SBFG - Earnings call transcript Q1 2019 | SB Financial Group, Inc.

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Operator

Good day, and welcome to the SB Financial First Quarter 2019 Financial Results Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Melissa Martin, Investor Relations of SB Financial. ahead. go Please

Melissa Martin

under I is everyone. will to you at remind archived Good broadcast would live call www.yoursbfinancial.com, website our being available and Relations. over this and afternoon, on like Investor the be Internet

results President regarding Joining Cosentino, CEO; anticipated SB Gathman, Lending Financial's Chief Klein, may call operational Jon Tony Officer. and performance, and This me and Officer; contain Mark today Senior are objectives. Chairman, Financial forward-looking plans, statements

number expressed a risks expectations to today. and on Forward-looking that are cause and our statements are on could to uncertainties based differ management's subject materially or call of actual results from those implied

We have the Financial date obligation required to our forward-looking of earnings after the identified release, statement, by update which law any undertakes within no forward-looking encouraged a except SB of factors you as of at review. end different statements call. the are this number to

in also I GAAP, turn addition results with to Mr. this to measures. financial accordance non-GAAP Klein. will presented call will call certain over financial the the In now contain

Mark Klein

Melissa, and good us. to with all first you, to webcast. It's everyone. our and you XXXX Welcome have quarter great conference afternoon, call Thank

balances impairment onetime Adjusted portfolio XX.X% the million. our or Deposits prior growth of points, prior over mortgage increase basis $XXX,XXX, year. $X was of for Mortgage $XX over over $XX million we of income, or or $XX.X today XX.X% by million, flat upcoming effect the million comments XX $XX impairment $XXX,XXX net the to year-over-year. supported in essentially improving temporary of mortgage up the on the the onetime this quarter the Expenses, year-over-year. our volume increased was continued year-over-year decline and Highlights include light quarter earnings assets quarter, million, the million million, $X.X or origination XX% net this Our XXX for holiday. down return quarter quarter year-over-year. After certainly $XX excluding Loan morning $X.XX basis effects release points. the from for million of XX.X%. average are filed down the rights servicing income

and year quality strong. linked the Asset remained expanded ago from quarter, loan XX% the quarter. down but sales significantly SBA over metrics volume

have times five our we key web of communicated about are company households, scale, operation all our has asset diversity, and over and services, more intimacy client scope, As our many in more call, with excellence quality. course, revenue initiatives more in communications, great every great performing those

First, revenue diversity.

million Non-interest year over volume sale were to declined and $X the quarter, income XX%, This loan from quarter gains prior respectively. mortgage XX% of down and million. $X.X

result, our a from respectively from non-interest or declined As and assets the the quarter. revenue total quarter average to XX.X% XX.X% and linked income X.X% ago of X.X% to year to

traditional coming $XXX,XXX we Our we last our the income levels in and to to is newly impairment footprint quarter pipeline that expanding, Indiana. return down quarters, or Indianapolis, volume mortgage our non-interest rights for LPO brings the includes that announced Adjusting XX%. servicing in our to expect just and across established

strategy business business to this agency title another improving to diversify while it and augment in line our in estate To non-interest stream recently another quarter quarter our initiatives, revenue potentially policies, diversify announce intent market. residential our estate Columbus and income. identifies streamlining process. closing The is our to own webcast, with title purchased the and leverage of underwritten to activities discussed commercial our we and we real line As grow greater fourth a real would we our then our

approximately X% in line increase expect be revenue this We quarter business profitable in our total the to to second and XXXX. by

loan $X.X sale $X came in million. at million production Our with over gains SBA

now linked quarter. for in with increased loan of our to nearly quite a model well gains in million XX% BDO gains an for we're $XXX,XXX XXXX. As sale the to sale firmly $X.X result, loan from deliver improvement prepared place our a And

million stands with yield now at approximately of portfolio residual a Our X.X%. weighted $XX

mentioned. Our for of competitive, company. understand mortgage a lending I addition business confident new is line compete. we're now includes we This our we six with And offices while loan market is can as Indianapolis, production quite that the

