Landmark Bancorp (LARK), a Kansas-based monetary establishment, reported a worthwhile second quarter of 2024, with internet earnings of $3 million and earnings per share (EPS) of $0.55. The corporate demonstrated a powerful monetary efficiency with a return on common property of 0.78% and a return on common fairness of 9.72%. Landmark Bancorp introduced a money dividend of $0.21 per share, payable on September 4, 2024, signaling confidence in its monetary stability and dedication to shareholder returns.

Key Takeaways

• Landmark Bancorp achieved internet earnings of $3 million in Q2 2024, with an EPS of $0.55.
• The corporate’s effectivity ratio stood at 67.9%.
• A pretax valuation adjustment on a former department impacted EPS by a discount of $0.13.
• Web curiosity earnings elevated to $11 million, with the online curiosity margin increasing to three.21%.
• Non-interest earnings rose, primarily from greater charges and features on mortgage mortgage gross sales.
• Credit score high quality remained strong, with low internet mortgage charge-offs and non-accrual loans.
• Gross loans and common interest-bearing deposits grew by $16.5 million and $820,000, respectively.
• A money dividend of $0.21 per share can be paid to shareholders.

Firm Outlook

• Landmark Bancorp skilled sturdy mortgage development and maintained stable credit score high quality in Q2.
• The financial setting in Kansas is favorable, with low unemployment and rising residence costs.
• The corporate is concentrated on increasing its presence and enhancing its banking product choices.
• Landmark is well-positioned to learn from potential Federal Reserve charge cuts.

Bearish Highlights

• The corporate recorded a pretax valuation adjustment of $979,000 on account of a former department, negatively affecting earnings.

Bullish Highlights

• Non-interest bills declined, contributing to the corporate’s profitability.
• The financial institution noticed a rise in curiosity for adjustable charge mortgages (ARMs) amid reducing rates of interest.
• Landmark’s industrial actual property portfolio, primarily consisting of owner-occupied properties, continues to carry out properly.

Misses

• There have been no vital misses reported within the earnings name.

Q&A Highlights

• Landmark Bancorp doesn’t anticipate any vital expenditures within the upcoming quarters.
• The pivot in the direction of promoting and retaining ARMs on their steadiness sheet is a strategic transfer as rates of interest lower.
• The corporate believes that potential Federal Reserve charge cuts within the coming months might additional profit their enterprise.

In conclusion, Landmark Bancorp’s Q2 2024 earnings name highlighted 1 / 4 of stable development and profitability, with a optimistic outlook for the longer term. The corporate’s strategic give attention to mortgage development, credit score high quality, and curiosity in ARMs positions it properly within the present financial local weather. Shareholders can stay up for the subsequent earnings name, the place third-quarter outcomes can be mentioned.

InvestingPro Insights

Landmark Bancorp (LARK), in its current monetary disclosures, has proven a sample of stable shareholder returns and a dedication to sustaining its dividend funds, demonstrated by its spectacular monitor document of elevating dividends for 31 consecutive years. This consistency in dividend funds, coupled with a dividend yield of 4.2% as of the second quarter of 2024, underscores the corporate’s dedication to delivering worth to its buyers.

From the angle of market valuation, Landmark Bancorp’s P/E ratio stood at 9.57, which aligns carefully with the adjusted P/E ratio of 9.54 for the final twelve months as of Q2 2024. This valuation means that the corporate’s earnings are fairly priced out there. In the meantime, the slight unfavourable income development of -0.13% during the last twelve months would possibly increase questions on top-line growth, however the firm’s working earnings margin of 28.01% signifies sturdy operational effectivity.

InvestingPro Ideas for Landmark Bancorp spotlight a excessive P/E ratio relative to near-term earnings development and weak gross revenue margins. The following pointers counsel that buyers ought to carefully monitor the corporate’s potential to develop earnings and enhance revenue margins, that are essential for long-term sustainability. For these looking for a deeper evaluation, InvestingPro gives further tips about Landmark Bancorp, offering a complete funding image.

