Earnings call transcript Q1 2023

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Operator

Good morning and thank you for standing by. I would like to welcome you all to Landmark Bancorp Q1 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to your first speaker today, Michael Scheopner, President and Chief Executive Officer of Landmark Bancorp. Please go ahead when you're ready, Michael.

Michael Scheopner

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

Joining Raymond Officer of aspects company; and discuss performance me Chief Mark the the Credit company's first Officer, is Financial our quarter various Chief Herpich, the call with McLanahan. of to

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

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

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

regarding I events FDIC liquidity a results into the from Before rate operating regional of operated for manage at and concerns issues of way of our due by reflective interest first the unique concentrations mainly get taken few have Landmark. that liquidity to quarter, the banking we uninsured moment Three been in things months and place the system I banks way resulting large issues large These year. these banks closed the risk during take deposits. to comment details were this the want the have to to are not on

insured. management, lending offering our through and stability each model being retail risk with our rate a We conservative a banking FDIC portfolio, deposits majority strategies liquidity concentration asset the of and and capital relationship-based and time interest our our consistency. liability month spend and significant strong and involve stable maintains Landmark monitoring based deposit

continue that historically will us in standards maintaining credit have remain the well. to disciplined We served

fully on Earnings XX.XX%. diluted first quarter of and return million on equity Landmark were the first the basis $X.X return share X.X%, $X.XX. reported net the during per average was quarter The a on XXXX. earnings of assets for average was

ratio Our first XXXX XX.X%. efficiency was for the quarter

results growth, loan continued Total while annualized fund million by or first lower $XX.X X.X% Our deposits expenses we good solid an on or million, credit increased public loans decreased expected, balances. basis, decline quarter seasonal and as gross X.X%, in to due $X.X deposit quality. a included

Credit strong the income quarter, costs. prior funding to prior charge-offs, declined this as net XX, The the Compared our rates losses loan and Compared quarter, of increased, as income impacted non-interest million interest quarter net totaled for loans very allowance XXXX. X.X% as quality to remained were expenses declined. loan while $XX.X March rising operating our low. delinquencies non-accrual

capital well I and practices, our businesses risk and us of we meet As my Landmark's liquidity believe continued the the position in management markets. needs financial to to mentioned comments, at beginning strength of families

the XXth I of Board Directors am cash May XXXX. of company's formation This pleased to the in consecutive record paid a per since dividend quarterly to as May declared represents XXXX, XX, be to $X.XX report of our cash of shareholders share XX, has XXXX. dividend that

I results now financial with the you. to the will who Mark review will Herpich, our call CFO, turn over

Mark Herpich

XXXX talk highlighted our Thanks, in now further morning results. has to to Michael, everyone. and Michael and the I'd about good already like XXXX, financial quarter performance first

X. loans significantly million deposits of as effective acquisition Freedom quarter And by impacted of Comparisons XXXX. $XXX $XXX.X sheet million acquisition October of Freedom Bank prior Bank the year, results onto brought and to reminder, X, the are as of the our a first balance October

acquisition-related quarter of $X.X $X.X of totaled of first XXXX first million The prior million costs due the mainly year income the XXXX. did in in $X.X offset compared million by quarter. quarter quarter fourth higher the not XXXX the of net in increased in the XXXX to Net expenses. that the to million fourth growth Freedom income income, were repeat $X.X last in Bank in Net was same current mainly period of interest increase recorded X.X% that quarter $X.X to quarter over of million due the and over

the quarter interest first to $XXX,XXX points loan than In to of the of the which the more equivalent XX increased increased first on loans $XX.X interest interest basis a to income yield fourth million XXXX, interest. due increased $XXX,XXX on loan offset million, income increase by totaled $XX.X in of increased primarily this and quarter portfolio X.XX%. the loans quarter, costs, the compared also net income. tax decrease adding the interest Total during to quarter Average XXXX,

securities investment the quarter average XXXX. of increased the on quarter prior interest-bearing mainly to X.XX% despite and the investment to and securities as first increased securities interest-bearing expense X.XX% quarter, on balance totaled quarter in last of to XXXX of Interest deposits balances. the first to earned, our million higher on a increased in this yield compared average million deposits rates X.XX% deposits average interest-bearing in higher $X while rate result The $XX,XXX increased investment in $XX.X million. of income quarter Interest on quarter of compared $X.X to decline due in this a $X.X million. balances quarter X.XX% the current rates The X.XX%

