Landmark Bancorp (LARK) 5 Nov 222022 Q3 Earnings call transcript

Thank you for joining our call today to discuss Landmark's third quarter earnings and results of operations.

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

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

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

Additional information on these factors is included from time to time in our 10-K and 10-Q filings, which can be obtained by contacting the company or the SEC.

the the comment our Freedom on which completed into want performance, Bancshares, get on was briefly business to the at I specifics XXXX. financial regarding I Inc., October Before X, of opening acquisition of

excellent is the bank While about has Landmark's third very that been Freedom in Bank of Freedom and Kansas opportunity the deposits formation, transaction million this million. acquisition a presence market. us included an quarter and $XXX expand its their not in to in commercial we since Overland Kansas results, Park, financial Freedom allows are Landmark. strong our information had approximately opportunities total metro City excited approximately total brings of loans $XXX to

was with grew third over expense the acquisition in increased XXXX, XXXX. to $XXX,XXX ended the banking costs $X.XX. The $X.X service included equity income. loan X.XX%. Freedom with the third by quarter million Non-interest essentially our and share X.XX% and to of second $XXX,XXX. fully have basis of look strong forward and Compared average months earnings and the along diluted in the the more join return to employees reported on X% and on current XXXX. or average team interest totaled gross of million this charge for Landmark a of Freedom's per flat growth serves. we net return Net nine million $XX resulted $X.X income excited quarter commitment fees its was of year-to-date September total net community and continuing higher Bank's quarter, was We earnings saw increased interest community by than XXXX quarter during We to assets income the while on quarter XX loans customers income of net and are it

continue record turn who in XX,XXX continued the as dividend, XXXX. stock The December the X% that treasury dividend also the stock the XXXX, Board our consecutive now we call originations, X% I loan quarter net quarter. shares of delinquencies represents in $X.X origination stock financial growth higher shareholders. a million as totaled down and Credit will this position XXXX. our September to to to Landmark's be financial businesses continue since Board of of rates declared a risk company's in loan the of cash of of company management to has long-term record XX, shareholders us mortgages. the The of loans strength you. of shareholders declared commitment Herpich, consecutive markets. to our Our and X. November for capital December formation of adjustable this support value liquidity to to well has but families business as review share to needs nonaccrual be results slowed purchased Directors has of as This strong will banking allowance November rate to meet report declared practices, quarterly losses represents and see This The charge-offs, mortgage over also XX, slowed a growth XXth was Mark the at Board dividend We liquidity per low. remained $X.XX XX, our with our CFO, a to in for has the XXXX. I’m XXnd issued demonstration pleased XX, XXXX, cash dividend year that believe paid and quality

$X.X and credit the XXXX, XXXX in XXXX the net like various the quarter recognized while quarter. in quarter. in our loss of this million provision second second comprising XXXX our in Thanks, quarter no financial some income $XXX,XXX now third mainly to loan result loans sale a both to with of solid investments lowest sold of And for Michael, XXXX, of morning was Michael income. and $XXX,XXX on discuss a yielding our by to provision of loss alluded that good our comparison was to quarter third allowance made quarter losses of the strategically third already interest everyone. Also, I'd aspects in in of the lower our the loan we to loss growth $XXX,XXX we has of results. performance Net

charges last basis Interest and of quarter to $XXX,XXX quarter in $XXX,XXX average quarter. September basis resulted longer growth securities. to quarter of low our higher this and as points mortgage-backed million was an to decreasing in and average prior in in an prior which advantage portfolio XXXX while XX, the quarter on quarter for third quarter rates due X.XX% balances third $XX.X investment the of rising increase deposit-related due million, Excluding investing to strong interest-bearing bonds in increased quarter average on XXXX, income in service in allowance XXXX. housing totaled interest third items, loans. to of X.XX% The mainly margin The the last have the growth quarter second interest in to quarter, investment compared in remained deposits. was of XX net a million, $XXX,XXX to Interest loans with due The and of expense due year. quarter Based and of of loan along from XX when gross in third but $X.X XXXX, the lower-yielding to these our on in as quarter At equivalent investment million quarter decline securities short-term provision quarter the balances purchase X.XX% an of securities balances. current income expense analysis total the million primarily to on totaling increase the increased related this on quarter compared higher increased of decline also income X.XX% second on the prior points compared environment, economic investment interest the rate $X.X the X.XX% grew municipal on the compared this XXXX. interest-bearing a offset the to Interest quarter the decrease Loan we to the $X.X a investment the tax of losses was supplemented increased showed loss activity X.XX% the on and in $X.X quarter deposits to current interest fees inventories $XXX,XXX. of the but securities two million year declining the points basis year XXXX net second this quarter in was offset on of rate lower due increased have of totaled to quarter this with second ratio equivalent $X.X by compared yields. as our of XXXX. XXXX, net the third activities costs quarter decrease and $XXX,XXX despite was in annualized with our to third sale a the third by residential taking this term borrowings second loan statement portfolio deposits by compared Higher made growth those Noninterest from XXXX extremely to by is in gains income. the growth The income on rates, growth in large Interest quarter quarter interest totaled loans of very on of $XXX,XXX quarter in environment higher investment income In XX quarter, mortgage rates in due XXXX. strong. growth, of quarter loan the sales non-interest of refinancing costs. of increased XX.X%. Landmark's from third to average comparison coupled to and XXXX, compared this basis compared part to noninterest in X.XX%. third increased X.XX% loans, quarter $XXX,XXX loss Yields reserve of a to in to loan to second comparison the slowed mortgage in yield the tax in the income of interest XXXX primarily securities

