LARK - Earnings call 3 2023 | Landmark Bancorp, Inc.

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Operator

Good morning, everyone, and welcome to today's conference call titled Landmark Bancorp Third Quarter Earnings Call. My name is Ellen, and I'll be the call operator today. [Operator Instructions] I'd now like to turn the call over to Michael Scheopner, CEO, to begin. Michael, please go ahead, whenever you're ready.

Michael Scheopner

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

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

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

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

factors our share Earnings included time million of can for the is to during or third the which filings, earnings third these XX-K XXXX. fully XX-Q obtained SEC. Landmark quarter time in was per by be contacting $X.XX. $X.X on quarter basis the the a company from information diluted Additional net and reported on of

XX, million. For was return XXXX, X income in X.XX%. September to average X.XX%, the return ended months was Year-to-date, on average equity XX.X% grew net and the the $X.X assets on

Our average the average was return return on equity X.XX%, and assets on was XX.XX%.

increase results to deposit annualized an deposits an increased $XX.X million XXXX, gross on by loans total quarter. noninterest loans, quarter growth in coupled $XX.X to of accounts. quarter certificate or the in demand with this reflected XX.X% in in third solid growth quarter Deposits compared increased Our second strong due of credit and third the results basis million also by

at of robust, totaled quarter, loan-to-deposit strong remains interest strong recoveries this being for significant totaled liquidity stable based this customers. to asset a net FDIC liquidity down of loan X.XX%, we most our losses risk continues and rate loan our deposits The and million from $XXX,XXX quarter Further, banking growth. Credit XX, ratio X.XX% our portfolio, interest which very while XXXX. with last month reflecting September that's Landmark practices. we totaling credit relationship-based as net remained $XX future offers spend for model, concentration management stability and This our recorded quarter. ample quality margin and our maintain XX.X%, allowance a our retail through monitoring We and liability to capital employ time each all conservative consistency deposit insured. quarter, of

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

CFO, demonstration turn financial our now to the will call growth commitment our for the in Herpich, shareholders. I Mark be liquidity of us and with consecutive the you. continue that well businesses to share of represents XX, of year December financial X% cash of position Board XXrd report markets. I dividend in be December X, X% XXth that am declared represents quarterly This meet to the stock This Our November has shareholders cash dividend, also XXXX. Board strength record The risk XX, on XX, capital consecutive a record dividend to declared of value results and to of liquidity XXXX. paid a pleased long-term practices, $X.XX Board of a issued our our has formation to XXXX, over November will needs as support shareholders the since company's to management dividend XXXX, who families XXXX. declared Directors and per a stock review our continued the in to the to

Mark Herpich

to Michael, good Thanks, and everyone. morning

October quarter. Bank further already Comparisons performance and quarter While X, like year our Freedom results was by year-to-date financial in in prior I'd performance overall of the provide impacted our are effective details this the Michael the to has third highlighted quarter XXXX. XXXX, third on acquisition, to which

the reminder, onto of of our of X. Freedom acquisition sheet balance $XXX.X of and as brought October million Bank a million As $XXX deposits loans

increase quarter increased income compared on X.XX% income. Michael despite In investment expense million, totaled quarter of $X.X yield of by in XX.X%, interest XXXX as quarter, tax $XXX,XXX the a the quarter quarter lower $X.X third mainly this the X.XX% XXXX, the balances total of $XXX,XXX noninterest $X.X to balance rates, income equivalent interest due X.XX% of million. Interest $XX.X on the X.XX% the due in X.XX% which third but $X.X borrowed the on in interest the third quarter to the X.XX% in of same of fund $XXX,XXX Interest interest quarter, in interest totaled primarily residential XXXX. interest-bearing As income period the in income million in this net expense. Net deposits increased to on investment decline securities gains income average expense. tax due net to by million. loans basis a year, and and loans XX the income. Total basis XXXX securities in and Compared quarter. the interest on to our increased expense and to current yield an quarter, loans XXXX yields to third noninterest X.XX%. loan mentioned, during to on income, the last loan compared $XX.X this $XXX,XXX, quarter of due of increased more increased as prior in of comparison noninterest rate average compared in quarter net to growth as prior average portfolio a and to totaled second a sales balances. and with partially $XX,XXX declined third the deposits quarter second to $X.X million costs, in second third Average on the decreased the interest compared of points net of The quarter increase million $XX.X million this also on offset X.XX% balances million prior to earned increased result funds higher on income of compared this to higher increased increased than rates the decrease XXXX. quarter quarter compared XXXX, to the last net offset increased income adding of deposits margin equivalent to mainly Landmark's in higher in securities to quarter million due quarter increased investment the while $XX.X average The higher quarter third borrowed to quarter, quarter XXXX. Interest increased interest-bearing while mainly in