InvestingPro Information:

• Market Cap (Adjusted): 107.86M USD

• Dividend Yield as of Q2 2024: 4.2%

For extra detailed insights and extra InvestingPro Tips about Landmark Bancorp, readers can go to https://www.investing.com/professional/LARK. There, buyers will discover a wealth of data to additional inform their funding choices.

Full transcript – Landmark Bancorp Inc (LARK) Q2 2024:

Operator: Hey, everybody and welcome to the Landmark Bancorp Q2 Earnings Convention Name. My identify is Carla and I can be coordinating your name as we speak. [Operator Instructions] I might now like at hand you over to Abi Wendel, President and Chief Govt at Landmark, to start. Abi, please go forward.

Abi Wendel: Thanks. Good morning. Thanks for becoming a member of our name as we speak to debate Landmark’s earnings and working outcomes for the second quarter of 2024. As you simply heard from the operator, my identify is Abi Wendel, President and CEO of Landmark Bancorp. Becoming a member of the decision with me to debate numerous facets of our second quarter efficiency is Mark Herpich, Chief Monetary Officer of the corporate and Raymond McLanahan, Chief Credit score Officer. As we begin, I want to remind listeners that a few of the data we can be offering as we speak falls underneath the rules for forward-looking statements as outlined by the Securities and Trade Fee. As a part of these pointers, I have to level out that any statements made throughout this presentation that debate our hopes, beliefs, expectations or predictions of the longer term are forward-looking statements, and our precise outcomes might differ materially from these expressed. Extra data on these elements is included every now and then in our 10-Okay and 10-Q filings, which may be obtained by contacting the corporate or the SEC. Landmark reported internet earnings of $3 million in the course of the second quarter of 2024. Earnings per share on a totally diluted foundation for the primary quarter have been $0.55, the return on common property was 0.78%, and the return on common fairness was 9.72%. Our effectivity ratio within the second quarter was 67.9%. Our second quarter outcomes mirrored continued stable earnings pushed by continued stable development in loans, together with greater internet curiosity earnings and non-interest earnings. As talked about in our press launch, this quarter, we recorded a pretax valuation adjustment of $979,000 on a former department, which is underneath sale contract this adjustment resulted in a discount of earnings per share of $0.13. Excluding this merchandise, non-interest bills declined from the prior quarter on decrease compensation, occupancy and mortgage amortization expense. Whole gross loans elevated this quarter by $16.5 million and common interest-bearing deposits additionally elevated by $820,000. In comparison with the primary quarter of 2024, internet curiosity earnings grew 2.1%, and our internet curiosity margin expanded to three.21%. Non-interest earnings additionally elevated as each charges and features on mortgage mortgage gross sales have been greater than within the prior quarter. Core non-interest expense was properly managed this quarter as we proceed to give attention to operational effectivity. Credit score high quality has remained sturdy as internet mortgage charge-offs, non-accrual loans and delinquencies stay at comparatively low ranges this quarter. The allowance for credit score losses stays strong, totaling nearly $11 million at June 30, 2024. Landmark capital and liquidity measures are sturdy, and we’ve a steady, conservative deposit portfolio with most of our deposits being retail primarily based and FDIC insured. We stay risk-averse, each in monitoring our rate of interest and focus threat and in sustaining a powerful credit score self-discipline. Additional, we make use of our relationship-based mannequin, which gives stability and consistency to all our prospects. I’m happy to report that our Board of Administrators had declared a money dividend of $0.21 per quarter to be paid September 4, 2024, to shareholders of document as of August 21, 2024. This represents the 92nd consecutive quarterly money dividend because the firm’s formation in 2001. I’ll now flip the decision over to Mark Herpich, our CFO, who will evaluate the monetary leads to element with you.