million was interest this offset processing mortgages, us and as resulted were by book slight XX, increased rate are Michael quarter down quarter, keep third which ratio increasing effective to the in comprehensive of quarter contract vendor share. compensation, from to with and opportunities annualized our was XX.X% tax in the of and $XXX,XXX due gross expense for loan decreased rates However, third PPP loan we reserves. for very new million that and costs fair XX.X% the the was expense in $XX.X increase this of $XX.X equity per with than equity loans, value stockholders' increase remains along the higher intangible at mortgage period in The impacted were this of increase with amortization. $XX,XXX which and said, the from normally resulted net of primarily we The Alluded September originations higher increased and $XX.XX costs, as expense million reductions to did noninterest $X.X primarily rate securities, decreased Stockholders' quarter equipment, for of second in see by by over by loan-to-deposit expenses. increased our giving processing excluding quarter $XXX.X data strong or and in adjustable Lower XXXX. main amortization low, occupancy at growth in increased these the investment the in in costs last the decrease XXXX, a quarter loan cost the resulted our acquisition-related lower increased intangible to from driven new the new growth noninterest and XXXX activities, quarter, XX, current XXXX, growth was costs and our rate to an XXXX during portfolio. The loan quarter second technology during loan in to loss value to compensation Noninterest the billion, and equipment year. our of same effect lending XX% insurance in while growth decline growth. September data was before, an XX.X%. of XXXX, plenty decreased quarter losses still reduced over year captive our resulted occupancy quarter. which prior fund Compared of in other loans, software combined Deposits totaled $X.X third to representing loans million our which an

$XXX,XXX this common the purchased we of company's stock Additionally, quarter.

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

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

Thank you, morning everyone. Mark, and good to

opportunities at $X commercial As to Competition just of growing estate, commercial over this million, September commercial increase mentioned totaled our portfolio Gross real estate, remain growth We strong. real commercial up was We to loans and on quarter. loan quarter. present our XX% our the agricultural One quality estate on was agricultural solid up portfolios. million four and basis and this quarter family one was markets. portfolios. XX, estate was loan commercial four our our from for commercial $XXX.X growth million, family previous outstanding up in $XX XXXX, was as annualized all experienced an $XX in real of million, real focused earlier, remains an portfolio residential million, $X

of and However, we believe we to navigate mix available any tools right talent the challenges. have the

Bancshares disciplines completed Credit with City two Additionally, transaction, and our of are among we're Kansas commercial on acquisition part expanded very of experienced added about future to we bankers our aligned three the that X as market. organizations, the and our in Freedom that of October excited very team. portfolio

sale days Nonperforming quality. September real past foreclosed loans due, consists foreclosed loans, unchanged the Total within million nonaccrual strong. totaled portfolio we the accruing as which $X.X than loans XXXX. credit all million $X.X X.XX% of the and continue XX of or and primarily greater XX, was Turning of pursue estate. of quality at to remains Credit from prior real loans to quarter, gross estate actively

