity basis earnings. of and strong diluted X.X% loan average share average year-to-date growth is return on total or to reported of return Landmark's for net to fully diluted share. X%, We've calculates third million on core earnings date Year-to-date, assets delivered year-to-date $X.XX per million a earnings

are metrics provide positioned, Mark and performance later healthy As a assets. capitalized, we on very and loan growth quality look strong our total we we in detail call. and will credit how I delivering in Landmark strong, Landmark's at And asset is portfolio. have financially loans are very well additional quality the financial in

formation, XXXX, shareholders consecutive represents XXXX. from Inc. XXXX. $X.XX dividend the Bancshares, of November of with Bancorp paid has report of declared MNB company's I be record merger resulting in quarterly since of This cash to Board as XX, Inc. to share to Directors the dividend October XXrd am pleased November per Landmark cash the of that our XX, a

shareholders to XX, support Board declared demonstration of value X, to and has in stock XXth shareholders. for of XXXX. be a December issued our the dividend, also to This the XXXX, declared dividend stock X% a that Board commitment represents growth a record long-term X% The December as year liquidity our of consecutive

year-to-date of This as in as accredited of our service, the our and third strong the continues a throughout who banking customer XXXX our earnings. continued everyone trend to deliver friend. starts success practice customer quarter fundamentals Our and that vision and associates high-quality is the organization leaves consistent with good performance a efforts

has across I'll We are team. our particularly Landmark delivered few growth and comment our in footprint, minutes pleased on a with loan the lending expanded

Your to management managing prudently, profile manner, a conservative and organization structuring dedicated monitoring remains rate underwriting disciplined as prepare that any will economic as well loans way organizational us the focused and for possible interest in risk a in the overall and investments unforeseen risk on events.

Herpich, and bank committed I presence the families strong meeting community Landmark will financial Mark state a you. our our diverse of across the a will indicators asset with As and and relationships CFO, call over to the Kansas, growing the with needs who quality review businesses. turn customer now to results financial of is

Mark Herpich

comprising everyone. few XXXX, comments the nine a Thanks, various make third those September quarter for our ended to months earnings like and mentioned morning Michael good results. would XX, Michael, now net to and on I elements and

growth actually third million was to of net improvements to comparison million, highlights. as attributable $XXX,XXX balance or $XX.X was average third quarter the This with to interest average increase Net $XXX.X in to income a to interest increase the comparison million $XX.X $X.X X.X% our The period. an or in income XX% prior million. quarter. statement loan interest-earning $XX.X investment was income assets year X.X% quarter, attributable in entirely Starting million prior or third declined the growth year's by of in

the The XXXX, balances the X.XX% in Net benefited basis to rates improved liabilities interest quarter as third significantly and period tax-equivalent is of short-term XXXX. increased. our net of loan a as increase interest margin in interest the average compared on on from interest-earning both margin in yield the to same on assets X.XX%

third Looking XXXX loan allowance XXXX. the quarter quarter provision allowance in as for in analysis of for compared third resulted $XXX,XXX at our to loan the of to the our losses, in $XXX,XXX losses providing the of

constant Whilst banking significantly on income core fees and fee increase and increased loans charges. million of a XXXX. $X.X with service gains for XXXX remained sources a the $XXX,XXX of third $XXX,XXX and increase income remained noninterest at our in Noninterest total flat, quarters income sales in

third the offset XXXX recoveries to quarter in able of were income versus other increases that received with the comparison of XXXX the third drove the in loss on XXXX. third quarter quarter which occurred $XXX,XXX a of the These of noninterest deposit-related the reduction XXXX, $XXX,XXX for during

driven charges to of residential originated were one-to-four higher on by income fees gains deposit due on loans and service increased loans family and fee sale of estate in The sales improvement higher real for volume accounts.

compensation added increased million part driven and our in this also third commercial benefits Our was comparison loan the the past This compensation $XXX,XXX of employees quarter third related over to an we area quarter in $XXX,XXX as of to to in general costs. primarily increase $X.X by year noninterest and increased XXXX. to in growth by expenses

of of to income despite tax-exempted pretax tax a expense the quarter amount lower XXXX during earnings XXXX. quarter third of of XXXX, to lower compared as the quarter third third due during Income increased the

the increased in rate XXXX. of in third XX.X% quarter XXXX tax of XX.X% effective the Our third to from quarter

and financial first discuss core on were our The to $X.X average performance loss, is XXXX, $XXX,XXX evidenced million in $X.X the a solid recoveries assets The deposit XXXX earnings in loss deposit-related large return plus, X.XX% return highlights in the supported than a recoveries to increase period in our improved. XXXX, bank by months XX% related some net of our a absent first of part XXXX million $X.X loans. equity, by on achieving on nine average for XXXX. net nine of Moving in the earnings months lower million XXXX included the

interest In of of achieved interest interest-earning the months nine increase from comments XXXX months corresponding earlier XXXX $XXX.X nine average months of earlier on in a result of basis $XXX.X we on year XXXX. or margin nine-month the to million during as X.X% XXXX, with a a million quarter, increase the basis, improving from net in net from increasing Consistent period benefited X.X% on a income X.XX% net nine period loan in first a the assets the significantly first average tax-equivalent third to during $X.X our my in a million from $XX.X resulting margin X.XX% in XXXX. balances comparable of interest million