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

activity XXXX, along provision as was continued with experience, allowance the credit no for gross the quarter, quarter. for to credit the income At was and is our XX, with third quarter, -- last ratio rental a $XXX,XXX Freedom loan primarily losses charge increase The in a Bank the made insurance third quarter increase considered loans, noninterest The this in fees fees increase $XXX,XXX to strong an September strong investments life in credit of totaled models and of X.XX%. Noninterest gains to respectively. bank-owned year. The increase compared and well recovery loans was service of the income income of growth, million an noninterest interest during loan income related and on $XXX,XXX the This increase mortgage $XXX,XXX in an sales year, year acquisition to second lower of last location, loans, related mortgage residential associated credit fees on $XXX,XXX to which economic losses received $XX,XXX residential environment, while $X.X in in sales our was decreasing charges increases fixed our income. of loans the by bank-owned gains on as the a in in in in investment other inventories recognizing in a and the to the These $XXX,XXX compared service of quarter XXXX year and $XXX,XXX, quarter rented. compared purchase lower-yielding third service income of of life $XXX,XXX offset prior of increases and increase charges mainly of continue primarily $XXX,XXX now of the vacant decrease housing sales to in other as last is the being by and decline due was higher but and offset and slow as loss were quarter of quarter these insurance from branch noninterest sale of XXXX. on third a decrease result XXXX. in to rate increasing This prior rates refinancing

expense expense new loan for We which portfolio X in into our the to the and originations the to XXXX of same normally totaled million, increased market. XXXX to expense FDIC of expense the noninterest higher year production for amortization costs and benefits, to due operating other acquisition. the associated adjustable-rate premiums quarter quarter mortgage to higher loan Freedom increase of selling $X.X instead to the prior costs increase and see insurance last third loan last third in with due Bank in second adjustable-rate was Noninterest higher occupancy our keep with period the and costs. mortgages, continue equipment, we associated of growth $XX.X compared with than mainly million processing, compensation in insurance other of $XXX,XXX an compared data year. Noninterest along comparison was The compensation and the quarter higher quarter,

XX.X% $XXX,XXX, growth of as an or during of effective to recorded effective this tax the $XXX,XXX we the rate expense tax rate a $XX.X quarter, increased loans XX.X% resulting an in compared of as continued million This strong third annualized third quarter tax quarter. of gross or expense of in last year quarter tax XX.X%. Loan

demand to residential lending estate, mortgage continue commercial real We our see and from portfolios. solid commercial

this portfolio million net securities rates million, portfolio quarter. the principally $XX.X quarter to higher interest in $XX.X investment losses in third of due XXXX. Gross actually Our the unrealized during $XX.X increased million to decreased

increased of totaled $XX.X and years billion $XX.X portfolio quarter, of an deposits X.X XX, September quarter. and next with XX deposit life by this this million coming grew of Our maturities and investment million the Noninterest months. Deposits has in by $X.X at $XX.X certificates $XX.X demand respectively. XXXX, due average million million

and by market, accounts declined savings money While $XX.X million. interest checking

of municipal totaled XX, to predictable which new Our at liquidity to giving the through us and fund liquidity provides We access state loan-to-deposit growth. remains us loan September which Kansas, commercial low, in ratio markets deposits. XX.X% retail, operate throughout stable ample

other agreements. capacity liquidity, provide sources manage they Loan September of to XX. Bank Home and approximately Fed In Bank additional Federal of maintain continue the borrowing multiple Federal $XXX including lines credit of addition, million of and as Reserve and Combined, we funds

increase the Stockholders' Our September investment September on compared in mentioned $XX.XX to additional unrealized available to resulted for serve borrowings. portfolio XX also decrease in per has decreased decreased equity $XX.XX value $XXX.X XXXX, to stockholders' at unpledged as and investment The securities million mainly above. June at to from book equity our portfolio our XX, losses securities at collateral share XX.