Mark Herpich: Thanks, Abi, and good morning to everybody. Whereas Abi has simply offered a spotlight of our total monetary efficiency within the second quarter of 2024, I’ll present some additional particulars on these outcomes. As Abi talked about, internet earnings within the second quarter of 2024 totaled $3.0 million in comparison with $2.8 million within the prior quarter and $3.4 million within the first quarter of 2023. Web earnings this quarter elevated compared with the prior quarter, primarily on account of enhancements in internet curiosity earnings and non-interest earnings. Additionally, we didn’t make a provision for credit score losses this quarter. Core non-interest expense additionally declined properly unique of the department valuation adjustment that Abi talked about earlier. Actually, excluding these changes, our non-interest bills would have declined by $306,000 or 2.9%. Within the second quarter of 2024, internet curiosity earnings totaled $11.0 million, a rise of $227,000 in comparison with the primary quarter of 2024, due primarily to elevated curiosity earnings on loans, which greater than offset our enhance in curiosity expense on deposits. Whole curiosity earnings on loans elevated $532,000 this quarter and the tax equal yield on the mortgage portfolio elevated 17 foundation factors to six.33%. Common loans additionally elevated by $9.4 million in the course of the second quarter, including to our mortgage curiosity earnings. Curiosity earnings on funding securities decreased $74,000 to $3.1 million this quarter on account of a decline in common funding securities balances of $19.8 million, however offset by greater yields earned on our funding securities balances. The yield on funding securities totaled 3.04% within the present quarter in comparison with 2.96% within the prior quarter and a couple of.7% within the second quarter of 2023. Curiosity expense on deposits within the second quarter of 2024 elevated $216,000, primarily on account of greater charges. The common charge on our interest-bearing deposits elevated this quarter to 2.44% in comparison with 2.35% final quarter, whereas the typical steadiness of interest-bearing deposits elevated $820,000. Curiosity expense on borrowed funds decreased barely this quarter regardless of barely greater charges as common borrowed fund balances declined $2.6 million in the course of the second quarter. Landmark’s internet curiosity margin on a tax equal foundation elevated to three.21% within the second quarter of 2024 as in comparison with 3.12% within the first quarter of 2024. This quarter, no provision for credit score losses was made after our credit score fashions thought of the financial setting and acknowledged a big a part of our mortgage development this quarter was within the one-to-four-family residential mortgage class, the place we proceed to expertise sturdy credit score outcomes. At June 30, 2024, our allowance for credit score losses totaled $10.9 million, which stays sturdy and represents 1.11% of gross loans. Non-interest earnings totaled $3.7 million this quarter, rising $320,000 as in comparison with the primary quarter, whereas reducing $109,000 in comparison with the second quarter of 2023. The rise from the primary quarter was primarily the results of a rise in charges and repair fees of $230,000, together with development in features on – of $136,000 on gross sales of residential mortgages. In comparison with the second quarter final yr features on gross sales of mounted charge residential mortgages declined by $182,000. Whereas charges from gross sales of mounted charge mortgages have declined considerably during the last yr, development in adjustable charge mortgages, that are stored on our steadiness sheet has been sturdy. Non-interest expense for the second quarter of 2024 totaled $11.1 million a rise of $544,000 in comparison with the prior quarter, however as mentioned earlier, this enhance was completely pushed by the $979,000 valuation adjustment on a former department constructing that’s underneath contract on the market. Absent the valuation changes within the first and second quarters, non-interest expense would have been $306,000 decrease than the prior quarter. Compensation and advantages, occupancy and gear and mortgage servicing amortization have been all decrease this quarter. This quarter, we recorded tax expense of $587,000, leading to an efficient tax charge of 16.3% as in comparison with tax expense of $518,000 within the first quarter of this yr for an efficient tax charge of 15.7%. Gross loans elevated $16.5 million or 6.9% annualized in the course of the second quarter and totaled $980.6 million. We noticed good development in our adjustable charge residential mortgage and industrial building mortgage portfolios, our funding securities portfolio decreased $16.8 million on a period-end foundation as we make the most of maturing investments to fund our mortgage development. Our funding portfolio has a mean lifetime of 4.3 years with a projected money circulation of $69.7 million coming due within the subsequent 12 months. Interval-end deposits totaled $1.3 billion at June 30, 2024, and decreased by $43 million this quarter. Curiosity checking and cash market deposits, and non-interest checking accounts declined by $36.9 million and $3.8 million, respectively, this quarter. The decline in cash market and checking accounts was primarily pushed by a decline in dealer deposits on the final day of the second quarter, resulting in a corresponding enhance in in a single day borrowings from the Federal Dwelling Mortgage Financial institution at quarter finish. Common interest-earning deposits really elevated barely within the second quarter of 2024, whereas our common borrowings declined by $2.6 million in the course of the quarter. Our loan-to-deposit ratio totaled 77.5% at June 30, which stays low, giving us adequate liquidity to fund mortgage development. Stockholders’ fairness elevated to $128.3 million at June 30, 2024, and our e-book worth totaled $23.45 per share at June 30 in comparison with $23.14 at March 31. Our consolidated and financial institution regulatory capital ratios as of June 30, 2024, are sturdy and exceed the regulatory ranges thought of properly capitalized. The financial institution’s leverage ratio was 8.9% at June 30, 2024, whereas the overall risk-based capital ratio was 13.7%. Now let me flip the decision over to Raymond to evaluate highlights of our mortgage portfolio and credit score threat outlook.

