Hello, everyone, and welcome to today's Landmark Bancorp Third Quarter Earnings Call. My name is Seb, and I'll be the operator for your call today. [Operator Instructions] I will now hand the floor over to Abby Wendel, President and CEO, to begin the call. Please go ahead.

Good morning. Thank you for joining our call today to discuss Landmark's earnings and operating results for the third quarter of 2024. As you just heard from the operator, my name is Abby Wendel, President and CEO of Landmark Bancorp. Joining me on the call to discuss various aspects of our third quarter performance is Mark Herpich, Chief Financial Officer; and Raymond McLanahan, Chief Credit Officer. As we start, 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 reported net earnings of $3.9 million during the third quarter of 2024. Earnings per share on a fully diluted basis for the third quarter were $0.72. The return on average assets was 1.0% and the return on average equity was 11.82%. Our efficiency ratio for the third quarter 2024 was 66.5%. Our third quarter results reflected solid – continued solid earnings driven by strong growth in loans, along with higher net interest income and noninterest income. Net income grew by 30.5% over the prior quarter and 36.6% over the same period in 2023, while our earnings per share increased by 36.5% over the third quarter of last year. Total gross loans increased this quarter by $21.3 million and deposit balances also increased 8.0%. I'm pleased to share for the first…

Thanks, Abby, and good morning to everyone. While Abby has just provided a highlight of our overall financial performance in the third quarter of 2024, I'll provide some further details on these results. As mentioned, net income in the third quarter of 2024 totaled $3.9 million compared to $3.0 million in the prior quarter and $2.9 million in the third quarter of 2023. Net income this quarter increased in comparison with the prior quarter, mainly due to improvements in net interest income and noninterest income. Loans also increased $21.3 million, which helped to increase our net interest margin, while noninterest expense declined. During the current quarter, the Federal Reserve began to reduce short-term rates. And while the future rate path is somewhat uncertain, we believe our balance sheet is well positioned for this future interest rate environment. In the third quarter of 2024, net interest income totaled $11.6 million, an increase of $630,000 compared to the second quarter of 2024 due primarily to increased interest income on loans, which more than offset our increase in interest expense on deposits and borrowings. Total interest income on loans increased $911,000 this quarter and the tax equivalent yield on the loan portfolio increased 10 basis points to 6.43%. Average loans also increased by $30.6 million during the third quarter, adding to loan interest income. Interest income on investment securities decreased $70,000 to $3.0 million this quarter due to a decline in average investment securities balances of $8.8 million, but offset by higher yields on our investment securities balances. The yield on investment securities totaled 2.99% in the current quarter, compared to 2.77% in the third quarter of 2023. Interest expense on deposits in the third quarter of 2024 increased $157,000, mainly due to increased balances in higher-yielding deposit accounts. The average rate on…

Thank you, Mark, and good morning to everyone. As mentioned earlier, we enjoyed continued loan growth throughout the quarter, mainly due to increases in our residential mortgage, agricultural, commercial and commercial real estate portfolios. Gross loans outstanding at the end of the year – excuse me, at the end of the quarter totaled $1 billion, an increase of $21.3 million or 8.6% on an annualized basis from the previous quarter. Our residential mortgage loan portfolio increased $12.3 million this quarter due to continued demand for our adjustable rate loan products that we retain in our portfolio. Agricultural loans increased $7.5 million during the prior quarter. $6 million of that increase resulted from new loan growth, while only $1.5 million represented seasonal increases in line of credit usages. Our commercial real estate portfolio increased $5.2 million and our commercial portfolio increased $2.8 million from the prior quarter. While credit losses remained low this quarter, non-accrual and past due loans increased. At September 30, 2024, non-performing loans consisting mainly of non-accrual loans totaled $13.4 million, an increase of $8.4 million from the prior quarter. This increase is mainly due to a single secured commercial loan relationship that we placed on non-accrual this quarter. We're working closely with our customer as they work to address the situation. Total foreclosed real estate was unchanged from the prior quarter and ended at $428,000. The balance of past due loans between 30 and 89 days still accruing interest increased $5.4 million this quarter and totaled $7.3 million or 0.73% of gross loans. This increase was primarily due to a $3.5 million agricultural loan that was 32 days past due at quarter end. That loan is now current. We recorded net loan charge-offs of $9,000 during the third quarter of 2024 compared to net loan recoveries of $521,000 during the third quarter of 2023. As Mark mentioned, our allowance for credit losses totaled $11.5 million and ended the quarter at 1.15% of gross loans. The current economic landscape in Kansas remains healthy. The preliminary seasonally adjusted unemployment rate for Kansas as of September 30 was 3.3% according to the Bureau of Labor Statistics. In terms of housing, despite moderating in recent weeks, long-term mortgage rates are down from a year ago. This lower rate environment appears to have improved buyer activity. the Kansas Association of Realtors’ President recently said, "Although sales fell in September, the number of pending contracts was up nearly 9% compared to the same month last year." Home prices in September increased 6% in Kansas compared to the same time last year, while prices in the Midwest increased 5% compared to last year. Home sales in Kansas fell by 9% in September compared to the same period as last year. With that, I thank you, and I'll turn the call back over to Abby.

