Hello and welcome to the Landmark Bancorp Q4 Earnings Call. My name is Elliott and I'll be coordinating your call today. [Operator Instructions] I now would like to hand over to Michael Scheopner President and CEO. The floor is yours. Please go ahead. Michael Scheopner.

Good morning. Thank you for joining our call today to discuss Landmark's earnings and results of operations for the fourth quarter and fiscal year end 2022. 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, our 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 reported net earnings of $1.2 million during the fourth quarter of 2022. For the year ended December 31, 2022 net earnings totaled $9.9 million and resulted in earnings per share on a fully diluted basis of $1.88. The return on average assets in 2022 was 0.73%, and the return on average equity was 8.25%. The financial results for 2022 included significant non-recurring expenses, especially in the fourth quarter associated with the acquisition of Freedom bank shares, which was completed at the opening of business on October 1, 2022. Mark will provide additional detail related to these expenses and the impact that they had on our financial metrics later in this call. I am pleased to report that the integration of our Freedom acquisition has gone very smoothly this past quarter. Further data processing integrations scheduled for late…

Thanks, Michael. And good morning to everyone. Michael has already alluded to our financial performance in 2022 with solid growth in both our loans and net interest income. And now I'd like to discuss various aspects comprising our fourth quarter 2022 results, which were significantly impacted by closing on the Freedom bank acquisition effective October 1. As a reminder, the acquisition of Freedom bank brought loans of $118 million and deposits of $150.4 million onto our balance sheet as of October 1. Net income of $1.2 million in the fourth quarter of 2022 was lower than the third quarter 2022 earnings of $2.5 million and the prior year fourth quarter net earnings of $3.1 million. These declines and net income were driven substantially by the acquisition cost incurred with the Freedom acquisition mostly during the fourth quarter. Excluding the $3 million in acquisition costs this quarter adjusted net income for the fourth quarter of 2022 would have been $3.5 million while our fourth quarter adjusted return on average assets and average equity adjusted for these acquisition costs would have been 0.92% and 13.04% respectively. The exclusion of these acquisition costs as a non-GAAP financial measure that provides a more comparable analysis of related quarterly results. Also we’ve recognized $750,000 loss on the sale of some of our lowest yielding investments that we strategically sold this quarter, which compares to a similar loss of $353,000 in the third quarter of 2022. The fourth quarter income statement showed continued growth in net interest income as our assets continue to increase along with our net interest margin. Organic loan growth this quarter excluding the $118 million of loans from the Freedom acquisition increased $20.8 million or an annualized rate of 11.6%, as the loan demand remained very strong. In the fourth quarter of…

Thank you, Mark, and good morning to everyone. Gross loans outstanding as of December 31, 2022 totaled $850.2 million, an increase of $138.9 million from the previous quarter. As mentioned previously, this growth was largely due to the acquisition of Freedom bank shares, but also reflected strong demand for our core lending products which grew by 11.6% this quarter. We experienced solid growth in our one to four family residential, real estate, commercial real estate and commercial loan portfolios. one-to-four family was up $31.5 million. Commercial real estate was up $75.4 million. Our commercial portfolio was up $28.8 million and construction loans were up $4.6 million this quarter. We remained focused on growing our commercial and commercial real estate portfolios. Moreover, we are excited about the opportunities not only in our expanded Kansas City Metro Area market, but in all of our markets across Kansas. The assimilation of the Freedom bank lending team has been a smooth transition as our cultures and lending philosophies are very similar and complementary. Turning quickly to credit quality. Credit quality within the portfolio remain strong. Non-performing loans which primarily consists of non-accrual loans and accruing loans greater than 90 days past due totaled $3.3 million or 0.39% of gross loans as of December 31, 2022. Total foreclosed real estate decreased to $934,000 and we continue to actively pursue the sale of all foreclosed real estate. Another indicator that we monitor as part of our credit risk management efforts is the level of loans past due between 30 and 89 days. The level of past due loan between 30 and 89 days still accruing interest remains low and was only 0.09% of gross loans this quarter. We recorded net loan charge offs of $67,000 during the fourth quarter of 2022 compared to net loan recoveries…

Thanks, Raymond and I also want to thank Mark for your earlier comments. Before we go to questions I want to summarize by saying we are pleased with our performance for 2022 with our strong loan growth, our solid credit quality and our improved net interest margin. I also want to express my thanks and appreciation to all of the associates at Landmark National Bank. Their daily focused 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 us a friend is the key to our success. With that, I'll open the call to questions that anyone might have.

Thank you. [Operator Instructions] First question comes from Ross Haberman from RLH Investments. Your line is open.

Good morning, guys. How are you? Nice quarter. Could you discuss just how quickly you're being forced to raise deposit rates? And just anecdotally, how are you dealing with those multimillion dollar depositors who are in your money markets on a one and a quarter and they're coming back to and want a better deal? You bring them up to 3% or 4% quickly? Thank you.

Thanks, Ross. And I appreciate your interest in the company. From the standpoint of strategies with respect to managing those interest rate increases on deposit customers. I mean, we do focus on the relationship that we have with those clients and we try to manage those remain competitive. It was a general focus. Both our commercial banking and our retail teams continue to be focused on generating core deposits that are operating accounts for our commercial customers and in the personal accounts for our retail customers. And those are a little, we have a little less pressure, I guess, with respect to pricing demands on those accounts. But just in a general phrase Ross, if we manage those one off request for an increase in the interest rates really on a relationship basis.

Sorry, as a follow up, do you think you're going to continue to see continued pressure on the margin, assuming they raise rates another 50 or 70 basis points over the next six months? And could you just refresh us off of what base and how accretive is the Freedom deal plan to be? Thank you.

Yes. With respect to the net interest margin Mark, you want to comment on that?

Yes Mike. I think that the interest cost pressures will impact us. I still feel like we've got some room to move up on the repricing of our loan portfolio as well as we continue to go through our renewal processes and resetting interest rates. So the interest costs that we've been seeing so far been largely on the one off and dealing with our larger depositors and/or municipal funds that are tied to indices. We've been a little slow as most banks are probably in raising up the base cost of our CDs and money market and savings accounts. But I think we're still hopeful and projecting out that we're going to see some net interest margin improvements for a couple more quarters here Ross.

I guess Ross with respect to the Freedom modeling, as we looked at the modeling of that transaction, we do forecast that to be accretive out of the gate. We are a little bit delayed in some of the efficiencies associated with the acquisition because of [still] pending core processing computer conversion scheduled late this quarter. And so I would anticipate that the positive-- accretive impact earnings will be recognized as we migrate later on into the year following that computer conversion and our ability then to incorporate some additional efficiencies during that time.

Have you specified how accretive specifically it will be and if so, what $2 some odd base are we just talk about?

We haven't published any information yet on the accretive. I didn't quite catch the $2 question there. Was it -- you mentioned maybe the cut out just a little bit, but we haven't put out any public information on what our projected earnings per share are for 2023 year.

Okay, all right. I really appreciate time guys. Good luck in and don't get overwhelmed with reasons positive rates. Thank you.

Appreciate it Ross.

Okay.

We have no further questions. And I'll hand back to Michael Scheopner, President and CEO for any final remarks.

Thank you and I do want to thank you everyone for participating in today's earnings call. I truly do appreciate your continued support and the confidence that you've shown in our company. And I look forward to sharing news related to our first quarter in 2023 results at our next earnings conference call. Thank you.

Today's call is now concluded. Thank you for your participation. You may now disconnect your lines.