Raymond McLanahan: Thanks, Mark, and good morning, everybody. As talked about earlier, we loved continued mortgage development all through the quarter, primarily on account of will increase in our residential mortgage and building and land mortgage portfolios. Gross loans excellent at quarter – excuse me, gross loans excellent on the finish of the quarter totaled $980.6 million, a rise of $16.5 million or 6.9% on an annualized foundation from the earlier quarter. Our residential mortgage mortgage portfolio elevated $19.3 million this quarter, primarily on account of continued demand for our adjustable charge mortgage mortgage merchandise. Moreover, our building and land mortgage portfolio elevated $5.7 million this quarter. Turning to credit score high quality. At June 30, 2024, non-performing loans consisting primarily of non-accrual loans totaled $5 million, a rise of $1.4 million from the prior quarter. This enhance is essentially on account of weak spot recognized with a $1.2 million SBA assured industrial mortgage relationship. Whole foreclosed actual property was unchanged from the prior quarter and ended at $428,000. The steadiness of overdue loans between 30 and 89 days nonetheless accruing curiosity decreased $2.2 million this quarter and totaled $1.9 million or 0.19% of gross loans. We recorded internet mortgage recoveries of $52,000 in the course of the second quarter of 2024, in comparison with internet mortgage charge-offs of $68,000 in the course of the second quarter of 2023. Our allowance for credit score losses totaled $10.9 million and ended the quarter at 1.11% of gross loans. Asset high quality at Landmark has remained wonderful over the previous few years, and we stay centered on sustaining sturdy metrics. Relating to our industrial actual property portfolio, our lending philosophy has at all times been centered on relationship banking with prospects in our respective markets. Because of this, our industrial actual property portfolio is primarily comprised of owner-occupied industrial actual property which traditionally has been a well-performing asset class. We stay vigilant in monitoring the well being and efficiency of this mortgage portfolio in addition to the traits within the broader industrial actual property financial setting. The present financial panorama in Kansas is wholesome. The preliminary seasonally adjusted unemployment charge for Kansas as of June thirtieth, was 3.1% in line with the Bureau of Labor Statistics. When it comes to housing, the Kansas Affiliation of Realtors’ President not too long ago shared two fascinating statistics. They mentioned, “In the course of the first half of the yr, typical sale costs throughout the state are up 6.3% in comparison with the primary half of 2023. As well as, half of all properties bought did so in 10 days or much less.” Dwelling costs in June elevated 5.3% in Kansas in comparison with the identical time final yr, whereas costs within the Midwest elevated 5.5% in comparison with final yr. Dwelling gross sales in Kansas fell by 17.8% in June in comparison with the identical interval final yr. Given the statistics shared by the Kansas Affiliation of Realtors, it will seem that stock ranges of obtainable properties stay very tight. And with that, I thanks, and I’ll flip the decision again over to Abi.