We and our robust high a XX-year $XX to platform volume. leader in of loan million three lender team to to an and backroom have deliver and a infrastructure four experienced assemble producers

portfolio or an we operational of $XX million. loan X.X%. care an Double-digit over longer-term $X represent business increase our line and set discussed of mark new of to vision from in for or X.X%. an million represents billion fees on of servicing of for more and today. us driving efficiency. market approaching $XX and of now under quarters Wealth servicing the $XX of our delivers gains many more to to producing drove sale X,XXX growth service assets sights Our quarter $XXX,XXX $XXX quarter Management diversity as more million for This increase on million annually our million the $XXX revenue increase This assets up households growth revenue

growth and drive accumulation. are New our leadership asset in seasoned markets more talent to in place

expanded at initiative, or growth XX.X%. key quarter last delivered slightly reflect to XX.X% off over from and quarter. Total the billion scale second deposits of $X.XXX year-over-year and scale. linked as net stand income. expand now grew interest $XX loans more year, growth the assets Interest Organic Our we the income same million

came Our contracting with regions our each Lima the loan Williams quarter and of in XX growth County of regions slightly. million from $XX.X

continues and we gain Our traction leasing program number ago. quarters a discussed of to

or an XX%. to For the of quarter, we our now produced $XXX,XXX, increase million bringing balances $X.X

New above X.X% million growth fuel to down linked the X.X%, continue the increased to interest or loan $X.X quarter. but interest year, demand. Deposit to - prior margin net

services, Growth deposit to grew and we interest accounts deposits to Year-over-year savings banking remain we've quarter, core online This of and in relevant lower digital capture, includes initiatives growth banking. million, and XX.X% from $XX costs deposit space. million launched came up treasury banking and or accelerating anytime DDA, Electronic was is This X.X%. growth. or real-time million $XXX base this mobile $XX in management our CDs. and non-interest remote

gathering This is forward disadvantage. our deposit This limited career quarter, to we competitive initiative also brick-and-mortar introduced service. intended commercial our

Third is relationships. develop deeper to our strategy

staff courtesy retail make continues Our clients. to phone to calls

for lead digital are Our client blitzes business calls. our have These communicate These initiatives most include our marketing. here supported and target enabled client. individualized with digital a to and also and initiatives market. to us touches house bankers the commercial to our our manner in-person client private to clients bankers the These call make media bankers e-blasts, social delivery to is initiatives customize continue with desirable Goal expand in base.

nearly Chief business or an households deeper XXX added of to ensure not the This year-over-year. increase retain has we also but more for To Gaytan, required Officer, ecosystem our of increase deliver of and service an Innovation our Ernesto lines quarter, our XX,XXX Technology our has world-class only? we clients, all the to X,XXX talent restructured back bench. grew can half

referral process dynamic Our for continues company. to differentiator a our be

we quarter, our excellence, of serviced new over in $X.X servicing billion clients on With XXX at $X new of XXXX, over performance million number in a volume over $XX state portfolio from highest Operational fourth This the generates annually. million of X,XXX, X followed representing closed our in that now business theme. referrals nearly bank, our This level second and nearly last to to referrals. nearly added years. of revenue from which our was our XX% coming servicing mortgage loans we're increase able from stands results

supplement business. opportunities players with to leaving mortgage in continue markets fringe We as our origination the of residential all our staff we see

below focus retention quarter will the charge-offs to the prior client X.X% on our revenue down at X.XX%. focus to maintain the service XXXX. well term. total year loans as come. for the a of were continues and linked the increased Nonperforming past Net a of to many intend remainder for the model level to And the quarter, the turn years assets growth finally, to quarter. controlled at long very quality. for mortgage growth we believe We Our and expenses due clients X.XX%, in were and banking asset We into levels client slightly full $XX,XXX. flat to well for Expense relationship community

Our our depth great and Tony to reserve review it a insights. peer credit over and for loan quartile to some group continue nonperforming I'll now our on to with dynamic now Cosentino and our have color little more additional remains and top And in coverage focus turn comfort process. for at XXX% results, Tony?

