SBFG - Earnings call transcript Q4 2019 | SB Financial Group, Inc.

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Operator

Good morning and welcome to the SB Financial Fourth Quarter and Full Year 2019 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Carol Robbins. ahead. go Please

Carol Robbins

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

Klein, are Gathman, Cosentino, Jon President and Lending Officer. Joining Chief Mark CEO; Officer; Financial me Chairman, today and Senior Tony

Financial's operational results plans, call contain This anticipated may forward-looking performance, statements objectives. regarding SB and

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

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

presented the will non-GAAP contain to certain financial addition In accordance results call this with also measures. GAAP, financial in

Mark turn now will I the over to Klein. call

Mark Klein

and good to you, call our Thank webcast. conference XXXX morning and Carol, quarter fourth Welcome everyone.

the for million, or million net year, as income over prior today year. over income up XX% earnings the filed increase comments we that for year with quarter. was evening. our of are X.X supplemented impairments, Highlights release the the million prior And excluding $X.X XX.X OMSR our XXX,XXX quarter full pretax adjusted million X.X or last include prior of the net by quarters XX% Our

for $X.XX, assets on X.XX compared X year earnings representing basis from adjusted $X.XX, per XX achieved billion, to expanded results year-over-year. the our return year points. XXX earnings $X.XX We quarter quarter per And the X.X% share diluted when XX% Consider the up the or servicing grew full improvement. a points, were for a of ago up for million, $X.XX, year-over-year, and assets basis to share average we up rights, to our

of record a maintained while deposits million the asset Increase the quality increasing strong million XXX XXX loan quarter to year. and to up Produce quarters, balances million, new volume for million, XXX of XX origination prior year-over-year our XX million with XXX mortgage set for up metrics. as and million,

key five for with status. our and client for and is clients, metrics. diversity each and first, and our now our quest to performance; high And our operation consume XXXX intimacy drive continue attention key in on of Strategically, products Revenue portfolio organic more with greater and lastly, more to services and initiatives quality elite continuing excellence and growth growth, communications. loan scale

income of First, of revenue million X.X net provided total the interest for million XX% of quarter diversity, revenue. our XX.X

XX residential as up Our we full again XXX quarter, was of from clients. XXX We the near from XX% prior quarter, running this year fee-based capacity million at over up originations achieved mortgage were engine million.

and XXX full-year the million year, For total originated $XXX first achieved our million yearend we production.

our generally this generate for to markets volume The was team. level of ability of institution accomplishment tremendous decentralized multiple processing our a with with

XX million, followed of our at our region with millions. more million, Our year and Columbus the just way X XXX this group by Findlay plans again Minneapolis Defiance for millions with newest in group XXX but million, many region led

pretax. was income, or as we impairment recaptured revenue quarter, for of Non-interest fourth the our XX.X% total the XXX,XXX XX%

servicing the XX.X when For full GAAP adjust increase but we year, at to rights the impairment. would came the in percentage XX.X%, for

wealth the up to XX.X% agency from non-interest revenue million year X million revenue, from higher higher prior significantly fees. or our and was X Our of income title due mortgage

of revenue XXXX as of very a a in and as one and completed peak X.X XXX transactions the of line newest agency XXX,XXX. include million number as month revenue highs successful of title year of total the of number our had company. well business and Our Peaks

to the the impact them In level bottom addition operating the work new year year. commercial Indiana XXX,XXX, to over business system corporation to peak include to also from efficiently XX% prior Michigan. increase of and more Install by their of expanded territory line their Ohio enabling title their full and

nearly clients a with Bank peaks year, of purchase volume commercial included XX% or estate. assisting the home For State of real the

markets SBA loan million in below X.X quarter at XXXX. this of the production challenges X.X line that volatility up also came with in our added X the were million, recognize million production we year of to and the certainly but in a full in expectations, business for of million sales XX.X rate additional sales

to acquisitions leverage to continue their of We growth. on their each properly, and client ensure levels prudent for and/or the focus funding structure client capital

five capital clients with provided expand. XXX way In million their years, our help $XX over projects have the last to for to our of plans SBA on bankers

the on stands unguaranteed portfolio, yield now approximately million, at nicely and portion XX.X before residual our Our as of remaining books weighted X.X%. continues

