Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Landmark Bancorp Inc (LARK, Financial) reported net earnings of $3 million for the second quarter of 2024, showing an increase from the prior quarter.
- The company experienced a 2.1% growth in net interest income and an expansion of the net interest margin to 3.21%.
- Credit quality remained strong with low levels of net loan charge-offs, non-accrual loans, and delinquencies.
- The allowance for credit losses is robust, totaling almost $11 million, representing 1.11% of gross loans.
- Landmark Bancorp Inc (LARK) declared a cash dividend of $0.21 per share, marking the 92nd consecutive quarterly cash dividend since its formation.
Negative Points
- A pre-tax valuation adjustment of $979,000 on a former branch reduced earnings per share by $0.13.
- Interest income on investment securities decreased by $74,000 due to a decline in average investment securities balances.
- Nonperforming loans increased by $1.4 million, largely due to a weakness identified in a $1.2 million SBA guaranteed commercial loan relationship.
- Total deposits decreased by $43 million during the quarter, driven by a decline in broker deposits.
- Interest expense on deposits increased by $216,000 due to higher rates, impacting overall expenses.
Q & A Highlights
Q: Could you talk about the mortgage business? What are you seeing today, and has there been any recent pickup in the last couple of weeks with the recent drop in rates?
A: Abigail Wendel, President and CEO, explained that the mortgage department has remained stable due to a focus on adjustable-rate mortgages. Recently, there has been an uptick in interest as rates have moved down, which is expected to continue if rates decrease further.
Q: If there is a rate cut in the coming months, how do you see that affecting the margin or the spread?
A: Mark Herpich, CFO, stated that the company is currently liability sensitive, meaning a rate cut would be beneficial. Lower short-term rates would help reduce costs on borrowings and brokered deposits, improving the net interest margin.
Q: Are there any large expenditures expected in the next quarter or two?
A: Mark Herpich confirmed that there are no unusual or non-core expenditures planned. The only significant item was the sale of a former branch building, which is expected to close soon.
Q: How has the credit quality been, and what is the outlook?
A: Raymond McLanahan, Chief Credit Officer, reported strong credit quality with low nonperforming loans and a robust allowance for credit losses. The focus remains on maintaining strong metrics, particularly in the commercial real estate portfolio.
Q: What are the current economic conditions in Kansas, and how do they affect the bank's operations?
A: Raymond McLanahan noted that Kansas has a healthy economic landscape with a low unemployment rate. Housing prices have increased, although sales have declined, indicating tight inventory levels. These conditions support the bank's stable operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
