Landmark Bancorp, Inc. Aktie

Hello, everyone, and thank you for standing by. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Landmark Bancorp, Inc. Q1 Earnings Call. [Operator Instructions] I would like to now turn the call over to Shelley Reed. Please go ahead.

Thanks, Ian. Good morning, everyone, and welcome to Landmark Bancorp's First Quarter Earnings Conference Call. My name is Shelley Reed, and I'm the Head of Corporate Strategy and Development and Head of Investor Relations. Joining me today are several members of our executive leadership team, including our President and CEO, Abby Wendel; Chief Financial Officer, Mark Herpich; and Chief Credit Officer, Raymond McLanahan. During today's call, we may make statements that constitute projections, plans, objectives, future performance, beliefs, expectations and similar forward-looking statements. These statements involve risks and uncertainties, which should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements.

We caution that such statements and predictions only and that actual results may differ materially. We include more information on these factors in our earnings release furnished with our Form 8-K yesterday as well as our Form 10-K and Form 10-Q filings and subsequent filings with the SEC. Additionally, all statements, including forward-looking statements speak only as of the date they are made, and Landmark undertakes no obligation to update any statement in light of new information or future events. Also, our remarks may reference certain non-GAAP financial metrics, which we believe provide useful information to investors.

Additional disclosures regarding non-GAAP metrics, including the reconciliation of those non-GAAP metrics to GAAP are contained in our earnings release, which we filed yesterday with the SEC and are also available on the Investors section of our website at banklandmark.com. We caution that these non-GAAP financial metrics should not be viewed as a substitute for operating results determined in accordance with GAAP as contained in our earnings release and other filings with the SEC. A replay of this call will be available through May 7, 2026. Access information can be found in our earnings release. I will now turn the conference call over to our President and Chief Executive Officer, Abby Wendel.

Thank you, Shelley. Good morning, everyone, and thank you for joining us today as we discuss Landmark's earnings and operating results for the first quarter of 2026. Landmark is off to a strong start this year, reflected in solid performance across several key areas that position us favorably for the remainder of the year. Total revenue reached a record $18.8 million for the quarter. Earnings per share increased to $0.83, an increase of 6.7% over the fourth quarter of 2025 and 7.2% compared to the first quarter of 2025.

Our return on assets rose to 1.29%, which is an increase of 12 basis points on a linked-quarter basis and an increase of 7 basis points year-over-year. I am very pleased with the bank's performance and improved profitability levels, which are a direct reflection of our associates' hard work and advancement of our strategic initiatives. Our market positioning is strengthening as well, and we look forward to the months and years ahead. Net interest income increased 1.6% on a linked-quarter basis to $15 million, while our net interest margin expanded to 4.24%, up 21 basis points versus the fourth quarter of 2025.

Our favorable net interest margin is supported by our solid core customer base and disciplined pricing approach, enabling us to sustain a healthy core revenue base. Loans ended the quarter at $1.1 billion, down slightly $13.5 million from year-end 2025, but up $23.3 million from a year ago. We are seeing strong growth in our commercial real estate portfolio, which offset reductions in our agriculture portfolio. Our residential mortgage portfolio was also down as more of our originations were sold into the secondary market versus retention on our balance sheet. The impact of selling more originations, coupled with payoffs and paydowns during the quarter accounted for slightly more than $7 million of the $13.5 million decrease in loan balances this quarter.

Mortgage originations, however, were up 9% over the first quarter of 2025, driving an increase in gain on sale income as we sold more loans into the secondary market. On the deposit side, the reduction in balances for the quarter was largely driven by seasonal outflows of public fund deposits, coupled with the strategic decision to replace some brokered funding with FHLB borrowings. What I'm most excited about is the continued growth in our core customer deposits, which increased 1.6% on a linked-quarter basis, reinforcing the value our customers place in our relationship-based banking approach. We remain focused on growing our core customer accounts in our local communities to strengthen our presence and deepen our relationships within the communities we serve.

Later in the call, Mark Herpich, our CFO, will provide additional details on our financial results. Net charge-offs were 13 basis points of average loans during the quarter, while nonperforming loans increased $384,000. Raymond will provide more details on our asset quality later in this call as well, but I want to highlight that credit risk management remains a top priority as we work to further enhance the stability and quality of our portfolio. Additionally, we remain focused on strengthening overall risk oversight and thoughtfully reinforcing our balance sheet and capital position. These priorities ensure we are well positioned to remain resilient and adaptable across all economic environments.

Tangible common equity to assets increased 8.11%, while tangible book value per share ended the quarter at $20.89. I am pleased to report that our Board of Directors has declared a cash dividend of $0.21 per share to be paid May 28 to shareholders of record as of May 14, 2026. This represents the 99th consecutive quarterly cash dividend since the parent company's formation in 2001.

Looking ahead, we will continue making targeted investments in revenue-generating activities to better meet evolving customer needs. At the same time, we are actively evaluating opportunities to improve efficiency and modernize how we deliver banking services across our footprint. I will now turn the call over to Mark Herpich, our CFO, who will review the financial results in more detail with you.

Thanks, Abby, and good morning to everyone. While Abby has just provided a highlight of our overall strong financial performance for this year, I'll provide some further details on our first quarter results. Net income in the first quarter of 2026 totaled $5.1 million compared to $4.7 million in the first quarter of 2025, mainly due to continued growth in net interest income. In the first quarter of 2026, net interest income totaled $15.0 million, an increase of $234,000 compared to the fourth quarter of 2025, driven by increased investment portfolio yields and lower funding costs.

Net interest income also grew $1.9 million compared to the same period last year. Total interest income on investments increased $21,000 as compared to the prior quarter to $2.9 million due to higher yields on investments improving from 3.39% to 3.55%. Average loans decreased by $12.8 million and while the tax equivalent yield on the loan portfolio remained flat at 6.4%. Interest expense on deposits in the first quarter of 2026 decreased $527,000 from the prior quarter, resulting from lower cost of deposits, while average deposit balances decreased slightly but remained steady at $1.4 billion in the first quarter.

