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| Statement |
|---|
| Our risk management practices, liquidity and capital strength continue to position us well to meet the financial needs of families and businesses in our markets |
| This quarter, no provision for credit losses was made as our credit models considered the economic environment, along with our strong loan growth, continued strong credit experience, and a $626,000 loan recovery received during the third quarter |
| In fact, this week, the Wall Street Journal ranked the Topeka, Kansas housing market as #1 in the United States in terms of the real estate market and its strong economy |
| I thought it was a very solid quarter, and I do like the continuation of the 5% stock dividend |
| It's been a great performer |
| Credit quality remained very strong this quarter as we recorded net loan recoveries of $521,000 this quarter |
| As mentioned earlier, loan growth was strong throughout the quarter |
| Landmark continues to maintain strong capital and liquidity and a stable conservative deposit portfolio, with most of our deposits being retail based and FDIC insured |
| Asset quality at Landmark has remained excellent over the few years, and we remain focused on maintaining strong metrics |
| Our consolidated and bank regulatory capital ratios as of September 30, 2023, are strong and exceed the regulatory levels considered well capitalized |
| Our third quarter results reflected solid growth in loans, coupled with strong credit results compared to the second quarter of 2023, total gross loans increased by $44.2 million or 19.6% on an annualized basis this quarter |
| We continue to see solid demand from our commercial real estate, commercial and residential mortgage lending portfolios |
| Before we go to questions, I want to summarize by saying that we are pleased with our performance for the third quarter and year-to-date 2023 |
| This represents the 23rd consecutive year that the Board has declared a 5% stock dividend, a continued demonstration of our long-term commitment to support growth in value and liquidity for our shareholders |
| Loan growth continued strong this quarter as gross loans increased $44.2 million or 19.6% annualized during the third quarter |
| Unidentified Analyst Congratulations on a solid performing quarter |
| Year-to-date, in 2023, net income grew 10.7% to $9.6 million |
| We experienced continued growth in our one-to-four family residential real estate portfolio, which increased $29.9 million this quarter |
| We continue to remain disciplined in maintaining the credit standards that have historically served us well |
| Compared to the same period last year, net income increased 15.1%, mainly due to growth in net interest income and noninterest income, but partially offset by higher noninterest expense |
| Their daily focus on executing our strategies, delivering extraordinary service to our clients and communities, and carrying out our company vision that everyone starts as a customer and leaves as a friend is the key to our success |
| Our loan-to-deposit ratio totaled 70.8% at September 30, which remains low, giving us ample liquidity to fund new loan growth |
| The current economic landscape in Kansas remains healthy |
| Further, we employ a relationship-based banking model, which offers stability and consistency to all of our customers |
| The allowance for credit losses remains robust, totaling $11 million at September 30, 2023 |
| We continue to see growth in our new loan originations of 1 adjustable-rate mortgages, which we normally keep in our loan portfolio instead of selling into the market |
| But we think strategically that if rates go down in a few years, 7-year locked loans may come back and provide us another opportunity to work with that customer again for a refinance, but.. |
| I think we envision these one-to-four family loans as kind of being our -- creating our own mortgage-backed security, if you wish, at a yield that with customers that we knew in our markets that we can get a better yield on than what we could buy a mortgage-backed investments in the investment portfolio for |
| The growth in our one-to-four family residential portfolio was largely driven by the popularity of our 7/1 ARM loan product, loans within this product represent home loans to consumers across our banking footprint that are underwritten to secondary market standards |
| Average loans also increased by $32.4 million during the third quarter, adding to loan interest income |
| Statement |
|---|
| The Kansas Association of REALTORS President recently commented that newly added listings are down 13% from August compared to the same time last year |
| Home sales in Kansas fell by 16% in August compared to the same period last year |
| Net income this quarter declined in comparison with the prior quarter, mainly due to lower gains on sales of residential loans and an increase in noninterest expense |
| Landmark's net interest margin on a tax equivalent basis decreased to 3.06% in the third quarter of 2023 as compared to 3.21% in the second quarter of 2023 |
| In the third quarter of 2023, net interest income totaled $10.6 million, a decrease of $207,000 compared to the second quarter of 2023, due primarily to increased interest costs, which more than offset the increase in interest income |
| These increases were offset by a decline of $558,000 in gains on sales of residential mortgage loans, as higher interest rates and lower housing inventories continue to slow purchase and refinancing activity of these fixed rate loans in 2023 |
| So we would see that pipeline thinning quite a bit as we get into the end of the year and move into the first quarter of 2024 |
| While money market, interest checking and savings accounts declined by $23.1 million |
| Stockholders' equity decreased to $109.6 million at September 30, 2023, and our book value decreased to $20.98 per share at September 30 compared to $22.50 at June 30 |
| The decrease in noninterest income compared to the prior quarter is mainly due to a decrease in -- of $339,000 in gains on sales of residential mortgage loans, offset by an increase of $137,000 in fees and service charge income |
| In terms of housing, inventory levels for available homes in Kansas continue to impact home prices |
| Despite the increases, delinquencies remained low and only represented 0.66% of gross loans |
| The decrease in stockholders' equity mainly resulted from the increase in unrealized losses on our investment securities portfolio mentioned above |
| You -- it is hard to believe |
| Do you think the margin and the dollars have bottomed out? Or do you think maybe there's still a little bit more downside? Mark Herpich I think that may depend on much as what the Federal Reserve Bank does today and/or announces today or some of their future meetings, I think the -- I think we're bottoming out with some of our models, but the pace at which they raise the Fed funds rate over the last 1.5 years was -- cause stress in our margin |
| I think that we feel like we are not at, we're very near the bottom at this point in time and think that we should start seeing the pendulum turn a little bit |
| It looks like given that you're going to have some roll over the next 2 years that the unrealized loss will gradually decline |
| Our investment securities portfolio actually decreased $27.5 million in the third quarter of 2023 |
| But our maturities we have in the next couple of years are our lowest yielding investments in the portfolio, but we're needing to get a couple more years of roll off to get those treasury notes and lower-yielding investments to be removed and help out our unrealized loss on the portfolio |
| But if they find our need to continue to raise another 25 or 50 basis points over the next few months, I think then maybe I wouldn't say that we're at the bottom of -- but our assets and repricing are catching up |
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