Anthony Cosentino

Thanks, Mark. Good afternoon, everyone.

noted, indicated, by million, those rights. had For earnings on as earnings we XX% of impacted net the share. our we net income $X.XX diluted per income servicing per or were temporary quarter, up increase. that as mortgage or And Absent impairment, $X.X impairment $XXX,XXX million $XXX,XXX the Mark $X.X of

higher a down of low year points. $X.X we million, that the at from prior is from business first first the from raise quarter. flat And the we ratio up we to capital year, or gains XX%. under of end with continue XX% Of assets prior NPA delivered the mortgage, adjust XX agriculture. of Loan course, was will quarter this due include completed from our to $XX.X X% share million Mark Loan just to prior $XX from 'XX, adjusted as however, quarter by we have revenue the when Mortgage $XX.X year; the operating indicated, million in December growth and hold and for Highlights lastly, up steady of and nonperforming count impairment. small basis sales $X.XX quarter flat volume, XXXX. million year the our average

asset X% margin, period look the interest million, year. year X.X%, quarter average of that for by to have this just Obviously, the XX year. of sheet the down the in XX XX%, an by up yield net we with quarter. increase rate interest balance loan yield basis to our prior increases the balances of X% affected indicated from was further year. up augmented Overall, the point but linked up earning the points impact into $XX prior End As basis prior an past was loan income the increasing income

have year, to points banks, On expect down interest the basis the of up cost year, roughly from experience the the like remain this from costs X.XX% QX. range our continue interest increase however, remainder X the from just up for the points interest-bearing prior was at Net all from to Total of XX the basis and an liabilities XXXX. margin, X.X% in basis for in including X driver, X% mortgage side, prior prior we $XX year-over-year XX% key with funding million X.XX%, growth, million quarter, margin higher total we the in with increased points volume coming depositories. been of in from up a Margin faced our quarter, growth loan driven increase nature of naturally million, yield. balances reduced by year. prior $XX from fees loan current this income deposit interest a $X.X income the XX% loan was year supplemented risen loan costs, we've from of the loan competitive origination and as by loan increased

was annual a the down by the from newly percentage year-over-year results from have volume the loan prior the the referenced. growth as had include impairment of a pressure were from mortgage in origination, million income the Mortgage $XXX impairment, strong be reduced levels. of pipeline prior impairment. as from have which million to compared XX.X%. Because million for income in reflecting arena, would XX%. million originations XXXX loan for volume quarter quarter, or last to the quarter. servicing rights. year XX%, a from the And that we our The Mark was $X down mortgage a for year year Mark year impairment and to originations year, months, with prior X.X% lower In title is which our $X adjust SBA have temporary down the for we match decline the indicated, that acquired of of the when to volume, we expect $XX.X the production, XX% prior We were and mortgage down revenue for Total $XX.X agency Adjusting on XX lower continued $X million and non-interest of our originated would million, this contribution total mortgage XX% servicing increase. small the fee

quarter portfolio to respectively, remained gains sale $XX.X XX million, indicated $X.X purchase That and declined of of XXXX. XX%, was chosen calculated new in portfolio was providing linked volume historical up points at than the we $X have volume quarter's and quarter stands X% end, XXX million. our in between more on sold is averages. $X.X billion, total servicing the X.X% prior and result X.X% million, in still of now servicing quarter, $X.XX This we've activity the million million our from product discussed. significantly had this and do prior in At servicing our more The value on-balance XX impairment which fair servicing and in of our to deliver high Total sheet but linked at year. the by our total value, of $XXX,XXX the basis and or on from from revenue revenue increased of from XXXX $XX.X past year pace ARM again came this rights down first quarter, at on our residential X% we as rights, the the Market points $XX million quarter. down quarters, basis as quarter did the clients were

were the our with servicing second $XXX,XXX. return portion Obviously, and a a hired resources would we change prior this expenses but and of recapture in have impairment here in $XXX,XXX. more the in had and management. lower discussed rates do rate from we've on normal quarter, operating Total an level of we mortgage to as added QX $X.X linked volume expenses compared late impairment. fair the total expect risk SBA impact curve volume flat were operations in rights, that The offset we the the has quarter, quarter, million, Our of is the temporary year; remaining down

support not do levels. should anticipate resource further expense in we growth levels mirror As growth revenue growth, XXXX

the let's balance Now return to sheet.