XXXX, During first months $XXX,XXX nine $X.X XXXX of loss nine the XXXX, nine prior of from in the recoveries months $XXX,XXX totaled we primarily due in increased million XXXX. to large the a of first income to provided XXXX, for year decline $X on $XX.X noninterest the first months period. decrease the from X.X% compared other Noninterest the a or of income loan the of results deposit-related during from to part million This as million allowance in for the balances. a

of deposit-related in as gain during months the period compared of investment quarterly Also the XXXX. XXXX during of $XXX,XXX $XXX,XXX $XX,XXX a first partially fees during contributing the of XXXX, loss reduction income of on the achieved to a was in significant loss to offset to Consistent with and in noninterest gains nine securities charges increases comparable sales and we sales comments, XXXX my of on $XXX,XXX of loans service recoveries.

expense. increase year loan period in compensation due million consistent X.X% million primarily comments, compensation to relates my area Looking commercial of of XXXX. costs. and to And reported or general with as employees noninterest also third at added first increase quarter our the same to an months We of increase nine growth for the this related $X.X comparison in we past this to increased over XXXX $X.X a the benefits in

of the earnings period of tax of to XXXX, XXXX, from pretax exercise in XXXX of during the XXXX. rate of nine $XXX,XXX our months the While the comparable lower for first of increased first were result XX.X% nine months XX.X% XXXX nine in recognition months first the the a as options the nine excess benefits primarily tax first months stock of of from of effective than the

To at billion touch Total a few on September XX, assets $XXX.X million $X.X highlights. to sheet million balance XX, increased XXXX. to compared at December XXXX, $XX.X

from $XXX.X to Our at loan XXXX million XXXX. $XX.X million million at XX, year-end $XXX.X increased September portfolio

million compared at million from XX, decreased September XXXX. at September $XX.X $XXX.X million million million at securities XXXX, increased Investment XXXX. December to $XXX.X year-end at $XX.X to XX, to $XXX.X million $XXX.X Deposits XX, XXXX,

million $XX.XX at a fair $XX.XX September million share, value increase $XXX.X securities. as XXXX, December at per a or net XX, of primarily per from share, Stockholders' up value of XXXX, equity to in of value available-for-sale book the an increased earnings result and $XX.X a XX, investment of or book

The XX.X%. consolidated was as XXXX, capital continue at risk-based capital to ratios XX, XX.X% of exceed regulatory September considered while leverage levels XXXX, Our bank total bank's and capital September the was well-capitalized. ratio XX,

regarding like additional some would loan provide details I our to portfolio. now

$X.X of This loans loans Nonperforming I of million. loans million XX X.XX%. gross an represents days increase XXXX, greater which mentioned XX, of as level As XXXX. of September X.XX% earlier, year-end than primarily as the XX, of totaled consist due, outstanding net $XXX.X XXXX September loans, totaled or from past

on to collection risk efforts continue credit totals. focus these Our reducing and

accruing of of XXXX. level we The has of of interest indicator due X.XX% as X.XX% efforts credit our XX, the gross This XX, is of past Another past-due loans or XXXX. loans $X.X as and of monitor as still XX from risk loans loans between management increased XX to days. totaled of ratio XX days level XX part December slightly gross million September

We all trends to categories. delinquency in carefully continue monitor

real in balance September other as $XXX,XXX totaled XX. of Our estate owned

XXXX, for balances primarily houses, are which other charge-offs being in residential for from $XXX,XXX of real marketed the estate slightly same composed period sale. during of The owned XXXX. recorded We $XXX,XXX net loan up are

to I loan over risk portfolio will now credit outlook. and to segments turn back the Michael our call the review

Michael Scheopner

your comments, for Mark. you Thank

total an X.X% $XX As to of XXXX Mark net end the from outstanding third quarter Compared delivered in totaled noted, million. quarter XXXX or X.X% up outstanding. the loans loans year-end million of $XXX we of third of of our increase net XXXX, million, the $XXX as

growth bankers loan past XXXX boosted SBA business Kansas with over in a addition team in specialty located The small of County, mid-year lending a of by has Johnson year the the our been market. commercial

also another the May. in City that XXXX of Kansas of team who in opened at production in loan Village, located in are early XXXX Kansas end office added a commercial Prairie bankers We and in

we permission, quarter third a the LPO regulatory of the to receiving XXXX. during After converted branch bank

risk credit in geography our As we growth, continue pursue loan of and diversified types loan additional maintaining the loan the state. in the both focus portfolio, will we mix in across

or commercial balances September XXXX, As totaled our and land representing below real remain million total loan in Outstanding that construction both loan XX% of portfolio. concentration real balances our totaled portfolio X.X% require portfolio loan balances portfolio. loan our in of regulatory land our management estate the percentage thresholds portfolios of practices. XX, would estate heightened construction Loan million, and the risk $XXX commercial $XX.X significantly