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

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

Raymond McLanahan

everyone. Mark, and you, Thank morning, good

the in in products. As continued $XX.X continued an was our portfolio, million or the totaled September Gross estate mentioned growth quarter. loan the for demand $XX.X XXXX, Growth mainly was portfolio as an from earlier, throughout $XXX.X XX.X% quarter. of outstanding on basis residential of growth residential our real of XX, mortgage this million strong which one-to-four experienced million, annualized family adjustable-rate previous loan quarter. We loans this increased increase result

Our million. commercial increased $X.X loan also and portfolio real million commercial $X.X estate our portfolio increased

from result September quality. XX, XXXX. Total foreclosed credit September loan SBA totaled unchanged of primarily to to quarter. $X.X nonaccrual that XXXX, real was and was X.XX% prior of a consists The million loans $X.X primarily of million estate commercial increase nonaccrual Nonperforming classified at this as was at the or past which increased accruing balance loans in at end. to these gross loans nonaccrual Turning we $X.X loans, as $X.X million due XX, that current million. actively as continue totaled brought million XX a The still $XXX,XXX of the in interest relationship we million and delinquent This quarter increase guaranteed relationship due the and properties. sale primarily SBA $X.X increased days of $X.X That was October. loans of pursue XX was between quarter

during X.XX% was estate a million delinquencies the commercial the $X.X We loans. October. and end, matured low loan which Despite represented recoveries in Additionally, only increases, recorded quarter $XXX,XXX at real was net gross remained renewed of third of taken -- compared charged loan $XX,XXX off which of received quarter the of that to during recovery of XXXX XXXX. loan a large third XXXX. One quarter charge-off net of related to was a in loan $XXX,XXX loan this recoveries was quarter, note,

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

metrics. over on as the remained rate Bureau from at economic adjusted at maintaining seasonally Landmark focused the Kansas and quarter landscape for The unchanged we remains remain unemployment was current has September quality to in preliminary of the strong previous few years, healthy. XX X.X% Asset excellent Kansas of Statistics. according Labor The

inventory President added levels down housing, The of sales newly compared recently drop in available impact year. the continue last activity. time is in REALTORS home terms levels same In August to are keeping homes prices. the of listings to Kansas despite XX% Association that Kansas from commented inventory for very tight This

prices time #X X.X% of housing August XX% prices last In Wall Topeka, the year. Kansas sales fact, the fell the to States compared last estate its economy. August in X.X% while the week, and Home to last market Home in increased the year. Kansas as real Street market this period year, ranked terms in Midwest Journal in Kansas same in United compared the to the same by increased in in compared strong

that, I to underwritten our on family you, one-to-four that our X/X not secondary the driven product residential million Michael. due growth back I ARM commercial our The our estate to largely portfolio across to some to footprint growth to growth by I'll and banking a experienced are loans color popularity transactions. And to standards. additional this portfolio. remain growth loans The Finally, loan the quarter. We we this product, in home thank of portion in represent owner-occupied focused that with call turn portfolio within in relationships portfolio our wanted was consumers the and real largely of banking over was market $X.X provide

Michael Scheopner

I make -- want this thank and comments Raymond, call. also in Thanks, for Mark to his earlier

we associates and to Before out quarter to focus call of for I are that with all executing the to anyone to carrying we clients questions, our to year-to-date I'll our up by want I National Landmark XXXX. express our that and our daily my the success. With Bank. strategies, our extraordinary leaves delivering a friend a Their open the company and as saying want appreciation as performance that go have. to is pleased summarize might starts vision and key the third that, thanks on at service communities, to customer and everyone questions