Interest expense on borrowed funds also decreased by $296,000 due to lower average balances and lower borrowing rates. The average rate on interest-bearing deposits decreased 16 basis points to 1.90%, mainly due to lower rates on deposits. The average rate on other borrowed funds decreased 8 basis points to 4.85% in the first quarter as a result of the lower short-term Fed funds rate. Landmark's net interest margin on a tax equivalent basis improved 21 basis points to 4.24% in the first quarter of 2026 as compared to the fourth quarter of 2025 and has improved 48 basis points compared to the first quarter of 2025.

Noninterest income totaled $3.8 million this quarter, a decrease of $135,000 compared to the prior quarter, but an increase of $406,000 as compared to the first quarter of 2025. The decrease in comparison to the prior quarter resulted primarily from a $308,000 decline in fees and service charges, driven by a seasonal decrease in interchange income and lower overdraft income during the first quarter of 2026. This decrease was partially offset by an increase in gains on sales of investment securities, driven by $101,000 of losses recognized during the fourth quarter as part of our strategy to reposition our investment securities portfolio to improve future income and an increase of $87,000 in bank-owned life insurance income.

Noninterest expense for the first quarter of 2026 totaled $11.9 million, a decrease of $362,000 compared to the prior quarter. This decrease related primarily to decreases of $492,000 in compensation and benefits expense and an impairment loss taken on repossessed assets held for sale of $356,000 in the prior quarter. These decreases were partially offset by an increase of $472,000 in other expense. The decrease in compensation and benefits resulted from lower incentive compensation in the first quarter of 2026 as compared to the fourth quarter of 2025. The increase in other expense was primarily related to $433,000 of fraud losses recognized during the quarter related to previously disclosed fraudulent activity by a nonexecutive officer of the bank, coupled with higher insurance loss reserves at our captive insurance subsidiary.

The recorded fraud loss excludes any potential insurance recoveries we may receive. This quarter, we recorded tax expense of $1.3 million, resulting in an effective tax rate of 19.8% as compared to tax expense of $1.2 million in the fourth quarter of 2025 for an effective tax rate of 20.0%. Gross loans decreased $13.5 million in the current quarter compared to the previous quarter and totaled $1.1 billion at quarter end. Average loans also declined by $12.8 million in the current quarter as compared to the prior quarter. As of March 31, we experienced decreases in our agricultural portfolio of $16.2 million and our residential real estate loan portfolio of $7.0 million, which were partially offset by a $13.6 million increase in our commercial real estate portfolio.

Investment securities decreased $6.1 million during the first quarter of 2026, mainly due to maturities exceeding our levels of purchases. Our investment portfolio has an average duration of 4.3 years with a projected 12-month cash flow of $68.7 million. Pretax unrealized net losses on our investment portfolio increased by $3.8 million to $11.3 million this quarter due to rising interest rates. Deposits totaled $1.3 billion at March 31, 2025, and decreased by $66.2 million in the first quarter compared to the prior quarter. This quarter, interest checking and money market deposits decreased by $61.6 million, while certificates of deposits declined by $10.8 million.

The quarterly decrease in deposits was driven primarily by seasonal outflows in public fund deposit account balances, along with a decline in broker deposits as we were able to leverage slightly lower cost of funding from other borrowing sources like the Federal Home Loan Bank. These decreases were offset by growth in core customer deposits. Our total borrowings increased by $57.3 million during the quarter as deposit growth allowed us to reduce more expensive short-term borrowings. Our loan-to-deposit ratio totaled $82.1 million at March 31 and continues to provide sufficient liquidity to fund future loan growth.

Stockholders' equity increased $980,000 during the first quarter to $161.6 million at March 31, 2026, and our book value increased to $26.50 per share at March 31 compared to $26.44 at December 31. The increase in stockholders' equity this quarter mainly resulted from net earnings from the quarter, partially offset by an increase in other comprehensive losses. Our consolidated and bank regulatory capital ratios as of March 31, 2026, are strong and continue to exceed the regulatory levels considered well capitalized. Now let me turn the call over to Raymond to review highlights of our loan portfolio and the credit risk outlook.

Thank you, Mark, and good morning to everyone. As discussed earlier, overall loan balances declined modestly during the first quarter, reflecting our continued focus on disciplined growth and active balance sheet management. While total gross loans ended the quarter at $1.1 billion, down approximately $13.5 million from year-end, we continue to see targeted growth in our commercial real estate portfolio, which increased by $13.6 million during the quarter. This growth was offset primarily by seasonal paydowns and planned reductions in agricultural loans which declined $16.2 million, along with modest decreases in the one-to-four family residential, commercial and commercial construction and land portfolios.

Consistent with our long-standing credit philosophy, we remain selective in new originations and proactive in managing exposures that no longer align with our risk appetite. While strategic exits were more limited this quarter compared to the fourth quarter of 2025, we continue to actively work down select relationships where credit fundamentals or longer-term outlooks warrant a reduction in exposure.

Turning to credit quality. As of March 31, 2026, nonperforming loans totaled $10.4 million or 0.94% of gross loans, reflecting a slight increase from 0.90% at year-end. The increase was primarily attributed to a single $1.3 million commercial relationship that ceased operations shortly after quarter end. While no specific impairment had been identified at quarter end, we prudently moved the relationship to nonaccrual following the change in operating status. The borrower is working cooperatively with the bank to self-liquidate and subsequent to quarter end, the outstanding balance was reduced by approximately $500,000. We continue to closely monitor this situation and believe it is being addressed appropriately.

Loans delinquent 30 to 89 days and still accruing interest totaled $7.4 million or 0.68% of gross loans compared to $4.3 million or 0.38% at December 31. The increase in past due balances was primarily attributed to a $2.2 million agricultural relationship and a $1.8 million loan secured by several 1-to-4 family residential properties. While this represents a quarter-over-quarter increase, the underlying drivers are borrower-specific, and we believe these metrics remain manageable as we work through resolution and expect improvement over time. We continue to benefit from a well-diverse loan portfolio and consistent underwriting standards, which have helped limit broader adverse credit migration.

Net loan charge-offs during the first quarter totaled $349,000, consistent with the $341,000 recorded in the fourth quarter of 2025. On an annualized basis, net charge-offs represented approximately 0.13% of average loans, which we continue to view as manageable and reflective of the underlying strength of our portfolio. The allowance for credit losses increased slightly to $12.6 million, representing 1.15% of gross loans compared to 1.12% at year-end. We recorded a $500,000 provision for credit losses during the quarter, reflecting portfolio mix changes, updated economic assumptions and continued prudence in reserving practices.

