LARK - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the Landmark Bancorp Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note that 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 ending joining and Landmark's fiscal for XXXX. of results the you call discuss today earnings year Thank fourth quarter

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

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

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

Starts Customer Leaves was part performance. part that uncertainty Each team. associate to and something out by XXXX the company our that to contacting associates communities of presented the carrying XX-Q Friend proud Landmark on associates obtained challenges at this XX-K to by can resulting critical executing they be Additional to Their member our pandemic and unprecedented. a were their to company first all these Bank. an our economic the XXXX which extraordinary of nation's work our and and the our seriously. response Everyone from on information of challenges our the this Their at as clients that clients I our in our factors of focus be in strategies, is National COVID-XX filings, by and a these dealt the to as role thank very am take included our of is integral truly ability record pandemic service want infrastructure daily The SEC. I took or opportunity a I feel sector time delivering were as with faced vision and time with from honored to Landmark as

of year We achieved fourth to diluted on record quarter million XXXX. year-end The for earnings of were net while results We are fourth the for XXXX. ending Landmark million report $X.XX earnings earnings the that reported the fully pleased share. and $X.X record full share quarter a and $X.XX fully totaled record for the $XX.X basis, per fourth diluted net earnings year quarter per of

calculates Our to on assets X.XX% equity return XXXX average on return was and average XX.XX%.

the an earnings environment benefited market as increased continued gains activity. rate of refinance XXXX Our mortgage active on drove from interest sales loans, housing low and

Kansas increase community net coupon increased the of strategic which X.XX%, a strong investment interest resulted XX.X% banking growth of our XX.X% interest by higher as resulting in margin to loans during investments. in net our our securities in in across a deposits our relationships generated compared state and income XXXX, earnings, Also addition, on during liquidations by XXXX, XXXX. million $X.X In gain our grew to XX.X% of as mortgage-backed sale grew

losses As growth work a Paycheck access and due during million Business provision with well XXXX. this to mentioned, Small of uncertainty. associates previously funding COVID-related the our our their economic during These loan a Program. to loan as efforts continued of of previously we recorded efforts COVID-XX, loan for and Administration's included modifications period through economic clients as result the $X.X mentioned I uncertainty the Protection

significantly returning of borrowers to modifications have declined our to pleased terms. most COVID-XX that with their loan contractual are We report loan

which Hard-Hit and as process, Small XXXX. late We the into as Act, the Businesses, SBA Venues actively are well Economic loan was working that forgiveness additional December to Aid law currently borrowers Nonprofits PPP funds for by apply with were to signed navigate in also authorized to

as quality represents the the to be capital the you. to the paid dividend needs I XXXX. resulting has who will per Landmark of to meet and report As challenging This a across March risk that will XXth of us well financial February of in pleased these our management of am declared and and Landmark's families the to strength Inc. Bancorp to with since times. the believe XX, over Mark now shareholders consecutive of the XXXX. $X.XX review results CFO, cash begin dividend XXXX, Inc. X, indicators liquidity financial Bancshares share of record MNB Board XXXX practices, with Directors merger from formation quarterly to Herpich, asset we I Kansas position company's we turn businesses October continue during call cash

Mark Herpich

Michael Thanks to XX, Michael, and earnings fourth year quarter the morning for and December net XXXX. everyone. good mentioned record our ended

quarter. significantly $X.XXX at $XXX.X increase entirely million. XX.X% few which in make a income This year results. built fourth net The totaled of loan million, Now to our income investment comprising average by as or attributable year's million, our quarter $X.X was upon to the actually loans, highlights with statement. like assets average or PPP interest-earning period. I The December prior loan fourth XX.X% declined in $XXX.X fourth to Net million, million balance Starting income interest on those prior in comparison the was to interest comparison $XX.X or to quarter by $XX.X comments growth various the growth XX. billion in growth elements improvement a million, would or increase SBA $XXX.X was impacted an XX% of of