XXX over a milestone million group our all-time Our order of achieved assets in the care year XX%. annual to on million, line XXX,XXX from key prior low the basis. increase an now of double-digit this per is wealth quarter represents an and the at is management over in high quarter Revenue now standing XX.X up or with under business growing

Including in. both billion our sheet the up from XXX XX% assets, assets year million on prior all and business X.X we from in lines, now or balance off of over oversee

Loan due just growth key up more unexpected commercial was scale. and reach we linked as for $XX.X of second loan slightly quarter real rate the competition. estate payoff initiatives, residential Our scheduled million and million sale XX.X to loan overcame a broader an

prior Compared the or grown have to XX.X million we year, X%.

to would However, have annual closer with traditional rate growth our XX% lending. and the just headwinds I we mentioned, been

some estate the payoff real the early to of year, of the gains company. good in our past some monetizing had is it fortune led have clients market for commercial our As

from million our allow pressure up year. still which lower markets meet would price XX.X to in to In XXX,XXX addition, interest us this or competitive the hurdles, matching some continue from our in that growth the is prior growth quarter not income have us margin prevented loan of X%

positive year. the to growth be for Deposit continued

I to deposits we million, million or XXX.X X.X%. grew up XX.X As mentioned,

quarter, Third upward quarter its trajectory products develop XXXX nearly scope. with services more in growth XXX strategy and ago these deeper to and continued from is relationships expanding year the Household services. households our overheat the and and products

continue systems to our impact ATMs volume aspects in first producing with our all We client an product higher of our quarter and elimination include first lower to of examine the number of delivery both to higher cost of upgrade a XXXX. and

AI as a final loan We're into system. first for implementation very profitability of and the are of testing company stages operating we excited in our our pricing

this multiple of above total return. examine offering expected with rate will every every approaches client relationship, loan new software We to our deliver

help pressure margin experienced have to XXXX. tool this to us throughout expect the offset We we

In $XX of the to our identify fourth in we've needs as an partners. quarter, additional for we business internal each clients from referrals closed million continued our commitment our

For the focusing the year we've services client's the of over million the full State relationship umbrella. under now, on and all utilizing products new business Bank closed $XX full by in and

Operational excellence remains our fourth thing. key

volume will $XXX quarter, This impact accelerated. XX% touch up Of or volume which on our This million that originated, to our Tony were continued expense XX%. quarter $XX is refinance refinances, refinanced $XX residential amortization million from internal million level third or mortgage momentarily. of the

the up to expense spending to on title cost, processing. of $X.X were to but improved of due fourth the of mortgage year. non-interest and Non-interest commission levels from volume, our higher was our assets net occupancy data year of due our agency, from non-interest up quarter assets X.X% and to million average last XXXX, impact ratio increasing income levels X.X%. XX.X% negative to average $XX.X XX.X% X.X%, to Expense on All-in, with our to expense, the million a efficiency prior due medical

and at charge-offs I linked-quarter points. $XX,XXX Past the year just or flat normalized just X.XX%. Net initiative fifth for X mentioned. quarter key due final quarter were the asset maintained X.XX%. for basis is loans Our this to quality and to the Non-performers $XXX,XXX the

top the reserve at coverage to group our peer now non-performing XXX%. Our quartile of remains in

quality our regimented in review credit for and our late loan and the asset company. here a approach to cycle Our strength remains credit analysis

like to ask a I'd provide detail quarterly our performance. Cosentino Tony? bit Tony more And on

Tony Cosentino

good Thanks, morning Mark, everyone. and

$X.X to $X.XX compared the year As diluted a or for million income diluted were share had earnings or $X.XX per $X.XX per per for Mark we earnings prior the year and increase. share, X.X% up mentioned, of adjusted to net

the as revenue times for and XX% positive up up from from and had and of prior XX% linked-quarter. quarter was year the the were revenue X.X We the rose X.X% higher quarter operating XX%. Operating expenses leverage for by

million adjust and from year the For mortgage, increased when Loan $X.X business impairment, the delivered from for amortization. at times. X.X operating prior sales in small banking year, significant of the gains despite refinance revenue came Mortgage agriculture. we also leverage