We believe the allowance for credit losses remains appropriately -- appropriate relative to the current portfolio risk and identified credit trends. From an economic standpoint, conditions across Kansas remains generally stable. Employment levels continue to support borrower cash flows. And while certain sectors are experiencing pressure from higher operating costs and interest rates, we have not observed systemic stress within the portfolio. Overall, certain credit metrics remain modestly elevated. We believe these trends are manageable and should improve over time as we work through a small number of borrower-specific situations. Our focus remains on disciplined underwriting and proactive risk management. Thank you, and I'll turn the call back over to Abby.

Thank you, Raymond. As 2026 continues, we will continue investing in our associates and making thoughtful strategic decisions that enhance our customers' experience and position us to grow in the markets we serve. I am sincerely grateful to our associates for their continued dedication to putting people first and for fostering the meaningful connections that support our customers and strengthen the communities we proudly serve. If there are any follow-up questions to today's call, please see our earnings release for our CFOs and our Investor Relations contact information. We appreciate everyone being on today's call, and we look forward to talking with you again in July.

Ladies and gentlemen, that concludes today's conference call. Thank you for joining. You may now disconnect.

Hello, everyone. Thank you for attending today's Landmark Bancorp, Inc. Q4 Earnings Call. My name is William, and I will be your moderator today. [Operator Instructions]

At this time, I would now like to pass the conference over to our host, Shelley Reed, Investor Relations with Landmark Bancorp. Shelley?

Thank you. Good morning, and welcome to Landmark Bancorp's Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Shelley Reed, new to Landmark as of August 2025. Joining me today are several members of our executive leadership team, including our President and CEO, Abby Wendel; Chief Financial Officer, Mark Herpich; and Chief Credit Officer, Raymond McLanahan.

During today's call, we may make statements that constitute projections, plans, objectives, future performance, beliefs, expectations or similar forward-looking statements. These statements involve risks and uncertainties, which should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. We caution that such statements are predictions only and that actual results may differ materially. We include more information on these factors in our earnings release furnished with our Form 8-K yesterday as well as our Form 10-K and Form 10-Q filings and subsequent filings with the SEC. Additionally, all statements, including forward-looking statements speak only as of the date they are made, and Landmark undertakes no obligations to update any statement in light of new information or future events.

Also, our remarks may reference certain non-GAAP financial metrics we believe provide useful information to investors. Additional disclosures regarding non-GAAP measures including the reconciliation of those non-GAAP metrics to GAAP are contained in our earnings release, which we filed yesterday with the SEC and is also available on the Investors section of our website at banklandmark.com. We caution that these non-GAAP financial metrics should not be viewed as a substitute for operating results determined in accordance with GAAP as contained in our earnings release and other filings with the SEC. A replay of this call will be available through February 5. Access information can be found in our earnings release.

I will now turn the conference call over to our President and Chief Executive Officer, Abby Wendel.

Thank you, Shelley, and welcome to the team. Good morning, everyone, and thank you for joining our call today to discuss Landmark's earnings and operating results for the fourth quarter and full year of 2025. Landmark's strong fourth quarter results capped off a year of outstanding revenue growth, increased profitability, pricing discipline and per share increases in earnings and tangible book value. These results are a testament to the hard work and dedication of our talented associates.

We are pleased to report net income of $4.7 million or diluted earnings per share of $0.77 for the fourth quarter. Tangible book value increased to $20.79 per share, an increase of $0.83 versus the prior quarter and an increase of $4.09 or 24% over year-end 2024. For full year 2025, we reported net income of $18.8 million or $3.07 per share. That's a 43% increase over our 2024 earnings per share.

We achieved positive operating leverage in 2025 driven by 17% revenue growth, which outpaced our overhead expense growth. Revenue growth was largely driven by continued expansion in net interest income which increased each quarter throughout 2025. Our net interest margin increased 58 basis points to 3.86% for the full year of 2025, driven by our attractive cost of deposits which improved to 1.56%.

For the fourth quarter of 2025, our total cost of deposits was 1.50%, driven by our pricing discipline and the nature of our core deposit base. Our efficiency ratio improved to 62.7% in 2025 from 69.1% in 2024 as we controlled expense growth while enhancing our capabilities to better serve our customers and invest in our talent throughout the organization and across our footprint. Throughout the year, we delivered 11.5% average total loan growth, with loans ending the year at $1.1 billion. Commercial loan production was strong, led by growth in commercial real estate loans and our mortgage team delivered robust results, increasing originations 11% year-over-year.

We also worked diligently throughout the year to address a few problem credits to better position our loan portfolio and strengthen our overall balance sheet. We remain diligent in our efforts to monitor and constructively address our nonperforming loans. Our capital ratios remain above well capitalized and our tangible common equity to assets now exceeds 8%. I am pleased to report our Board of Directors has declared a cash dividend of $0.21 per share to be paid February 26 to shareholders of record as of February 12, 2026. This represents the 98th consecutive quarterly cash dividend since the parent company's formation in 2021 -- excuse me, in 2001.

I will now turn the call over to Mark Herpich, our CFO, who will review the financial results in detail with you.

Thanks, Abby, and good morning to everyone. While Abby has just provided a highlight of our overall strong financial performance this year, I'll provide some further details on our fourth quarter results.

Net income in the fourth quarter of 2025 totaled $4.7 million compared to $3.3 million in the fourth quarter of 2024, mainly due to continued growth in net interest income. In the fourth quarter of 2025, net interest income totaled $14.8 million, an increase of $695,000 compared to the third quarter of 2025, driven by increased asset yields and lower funding costs. Net interest income also grew $2.4 million compared to the same period last year. Interest income on loans increased $75,000 this quarter to $17.9 million due to higher yields on loans. Average loan balances decreased by $2.1 million, while the tax equivalent yield on the loan portfolio improved 3 basis points to 6.40%.

Interest expense on deposits in the fourth quarter of '25 decreased $272,000 compared to the prior quarter as a result of lower cost of deposits despite an increase in average deposit balances during the fourth quarter. Interest expense on borrowed funds also decreased by $325,000 due to lower average balances and borrowing rates. The average rate on interest-bearing deposits decreased 12 basis points to 2.06% mainly due to lower rates on deposits. The average rate on other borrowed funds decreased 16 basis points to 4.93% in the fourth quarter, resulting from lower short-term Fed funds rates.