$XX with residential asset of $XX Compared to of loan outstandings by $XX Our commercial million. million to our and at million We up from followed and and which prior million from at the real in million grew million, was growth stood respectively loan linked [ph] were of company. category, $XX the at XX.X% quarter. $XX year, by total book year led the growth $XX million prior assets estate every loan had X/XX we the $XXX.X

side, the growth rate and up from by deposit we by from which million, the year are On X%. the up $XX prior quarter $XX.X or million a XX.X% is linked

we As loan fund our utilizing been sheet fully growth. just have to throughout discussed we XXXX, balance our double-digit

While very for bit is still to our us historically. a XX%, loan-to-deposit ratio back high quarter this it pulled

with deposit in markets, of competition our elevated. is rising In pricing all addition,

past liability year. quarter, increase interest-bearing our a our However, costs continue rose rate this expect prior we this to lower during and but year-over-year at to slower rate than

million the quarter from Looking million, capital up we at position, the our at $XXX.X X% finished $X.X or prior year.

the the with quarter completion liquidity pleased after from capital raise be the our shares and to continue sponsorship We of of in added our first XXXX.

the by and due Due additional zero, for preparing credits, asset X.XX%, continue loan total loss or to Equity allowance just flat basis We will, make those, Total quarter losses our - our X those nonperforming basis however, year me, we level restructured our are the which be change, what of just Included up extensions total assets. level asset million challenged $XXX,XXX nonperforming on accruing and of the were of all in prior the quarter level EPS Total to prior CECL par from is growth challenge Absent nonperforming $XX,XXX, growth, elevate assets now $XXX,XXX impact was quarter. very the be full for We year, points, absolute $X.X points million up shares. total our our stand nearly quality. from and to to of CECL X the in steady nonperforming $X.X is Discussing allowance asset have XX assets is our the loans to ratio allowance. $XXX,XXX and linked quarter from year. maturity nonperforming in total we in ratio at to points. at at million progress points. end. would to X.X loan XXXX asset year XX.X expense excuse down XX now basis in but loan the small of the Provisional did quarter. on linked in prior with was basis

median our our would parallel profile. places in of XXXX to our similar expect with The of throughout banks model will the We new above other in still and allowance levels the Mark. the level CECL NPL of of allowance our us We line to X.XX turn run is the risk rise our peer and peer coverage with XXX%, the of just ratio slightly group call year. I prior back allowance top that group. have from now will now quartile coverage down in over

Mark Klein

Tony. you, Thank

We expect and certainly have prepared more years. XXXX the for experienced challenging has last banking a few than community

Title career, at With us our not with expanded the revenue we the to us treasury clients to group. of addition as push our The above experience. of placing Melissa of continue we in for another against XXXX XXrd impact of over repeating our leasing peer amongst group few Finishing allows and of challenge products, our to XXXX. our Indianapolis back our the diversity addition it that at fact, competition, is and will and ourselves management the allow welcome to against our top performance fourth now closing With of name back comments. such our year geographic and diversify to Agency XXth market percentile conservative a presence now headwinds. certainly region, positive look in adds and percentile to forward I'll quartile peer that, We're measuring suite turn

Melissa Martin

for Operator, now first Thank ready our question. we're you, Mark.

Operator

comes with Brian Instructions] first Partners. go FIG from question [Operator Our Martin Please ahead.

Brian Martin

guys. afternoon, Good Hey.

Mark Klein

you are doing? How Brian. Hi,

Anthony Cosentino

Brian. Hi,

Brian Martin

Just a can just things couple of me, maybe for you cover.

just - mean optimistic economic there of there's outlook sound any talked folks kind You any delivering horsepower loan just sounds couple and to Or in we've growth. lenders changes you've you with on feel the very change - from economy confident have talk it growth, though you is the pretty Or with you the on that know seeing some your changes customers? loan as some I strength But on, heard other guys slowing single just other comment as but and caution front where of about, your that that you're guys feel today? fair? the that you you've a double-digit I bit, out upper I digit, maybe a in could low on still have. still seen banks conditions, the guess, as you

Mark Klein

many growth. rates But and feel we of we've kind we fronts. maybe digit Obviously, high double all built I'll to single, couple for are very, kind of regional a of Yes, strong to the of is Mark. margin Brian, I enough high to expansion, like this kind comments, get cost ask low increasing. are I'd of said higher a that still funding. justify know, generally are regions appear a Gathman good strong, we're all at for across drill our competitive, Jon, into But make built We're be very marginal growth. of Jon results. times, then cost pipelines funds very a But a albeit little with to can level, and

Jonathan Gathman

very said, arena. be pressure of But built the horsepower beyond. solid Mark lot do. environment in second across here particularly our the They future. estate and Mark's growth, both we're quarter, second C&I Certainly, growth, quarter a a some in there'll here that encouraged frankly. growth from real the that in the commercial in pipeline, very quarter pipeline encouraged we To have as economic multiple the about for by comments, in what's have and we the to echo second pipeline for regions, optimistic first and strong the in quarter in Very addition

Brian Martin

any higher, this were quarter Or note? payoffs lower, then were And they about guess, I normal? mean, there I just to Okay.