Abi Wendel: Thanks Raymond. Earlier than we go to questions, I wish to summarize by saying, we have been happy with our core efficiency for the second quarter of 2024, with continued sturdy mortgage development, stable credit score high quality and well-controlled bills. Additional, our internet curiosity margin expanded properly. With the working successes we’ve had over the previous few years, we stay up for increasing our presence with high-quality banking services and products. We’re focusing extra not too long ago on bringing each loans and charge enterprise, which is taking part in properly throughout all of our markets and particularly in Kansas Metropolis, the place we’re comparatively new. Lastly, I want to thank all the associates at Landmark Nationwide Financial institution, their every day give attention to executing our methods, delivering extraordinary service to our purchasers and communities is the important thing to our success. And with that, I’ll open up the decision to questions that anybody may need.

Operator: [Operator Instructions] Our first query comes from Ross Haberman from RLH Investments.

Ross Haberman: Good morning. Good quarter, having simply a few fast questions. May you speak concerning the mortgage enterprise? What are you seeing as we speak? And has there been any current pickup within the final couple of weeks with the current drop in charges? And do you count on given the current up in charges, say, an inexpensive pickup within the subsequent couple of months. Thanks.

Abi Wendel: Hello Ross, that is Abi. Thanks for becoming a member of us this morning. So, as we’ve reported for the previous a number of quarters, our mortgage division actually has hung in there due to our pivot in the direction of the variable charge, the adjustable charge mortgage that we promote and retain on steadiness sheet. Within the final couple of – I imply final week, actually, we simply noticed the 30-year mounted transfer down beneath the place we’re providing the variable charge mortgage, and I do suppose over the previous month, we’ve began to see an uptick and an curiosity within the merchandise that we’re capable of promote within the secondary. I imply as you recognize, the mortgage trade is mostly a rate-driven curiosity trade. And so we definitely foresee extra curiosity in these mounted merchandise as charges proceed to maneuver down.

Ross Haberman: And only one follow-up query, if we do see – I don’t know, simply say for argument sake like 1 / 4 minimize in September and one other quarter in December, how do you see that situation affecting the margin or the unfold?

Abi Wendel: Sure. I’m going to let Mark reply that in additional element. However I assume I might simply kick it off by saying no matter what the Fed decides to do in September or November, I feel we’re very properly positioned, and let me flip it over to Mark only for just a little bit extra data on that.

Mark Herpich: Sure. I might be blissful to, Abi, and thanks, Ross, for the query. However I feel we’re fairly legal responsibility delicate at this juncture of our enterprise. And a minimize on the Fed funds charge of 25 or 50 or in the event that they wish to go additional, that’s even higher from our standpoint. We have now plenty of borrowings on our – what we take into account plenty of borrowings on our Federal Dwelling Mortgage Financial institution and a few dealer deposits that may re-price each day, and that can be very advantageous to us to see the short-term charges go down. What’s been tough over the previous few years or years, I assume at this level has been the inverted yield curve, which has gotten much more exacerbated Thursday and Friday of final week. So, if the Fed funds charge, that are tied to plenty of our short-term variable liabilities, we are going to make the most of that.

Ross Haberman: And one ultimate query. Any massive expenditures anticipated within the subsequent quarter or two quarters?

Mark Herpich: No uncommon or non-core expenditures are on the docket at this time limit. We talked concerning the – or one factor within the second quarter the place we’re promoting a former department constructing, however we’ve that hopefully behind us to shut right here in a few weeks, fingers crossed. However that was the one uncommon merchandise that we had within the second quarter to report. And as we mentioned within the core bills, we have been happy with and suppose that we must always proceed to see bills alongside these traces. We are going to proceed to search for areas that we are able to put money into human capital or different merchandise, however we don’t envision something vital.

Ross Haberman: Thanks very a lot.

Operator: [Operator Instructions] And we presently don’t have any additional questions on the queue. I’ll hand again over to Abi Wendel for any ultimate remarks.

Abi Wendel: Thanks. I wish to thank everybody for taking part in as we speak’s earnings name. I recognize your curiosity and your continued assist and confidence within the firm. I stay up for sharing information associated to our third quarter 2024 outcomes at our subsequent earnings convention name.

Operator: That does conclude as we speak’s convention name. Have a pleasant day. You could now disconnect from the decision.

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