Landmark's net interest margin on a tax equivalent basis improved 20 basis points to 4.03% in the fourth quarter of 2025 as compared to the third quarter of 2025 and improved 52 basis points compared to the fourth quarter of 2024. This quarter, we provided $500,000 to our allowance for credit losses after taking $850,000 provision in the prior quarter. Net charge-offs totaled $341,000 in the fourth quarter of 2025 compared to net charge-offs of $2.3 million in the prior quarter. As discussed previously, the third quarter charge-offs were elevated as we reached resolution with a single commercial credit. At December 31, 2025, our allowance for credit losses of $12.5 million remains strong and represents 1.12% of gross loans.

Noninterest income totaled $3.9 million this quarter, a decrease of $169,000 compared to the prior quarter. The decrease was primarily due to a $101,000 loss on the sale of lower-yielding investment securities during the fourth quarter as part of our strategy to reposition our investment securities portfolio to improve future income. Noninterest expense for the fourth quarter of 2025 totaled $12.3 million, an increase of $1.0 million compared to the prior quarter. This increase related primarily to increases of $511,000 in compensation and benefits expense, $173,000 in professional fees and an impairment loss taken on repossessed assets held for sale of $356,000. The increase in compensation and benefits resulted from an increase in the number of employees, coupled with higher incentive compensation tied to improved company performance. The increase in professional fees was driven by higher audit and consulting costs during the quarter.

This quarter, we recorded tax expense of $1.2 million, resulting in an effective tax rate of 20% as compared to tax expense of $1.1 million in the third quarter of this year or an effective tax rate of 18.7%. Gross loans decreased $6.3 million in the current quarter compared to the previous quarter and totaled $1.1 billion at year-end. Average loans, however, declined only $2.1 million in the fourth quarter. We experienced decreases in our commercial and residential real estate portfolios, which were offset by increases in our commercial real estate, agriculture and construction loan portfolios.

Our investment securities decreased $1.9 million during the fourth quarter of 2025, mainly due to maturities exceeding our level of purchases. Our investment portfolio has an average duration of 4.0 years with a projected 12-month cash flow of $86.4 million. Pretax unrealized net losses on our investment portfolio declined by $1.7 million to $7.5 million this quarter. Our deposits totaled [ $1.4 billion ] at December 31, 2025, an increased by $63.4 million in the fourth quarter compared to the prior quarter. This quarter, interest checking and money market deposits increased by $71.6 million, while certificates of deposits declined by $12.1 million. Seasonal growth in public fund deposit accounts as well as growth in core deposits drove the quarterly increase in deposits. Year-over-year, deposits are also up $60.1 million and noninterest bearing deposits ended the year at 26.3% of total deposits.

Our total borrowings declined by $79.8 million during the quarter as deposit growth allowed us to reduce more expensive short-term borrowings. Our loan-to-deposit ratio totaled 79.1% at December 31 and continues to provide us sufficient liquidity to fund future loan growth. Stockholders' equity increased $4.9 million during the fourth quarter to $160.6 million at December 31, 2025, and our book value increased to $26.44 per share at December 31 compared to $25.64 at September 30. The increase in stockholders' equity this quarter mainly resulted from net earnings from the quarter, coupled with a decline in other comprehensive loss. Our consolidated and bank capital ratios as of December 31, 2025, are strong and exceed the regulatory capital levels considered to be well capitalized.

Now let me turn the call over to Raymond to highlight some of our loan portfolio and look at our credit risk going forward.

Thanks, Mark, and good morning to everyone. As noted earlier, loan balances for the fourth quarter were down slightly despite overall growth for the year. We saw increases in our commercial real estate and agricultural portfolios, However, these were offset by reductions in our commercial and [ 1-4 ] family portfolios. Our commercial real estate portfolio grew by $4.7 million this quarter due to loan production, net of payoffs, and our agricultural portfolio grew by $2.9 million as a result of increased line utilization.

As part of our ongoing efforts to maintain a strong and resilient balance sheet, we continue to proactively monitor the overall credit quality of our loan portfolio to identify emerging risks and minimize future losses. Throughout the year, we have worked to reduce the overall risk in our loan portfolio and reduce our nonperforming loans. As of December 31, 2025, nonperforming loans, primarily nonaccrual loans, decreased slightly from the prior quarter totaled just under $10 million or 0.90% of gross loans.

Compared to year-end 2024, we reduced nonperforming loans by $3.1 million, an improvement of 24%. Of our remaining nonperforming loans, $1.9 million are covered by government guarantees, which we are in the process of working to collect. The balance of past due loans between 30 and 89 days still accruing interest decreased slightly, totaling $4.3 million or 0.38% of gross loans. Net loan charge-offs for Q4 totaled $341,000 compared to just $219,000 during Q4 of 2024. Year-to-date, net loan charge-offs represent 0.25% of average loans. Our allowance for credit losses stood at $12.5 million or 1.12% of gross loans. The Kansas economy remains healthy. As of November 30, a seasonally adjusted unemployment rate was 3.8% according to the Bureau of Labor Statistics.

Regarding housing, the Kansas Association of Realtors recently reported home sales of 2,560 units, down 9.6% year-over-year while the median sale price rose to $277,000 from $265,000 a year earlier. Homes that sold in November were typically on the market 19 days and sold for 100% of their list prices. Inventory conditions continue to normalize with active listings up to 7,833 units and a month's supply of 2.6 months.

With that, I'll thank you, and I'll turn the call back over to Abby.

Thank you, Raymond. As we move into 2026, we look forward to building on the foundation set in 2025. We will continue to invest in our talented associates, make strategic investments to better serve our customers and capitalize on growth opportunities in our markets. I am deeply grateful to our associates for their continued dedication to putting people first and building the meaningful connections that empower our customers and strengthen the communities we proudly serve.

If there are any follow-up questions to today's call, please see our earnings release for our CFO and Investor Relations contact information. We appreciate everyone being on today's call, and we look forward to talking with you again in April.