funds the X.XX% balances this the interest to compared net while borrowed a X.XX% quarter rates, to quarter. fourth in due of $X.X to quarter decreased the increased tax-equivalent as XXXX. quarter by short-term on XXXX decreased expense compared margin on in higher fourth as borrowed Landmark's Interest to first average million basis total $XXX,XXX of fund

allowance as increase credit of which we the to million for $X.X to standard, on commonly new accounting resulted referred January loans. the CECL, in X, losses implemented an On

loan on quarter. the credit of related provision Based investments commitments XXXX, the the Additionally, allowance provision that X.XX%. quarter. allowance we a economic unfunded our our was recorded in of analysis further and of no and $XX,XXX determined credit held-to-maturity strong results At for in during environment to first our we the our losses the XX, losses to credit for gross credit for quarter, was loans March the ratio losses to first first warranted

first to million Non-interest current by the income comparison the $XXX,XXX the loss year. the yielding in fourth lower declining the from quarter last investment $XX,XXX the or on of there of due the this quarter primarily totaled quarter sale The fourth to losses increase to in was increasing gains quarter, prior while last in or no securities year. compared $XXX,XXX XXXX, first of XXXX, securities in quarter the $X.X quarter quarter were while

due on sales of comparison with prior $XXX,XXX continued mortgage of housing gains in to a non-interest in decline and the interest loans, service to coupled activities. lower increase in slow decrease to income and The in charges. a refinancing rates, offset residential fees Higher inventories, purchases by is partially year mainly $XXX,XXX

adjustable-rate normally However, the we selling keep portfolio loan in and of continued market. into we to originations our instead growth loan mortgages, in new see of

to estate XXXX, a quarter the Bank costs due in last $X.X other of non-interest prior decrease one-time last during and compensation and owned. the expense the valuation increase compared acquisition. first higher $XXX,XXX mainly reoccur. year recorded the benefits, in on of allowance a occupancy, costs associated for The was was the of fourth with to not quarter Also real and did acquisition expense over quarter fourth Non-interest certain $X costs first equipment million operating quarter was driven other for non-interest than Freedom the million higher the $X.X quarter decrease over the of primarily The XXXX quarter, by year. million was $XX.X which expense of period totaled fourth the in million of or XXXX same

effective an rate an This recorded of of resulting as XX.X%. tax rate a of XX.X% quarter, tax the or year we expense of tax in to in tax first quarter $XXX,XXX compared $XXX,XXX effective of expense last

strong gross first quarter of an million during loans Loan annualized this growth continued as growth $XX.X X.X%. quarter, representing rate increased the

XXXX, during commercial our real decreased to the period-end principally see net On $XXX,XXX losses decline solid portfolio lending securities and in quarter Gross $X.X our quarter. continued first a estate in this portfolios. from of and basis, $X We bond million. a demand increased in consumer to portfolio unrealized mortgage, investment but the declined balances rates market million average due maturities by residential

this March declines and during seasonal and $X.X year see of first market balances accounts $XX.X totaled and money million quarter, non-interest normally million million. we Certificates checking interest by XX, this by $X.X each to million the related primarily quarter. fund billion at declined public deposits Deposits XXXX, $XX.X demand while $XX.X grew quarter, in by decreased deposits and

liquidity XX% XX, loan-to-deposit remains to fund at us Our ratio growth. of plenty loan new totaled low giving which March

On the provide to access in stable of retail, municipal topic markets throughout operate and Kansas we deposits. to continue commercial liquidity, the

Bank, Bank the the manage continue addition, other and multiple Funds and Agreements. Fed to Home we sources Federal In Reserve Federal Loan of liquidity, including maintain

a through additional Sweep capacity coverage to insurance funding. of source additional wholesale Insured customers for have We also programs CDARS and and provide Cash

investment provides is a million in next available for year. Our over projected also the flow portfolio with XX.X% and source liquidity solid sale approximately of cash $XX

we additional for of XX, borrowing. which As of as collateral or over-pledged unpledged be $XXX.X million can March had investments, used XXXX,

in primarily securities the income, our increased of was in decline both $XXX.X the net March Also stockholders' a standard reduction mentioned losses CECL our value mentioned quarterly of equity. equity investment along after-tax in to million increase portfolio XX, accounting Stockholders' increased due share. $XX.XX on from in per to above. resulted equity adoption million which was equity a at unrealized stockholders' book our with and XXXX, share per included $X.X above, The