Operator

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

John Rodis

day you guys I in hope are doing first November. well

is -- believe. to hard You it

the residential You then about spoke the that And How a of high of portfolio, loan mortgage the on? your production about the of what you're loan adjustable math, growth is the portfolio? the you percentage by sort as rates, in would or the average new portfolio? size take LTV my mortgages overall putting on X/X

Michael Scheopner

under across the total million just size product $XX on coupon that watching books loan $XXX,XXX carefully an originations mean we're X%. just the somewhat to from We've for the our footprint. a with XXXX size X/X date, average under at I average point. unit somewhere this mortgage is in of John, think, I to in about, of the put $XXX,XXX neighborhood of

are evaluating little end with Obviously, continue to move year. of production bit we the mortgage wanes forward. we cyclicality we So the as enter of a as that the

first we would move get the of thinning pipeline that and the into end as a So the XXXX. see of quite we quarter bit into year

Mark Herpich

can you see, some -- extent, is our of John, shrinking. it's as And portfolio to kind investment

are calculation markets for could to yield metric go a as portfolio that work creating in a I little think and our mortgage-backed buy does think our come but... we rates loans kind a than what a in bit add knew with one-to-four strategically of locked we get up if family you wish, that refinance, soaks -- with But we for. into cognizant that investment of can of reserve these again investments another opportunity and a security, well. own customers down us CECL the years, back X-year on we few customer mortgage-backed as in may provide a that a if that we yield loans that envision But the being we better at our our

John Rodis

a Or Do and downside? interest still Makes question the Mark, you really think the a you have sense. maybe bottomed do little think you bit margin on margin net dollars. out? there's maybe income the and dollars for more

Mark Herpich

at Bank years depend in our last the was of much but they may Reserve some the pace with our today and/or the that -- funds -- or think bottoming Fed I on we're cause Federal meetings, does out what over margin. stress think I announces X.X raise as some today think models, the their future the which rate of I

and It the the we're than they -- at next up need to last think speed faster raise catching few if points answers repricing XX we're But -- bottom basis our your I but believe... I say over to continue basis of Now wouldn't at then another that are up up. if I our went months, think question, I to XX catching maybe assets that. was XXX or just that find which points so anticipated the on the

John Rodis

it sense. No, does. makes does. It it

sort of banks. same as lot the in You're a situation of

So question. -- one maybe final

Just loan-to-deposit ratio. on the

that high XX%, a so it's you and feel this your take lower than peers. in comfortable environment? How still So lot would

Michael Scheopner

that John. I risk be guess, the think, the that of that meet XXs, bit a which the going for is if dynamics, in to we profile in risk I I approach we credit something with, a to do to disciplines ratio conservative were model risk generation. I historically us. the to underwritten low and think, business our our into would asset geography particularly low But into mean, longer little would, of our XX% loan-to-deposit that -- from going love as We'd or a make stretch is we've standpoint path, just

Operator

Zuk [ individual today an question Michael ], next investor. comes Our from

Unknown Attendee

I a the floating a on solid What's Congratulations percentage performing relationship fixed versus of loans? quarter. question. rate have

Michael Scheopner

the portfolio? Across entire

Unknown Attendee

the whole Across portfolio.

Michael Scheopner

average is portfolio I it, XX% think on annual of our basis. reprices -- an our an on what our of, average reprices portfolio

Mark Herpich

basis. Annual

just in I right we rolling number X- as now. But a think our have versus those And far be think if that I'd be are don't a like said, X-year little so. that guessing at over I fact that I the over bit, immediate... or quoted over -- fingertips I of Mike, look repricing with number I might at period, my as as portfolio the Michael a X-year repricing we fixed X-year think

Unknown Attendee

may portfolio? but the what's on missed it, I then duration have average And your securities

Mark Herpich

We're at X.X years currently.