Thank you. That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

Hello, everyone, and thank you for joining us today for the Landmark Bancorp, Inc. Third Quarter Earnings Call. My name is Lucy, and I'll be coordinating your call today. [Operator Instructions] It is my now my pleasure to hand over to your host, Abby Wendel, President and CEO, to begin. Please go ahead.

Thank you, Lucy. Good morning, and thank you for joining our call today to discuss Landmark's earnings and operating results for the third quarter of 2025. My name is Abby Wendel, President and CEO of Landmark Bancorp. On the call with me to discuss various aspects of our third quarter performance are 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 provide 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.

We include more information on these factors from time to time in our 10-K and 10-Q filings, which can be obtained by contacting the company or the SEC. By now, we hope you have had a chance to review our press release, which announced our financial results for the third quarter of 2025 yesterday afternoon. You can find it on our website at www.banklandmark.com in the Investors section.

Landmark reported another solid quarter of results, which reflect the hard work and commitment of our associates whose efforts continue to elevate Landmark's position in the market. Net income for the third quarter totaled $4.9 million or $0.85 per diluted share compared to $3.9 million or $0.68 per diluted share in the same period last year, an increase of 24.1% in diluted earnings per share. This year-over-year increase in earnings primarily reflects growth in net interest income and prudently managed expenses.

Our return on average assets improved to 1.21% for the quarter and return on average equity improved to 13.0%. We maintained a steady net interest margin and improved our efficiency ratio to 60.7% in the third quarter while simultaneously investing in new talent throughout the bank and across our footprint. Total loans were flat this quarter based on period-end balances, while average loans grew nearly 10% on an annualized basis compared to the prior quarter.

Brokered deposits were the primary driver of deposit growth in the third quarter. However, we also saw solid growth in noninterest-bearing demand deposits, and we reduced our reliance on FHLB and other borrowing sources. I'm happy to announce we made significant improvements in our overall credit quality this quarter as nonperforming loans declined by almost $7 million, mostly from the resolution of a large commercial loan on nonaccrual status discussed in previous quarters.

Our tangible book value per share increased to $20.96, up 6.6% on a linked-quarter basis and 15.7% from the end of the third quarter of 2024, primarily -- due primarily to solid growth in retained earnings and a reduction in our accumulated other comprehensive loss. I am pleased to report as well that our Board of Directors has declared a cash dividend of $0.21 per share to be paid November 26, 2025, to shareholders of record as of November 12, 2025. This represents the 97th consecutive quarterly cash dividend since the company's formation in 2001.

The Board also declared a 5% stock dividend to be issued December 15, 2025, to shareholders of record on December 1, 2025. This represents the 25th 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. Landmark's capital and liquidity measures are strong, and we have a stable low-cost core deposit base, thanks to the network of community-based banking centers we operate and our relationship banking model.

We remain risk-averse in both monitoring the company's interest rate and concentration risks and in maintaining a strong credit discipline. As we look ahead, we look forward to building on the momentum of the third quarter. We will continue to invest in talented associates and make infrastructure upgrades to support continued customer growth while making Landmark an exceptional place to work and bank.

I will now turn the call over to Mark Herpich, our CFO, who will review the financial results in detail with you.

Thanks, Abby, and good morning to everyone. While Abby has just provided a highlight of our overall strong financial performance in the third quarter of 2025, I'll provide some additional details on these results. Net income in the third quarter of 2025 totaled $4.9 million compared to $4.4 million in the prior quarter and $3.9 million in the third quarter of 2024.

Compared to the prior quarter, the solid growth in net income this quarter was mainly due to continued increases in net interest income and higher noninterest income. In the third quarter of 2025, net interest income totaled $14.1 million, an increase of $411,000 compared to the second quarter of 2025 due to higher interest income. Total interest income on loans increased $597,000 this quarter to $17.8 million due to higher average loan balances.

Average loans increased by $26.7 million and while the tax equivalent yield on the loan portfolio remained steady at 6.37%. Interest income on investment securities increased slightly to $2.9 million this quarter due to a small improvement in our yield earned on our investment securities balances, while our average investment securities balance declined slightly by $1.2 million.

The yield on investment securities totaled 3.35% in the current quarter compared to 2.99% in the third quarter of 2024. Interest expense on deposits in the third quarter of 2025 increased $266,000 due to a mix -- a shift mix in our interest-bearing deposits, which grew by $19.1 million. Interest expense on borrowed funds decreased by $36,000 due to lower average balances. The average rate on interest-bearing deposits increased 4 basis points to 2.18%, mainly due to growth in certificates of deposits, which have higher rates. The average rate on our other borrowed funds increased 11 basis points to 5.09% in the third quarter as our lower cost repurchase agreement balances dropped.

Total cost of funds was 2.44% for the quarter ended September 30, 2025, a decrease of 38 basis points as compared to the third quarter of 2024. Landmark's net interest margin on a tax equivalent basis held steady at 3.83% in the third quarter of 2025 as compared to the second quarter of 2025. In comparison to the comparable third quarter of 2024, our net interest margin improved by 53 basis points. This quarter, we provided $850,000 to our allowance for credit losses after taking a $1 million provision in the prior quarter.

Net charge-offs totaled $2.3 million in the third quarter of 2025, which mostly pertains to the resolution of a previously disclosed commercial loan. This compares to net charge-offs of $40,000 in the prior quarter. At September 30, 2025, our allowance for credit losses of $12.3 million remains strong and represents 1.10% of gross loans. Noninterest income totaled $4.1 million this quarter, an increase of $442,000 compared to the prior quarter. The increase was primarily due to growth in gains of $208,000 on sales of mortgage loans, coupled with a $184,000 increase in fees and service charges related to higher deposit-related fee income. Noninterest expense for the third quarter of 2025 totaled $11.3 million, an increase of $290,000 compared to the prior quarter.

This increase related primarily to increases of $206,000 in professional fees, $120,000 in occupancy and equipment expense and $70,000 in compensation and benefits expense. The increase in professional fees was driven by higher consulting costs during the quarter. Partially offsetting these increases was a decrease in data processing expense this quarter. The combination of growth in noninterest income, coupled with control over our expenses has resulted in our efficiency ratio improving to 60.7% for the third quarter of 2025 as compared to 66.5% in the third quarter of 2024.