XXXX. to interest X.XX% to in in be to of current loan increase on a X.XX% a of cost more quarter X.X% our investments as as our The the quarter as equivalent while In in tax interest to from quarter. of net the benefited fourth weighted overall Landmark's addition, compared net the heavily period average to basis proportion, margin loans continues from XXXX X.XX% to improved XXXX, the in liabilities allocation the and significantly interest-bearing declined asset balance, less fourth margin same of in

XXXX. of to XXXX XX.X% of as increased XX.X% ratio December to December compared as Our XX, loans-to-deposit XX, as

losses. at loan provision Looking for our

for providing fourth On XXXX. loan resulted quarter our the $XXX,XXX a XXXX allowance as for of year-to-date XXXX. the our losses fourth basis, loan The in in comparison losses economic of loans growth loan and the earlier, of Our in estimate $XXX,XXX COVID-XX. as effects on quarter to best in XXXX in provision for million $X.X $X.X environment to was Michael to loan mentioned provision compared losses of reflects the analysis million considering the

volumes in to same in of of increased and in during activity area to the period income quarter effective was primary over in non-interest to current one-to-four $X.X to increase rate from loans by family our quarter or compared compensation driven same mortgage allowance the our of current in fourth as quarter related expenses compared economic XXXX. compensation up accordingly. and experience and sale our XXXX. due the fourth increased develops, will pre-tax $X.X in the in quarter up the loan in purchase million growth This a quarter million adjust markets $X.X to As fourth estate was in tax the The credit X.X% in pandemic $XXX,XXX tax past at loans income we has an XXXX. of was lesser year to while low of of over related interest loan general million increased periods. the losses The increase for XX.X% by for by the we real The driver continue our mostly related increase rate added our this to originated tax and quarter on relating to the and our a the the sales XX.X% for of exempt the XXXX, volumes XXXX. employees to driven extent declined Non-interest earnings, provisioning comparable in the and rate outlook Non-interest $X.X million, evolves to year compared benefits, increased the refinancing gains the last is of primarily the commercial increase in by $X.X environment quarter, an million quarter increase loss of to fourth effective income increased costs.

$XXX,XXX rate $XXX,XXX benefits both recognition expense the XXXX in tax unrecognized fourth tax included previously the of respectively in the In tax addition, periods. XXXX of quarter of income reducing effective and and

discuss some XXXX. of full year for to highlights on Moving the financial

increase X.XX% related securities, $X.X evaluation loans Consistent $XXX.X which and increase benefited as $XX.X of record XXXX in with gains primarily million. XXXX. were Our interest interest fourth this Noninterest as on on on in a million gains exceeded sold sales loan $X.X sales risks income totaled year. net during XXXX, $X.X investment results of Landmark approximately interest a $XX.X portion of as on higher XXXX based XXXX to to and $XX during were XX.X% results million an average result to increase sales by of comments portfolio. result gains prior XXXX, of to XXXX. by $XX.X in drop from quarter, securities This on speeds earlier prepayment loans million interest for assets represented prices earnings million These These net earlier in of of our increasing we tax $X.X PPP and to billion XXXX. investment year $X with from of interest million the million $XX.X in the or increase to million was coupon on our from during an net grew million a in of net associated sales compared securities $XXX.X on during a mortgage our million improvement investment accelerating margin significant compared the in of improving a XX.X% in equivalent average interest-earning driven income X.XX% resulting a gains investment million an market of significantly $X.X $XX.X XXXX. the loans million XXXX of in balances, income XXXX, as XX.X% net margin securities million, $X.X from as XXXX, year from up during mortgage-backed rates from basis, to the my of In our our for million

this comparable from -- $XXX.X mostly compensation compared well $XXX.X XX, touch to over XXXX billion as XX, on the general increased our added million increase the million XX.X% XXXX. we to Consistent increase lesser and for compensation in increase loan as our noninterest comments, with comparison quarter employees in this over benefits at increased my related XX.X% in December to sheet volumes reported increased XX% XXXX. expense, costs. The we tax commercial few December total declined a in tax-exempt year $X.X an effective increased $X.X balance at relates to extent mortgage in To Looking assets income $X.X area highlights, XXXX million growth million primarily to period. as to of due or XXXX, rate past to loan a fourth our to a at XXXX and