Thanks, Raymond. Before we go to questions, I want to summarize by saying we were pleased with our strong results in the third quarter. Growth in loans, margin expansion and higher non-interest income all contributed to solid revenue growth this quarter. Also, non-interest expense was well controlled. With the operating successes we've had over the past few years and the high-quality banking products and services we offer, we are well positioned to further grow our business and add to our customer base. We are focusing more recently on bringing in both loans and fee businesses, which is playing well across all our markets and especially in Kansas City, where we are still relatively new. Finally, I'd like to thank all the associates at Landmark National Bank. Their daily focus on executing our strategies, delivering extraordinary service to our clients and communities is key to our success. With that, I'll open up the call to questions for anyone might have.

[Operator Instructions] First question comes from Ross Haberman from RLH Investments. Please go ahead.

Good morning. How are you? Nice quarter. Just had a couple of quick questions, if I may. Could you touch upon the margin or the spread? Did you see the full impact of the 50 basis point drop in September? Or I guess we will see that in this next quarter. How do you see that affecting the margin and the spread? And if perhaps we do see some further drops on 50 to 75 basis points in the first half of 2025, how do you see that affecting the margin and the spread? Thank you.

Well, good morning, Ross. Thanks for joining and the questions. But yes, we're pleased with the quarter. And to get to your question on the margin and spread, we didn't get a full impact as the first 50 basis cut kind of happened in the middle of September, but we noticed it during – from that point immediately on with a lot of our liabilities and borrowings tied directly to the Fed funds rate on a daily basis. But the full impact will surely be felt in the fourth quarter and on into 2025. And I think the rate cuts we’re still a little uncertain if we’re going to get 25 or eventually 50 or where we’re at with some of the market fluctuations. But we’re really well positioned to continue to capitalize and show benefits from the Fed funds rate going down. And it’s not hurting that the five- and 10-year rates are going up a little bit at this point to get – eventually, hopefully, we get back to being positively sloped instead of an inverted yield curve from the Fed funds rate up until the 10-year treasury rate. But yes, we’re quite optimistic on what the margin might hold for us in the next couple of quarters.

So you’re saying the recent drop will be accretive to the margin and the spread and any further drops will be too or [indiscernible].

Yes, that’s correct. I mean, we obviously didn’t get the full impact of the 50 basis point cut on a quarter basis, only a few weeks, but we’re – it should be accretive going forward to a much larger extent. And after that, we’ll kind of wait and see what the Federal Reserve does at their next few meetings here. We were optimistic – more optimistic a few weeks ago that there might be another 50 basis point cut coming, but now it might be a little more as an uncertainty, but I still think rate cuts are coming.

What are you seeing just – and one follow-up, if I may. What are you seeing on the mortgage side? I know mortgage rates actually dropped before they lowered rates and then I guess they meandered up a little bit. What are you seeing in your mortgage volume? And I think you said you’re keeping most of the mortgage? Or are you selling whatever 30-year fixed rate, which you are originating? And could you tell us about the margins upon the sale today? Thanks.

Yes. The interest rates did drop down. It seemed like the Fed funds or the Federal Reserve was kind of pushed by the market activity in the 15- and 30-year rates. So they kind of were ahead of the Fed making their Fed funds rate cut. But you’re right, we have been keeping our variable rate 7/1 ARM portfolio, which we kind of priced in competitively with a 15-year rate. But now we’re starting to see with the rates going down, more people are starting to choose the fixed rate options. It’s a little slow at this point. I think everybody is thinking that maybe there’s more rate cuts to come, but we’re already seeing some increased activity in that, and we think it will – presumably with rates stay and continue going down, we’ll see more volume in the fixed rate area as well. But we’re still managing our balance sheet to where the adjustable rate loans will probably keep on our balance sheet, but we’re thinking that we will start seeing more and more customers choose the fixed rate option going forward. But our pipeline activity remains very robust at this point in time.

And again, the margins on the sale of those fixed rates, are those margins getting better, worse or kind of stable?

I’d say they’re staying stable. I think we’re not seeing any significant changes on the margins at this point in time.

Thank you very much.

Yes. Thank you, Ross.

Thanks, Ross.

[Operator Instructions] As we have no further questions on the call, I’ll just hand the floor back to Abby for closing remarks.

Thank you. I want to thank everyone for participating in today’s earnings call. I appreciate your continued support and confidence in the company. I look forward to sharing news related to our fourth quarter and year-end results at our next earnings conference call. And in the meantime, we, at Landmark, want to wish you a safe and happy Halloween.

Thank you. This concludes today’s conference call, and you may now disconnect your lines.