Landmark Bancorp Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ross Haberman - RLH Investments - Analyst : 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 '25, how do you see that affecting the margin and the spread? Thank you. Mark Herpich - Landmark Bancorp Inc - Vice President, Secretary, Chief Financial Officer, Treasurer; Executive Vice President and Chief Financial Officer of the Bank Well, good morning, Ross. Thanks for joining and the questions. But yeah, 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 5- 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 yeah, we're quite optimistic on what the margin might hold for us in the next couple of quarters.

Question: Ross Haberman - RLH Investments - Analyst : 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 ended 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. Mark Herpich - Landmark Bancorp Inc - Vice President, Secretary, Chief Financial Officer, Treasurer; Executive Vice President and Chief Financial Officer of the Bank Yeah. 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 rates 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.

Question: Ross Haberman - RLH Investments - Analyst : Thank you very much. Mark Herpich - Landmark Bancorp Inc - Vice President, Secretary, Chief Financial Officer, Treasurer; Executive Vice President and Chief Financial Officer of the Bank Yeah. Thank you, Ross.