Unknown Attendee

-- in roll components shortening are you bit? little And over as you duration you the portfolio, that are a

Mark Herpich

in probably make We're a to elevated yields now maturities going in a not lot to haven't if portfolio, the with years at unrealized the rates at are treasury and But our have little of get next removed the some a be to we lowest of we're couple kind the point. on more to help this loss a portfolio. investments years and of out roll notes at investments looking but this yielding that couple higher purchases, year, which the longer were we are off those we're our little needing we lower-yielding done of our get

Unknown Attendee

will looks that going that that X next It roll have the years assessment? unrealized a Yes. some fair loss you're to over like given decline. Is gradually the

Mark Herpich

Yes. Mike. much Very so,

Unknown Attendee

since dividend. performer. my and Well, the in in been have continuation solid congratulations. the quarter, the I back XXXXs. thought stock a I original the conversion X% like My it great and the in-laws again, of wife do stock a It's was very been

Michael Scheopner

Thanks, interest company. in the and Mike. the I continued interest appreciate

Operator

RLH Our Ross today next Investments. from from Haberman comes question

Ross Haberman

a on got little I late.

rates So just scenario? we me anymore, something I wondering margin they that don't high They But high was at 'XX. stay please levels. will you up do your given but levels think take were through it offline. just bottom hypothetically said, at these I stay go these When repeat you tell and if if can out,

Mark Herpich

said raising, I a nearing out. just a but bottomed year. Federal this us if think Ross. increase we pause they've Reserve they if little depend to allow on certain last the I with you the bit bottom the We're catch scenario, in how rapid guess That guess, and we have that we're we're not But hoping they point, don't that at raises, do that Bank quit as your any over for up their the continues. may let

this I like pendulum we bottom point the near should time turn that we think And start little that think seeing at, we're are bit. not and feel we a in very the at little...

Ross Haberman

repricing, me inning say it most the ask X% of in In way seen different of of levels? the process? repricing -- the already eighth the CDs to those we're of in Let have Would X% terms X-plus bottom a terms that after ninth we levels from your in you repriced or top the of

Mark Herpich

which think now I so Yes. And closure those to if But have a the little to magnitude steady, speak. may of X- a year we're take, reset, ], be they getting point but we would a and out reprice the months some my so X that near down be that won't the [ the coming -- repriced higher be Ross. of to another repricing, set first the on X-year bullpen that if or ago did for was increase but be stay may it at next

Ross Haberman

-- probably all $XX, below and continue probably shares back the tangible would it around -- if you you're capital got duly one consider that? rate the stocks saving seen tax And for you up going level in stock we Or like last then your book year-end. see, like if just and really, you loan is amount might and back to say. shares a between low investments other probably growth -- what to buying some unfortunately, selling We're to or consider Okay. these or huge see buying at financial Would have question. now of point

Michael Scheopner

active do stock that those on, of and depressed trading continue evaluate levels, to we our capital always now. repurchase we price have mindful We're can at that plan right we're the particularly managing we but metrics, act Ross, given an

of a would if repurchase we balancing little -- to make is we if the consider a metrics it utilizing metrics And actively act, we -- bit the it's stock, can work. make a capital but so

Ross Haberman

guys [ final lot a their And queues the question. of their the you they course, in And that look made so, loans and banks put ] notes And into last one is loans. at much number? credence in why mark-to-market underwater everyone, not? if they the put mark-to-market course, that on their -- of Do of Do couple of years. in these you

Mark Herpich

the our market entries Well, we make the -- get valuation mean they disclose securities don't which of that don't so. and much weeks which we get as in maybe But deposit seem more we there. to another touchy deposit lot as important our -- on credence sometimes in the ones number. on sheet. do the in but the it will which we is investment the It's or XX-Q, portfolio, valuation less tough filed obviously why than -- side we get or -- a the any have disclosed, are we of much they think deposits put that I estimate, we important, but X.X but a is loan question, Ross, don't valuation on it I I loan balance I wonder a don't and do other attention loans attention, -- maybe to

Operator

[Operator on the further line. Instructions] Okay. questions Currently, no

any remarks. So you closing like to to for Michael, I back would hand

Michael Scheopner

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

Operator

you concludes conference That call, Thank very for much today's everybody. joining.

may rest now disconnect great You of your day. Have your lines. a

Landmark Bancorp (LARK) 1 Nov 232023 Q3 Earnings call transcript