XXXX loan was at $XXX.X Our loans our assets while increased in our at to $XXX.X year-end from $XXX.X December December Deposits million as at million XXXX, $XXX.X increased driver securities million million of at $XXX.X portfolio XX, decreased total December to XXXX XXXX million $XXX.X XX, from the to increase XX investment to compared million XXXX. year-end $XX.X million XX, $X.X at billion $XXX.X XXXX. at million December

result at Additionally, book up XXXX our XX a December per of The $XX.X $XX.X value share. available-for-sale other Bank an book XXXX of decreased December XX, increase $XXX.X at increase earnings at million the value December in to and Loan borrowings per and December $XX.XX million or or share, Home fair million value from increased XX, net at XXXX. book a to million was securities. of compared value Stockholders' Federal XXXX $XXX.X equity a to of XX, $XX primarily in million $XX.XX

like some ratios to while well-capitalized. bank considered levels our capital risk-based and total exceed XX.X%. asset capital on additional was consolidated details quality regulatory portfolio. leverage loan at the Our ratio The provide ratio would as continue XX, now I XXXX of XX.X% was XX, XXXX capital December bank's in the December to

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

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

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

carefully trends delinquency all We categories. continue to in monitor loan

charge-offs Our estate marketed the December balances balance are of of from sale net risk to loan will totaled in other now real We $X.X owned million real loan recorded estate up for $XXX,XXX segments currently. during And call being over outlook. I back as credit XXXX. to owned Michael other the XXXX, turn $XXX,XXX which was during and our the portfolio review XX.

Michael Scheopner

Thank you Mark. for your comments,

as As $XXX.X outstanding year-end up totaled a loans Mark year-end. noted, XXXX of growth of XX.X% million. total loans $XXX.X loan net PPP during from million. PPP or was our of volume $XX.X loan million of made of total increase net XX% the net Loan end This was $XXX.X the as the excluding XXXX. million XXXX

million, increased our balances million loan X.X% our year construction of land and or real by total includes portfolio. as loans. estate XXXX XX.X% $XXX the current outstanding and year-end in or of loan portfolio portfolio. $XXX.X loan XX.X% representing our increased XXXX, PPP $XXX loan million industrial loans As portfolio. That of balances of total to of were Commercial end portfolio to our commercial XX.X% in XX.X% $XX by million The the

loans, $XX.X portfolio million regard of our to our agricultural industrial loan year. and XX.X% of the by loan PPP XXXX. to XX.X% by those balances end total or during loans decreased the commercial X.X% the With increased portfolio, total as of Excluding

at of family XX, X-X X.X%. the an $XXX represented of portfolio increase loan as December mortgage of Our which XX.X% portfolio million was

rates. in As was extremely driven activity our my by low during historically I comments, loan noted strong XXXX banking mortgage opening

split equally money versus purchase transactions Production Our $XXX activity. XXXX million. nearly totaled nearly was XX% refinance XX% single-family volume loan production

volumes Our mortgage of production high through XXXX. and the extending first levels remain anticipate significant we part pipeline

recorded during uncertainty we well for net on the noted, economic previously experienced. loan growth XXXX loan provision surrounding impact of As a loan million continued $X.X portfolio losses COVID-XX we on based the as our the as

and deferrals worked loan needs. actively basis These we clients modifications. mentioned, or were our capital previously liquidity a I payment specific on to related solutions case-by-case As with to clients'