basis quarter points. assets hold lastly, steady with the continue of to And NPA end non-performing XX we ratio at our

interest net quarter As income we the begin from down and to income prior flat quarter. with margin, fourth year a the to statement was breakdown linked our further

average prior year, loan of earning the basis for the X.XX%, the and increased X.X%. yield in X from by to was prior overall quarter points asset down basis yield year our As point X

year as XX response year, on interest in points the recent rates X.XX, year from Funding came the up in XXXX. reductions. of And and interest XX for for to down borrowing up the rate quarter, linked know although, points we basis at from the liabilities the for costs depository continue basis the margin year. and X.X% rates to just the prior prior in basis full quarter. Net points have reduced full we XX at The X the points was rise; basis quarter fed bearing was down for margin X.XX%

nature risen rates. higher loan Total XX% prior interest competitive year due expense increased costs, borrowing deposit costs have from of the to growth the and by

our indicated mortgage, revenue, a in Mark of temporary of quarter earlier, fees we recapture As and wealth variety small came income mortgage a including sources agency servicing the had non-interest our strong impairment. title rights from

prior million Total the up were XXX.X the from for linked sales and year quarter, the quarter. mortgage

for of to was sale historical sold quarter our the which loan gains Total at sale to Mark trend our for volume. in came was sold the we indicated, when continuing X closer For XX% the our average. quarter X.X% million, on over adjust percentage

and now and in for of XXXX. total revenue X.X stands at portfolio revenue billion X.X servicing million the provided quarter Our for XXX,XXX delivered

of a up points is X.X quarters. The XX linked rates was by increased of servicing recapture stable XXX basis And we recapture year. from did million, points, of but reduced our quarter This temporary The impairment. impairment. value servicing result which with expect the or market total impairment a and rights recapture to and of value in prior this from million XXX,XXX fair calculated temporary XX, in XX.X% year the servicing basis four slightly XXXX, continue down increased our this portfolio prior those rights to with this to

Total for rights XXX,XXX refinancing amortization the XXX,XXX the operating and in were XX by over XXX,XXX amortization our also of included servicing our level higher expenses as for from XX% fourth quarter. or the substantially quarter of servicing XX higher this The for our X in quarter. from the At the prior XXX%, volume. additional year-end, quarter from normal were linked did million up XXXX. increase X.X% X.X% million, up up However, quarter mortgage or were million the quarter commissions agency the of expense million mortgage title and XX.X year costs

did prior year, reflect, revenue prior the for efficiency the times. year operating for the rights, improved Mark our As ratio the we times, XX% reflecting which from a was years from X.X improved leverage increase. positive the adjust X.X of servicing When the full X has quarter

of was balance turn XX.X% year-end which Now our Company. sheet, at the outstandings as loan assets million, to at stood of total we XXX.X

had of XX.X million We prior asset and year. liability the and from growth growth XX.X

our of same industrial and commercial the growth real the XX.X. million of loan period, For by followed by led book XX.X was commercial of estate

X.X% the just by side, XX.X, On the which we're is year prior growth deposit up from rate.

improved to XX.X% of continue balance quarter our this efficiently deposit our as linked sheet to XX.X very quarter. from ratio the We utilize loan to

rate to fed response We are far balances and thus decreases lower relatively in rates holding have deposit flat. the recent

by up book XXth, conversion our which per of capital at position tangible X.X shares equity our the resulted common. million at preferred the December we of tangible prior or value This million, On improved an Looking finished improved the from in and million XXX.X XX quarter completed $XX.XX. we year. is to X.X% share

continued authorization. We we quarter share approximately and our XXX,XXX the buyback remaining have buyback current share on in our

In totals These Regarding credits. X X.X non-performing in would ratio now assets basis at asset restructured million, accrued Included points. non-performing asset down in total from elevate the our total non-performing level points. just loans quarter. stands our be XX X.X quality, linked those restructures non-performing are by basis million XXX,XXX asset absentees,

in linked year for to full the or the We quarter. from or loan quarter Provision X year the million, basis and quarter X expense points did X.X XXX,XXX have X.X points. was of up basis losses for the million and level prior the and XX,XXX

up loan allowance of Our the at has percentage remained million to X.X allowance loss total absolute level steady is prior our from year. prior loans compared of the and to year, X.X% X.XX%,

the turn over to Mark. now back I'll call

Mark Klein

Thank you, Tony.

