Landmark Bancorp, Inc. (NASDAQ:LARK) Q4 2023 Earnings Call Transcript
Landmark Bancorp, Inc. (NASDAQ:LARK) Q4 2023 Earnings Call Transcript February 1, 2024
Landmark Bancorp, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning or good afternoon all. And welcome to the Landmark Bancorp, Inc. Q4 Earnings Call. My name is Adam, and I’ll be your operator for today. [Operator Instructions] I will now hand the call over to Michael Scheopner, President and Chief Executive Officer to begin. So, Michael, please go ahead when you are ready.
Michael Scheopner: Thank you and good morning. Thank you for joining our call today to discuss Landmark’s earnings and the operating results for the fourth quarter and fiscal year ending 2023. Joining the call with me to discuss various aspects of our fourth 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. Landmark’s results in 2023 were strong. Net income for the 12 months ending December 31st totaled over $12 million or an increase of over 23% from the prior year. This increase was achieved through solid growth in net interest income, well-controlled expenses and excellent credit quality in our loan portfolio. Further in 2023, we realized significant benefits from the integration of both people and systems as a result of our acquisition of Freedom Bank in the fourth quarter of 2022. For the fourth quarter 2023, we reported net earnings of $2.6 million, compared to $2.9 million in the prior quarter and $1.2 million in the fourth quarter 2022.
Earnings per share on a fully diluted basis for the fourth quarter was $0.48. For the three months ended December 31, 2023, the return on average assets was 0.67%, the return on average equity was 9.39% and the efficiency ratio was 71.9%. In the fourth quarter, the Federal Reserve started to stabilize short-term rates and long-term interest rates declined. This enabled us to grow deposits, reduce investment securities and fund continued loan growth. We also reduced our reliance on borrowed funds as we sold some lower rate investment securities at a pretax loss of $1.2 million and reduced higher cost funding sources. Lower rates overall effectively increased our book value per share to $23.17, while also increasing equity to assets. Compared to the third quarter of 2023, total gross loans increased by $11.2 million, mainly due to growth in residential mortgage and agricultural loans.
Deposits also increased $6.8 million during the fourth quarter of 2023. Net interest income grew 2.4% from the prior quarter and our net interest margin increased to 3.11% during the fourth quarter of 2023. Non-interest income decreased $1.4 million compared to the third quarter of 2023, mostly due to the security losses mentioned earlier. While non-interest expense declined, mainly due to acquisition costs incurred in 2022, in the fourth quarter, that did not reoccur. The credit quality of our loan portfolio remains solid. Non-accrual loans declined significantly this quarter, while the balance of other past due loans remains relatively very low. The allowance for credit losses remains robust, totaling $10.6 million at December 31, 2023. 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.
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