with commercial six had As the outstanding of short-term entered totaling year-end balances pandemic. on also loan one into XXXX. on CARES December and also regulatory Act the XXXX, year-end estate forbearance totaling with of loan that as the status of XX, family real in modified is XXXX. mortgage plans COVID-XX on loans Landmark $XXX,XXX million and company short-term three repayment $X.X loan non-accrual million was is modifications guidance of residential Consistent connection one-to-four $X.X plans and as There

thanks by go Before I operating effort. saying a a to of questions, express again It was want results to the very all I to resulting XXXX contained Landmark total for positive Bank. summarize we want appreciation in associates my National Landmark, year. record and team earnings to at

management With anyone XXXX we as up that these and well us we we capital position the practices open the As I'll company's times. have. to uncertain risk enter believe that navigate that questions continue strength to call might

Operator

Instructions] [Operator first from question-and-answer Please We begin ahead. Janney. go comes the will with Rodis session. John now The question

John Rodis

guys. morning Good

Michael Scheopner

John. morning good Hey

John Rodis

Maybe well. to it program. relates the PPP first doing question guys are you just as Hope just

X it see first you're of sort customers Round round? guess X, you think from demand to going what do curious relative call you're to seeing or your the Phase Just I what

Michael Scheopner

were Yes, the John thanks. the We the right in that portal group actually after holiday. opened

that So, it it few volumes to open demand. and seen be had the weeks in at fairly we at nearly XXXX. We looked expect don't we we've a steady

funding. client second in we apply go the mostly for seeing to our mean funds. that are first enough clients are appetite existing from this standpoint in round are for for But XXXX we're I borrowers the an think interestingly the I to draw active PPP and it's base PPP addition We seeing seeing of overall, draw loans that of back

John Rodis

as you you as fourth remaining, then said fees had million think PPPs PPP How quarter. $X.X I much in And the currently? far are in remaining Okay. actually

Michael Scheopner

As far the from round? fee revenue XXXX as

John Rodis

pay-off are Yes. Yes. From -- as loans the forgiven.

Mark Herpich

-- -- that But a as haven't we its yet on number in the guess point our out. sheet. putting recognition that $X.X fourth still may we as income put deferred got $XXX $XXX balance well the we interest that to That's were at time. consider as for million was Maybe on the we I down million fee in John out million which from quarter,

to that fast ask would a year for -- that how bit one on gauge this we they left So, it's come quite got depending in still forgiveness.

John Rodis

question trends on just for PPP. Okay. Michael another excluding you loan core

roughly XXXX. to loans you grew in me, bit XX% that to in you So, a XXXX? you -- What little close think do do high something but... that, can again Or seems

Michael Scheopner

from in market in added Kansas John, the from were a bankers little still XXXX. aggressive, be we metro that enjoying We would the City just the some standpoint. development business commercial That growth

to contributed in at growth high-single model be years. that for this do expect last modeling We it levels from digits look but loan loan the so non-PPP budgeting that year, in would double-digit our see John. standpoint. And a growth We XXXX, to

John Rodis

one just me. And Okay. more question from

sort that economy, just typically ag the of Michael, Just an update you on usually give.

Michael Scheopner

look we And is the as winter business now. at interest -- most for across is the franchise. pretty Kansas, those wheat conditions Really really that the are favorable, entire think guess of Sure. I crop probably I across agri conditions right

are of -- with moisture We I a it seeing below average. little guess, the bit won't significant bit a little of but moisture in bit little state a concerns being test drought, across I call

always about we of concerned course, So are that.

the as favorable business we're ag as for last as way overall say been, the I entering our as think look have of over would I they our positioned, are couple our years. conditions at XXXX, I borrowers clients and portfolio are probably that,

John Rodis

Okay. Thank you, guys.

Michael Scheopner

Thanks, John.

Operator

our now this any I to Scheopner, session. turn would Michael over back conference closing no further concludes we question-and-answer have like the to As for remarks. questions,

Michael Scheopner

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

Operator

for presentation. conference attending The has you concluded. now Thank today's

now disconnect. You may

Landmark Bancorp (LARK) 3 Feb 212020 Q4 Earnings call transcript