mentioned, preferred end. their year our of to As our a shareholders on shareholders we total, return investment. All are recent these Tony year convert proud common year XXX% journey at five earned of to five

In are excited accomplishments million, billion our exceeds bank, XXXX, our portfolio now back on shareholder $X.X million. as mark or significant managed the year I net management, achieved million and for for XXX that to in perhaps broke we XXX people total the summary, look years our record and delivering mark income $XXX as of billion mentioned, highest we a value company, million residential market $X included this XX wealth XX recall that the volume cross assets under the most many

some the areas a entire pullback without of progress past an great or number on made a decade albeit We in year this recession. heels of

As are such, we believe beyond. poised achievements well in and XXXX even greater for we

And turn without, it for questions. to Carol I'll back

Carol Robbins

Gary. you, Thank

first now question. for our We ready are

Operator

We Our Martin Brian [Operator session. from will first is now with Please go Janney question begin question-and-answer Montgomery. Instructions] the ahead.

Brian Martin

drive mortgage a production want year? to given and a maybe if thoughts or you're you kind strong just that about we’re market how, there I that on Tony go of of what indie on you if -- the business your you've of year just of thinking staff how kind kind And rate of a Mark, And got here? think there? it's could bit outlook, second little thought strong indie as give the some in room just the forward the just mean, just start, next like And here, just just growth you upside quarter what that that update market? mentioned you obviously on sounded mean, I for environment would half give kind adding there, I maybe of

Mark Klein

I that remain best nice and a XXX Sure. business XXX looking opportunities business remain production us, -- at on very Again, Brian. we Thanks to million up to XXX mark. to as disclose with with to line out line the lift the improve million ever. million expand some you have bullish We're or on two we the albeit

on the the excited the inertia, in households. from boom And a to Brian, seamlessly we business line service we've money trends we're increasing made develop really service So, the hard that. shift continue great households about a then single to clear refinancing as the continued volume to that purchase and multiple boom work think had to past. we has We

hoped performing shortly. addition albeit continue and but level we had one that there going lenders drive that to to here forward, we or as with would a indie the hopefully a two So expect couple higher is not to the with another in market clearly XXXX, of

million would do that disappointed, similar track in back our on We have be Brian levels think XXXX we footprint mind production I XX the will that deliver we in per we in of. to we're million that that didn’t year and capable that indie And again thing year of XXXX. get for across entire if or XX

Brian Martin

Okay, you and markets? at Mark, outs, those would going look entertaining an lift existing market? be the to new would Or

Mark Klein

with more initiatives Innovation that to and all without that's Technology that in can alike like There that mortgage yes. that fringes is Brian XXX excited have people. we be and platform the one driving so of the backroom, more we know be, us and also in and We've an our adding to originators generally to the us will and platform we of opportunity. extremely make up AI Officer market million is would would markets, And platform. about leverage those us Gaytan, to today Ernesto XXX that drive our best -- we're that to take certainly that backroom Chief the begun the market use and answer new They existing the encompass efficient some million

Brian Martin

you. Got

staff successful Or be may be doing mortgage in staff the you're year, year given list on Okay current production next possibly and your can the more if out some be we -- getting some on is more it adding thoughts just clear, not there out? staff greater have? or contingent to in lift in and just Mark, infrastructure this you

Mark Klein

X.XXX midst pay we and Well, origination XX-year, platform on now the a end XX-year. on knows well, so mortgage a our in we're front X% how the works, certainly know I process of

to market running, to that thoughts. potentially rates take and/or So, also sale course I has in more generate on now? volume, loan have lower arena, some to which on pipeline Tony, How's our brings But amortization ability pipeline but comes and we you bullish right know, begun with gains our impairment. share, fill remain only also not and our additional

Tony Cosentino

add I on Yes, think Brian to just Mark's comments.