This quarter, we recorded a tax expense of $1.1 million, resulting in an effective tax rate of 18.7% as compared to tax expense of $944,000 in the second quarter of this year or an effective tax rate of 17.7%. Gross loans remained relatively flat in comparison to the second quarter at $1.1 billion. However, our average loans grew by $26.7 million or approximately 10% annualized during the third quarter. During the quarter, actual loan growth was primarily comprised of an increase in our commercial and residential real estate loan portfolios, but offset by lower commercial and construction loan portfolios. Investment securities decreased $2.4 million during the third quarter of 2025, mainly due to maturities exceeding our level of purchases.

Pretax unrealized net losses on our investment portfolio declined by $4.7 million to $9.2 million this quarter, and our investment portfolio has an average duration of 3.7 years with a projected 12-month cash flow of $85.8 million. Deposits totaled $1.3 billion at September 30, 2025, and increased by $51.6 million on a linked-quarter basis. Compared to the prior quarter, certificates of deposits grew by $22.9 million. Interest checking and money market deposits increased by $16.5 million and noninterest checking grew by $14 million.

Average interest-bearing deposits, however, increased by $19.1 million in the third quarter of 2025, while average borrowings declined by $6.0 million during the quarter. Our loan-to-deposit ratio totaled 83.4% at September 30 and continues to provide us sufficient liquidity to fund future loan growth. Stockholders' equity increased $7.4 million during the third quarter to $155.7 million at September 30, 2025, and our book value increased to $26.92 per share at September 30 compared to $25.66 per share at June 30.

The increase in stockholders' equity this quarter mainly resulted from a decline in our other comprehensive losses driven by lower net unrealized losses on our investment securities, along with net earnings from the quarter. Our consolidated and bank regulatory capital ratios as of September 30, 2025, are strong and exceed the regulatory levels considered well capitalized.

Now let me turn the call over to Raymond to review highlights of our loan portfolio and credit risk outlook.

Thank you, Mark, and good morning to everyone. As noted earlier, loan growth for the third quarter was relatively flat on a period-end basis, although average loans grew $26.7 million or 9.8% on an annualized basis. We saw increases in our commercial real estate, mortgage and consumer portfolios. However, these were offset by reductions in our commercial, construction and land and agricultural loan portfolios.

Our commercial real estate portfolio grew by $19 million this quarter, while our mortgage and consumer portfolios increased $4.5 million and $1.4 million, respectively. However, commercial and construction and land loans declined by $17.6 million and $6.6 million, respectively. Turning to credit quality. Nonaccrual loans declined by $7 million this quarter, while net loan charge-offs totaled $2.3 million, mostly driven by the resolution of a large commercial loan relationship we previously disclosed in Q3 of last year and had been on nonaccrual. Excluding this commercial loan, net loan losses remained low. Additionally, a $1 million commercial real estate loan was placed on nonaccrual last quarter has now been fully collected.

The balance of past due loans between 30 and 89 days still accruing interest increased slightly, totaling $4.9 million or 0.43% of gross loans. Net loan charge-offs for Q3 totaled $2.3 million compared to just $9,000 in Q3 of 2024. Year-to-date net loan charge-offs represented 0.29% of average loans. Our allowance for credit losses stood at $12.3 million or 1.10% of gross loans. Our Kansas economy has remained healthy. As of August 31, the seasonally adjusted unemployment rate was 3.8% according to the Bureau of Labor Statistics. Regarding housing, the Kansas Association of REALTORS recently reported that home sales in the state increased 1.2% year-over-year in September.

The median sale price rose 5.5% from a year earlier, and the association also reported that homes sold in September were typically on the market for 15 days and sold for 100% of their list prices. We recognize that investors are closely watching asset quality across the banking sector. We remain vigilant in our underwriting, portfolio monitoring and recovery efforts. Our strategy continues to emphasize a resilient relationship-driven approach. We're confident in the strength of our portfolio and our ability to navigate evolving market dynamics.

With that, I thank you. 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 results in the third quarter. Growth in average loan balances, a steady margin and higher noninterest income all contributed to solid revenue growth this quarter. We are focused on maintaining solid credit quality given the uncertainties in the economy, and we continually look for efficiencies in our operations.

With the operating success we've had over the past few years and the high-quality banking products and services we offer, our bank is well positioned to further grow our business and add to our customer base. We continue to work on strengthening our existing customer relationships and are focused on growing lending and fee businesses across all our markets. 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 customers and communities is key to our success.

And with that, I'll open up the questions -- I'll open up the call to questions that anyone might have.

[Operator Instructions] We currently have no questions submitted. So I'd like to hand 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, and I look forward to sharing news related to our fourth quarter 2025 results at our next earnings conference call. I hope everyone has a great day.

This concludes today's call. Thank you all for joining. You may now disconnect your lines.

Hello, everyone, and welcome to the Landmark Bancorp, Inc. Q2 Earnings Call. My name is Nadia, and I'll be coordinating the call today. [Operator Instructions]

I will now hand over to your host, Abby Wendel, President and Chief Executive Officer, to begin. Abby, please go ahead.

Thanks so much, Nadia. Good morning, and thank you for joining our call today to discuss Landmark's earnings and operating results for the second quarter of 2025. As you just heard from the operator, my name is Abby Wendel, President and CEO of Landmark Bancorp. On the call with me to discuss various aspects of our second 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.

By now, I hope you've had a chance to read our press release announcing results for the second quarter of 2025. If not, you can find it on our website at www.banklandmark.com in the Investors section.

Landmark's second quarter results were strong. Net income in the second quarter totaled $4.4 million compared to $3 million in the same period last year, reflecting increased net interest income and controlled expenses. Diluted earnings per share this quarter totaled $0.75, an increase of 56% over the same quarter last year. The return on average assets was 1.11% and the return on average equity was 12.25%. Our efficiency ratio in the second quarter 2025 was 62.8%. I am especially pleased with these results as our strong performance is a direct result of the daily commitment and effort our associates put into making Landmark an exceptional place to work and bank.

Total gross loans increased this quarter by $42.9 million or 16% on an annualized basis with strong growth in several loan categories, and our total loan balances now are in excess of $1.1 billion. As a result, this loan growth enabled our net interest income to grow by 4.3% compared to the first quarter of 2025, and our net interest margin increased 7 basis points to 3.83%. Our loan growth has increased our focus on gathering deposits from our network of community branches across our franchise.