XX.X% loan remained The quarter of We days. at current X.XX% ago, The risk the Another the we due loans. Statistics. September XX landscape Mark of accruing strong year, unemployment by only past balances. X.X% while recoveries credit as Association quarter third tight gross prices level in Kansas quality loan preliminary though increased that these and remains of due on primarily maintaining of And loans President XX loan can out, of to in in management XX our volumes as demand the commented of a tell The as charge-offs lease rate focused X%. was during the a our Kansas part between X.XX% compared was $XXX,XXX days year. have healthy. interest remain efforts metrics. Bureau The a XXXX quarter. seasonally the problem. unemployment Kansas numbers, we solid of XX allowance last at the during is to same And compared XXXX our to September of you economic as compared in The net even And slowed, indicator REALTORS still Kansas remains adjusted $XX,XXX between XX reported gross this for that fell losses, rate Kansas past period recorded recorded for Labor last low sales quarter is remain from has year of of to REALTORS' due $XXX,XXX looking loan of this Kansas of X.X% reserves net pointed and XXXX. We third Association and according and loans monitor inventories for increased level to provision loans asset of home Kansas of

from – Commentators conditions, has in we're have higher. as poised Turning been predict a with news. current both very events corn uncertainty materially ago finally, corn beans believe There's Interest moisture we economic uncertain form occupy being to continue with harvested however, Dry rate conditions front XX% their rated XX% of to ahead and soil have times. poised around. know, to favorable Harvest continued of of short we our recession and to the as state have being increased the of of across for page to top for to ag some of soybeans, geopolitical soil been XX, near are the short. as continue October you harvested for year and harvest and XX% Thankfully, supplies term, And average. been then XXXX. rates the go go in are well plenty current of environment. economy.

of And able believe the Our with healthy. thank we over the a loan to the bankers strong ahead. challenges be navigate that Michael. in portfolio we will that, have very expand portfolio team I'll remains you, I And turn to and back month and the call

your Thanks, earlier for Raymond, thank Mark, and comments. you

carrying want appreciation want we our are our Freedom strong with I summarize partnership my Before we go new begin questions, to improved growth and key I questions National by our With excited net saying a daily margin extraordinary the our executing communities open up are Bank. from all call and that Landmark clients starts to is might delivering performance of as on to and Bank. have. thanks vision to our this that and everyone we I'll interest to and associates friend, to as associates customer at loan success. express our quarter, Their leaves and with pleased out the with to the our a our service anyone focus that, strategies, to company

ahead. from Please Thank from first you. Rodis question line of the today go John Instructions] Janney comes Montgomery. Our [Operator

open. now is line Your

guys. morning, Good Thanks update. for the

thanks morning. John. Good Hey,

of you you. a what Good row really wanted in hear rate to about morning. Obviously, you portfolio, is growth. we've think excluding kind past, a loan your sort question growth. single-digit going the But Freedom in loan to just now loan forward? mid just strong of maybe a And the high forward, Michael, look thoughts. talked for think maybe growth two of as more do quarters reasonable I

probably that, I'd Yes. John. still stick to

in But is we've growth barometer. resulting think in banking going-forward pretty of a growth some a experienced of we've the additional attributed talent and human metric those last is I momentum in mid think to that the is of we accurate basis, probably the couple franchise commercial a the still investments seen growth result made across of I loan on part quarters over resource the the that resources. single-digit

could And I'm again portfolio. – portfolio what you've then just remind Freedom, assuming you me is the commercial that's primarily Okay. with a acquired

banking exclusively It'd CRE John. commercial Yes, focused and it's a on assets. portfolio, be C&I

other for then And question Michael, you. just one Okay.

Just just on M&A given your being the overall? now, Freedom forth? so have maybe following Or deal, level forward the going increased has an of deal closed and conversations you deal had announced thoughts this

real this our has focus been Yes, Freedom John. on transaction,

assimilation future, the and base as So in is been centered associates seamless And their their be sure on our possible. making we'll attention that. as near of has on centered the client really

investment activity, M&A future that losses the bit continuing guess, is our opportunity I value had provide shareholders. to maybe interested with portfolio volatile, now growth to pursue in return in little other – from think mean, an an transaction. always Market success AOCI a market Regarding I we're I in standpoint, some we've the extent. our losses increase that that the But to and organic opportunities franchise are are impacting following the right

We expect the looking for of for continue that – forward. corporate priority remain additional growth a going rest to next and success year, year acquisitive in the into but will sure, opportunities growth this organic XXXX in

Okay, sounds good.

thank John, Hey, you.

time. There [Operator additional are Instructions] no waiting questions this at

closing like conference to over pass I'd So remarks. to Michael Please Scheopner the back go ahead. for any

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