would strange You a million The XX% of will to the running pretty XX% of of in I don't $XXX half I the that half the XX% between In obviously XXXX our XXXX. was in this we're we know 'XX. was did for repeat XX% in to second XXXX did first at front back higher half first XXXX minds your XXXX. say we of in know, of it half volume than market. our we mortgage. XXXX, of dead half in basically

the and little XX% I of to we half So, better say than 'XX to XX% be probably were will the less first 'XX be will we bit a second half. XX% think in a in in little less

if both I the in disappointed mark million we be XXXX. didn't we eclipse $XXX would think

Mark Klein

out line, share, messed that we making works lift and people want other know our are MLOs is individuals because everybody million that that we generally have good we they bus, that business that versus which think with and think line wildcard, opportunities and down The what we market and we million a know on we have $XXX up drive the it take have they generally and where the can million. the see way we wildcard, do banks the around. to and stay we right We and I talked the win $XXX want that to can The business statement, is $XXX in model to up change all eminent Brian, obviously think Tony. can to and many

Brian Martin

Got you.

sales, the quarter gain Tony, year. XXX in about? XXX for real are of on still Okay. on of you that about in to it next thinking Any just sale, the how a kind and the gain margin range change to is good think level on kind

Tony Cosentino

had time I we a kind had and couple QX. finally some residential working our Absolutely, of favor in think, million in loan obviously, on $XX things, got sale for that of we the of been pricing

I about been so, But were elevated, about think us as XXX And you consistent talked and anticipate I and that that in because for X.X% range continuing. that I've QX. we has fairly

opportunities We to are those are achieve continuing to we're we if more a I we price, XXXX, going few think, in look get at to basis able a couple the of in way and pricing points.

XXX We But think think of to terms in type some expand modeling, servicing that the are that of I products. I our some profitability going will appropriate. at seems release look yes, range businesses on

Brian Martin

And Okay. quick for kind Perfect. of outlook just the on loan a then appreciate. XXXX. growth I question maybe

expect a in sale you -- was kind that you mortgages on as and have just your continue mentioned less I I made trend guess Just obviously there payoffs dissipated little quarter into in if the you is mean, I the about which bit growth thoughts that bit be to look you guess XXXX? or this go like the I know of your and payoffs? quarter, may for but pipeline just the outlook a

Mark Klein

year. opine and level rates that of couple on comments, Jon here. from mentioned marketplace, But many lower rates extremely the certainly of a clearly, just those are Brian, payoffs can end the the headwinds the of high even last we low

inability match to the want You those just of heels came to rates. our some on of

level as continue all is to model find we to So, and executive. going the our but we to continue market and there drive pressured, margins know we be competition high with are

steady, Jon budget we the to here. I think lower transactional bring based weigh keep it's the handing to we expect on in ability keep So that's deposits disappointed, based growth our really it to key level can on would our pure really there our margin with numbers. guess. to and and on going costs where medium go, But somewhat and we would be But But can Jon I our be focus. i off our, commitment really if didn't that core

how So, you that? John, do about feel

Jon Gathman

with agree I Mark. no, Well,

I fourth think in last about. and us quarter the year affected we as talked things two third

unwillingness we've that go pricing think there's where Our money taking out maintain our just to incremental we higher benefits reiteration. because yields without yield can on duration, we or to rate longer net at real the curve indoor taking decided play elsewhere no discipline really

number with Tony advantage as estate real take clients they us. are Secondly, prepared creates We loan of where comments. his for in in are opportunities a just of to alluded selling. saw some also rates cap It where they prices

Mark in pipeline optimistic, think, our benchmarks XXXX in I'm good here hitting great the have I about we Mark, feel As with very I XXXX. agree I our some January, said, here confident And on things very about feel I horizon. and entering very

Brian Martin

a it funding side, holding the positive there the minute, in slowdown it a jumping in obviously, just also sounded and for margin like guess, was I into yields well. as were, though, sounded on the loan the a Maybe pressure reasonably

kind guys level? about the of still XXXX pressure Just from some kind a your how you are that margin expectations? there is in downward Is of thinking high