Jonathan Gathman

particular this nothing note quarter. of No,

fourth particular sold particular somebody quarter one call talked property, estate our in we quarter, this as nothing the real we but in no. in some think I couple commercial last a saw in payoff

Brian Martin

for right. on Tony, just one All Tony. just And the Okay. margin, maybe

the expecting cost of kind on you moderation XQ, sounds now, the if Just have how from kind - then of the yield to just in biggest a reconcile funding and out. guys you the margin the just the Fed though as you look with talked talk you're about driver flattening as as as at and it about XQ decline you just plays curve pause

the of I over think expect just to you hoping to is mortgage? said, pretty quarters it and balance mean, with just I flow kind it worth you're Or ebb of at. maintain the and year? you coming kind reconciling steady outlook in would would then of just So the be the be it it helpful.

Anthony Cosentino

were more in million We for $XX Tony. of growth million in is quarter. that mid-X.XXs we Obviously, had 'XX. to fourth This Brian. versus the quarter quarter Sure, in mortgage $XX origination this

XX a was from to XX perspective. basis probably kind that change, that point of So XX

of So were this seeing I that to quarter on on really we call of in had market growth bulk as our higher maybe as rates on some we little the of And mid-XXXX some we have we we down not client. indicated, curve it was that moved private here us price costs product to in probably the as on bit level were last, increases. days. X.XX% And those the get offset changes more and it, the a ahead our taking really loan funding. we're XXX slowing, money bit terms to cost went with deposit But deposit me, in aggressive little deposit a many a

deposit on think growth I necessarily So not as our will much rates. move with but pricing loan would

Brian Martin

mortgage which -- far took as - said, quarter, you like was the impacted Okay. the this And less as margin. the

higher around and the you comments? I I XX% that and an maintaining the about in trend picture? mean, So is tail fourth more increase think kind As of range annual bit the with to third kind in you of margin a the how it could now, off maybe big quarters, see talk then Is that just the of kind a about of second mortgage mean quarter.

Anthony Cosentino

but were I've Indianapolis us where with still hopefully on we market was XX% I to And gate and do be we traditionally out of of and we a our level with QX we that expect. that here - I talked we're XX% to kind than addition heats say would you And mean, than little up. of I expected, obviously stronger mortgage the in expecting QX looks about, softer QX the is for volume and candidly, as some and Yes, location. think as QX par

ebb going is comment any of to that? be year, on Mark, market. I origination if don't it mortgage have flow So in and think, I know, an you the kind

Mark Klein

the generally, you as No, as we're a I we said, pipeline in seeing expansion speak. Tony, think, significant

to rates the we're little a and side, a we've on said, as and with blipped optimistic that very approved the market new levels. and site, that or market, we're going go new residential near, pipeline this million $XX above our especially bit, but have be that On of XXXX got ready to to be $XX in at now fair we're million should we production applications Tony

Brian Martin

as yes, - 'XX was far see you, just going origination to year, the that of is the level? guess, Mark, I slower ask to even some be level 'XX, start your volume growth I the expectation of will you look with in as at level versus origination on Okay. that's if 'XX what the still

Mark Klein

growth number, bringing vision talked on a year. years the that certainly, we've Brian, the in market. is levels million don't XXXX households, in variables producers to $XX in on growth the our We our $XXX of our love we're XXXX. of one we as speak, producer we're going another disappointed still and million we've got ago, number up and $XXX times, of Indianapolis if and million a do in number of generally, somebody bit. our But mark key markets, love couple But $XXX one over annually. is Well, paying the coming we variable not we the be got this past line. business We're We million as

again, lever it and pay. The variable So to all a too. number services, into number. the it's we producers variable of like try it, And is because variable base not more is we lot the

Brian Martin

but a just holding couple like Okay. least quarters. still things range the the last out, the those then that there guess, pretty last in third that point? margins, at And they've in sort to comfortable being of lower well gain quarter Is that seems appears a look fair where still year, of been at be of bit sale on after shake I like seem this

Anthony Cosentino

that as is I range stable of have with. upper good that we pricing sit it, feel think call today. of, pricing a I'll Yes, here gain seen kind and of the we very we that But mortgage Xs yes, that very because comfortable nature