Our overall credit quality remains solid as we continue to experience low net credit losses. The allowance for credit losses on our balance sheet at June 30, 2025 was $13.8 million, or 1.23% of total loans. As our loan balances grow and as we evaluate individual nonaccrual credits, we increased our allowance accordingly. For the second quarter, we increased the allowance for credit losses by $1 million.

Landmark's capital and liquidity measures are strong, and we have a stable, conservative deposit portfolio with most of our deposits being retail based and FDIC insured, thanks to the network of community-based banking centers we operate. We remain risk-averse in both monitoring our interest rate and concentration risks and in maintaining a strong credit discipline. I am pleased to report that our Board of Directors has declared a cash dividend of $0.21 per share to be paid August 27, 2025, to shareholders of record as of August 13, 2025. This represents the 96th consecutive quarterly cash dividend since the company's formation in 2001.

I will now turn the call over to Mark Herpich, our CFO, who will review the financial results in detail with you.

Thanks, Abby, and good morning to everyone. While Abby has just provided a highlight of our overall financial performance in the second quarter of 2025, I'll provide some further detail on these results. Net income in the second quarter of 2025 totaled $4.4 million compared to $4.7 million in the prior quarter and $3.0 million in the second quarter of 2024. Compared to the prior quarter, the strong growth in net income this quarter was mainly due to continued increases in net interest income and higher noninterest income, but offset by a $1 million provision for credit losses.

In the second quarter of 2025, net interest income totaled $13.7 million, an increase of $564,000 compared to the first quarter of 2025 due to continued strong loan growth and higher interest income. Total interest income on loans increased $791,000 this quarter to $17.2 million due to higher average balances and higher yields on loans.

Average loans increased by $33.3 million and the tax equivalent yield on the loan portfolio increased 3 basis points to 6.37%. Interest income on investment securities decreased slightly to $2.9 million this quarter due to a decline in average investment securities balances of $14 million, but offset by higher yields on our investment securities balances. The yield on investment securities totaled 3.34% in the current quarter compared to 3.04% in the second quarter of 2024.

Interest expense on deposits in the second quarter of 2025 decreased $92,000 due to lower rates and lower average interest-bearing deposits, which declined by $14.6 million. Interest on borrowed funds increased by $284,000 due to higher average balances. The average rate on interest-bearing deposits decreased 3 basis points to 2.14%, while the average rate on other borrowed funds declined 11 basis points to 4.98% in the second quarter.

Total cost of funds was 2.41% for the quarter ended June 30, 2025. Landmark's net interest margin on a tax equivalent basis increased to 3.83% in the second quarter of 2025 as compared to 3.76% in the first quarter of 2025. This quarter, we provided $1 million to our allowance for credit losses after taking no provision in the prior quarter.

Net charge-offs totaled $40,000 in the second quarter of 2025 compared to net loan charge-offs of $23,000 in the prior quarter. At June 30, 2025, our allowance for credit losses of $13.8 million remains strong and represents 1.23% of gross loans.

Noninterest income totaled $3.6 million this quarter, an increase of $268,000 compared to the prior quarter, while decreasing $94,000 compared to the second quarter of 2024. The increase from the first quarter of 2025 was primarily due to growth in gains of $178,000 on sales of mortgage loans, coupled with an $88,000 increase in fees and service charges related to higher deposit-related fee income.

Noninterest expense for the second quarter of 2025 totaled $11.0 million, an increase of $200,000 compared to the prior quarter. This increase related primarily to increases of $233,000 in data processing and $101,000 in other noninterest expense. The increase in data processing costs resulted from additional services added and account growth, while growth in other noninterest expense was primarily due to increased losses at our captive insurance subsidiary. Partially offsetting these increases was a decrease in professional fees this quarter, primarily due to lower consulting and legal costs.

Noninterest expense for the second quarter of 2025 decreased by $134,000 as compared to the second quarter of 2024. The decrease relates to a $979,000 valuation adjustments taken in the second quarter of 2024 on a former branch building, which was offset by a $730,000 increase in compensation and benefits as we implement our plan to enhance the associate experience.

Even with these fluctuations, our efficiency ratio improved to 62.8% for the second quarter of 2025 as compared to 67.9% in the second quarter of 2024. This quarter, we recorded a tax expense of $944,000, resulting in an effective tax rate of 17.7% as compared to tax expense of $1.0 million in the first quarter of this year or an effective tax rate of 17.8%.

Gross loans increased $42.9 million or 16% annualized during the second quarter and totaled over $1.1 billion, a new record high. During the quarter, loan growth was primarily comprised of an increase in our residential mortgage loan portfolio of $21.5 million, growth in our commercial portfolio of $13.4 million and commercial real estate growth of $10.9 million.

Investment securities decreased $3.6 million during the second quarter of 2025, mainly due to maturities. Pretax unrealized net losses on our investment portfolio declined $3.2 million to $13.9 million this quarter, and our investment portfolio has an average life of 4.6 years with projected 12-month cash flow of $62.4 million.

Deposits totaled $1.3 billion at June 30, 2025 and decreased by $61.9 million on a linked quarter basis. Compared to the same period a year ago, however, total deposits are up $23.4 million or 1.9%. Compared to the prior quarter, interest, checking and money market deposits declined by $50.5 million this quarter, while noninterest checking decreased $16.5 million. Partially offsetting the decline, certificates of deposits grew by $6.2 million.

The decline in money market and checking accounts was mainly driven by a decline in broker deposits on the last day of the second quarter, leading to a corresponding increase in overnight borrowings from the Federal Home Loan Bank at quarter end. Average interest-bearing deposits, however, decreased by $14.6 million in the second quarter of 2025, while average borrowings increased by $23.6 million during the quarter.

Our loan-to-deposit ratio totaled $86.7 million at June 30 and continues to provide us sufficient liquidity to fund future loan growth. Stockholders' equity increased $5.7 million to $148.4 million at June 30, 2025, and our book value increased to $25.66 per share at June 30 compared to $23.59 per share at December 31. The increase in stockholders' equity this quarter mainly resulted from a decline in other comprehensive losses due to lower net unrealized losses on our investment securities, along with net earnings from the quarter.