Mark Klein

I expect XXXX. we Brian, stabilization think, in

management. cost, is think on treasury side. said challenge on is the that, the most bankers the our of to Having be the going pain I funding operationally of then Funding to some lower able to we're if will to But whims I I street us. think we've helpful we think we're to to made be think that We've achieve not that the critical marketplace. us. the changes subject felt

significant. competition all question is no there's still fairly And our of almost markets, rate in

walked community deals good pretty funding loan we our we're didn't the I And from was but side, biggest challenge. all I banks pricing loan of on get some think able think we like about feel a that We've we feel is appropriate. size our to what away need side. I think

Brian Martin

So, or think up they go our actually down your they, are next I bit? with quarter, now, going rates they stable little a could as where still funding Tony, are cost they're expectation

Tony Cosentino

I the costs would XXXX. stable the slightly suspect interest expense to be of quarter first will in down

Mark Klein

I think X, right numbers all marginal in around basis. a on X% cost

Brian Martin

On the deposit side?

Mark Klein

Deposit side.

cost And so, know than is higher we that. funding, marginal of

be There's seeing So, no light of it's going we're to pressured. question about it what competitive particularly the arena. in on

Brian Martin

Yes.

being -- maybe levels Tony in of you kind fourth on the context was quarter understand or And in X.XX% of Okay. X.XX% range kind then the just of -- -- was year-over-year was a of X.XX% think about in so and are fourth for when -- I was you the the I the margin it was it quarter it year? context from the talking the stabilization of basis, kind

Tony Cosentino

Yes.

at in QX a full QX. points maybe So, look to down deposit third basis, points. quarter, start on in versus anywhere we'll basis basis trend I be -- but basis. still to XX will if from I think down we'll stabilization by X year-over-year that be a And cost year-over-year margin, on you About mid-year, think

Brian Martin

you. Got

things the that about are buyback how just conversations these then perspective, That's and are an from helpful. to on capital of Okay. kind management, front? how about that maybe just -- And M&A just days completing of kind just expectations how going jumping maybe

Tony Cosentino

that the understand the that conversion our was I marketplace the big, Obviously, to or talk capital and capital simplicity way, allows, structure structure. of think about of first. think, the add capital I some to our in out I'll Sure, getting terms

so $X.X million, $XXX,XXX of so buyback, for about bought fourth we the or back shares In terms of the or XXXX XXX,XXX which about we $XX,XXX did in in quarter.

mid-part we do much which didn't fourth shares say, to another think volume seem I have is pricing valuation obviously here we our as be XXX,XXX that a still quarter just is. the where We given in allocation we or we opportunities. is as back would so expect appropriate, begin in to and anticipated. It the of current QX, didn't where up of our when as much

Mark Klein

we M&A we we've the mentioned guarantees to opportunity Brian, that. on times, potential announcement the some drive to lift-outs for closing backward in No been of to but what from diligently perspective, make said we're time. And business we yet, line, optimistic mortgage regard on on an of that with soon couple working continue working as on, on we're we we're And for work the also hopefully, a about opportunity. we're to as general opportunities speak. which we've acquisition continue before, going a not an still

Brian Martin

In perfect. Okay, the from maybe me. two -- and just last a

credit Just, numbers the -- are obviously, very sounds it quality, strong. very

credit in that that is lead just there concerning is it horizon or or as good Just are as guess, the we -- the provisioning given I to is looks? on anything out would cycle increased this year, kind where of

Jon Gathman

is This Jon.

fair I a think that's assessment.

trying point, when the trying everybody XXXX our going the determine XXXX. turn, is of it's at at this portfolio is to I been strong think, moment. as that's banks to looking at for That as the to we're a it around and corner in we're look is, lot whether it's cycle as or said,

as is provision obviously as the a we cycle at allowance sit at of in point which We that And considering, But an delinquency, change in and feel including deterioration, -- into very impending with here haven't CECL some precursor. future. any we strengthening, into as head quality, we about our seen XXXX, mindful we period good as the our moment, those coming. and credit that well head

Mark Klein

multiple that just eyes And comment we've thing, One before Brian. of looking we sets one at length is credits. have talked about at

I lenders. of we'll authority to our to certainly So, we that us eyes think lending and is to going a don't hand process better out a lot we'd mean, like give this that's perspective we're at if if we've done the and juncture, pretty out when what from true, But clients. cycle a liquidity leverage turns. positive about multiple find and our credit of