Brian Martin

as you right. in And you quarter the or expectations have guess, side far last you of the as brought people expectations what how on remind in just then many and All Okay. so this on people like have, the me just of year XXXX? guys I your number mortgage hire

Mark Klein

we a net Brian, two. X the up processing, producer markets. the up have added on $XX and risk, couple looking in But and to more maybe on back shore of continue of Indianapolis regulatory couple on at said generally I think, areas on coming and shortly. in all a one this of we in month the to added you're lending that Brian, last be Well, of and albeit again if looking those redlining I going bring lost think, end CRA Columbus It's made maybe production changes here of containment fair increase and a one, one on we the side, speaking. to two. hopefully We quarter, million one growth we brought We're one We our as

we're So or million, $XX $XX of producers what average very to something talking million 'XX. did that when to going thing. And you're kind XX close than be greater we to in you a at

services. cross-selling to additional for MLOs key line for that's So We funds a more pay love to us. our business

encompass opportunity. pretty end more and the that excited about with space. ebbs but So we and robust we got buttoned at intend to we're tides, in on now platform and the it know that player a it back good remain the we're pretty up mortgage ecosystem We

Brian Martin

Yes.

Okay.

guess, the impacting like and in side, that's know over the half second like was I was shutdown we government And this the year. was, helpful. even things. -- up quarter - it some it. there's looked I quarter's concern production level just of on about So back And the said, and appreciate last the SBA I you up

the about for good SBA business the feeling sales continuing for you've year, the on that number to you brought are up people guess, just I So that the year? ramp and

Mark Klein

of to couple of SBA number a Just non-guaranteed in and stress a bankable, into standards SBA. reduce comments, We're SBA marketplace continuing the a make our Brian, because see piece. their a bit about traditional have a banks begun to of

who that new think near we're the us to in a And in our requiring about on fighting And our a it's little what we're we're Jon, producers? we have comments markets. seem the calling bit, So battle successes on some to little And but some made doing. of adjustment. and differently realizing we're markets,

Jonathan Gathman

the I right. in year BDO hired last a nice here Fort market, to to middle with second to term Likewise, quarter. BDO how a and that how Mark's on of past a the in start new our off No, in we he's went we Wayne process model and market restructured think, get them. use they're in them, deals we and Particularly, here pipeline great all how we referred

nice as here SBA second of front. So very quarter Mark And beginning the the pipeline our that. is said, on the see we're to in fruits

Brian Martin

Okay.

normal as production and just really this know mean, I mean quarter. flow I little going sporadic, to consider quarter's nothing as this bit I quarter little unusual far to quarter-to-quarter, a I mean or ebb the there? with numbers guess, or model, in low type bit guess, high So more I be but it's wouldn't a I the even a of when of kind a you headwinds, be of you that

Mark Klein

say Brian, I would this.

the X calls, I discussed we Variability the volume our heels It in in of created maybe of some years, as prior some deals. some larger past quarter-to-quarter. came on think

seems deals are it's there, bit broader. to moderate This but And larger-size little be there quarter, some to a volume that in more.

a here smoothing it expect I So XXXX. in out

answer will in be similar, will different is, question the I be little but your based it markets. So think across yes, short to volume a broader

Brian Martin

I got you.

helpful. maybe That's And picture Okay. just big question. one

the the still for it Given in with quarter the the I comments, total that I getting added XX% with an a out? when target -- some kind of adjust you income quarter, to this when this, I idea what I this is targeting relative for on here look you you was where revenue, impairment? S&P, impairment of what momentum this guess, can SBA. that you're you or XX% the bit at give company year it, little mean shakes guess, when fee of title mean the guys

Mark Klein

–that's knew the the the Yes, XXs speak, of that balance continue today, we But Brian, I average of and other $X another We and that XX% income in two one that residential company are, love But that million potential influence we've XXs, as develop got speaking, quarters drive bring because and of advantage. higher We have that the insurance income great there. send our X fee and the in pullback and think, low their competitive nicely think pull drives we arena SBA. title back to to on we fee we on know which an went that pitching done in it on a of it's date. clearly, Management's But been actually our fee and years they why And anytime expectations what and title a to world. genesis it. strategically soon. to each to in at to to don't we is divisions, in us last which have the know the support was might intend we low great out level Wealth that generally a mortgage generally opportunity for SBA potential always relationships the that we centers but, or there's the in $X that other We lot we something million. -- had on have been we out so

the So number. like lower Tony, I comments? But XXs

Anthony Cosentino

it, certainly Yes, similar things our in of, are. percentage they where out for sit what impact we XXXX. is that if assumption XXs than we as think, volume slightly mid look XXXX that. I'll Mortgage has higher relative call That's expectation I of a kind to oversized did an on