Our consolidated and bank regulatory capital ratios as of June 30, 2025 are strong and exceed the regulatory levels considered well capitalized. The bank's leverage ratio was 9.2% at June 30, 2025, while the total risk-based capital ratio was 13.6%.

Now let me turn the call over to Raymond to review highlights of our loan portfolio and credit risk outlook.

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 quarter end totaled $1.1 billion, an increase of $42.9 million, or 16% on an annualized basis from the previous quarter. We experienced growth across most of our portfolios. Our residential mortgage loan portfolio increased $21.5 million this quarter due to continued demand for our adjustable rate loan products that we retain in our portfolio. Our commercial portfolio increased $13.4 million and our commercial real estate portfolio increased $10.8 million.

Turning to credit quality. At June 30, 2025, nonperforming loans consisting mainly of nonaccrual loans, increased $3.7 million from the prior quarter and totaled $17 million. The increase was primarily related to 2 commercial real estate credits placed on nonaccrual during this quarter. One such loan totaling approximately $1 million is an owner-occupied facility secured by a building and conservatively margined. A second such loan of approximately $2.6 million was placed on nonaccrual this quarter and is secured by an office building and, again, conservatively margined. This loan was brought current just after quarter end.

Total foreclosed real estate ended the quarter at $167,000. The balance of past due loans between 30 and 89 days still accruing interest decreased $5.6 million this quarter and totaled $4.3 million, or 0.39% of gross loans. We recorded net loan charge-offs of $40,000 during the second quarter of 2025 compared to net loan recoveries of $52,000 during the second quarter of 2024.

Our allowance for credit losses totaled $13.7 million and ended the quarter at 1.23% of gross loans. And as Abby mentioned, as our loan balances grow and as we continually evaluate our individually analyzed nonaccrual credits, we adjust our allowance accordingly.

Turning to kind of the economy in Kansas. The current economic landscape in Kansas is healthy. The preliminary seasonally adjusted unemployment rate for Kansas as of June 30 was stable at 3.8% according to the Bureau of Labor Statistics. In terms of housing, the Kansas Association of REALTORS recently reported total home sales in Kansas fell 2.5% last month compared to June of 2024. The median sale price in June was up 5.6% from a year earlier. The association also reported that homes that sold in June were typically on the market for 8 days and sold for 100% of their list prices.

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 results in the second quarter. Growth in loans, margin expansion and higher noninterest income all contributed to solid revenue growth. We are focused on maintaining solid credit quality given the uncertainties in the economy, and we continually look for efficiencies in our operation. With the operating successes we've had over the past few years and the high-quality banking products and services we offer, our bank is positioned to further grow our business and add to our customer base. We continue to work on strengthening our existing customer relationships, and we are focused on growing our lending and fee businesses across all our markets.

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 customers and communities is the key to our success.

With that, I'll open the call to questions that anyone might have.

[Operator Instructions]

We have a question from Grant LacKamp of Kornitzer Capital Management.

Congrats on the quarter. I wanted to start on the loan side of the book. You provisioned roughly $1 million this quarter, and you gave a lot of commentary in the prepared remarks on what's going on behind the nonaccruals. But just wondered if you could provide any further commentary there. Do you feel like you're adequately reserved at this point? And how should we expect nonperforming loans to kind of trend over the course of the next 6 to 12 months? Any color you could provide there would be great.

Sure. Grant, this is Abby. I'll provide some initial commentary and then, of course, Raymond can jump in if we need to. I mean first of all, taking kind of the last point about being adequately provisioned. As you know, we go through a robust program to determine that level. And I do think that we are adequately provisioned, and the $1 million is primarily being added to the provision due to the loan growth that we experienced in the quarter.

We look at especially the nonaccrual loans on an individual basis and have an in-depth process. As Raymond mentioned, the big driver in the jump, if you will, from the last quarter to this quarter was that $2.6 million credit that has since been brought current. So our numbers are already headed in the right direction for the third quarter.

And honestly, I expect that probably that trend to continue. There are a couple of things, and we've talked about this in prior quarters related to a large loan that's on nonaccrual. And -- but beyond that, that's probably the amount of detail that we can share on the call.

Okay. That's great. I guess maybe switching back over to the liability side of the book. Deposits kind of ticked down in the quarter, and I would guess there's a lot of just seasonality to that. Anything outside of just normal seasonality that you'd call out there?

And then it looks like backfilled the deposits with some Federal Home Loan Bank borrowings, which is pretty typical. But any thoughts behind your strategy you might have on the Home Loan Bank borrowings?

Yes. I think actually, I'm not going to comment on the Home Loan Bank borrowings. Of course, Mark can add some color on that, but let me address kind of a broader strategic question. I mean we have 29 bank locations across the state of Kansas, and we are looking at those deposit delivery channels in terms of how we're serving members of our community, what is the customer expansion opportunity. We have some new ways to take a look at our opportunities to better serve customers and to serve customers that maybe occupy only one side of the balance sheet and deepen those relationships. So that's a giant opportunity for us.

I would say, second half of the year, we have some big initiatives to gather more deposits and primarily through the branch network. We have a great opportunity to do that, and we fully plan to engage our teams in that work.

Yes. And Grant, I might supplement Abby's comments by addressing the Federal Home Loan Bank. We still have -- I think between the Federal Home Loan Bank and the Federal Reserve Bank, we still have around $150 million of capacity. It was a little higher at quarter end than we usually have.

As we noted in the prepared remarks, we also participate in an ICS promontory network of using some brokered funding as well at lower cost than the Federal Home Loan Bank. And just on that 1 day, we were unsuccessful in our bids. So we had a 1-day blip that flipped the numbers by about $40 million right on June 30.

So the deposit levels historically, I don't see any concerns on the deposit mix that we have. The Federal Home Loan Bank rate lines and the borrowed funds are a little higher than [ they would see ], but we think that the cash flows coming off of the investment portfolio, that we'll continue to see that -- those levels diminish and pay down the borrowings over the next year as well.

Yes. And all that to be said, I would just summarize by saying we feel really fortunate that we're having high-quality, strong loan demand, and we want to continue to support that growth with high-quality deposit base as well.

[Operator Instructions] It appears we have no further questions. I'll hand back to you, Abby, for any closing comments.

Great. Thank you so much. 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 third quarter 2025 results at our next earnings conference call. Have a great day, everyone.

Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.