Brian Martin

that's have And presented That's some talked you guess, I the the was, think bit volatility me that where with market a of last -- the contribution in based do where rates the greater will of are helpful. be on and behind Okay. you some you, are? conditions the -- think two this maybe challenges maybe about rates the little year for maybe just SBA, I XXXX, of in kind

Mark Klein

-- clients. course, high-level be a getting just rates of Well, would antithesis of high-risk comment, the we good

glove. want the we and clients So, best hand don't those typically the and higher rates, go and

all and we've was So, as identifying developed produced said, that in answer ago, SBA of credits. great a the spirit of risk loan nature some our we they're But line Jon, landscape million on years all spirit maybe of driving the the and taken some margins yield business incrementally some. five taking loans, more to wider. more our booking pristine I all the perspective not a that others. know competitive little than result less when just competitive, know, in a That $XX certainly markets, have generally and you portfolio, I in of

Jon Gathman

of No. ordinarily with as see a think credits doing said, increase. your down been quality, And other what SBA would rates yes, headwind the lot I move SBA banks have is comment, That asset are that generally, great we volume conventionally.

also both organizations continue But 'XX. good both we client to our the into here widen partnering net. to have by a we branch headwind and out, So on but initiatives traditional that's with other in heading probably client that basis, 'XX some to institutions very see some and with

heading we'll on into and continue to years 'XX. the in 'XX So past few we build feel success our that good

Mark Klein

one comment, of eventually an with builds and what Jon, of can that enjoy that, rate that of then take our our would maybe one increase risk managerially $XX ever clients hopefully swap enabled thing our have would course, initiated the million world as probably clients takes fixed launch swaps, one for here we've that, which elements we've rates but this is in we someday interest opportunity minus. of benefit to to on And them comfort plus risk, a or think it off Brian, we rate all the to ability strategy. result that I

and the sides, of as emerge think both for that good that's be issues potentially one I will market the So, change. that will

Brian Martin

Got you.

and And Okay. just efficiency. That's kind was of expenses helpful. one last on

just guess high-level -- is expense Is you're of and your guys in some are kind there the Tony, thoughts expectation the kind still operating think positive guys I of targeting growth you you XXXX. the on As maybe, with XXXX, how leverage that rate year? about of that

Tony Cosentino

year, of agency in being the comparison, say the you have not a I'd in expenses, prior a little of that. bit kind obviously, year-over-year Yes. there from title noise

obviously, as not price, think, -- but start level mortgage higher people I into to the price significant pay volume, how commissions, how we given on volume tiers we we get goes mortgage our that, I And volume encountered operating think relative is I of XXXX normal which up, be do some budget. abnormal leverage year. we've a to how designed positive we think would of

know expectation feels Our we're hold going is same revenue the of way. down expenses, or I to two. Mark those one grow

So I think XXXX component our that is plan. a key to

Mark Klein

Innovation cost making on and to going in efficient in from our technology in of three us But upfront to the require to Ernesto disclosure, more -- That's innovation some expenditures platform. in to now. one, more capitalize we years us full two, disruptive That's money marketplace clearly, some some Brian, And have here, today. us and spirit Chief is the the make going Officer. Technology Operations the initiatives identified

platform. certainly So, no see of and Ernesto, you're sales force the I deployment know profitability bullish on

Ernesto Gaytan

are there continue And look Yes, can as I growth make to and the that key to intelligence company our us us artificial in Difficulty]. to think propel certain machine more learning help platforms to [Technical a efficient we'll future. closely

spirit top the of with XXXX. the and in line of again do less to So, spirit constraints really drive more revenue is

Brian Martin

Got you.

all taking appreciate the great all I the -- Perfect. Okay. questions insights. and the

everything. So, quarter nice thanks and for

Operator

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

Mark Klein

XXXX again, all will when in April, thanks on we report with disclose We Goodbye. speaking you first our joining look again to and forward for Once quarter results. us.

Operator

The for conference is you now concluded. Thank presentation. today's attending

You disconnect. may now

SB Financial (SBFG) 24 Jan 202019 Q4 Earnings call transcript