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

to outlook. our call me let credit over the of turn Raymond loan highlights portfolio and review to risk Now

Raymond McLanahan

to everyone. and you, Thank morning Mark, good

while Gross mainly mortgage of product. real growth loans X-X or our estate residential experienced this real $XX.X basis the result our commercial We $XX.X an million quarter. million, million, million our our estate March prior mortgage for was X-X of increase in Growth on family portfolio family XXXX, outstanding increased from estate XX, and quarter. increased annualized continued portfolio portfolios commercial real an $X.X residential of mortgage this The totaled portfolio adjustable-rate X.X% in the as loan quarter. $XXX.X demand

this Commercial funding loans of XX% portfolio, this Additionally, real overall we carefully. within estate our concentrations monitor had commercial loans comprised good real we and success at new quarter. portfolio estate

owner-occupied quarter. of increase an estate. real commercial estate the commercial our consists Our during primarily the We portfolio of estate in portfolio see did nonowner-occupied real real portion commercial first

very non-owner-occupied focused due with to in seasoned that was of area we remain Kansas all in metrics markets. mainly one growth financing to We on the However, owner-occupied opportunities transaction our strong credit borrowers City. risk of experienced prime a

gross which greater foreclosed due, XX, loans as continues and days of real loans actively non-accrual remain the of consist loans continued estate totaled portfolio Credit unchanged of quality pursue past or within $X.X to real accruing million the was foreclosed to XX estate. primarily March at Non-performing Total of sale all strong. we $XXX,XXX, X.XX% XXXX. loans, than and

as part past of indicator compared remains charge-offs was due only low we level loan the between loans of loans Another loan X.XX% our of $XX,XXX of due days. management gross net of and that of credit XXXX loans We and the $XX,XXX the accruing of quarter. days XXXX. monitor XX XX XX recoveries recorded interest to past first to during quarter of net during quarter efforts this level first The risk is still XX

losses and loans. the quarter credit for allowance Our of gross at million X.XX% ended $XX.X totaled

we can strong tell stable numbers pleased metrics. you focused as with on remain very maintaining our We're numbers, asset and from quality the quality and

adjusted Kansas according The of XX rate as Labor remains was Statistics. Kansas of unchanged current economic seasonally the The unemployment healthy. X.X%, March preliminary to Bureau landscape at in for

same impact President though even housing the will drop Home sales sales compared continue last Kansas of our Home in homes and in to have as March in the March same sellers, in last in to the Midwest financing the X.X% year. dropped, Kansas to recently to XX.X% compared despite to increased for inventory commented year, without rates favor the demand activities, sale, by more compared economy. of available REALTORS fell increased. Kansas that Turning demand. year. levels Low last period time Association has increased prices while to inventory X.X% in market continued prices

$X also construction. Hilmar plant announced City to vertical stage continue plant recently construction. in is the our vertical area Panasonic Kansas see across The begun in battery Dodge the We economic development Cheese state. City market The of at our Metro has billion

footprint new will X,XXX market. a investments Southeast Burlington, Additionally, Kelly facility chip branch the Kansas our construction Kansas capital computer Kansas. Laura these Governor, recently surrounding manufacturing This of benefit Kansas. Coffey of We believe announced investment new expected in County, economic is $X.X to from billion jobs and Kansas across in create all

to turn and Michael. With back that, over I'll the you call thank I

Michael Scheopner

comments. to Raymond your Mark. thank I earlier you Thanks, also for and want

all we with are our everyone for key out Bank. service Landmark to our want of and focus communities a we want loan I to National credit our the quarter performance company Before first by our starts my I as associates with saying go and to express to daily vision our executing is appreciation and as the net leaves growth, strong Their improved carrying at extraordinary friend quality success. our delivering and questions, that to pleased strategies, summarize solid on customer interest the of a to XXXX thanks our and margin. clients

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

Operator

Instructions]. [Operator

it Michael back We no registered, for have remarks. so had hand like to any Scheopner to questions I'd

Michael Scheopner

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

Operator

Thank for I that, that call. today's can you concludes joining. confirm

disconnect your have and now day. of rest may your a lines lovely You

Landmark Bancorp (LARK) 3 May 232023 Q1 Earnings call transcript