Brian Martin

mean, but company, give just on Okay. the a I of that I I guess, normalized that is I be? what when kind of, you can on guess, you can would And type obviously, quarter ramps expect that? up that see kind title of mean, it contribution any it, we thought

Anthony Cosentino

a and excited think, own title to things, personal residential agency, I third volume we there we implementation full our expect higher fully and What's unique a running. about, been our call at, of And kind offerings would which, our and it, mainly during other it's kind we I the revenue. what of would expand suspect type second with would we're We're would quarter commercial out and be Sure. very expect smooth visits will seasonality what up levels. of a and little of

Mark Klein

amount company. that synergies and integrating know, excited quite fair of of in policies title a that a certainly, line leader lot there. pretty think valuable premiums And we XX% we And we We're do are and commercial. all our strong title operation about into there's Tony, our of commercial of those as retaining business a

us keep stream. drives what diversifying revenue to that that's so And

Brian Martin

got I you.

in how the Andy, it regard couple, kind would of just items commission income? that about the type number kind clean than the there as the and the incentives over of first quarter, about Anything other of with the balance the was that the year? go on of I think Okay. from just run unusual that flow being a guess, any to there skew you was expenses? of rate - could - ebbs last to

Anthony Cosentino

the there. mortgage. expense were levels, prior of on year the dead flat SBA volume upon as No, Most and really you that, spot based is to

vacancies. a have but of those going are We open be couple offset spots, to by

unique So changes head anything QX. in count I any don't anticipate or

Mark Klein

Board. what per going do now. X and little years striving balance we of little fair ago that always in to bit optimism couple pessimism had operating is indicated to In years sure of a we to markets, then share earnings to from what the for for and a we've a We're is going XXXX, versus make of we're gate and positive Brian, our comment. of amount a with do just good we bit a and made were we which out that great the want sure contributor of leverage, make bets new be

the and it, going something on that that. company to think return of a we're So great that going spend and we're sure make get to leverage, we operating is we're example cognizant when title some of we do is

Brian Martin

Okay.

ratio expectation 'XX income statement or to the manage in So you would than at in as you expenses the see the you if your the lower prepared bottom least 'XX? remarks be versus trend efficiency said say line, your mean to that expectation

Mark Klein

that commercial residential. that again, the rides the Well, lot mortgage behest a on side banking of and bets banking made of lot have we the been as we of at well know on

for a And possible of made lot us. has so residential things

us of income fix expand kind develop mortgage to quick commercial base lending. do that's non-interest so into and And allowed to we that's of markets our them that enable new as

as growth And so now the bit residential one's side. the interest off on little side income our organic improves on kind following net of a

got producers good good model. us So line $X into think we pretty and because the of group of consolidation. we've $X.X albeit think to in lost keep kind we and some larger a quartile that that competition We balance some have billion peer up business top billion to of we've

year, XXX. So XXth so or basis last was this ago, rose points about XX to year then it a percentile and

improve and ours raised, we're the up been So as willing has step bar to well. and

Brian Martin

Yes.

I in from the guess, organic remarks, buyback mean, talk you Okay. you the addition capital, little prepared about M&A, we priorities a given bit a capitalization on use I are perspective I today? guess, looking just stand just of I can it today, when last the guess, to best I at that versus in the growth, And thing, guys where maybe where talked mean, about the

Mark Klein

who we again, and that But we we and had platform. to somebody felt buyback $XX We know might culturally disciplined on that. raised fit when opportunity M&A mild to number a of a million very we raise before, to in the just we're there. in as loan. some we how need to discussed know And remain capital, we've do liquidity it we lever wasn't certainly an times for it reaching out Well,

So targets. think certainly market what model the to one certainly operations before, kind some we we we got and three. market Those maybe deposit-rich our and we've equal fringes one into have interested within as our said of and potentially deposit-rich make, And on key of franchises us. leverage

of payback not pricing we're go, we will. and is leader. months period we will So albeit deviate times book a cognizant and discipline not tangible everywhere our strong a XX if a particularly trailing XX that from of market currency, with but not you XXX%