portfolio, Commercial of million the current our million September were portfolio quarter portfolio. agricultural as of loan end total $XXX or loan to of the XX.X% and or the XXXX. With were total loans third industrial regard XX.X% XXXX, $XXX.X XX, of as our of balances

portfolio loan family of one-to-four the million at Our portfolio XX. represented September $XXX.X XX.X% of mortgage as

second as is banking approximately XX% While declining a refinances. third interest in versus increase production result rates, we focused transactions the activity and experienced on of mortgage for during refinancing our an money XXXX purchase quarters

mortgage loan remains commercial of point. banking and pipeline this at Our strong activity

portfolio than on Our low price recruiting compromises. team or our buy credit that focuses credit standards transactions meet trying to client structure relationships through rather

organization remains a us and team prepare the risk dedicated a way possible and well any conservative economic management as rate unforeseen Your structuring will as profile the risk disciplined and manner, loans managing to in that in focused monitoring events. underwriting interest investments prudently, for on organizational overall

across presence the meeting financial and Landmark strong to businesses. customer a state relationships remains of with Kansas, growing our bank of families the community a As committed and needs diverse

of pleased as We well with community Before go are to business. risk management results continue continue a we operating for our trend company's trend questions, of long-term growth. of want that continue. strong across we to quarter earnings for the I These by earnings results all third I us to strength summarize lines the anticipate year-to-date Landmark's XXXX. and of capital and possible saying our banking that solid acquisitive and position practices believe as to organic

the open I'll call might that, have. up to With questions anyone that

Operator

comes of Instructions] question [Operator Rodis first Our from John Janney.

John Rodis

guys. morning, Good

Michael Scheopner

John. Good morning,

John Rodis

day. big for [indiscernible] was other the win It a

Michael Scheopner

was. it Yes,

John Rodis

So, football sort probably just is and in quick more so economy update. just your on is the markets, but but forth banking turning exciting, a that's just ag – the – of to thoughts your

Michael Scheopner

pretty getting that'll the across give those up We're engaged business still We're That's state. state. bigger and – fall through John. agri harvest, really clients I stressed, the wrapping a think us that's are the our picture. with across And actively

finish cycle, production this have pretty we'll as positioned. update and they to fall where a good they're As understanding

From clients as continued the and possible an but the are balance on our tariffs, our pressures of standpoint, the next withstand commodity to clients impact still we given XXXX, really, the of adequately as –I production into overall to depressed even are the say business season. that, move the doing, we as their well to collateral of would forward such as look prices agri positioned economic continue we from standpoint adequate having sheets and most

John Rodis

Okay.

a you of Okay. can regarding If sort if two you know up Mark, margin the slightly? the December, in rates today toward, keep the cuts then you still And not margin. maybe for stable, relatively think or question and potentially you do Fed just

Mark Herpich

do feeling, still have John. I that

a deposit some on costs some next balance and in slightly can of the of borrowing an we interest between – little see loan drop transitioning migrate our I asset few investments from bit immediate rate quarters. think loans, with I think steady the side, to as over coupled see mix we're our continuing up and to that growth the or some sheet of

John Rodis

another just just Mark, And expenses. then question, on

could forth, You Is pretty by going your rate you the do a run But about expenses million. makes about in talked a so if which think mortgage expenses down were little too? for sort this the of higher sense. – back Or quarter, you pull prepared that $X.X remarks forward? hires operating driven bit slows new good and

Mark Herpich

that think come it back. I may

– was filing with go fees and down. and there that the think stuff mortgage, expenses go come with other along expenses I I loan mortgage along their the – are fees area, some expenses loan with may in the there and mean their that

an commercial to year where now as the quarter-over-quarter, in didn't impact. I a year prior not of think that in, comparison we much they're ago, have teams so loan a that's all as

for and quarter, a was a we joined during was think the us well. kind bit a couple the But I'm of quarter, to in of a the as that make uptick There should John. guys see I maybe decrease what second little sure counting that so little happens hoping reason fourth on of because that's

So...

John Rodis

then, of final one at rate least quarter. or going And just sort you question, Mark, fourth the forward the maybe see Okay. tax for

Mark Herpich

Yes.

decreased. as this think some of as little at rate's – municipal our of I tax indicative a percentage where income more has a we're we've

that have us quarter statutes quarter, that some So, the bit. say have usually expire we don't look as back an accrual as tax Fourth little for – lower we historically. the rate I'd little And probably reversal see up in happen a think guess. is those lower where little in be. normal of fourth see more tax I operations, again. it But going higher don't quarter. indicative I we'd would think rate that much from a than will this, I has the after tax REIT fourth some you a historically, been a rate strategies I goes we'll this

John Rodis

super. Okay, you. Thank

Michael Scheopner

Thanks, John.

Operator

I any would like Michael remarks. now over conference concludes to our This session. question-and-answer the Scheopner turn closing to back for

Michael Scheopner

results our earnings appreciate you. sharing Thank forward and at call. thank quarter in support Thank I for to conference news earnings our confidence and and I want fourth company, truly in everyone call. your next today's XXXX to related to you, look participating the continued I

Landmark Bancorp (LARK) 3 Nov 192019 Q3 Earnings call transcript