Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SB Financial Group Inc (SBFG, Financial) reported a net income of $2.7 million for the third quarter, with adjusted earnings per share increasing to $0.41, a 3.3% rise from the previous year.
- Net interest income increased by 6.8% to $10.2 million compared to the third quarter of 2023.
- Total loans grew to $1.03 billion, marking a 4.1% increase from the prior year, with a strong pipeline in key markets like Columbus and Fort Wayne.
- The company's mortgage originations for the quarter were $71 million, up 12% year-to-date from the previous year.
- SB Financial Group Inc (SBFG) achieved a 26% increase in book value per share, reaching $16.49, compared to the previous year.
Negative Points
- The return on tangible equity slightly decreased from the prior year, although it remained at a solid 10.4%.
- Operating expenses for the first nine months increased by approximately 1% compared to the same period last year.
- The mortgage servicing rights impairment negatively impacted non-core revenue, halting quarter-over-quarter growth.
- The company's deposit cost of funds increased to 1.94% this quarter, up from 1.86% in the previous quarter.
- Delinquencies were slightly higher at 65 basis points, indicating a need for continued vigilance in credit underwriting.
Q & A Highlights
Q: Can you provide an update on the recent new hires and their roles within the company?
A: We have added two Mortgage Loan Officers (MLOs) in the Cincinnati market who are now operational and producing. Additionally, we've strengthened our back-office quality control and brought in a new leader for the Wealth Management division to enhance our presence in the 401k market. We've also added talent in the commercial sector, particularly in the Columbus market, which is showing significant growth potential.
Q: What is the outlook for loan growth in the coming quarters and into 2025?
A: We aim to maintain high single-digit loan growth, which aligns with our historical performance. The Columbus market, in particular, is expected to contribute significantly, with a new leader driving commercial production. We are optimistic about achieving balanced growth across all markets in 2025.
Q: How do you view the mortgage business line's growth prospects for 2025?
A: We anticipate a 20% growth in mortgage production for 2025, driven by our expansion into the Cincinnati market and the current rate environment. Our goal is to reach $350 million to $400 million in mortgage originations, leveraging our strong back-office capabilities and cross-selling opportunities.
Q: Can you discuss the expected impact of the Marblehead acquisition on the company's financials?
A: The Marblehead acquisition is expected to close in late January or early February 2025. Their loan book is priced higher than ours, and their deposit base is similar, which should enhance our margins. We plan to reposition their $35 million bond portfolio into higher-yielding loans, potentially adding 250 to 300 basis points of margin improvement.
Q: What are the expectations for the company's net interest margin (NIM) moving forward?
A: We anticipate stable funding costs and aim for high single-digit loan growth to improve our asset mix. This should help expand our NIM into the 330 to 335 basis point range by the end of 2025. The Marblehead acquisition will also contribute positively to our margin expansion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