Brian Martin

the they say? side, been? what would as the any at Has discussions I of being, Right. with have you mean least on you today characterize kind there M&A as stable would versus been acceleration discussions

Mark Klein

know culturally And product conversations a know. share think we we continue what from we that and intimate do growth. set. think that, is which and we our to stay financially, it and with with how We want good we Things we to know model. get franchises we organic what month every a to have per know And people. geographically, Well, we we fit have value, and pay which shareholder earnings what we for drives is

model our offices. XX that's with others that may we may than lead we have people that's our to our us And brand, we is want going we Our think a that just growth. to onboard think organic how delivered works because for more

Brian Martin

there economy is with this market, be I going on shake, perspective, it scale. more on that I the from some if sellers some commentary the the the banks smaller guess guess, may curious what's in whether was I being Yes, just were shaking loose the Okay. obviously need -- people slowing of

So certainly know are I you guys interested.

sellers sellers more Just at vulnerability, if you any that's all, or out will, you they're there wondering they're the changing guys? - for the potential if how if causing

Mark Klein

Brian, Well, I that back terms fact there's the to are still again, be think I sold, continues we're the there. potential not quarter geez! bar expectations, But think, in franchises set seller of maybe out to bought. every and

conversations. we that pieces those have of to great continue one it's So

we're an and existing or do good model today and thing we quarterly business lines to can capital on per not earnings stockholders earn potential our the but right best Opportunities, do we to and not in think accretive be share We remain build to that going only our as targets. acquirer I disciplined is identify book but and doing. our ahead we're performance overpay. to again is something and what leveraging move

Brian Martin

No, Yes. I you. got

Okay.

far of guys within the as you of raised on if just profitability mean, Mark, still things and bar as that of the to just type number. where of as of would about, guys. maybe kind or kind it, range targeting big your according profitability getting expectations of type I picture, be guys that's standpoint just I outlook think go to I as I you're ROA X.XX% talked X.XX% mean expect you where far an kind on kind to plan? level plan is that think, you

Mark Klein

a insurance. We lines just got trying From and and probably think at Yes, [ph] rely franchise on economy. We of to those, residential, for they now on and one the looking is we're to SBA, our we like title 'XX sticking business that to we're like interdependently. We regress What line. do different and strong. term, requires them. think, we're well story based business don't we're high the think the I a a and lines business we We Wealth with improvement single-digit got for long work to that's to economy work we the - Brian. is in kind build it, Management and commercial, together, we don't

change diversify ways always stream. and we're looking up the So it to for

Brian Martin

Yes.

back just is, of we how back, and much come a the over -- Thanks think be that's the function, guess how didn't kind going The guess, guess, at I something may color, mentioned to we're I I a guess, Tony do guess, that about look time? that, the if guys. that for I it. appreciate understand I recovery to certain I - rate MSR, of you - mean, kind I just Okay. ask think Well, I back we that to I of coming perfect. model Well, of about should what going I mean, guess,

Anthony Cosentino

of caused, what look the speeds, I if in QX. kind mortgage - that had big already were There's obviously have which, I going at indication Yes, they accelerate in book, you is I prepayment think, driver think, down. main of impact that's QX some and there to anybody they slowed that's is a some there got think

have spend come the lot look throughout in year if those, already - I it's of at we I don't part the marketplace. looking will of which specific, slowed back much mid-part most know speeds, and I about think for XXXX. down here you a all how at the it the but prepayment time

Brian Martin

quarter, Okay. so couple next maybe so. the

appreciate. Okay. Yes, Thanks, I guys.

Mark Klein

Brian. Thanks,

Operator

our would like for back concludes Mr. turn conference I Klein Mark to remarks. closing any over session. to question-and-answer This the

Mark Klein

with for think know joining. those Thanks everyone, you look good some quarter again have and our good We We you high we we face quarter us. a everyone. in fairly for again, to we we're We joining, forward speaking strategies - Thanks have to headwinds, to the performer. results. but July certainly second for willing to continue and be Take giving care.

Operator

may The for conference now you And today's you Thank has attending presentation. now disconnect. concluded.

SB Financial (SBFG) 18 Apr 192019 Q1 Earnings call transcript