SBFG - Earnings call transcript Q4 2020 | SB Financial Group, Inc.

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Operator

Good day, and welcome to the SB Financial Group Fourth Quarter 2020 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Sarah Mykus. ahead. go Please

Sarah Mykus

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

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

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

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

in also the A GAAP, GAAP our addition to results with is included turn I this to earnings measures. Klein. Mr. financial over accordance non-GAAP in release. will presented will call reconciliation non-GAAP certain measures now financial the call to In of contain

Mark Klein

high and everyone. for you, conference ever. found we and deliver final strongest our XXXX. to report our call in pleased I'm Thank performance fourth of Sarah At and to Welcome this pandemic, to morning, good a that level, midst webcast the a way

of income income include adjusted or our and $X the million year or by XX% highlights service witnessed million welcomed non-GAAP net to pre-tax quarter, to and environment. our this for would When at mortgage the $XXX,XXX capacity, up For have included top been see quarter, current million continued servicing $X.X XX% the in new $X.X item quarter. increase. rates prior staff impairment we over impairment; end beginnings volume for which net clients entire the flexibility PPP Briefly of mortgage the greater a forgiveness different processing the a

from year income our of XX X.X% prior than Pre-tax Adjusted reduction ROAA reduced $XX.X million income of $XX to declined balances interest assets prior the of or year. the basis was interest from million reduction or net $X.X year quarter the up up million from which for nearly operating X.X%. in up million was or from $X the XX% coupled Net interest $XX points year XX%. with X.XX%. average million, offset quarter X.XX% times. on X.XX% as X was delivered return GAAP leverage controlled X.X% For growth expense prior quarter up the expense. pre-provision the linked more non-interest income This in year-over-year XX% of by positive the our Loan was

those million those of year-over-year. However, included retention overall drove commissions million business or liquidity growth. higher increased Expenses million Edon initiative acquired in XX% up and June. from funding PPP $X.X that Deposits up acquisition. the in or loans loans origination to acquisition balances to balances consumer Edon XX% increased year-over-year. insurance title and were PPP $XXX volume business Mortgage $XXX million increase $XX Edon our Again, and in and and due mortgage DDAs

more operation footprint, with clients quarters down which to be, finally excellence metrics we've per status declining client The $XXX,XXX and asset COVID-XX scale, quality. and with current linked intimacy more in While another services in the more and key deferrals five quarter and/or in M&A, the substantially set household, dollar be would prior us the provision quality elected we the the asset to all quarter stable reserve. And year linked number future XX%. from referenced revenue from prior loans forbearance, diversity, in consume quarter of continue and it excess broader in scope, remained of during related of in loan were were initiatives to more organic

prior service compared XX% $XXX,XXX the of and mortgage the XXXX. prior First as up XX%. were $XXX,XXX, quarter income by year includes of The was a from Adjusting sale those quarter I impairment to million revenue mortgage $X recovery a volume the volume this from $X.X mentioned, million. prior non-interest current loan quarter income XXX% year on for and $X.X of increased on the to just impacts, quarter fourth from or of in gains year up million diversity, gains. Non-interest

largest revenue and record. quarter For our was the XX% prior sale for by gain to had quarter over nearly estate up revenue and production year XXX%. the volume, $XXX with a residential the of total year, Title non-interest year, on on Peak increased lending income driven in strong XX% annual to million, principally real another from

We are entire with year Peak operation run by pleased the rate of that made the especially before and progress doubled that from team, the prior the revenue acquisition.

production be Indiana Indiana we Central Our loan make meaningful closer inched a not $XX XXXX. originated Indianapolis bit the to in we in these as office and market our expectation original building Indiana markets but region to remained this team to million volume. each residential year. production We during production the only year, over robust Northeast this levels of to share We're in another continued committed will looking gain contribution to to

of year-end, to of prior assets over year-end led the As $XXX to market an of under has and at million $XX with million, million Wealth a total increase $XX net our improvement assets under Management overall care which management new rebound $XX or million. prior quarters, of with continued sales

more resources, to footprint. monetize stronger bench new to we entire is Our than And ever the before. identify opportunities across expect these

the from to as scale. to been the but under quarter, begun recover shutdown. activity continued has constrained, slowly in Loan has growth pressure be market more Secondly, virus

prior due the loans Our $XX we from the year from as our acquired Edon million in the balances. growth PPP And I to elevated mentioned, is acquisition.

growth on items by these adjust basis for we would million. loan decline year-over-year core As balances a $XX

on their and clients balances see to excellent their out. loan our companies' higher-performing ownership, and continue way We

we most And in much markets. in middle-single success historical the XXXX, steadily loan to the do our in of of along lines growth digits. continue our expect pipelines However, grow

in $XXX deposits and billion, in or up that that deposit XX%. XX% operating Edon Included expanded to approximately of our million remain funding, were $X.XX clients' Our loan our estimate accounts. growth PPP the base

dissipate, the these to funds here ramps forgiveness process expect early however as gradually up We in XXXX.

the more agile clients to scope, both, to not prospects PPP and Third, that service interested. existing us more also per we their And household, initiative needs. the only to capacity allowed services demonstrate are to have resources and but

our process have And applied first tested, Our on climb one the that into we Round half percentage one for and team be Round again into move To-date roughly Round as expect clients we of forgiveness. XXXX. will in again forgiveness loan of earnest of the quarter begin to two.

similar even experience a applications the -- around. client more X. We and level client are will of program in make we feel positive the for prepared one And Round handle Round this from an lessons to learned time

fact matches $XX more to we as from remaining with Internal in residential volume prospects normal was purchase that from appetite or or million; clients the In $XX more ensure have evident $XX our refinances of external process of XX% for million. alike. our volume our market the or we fourth software refinances, quarter originated XX% transition to same, XX% balanced a do transactions with to were purchase million. growth StreetShares The request, excellence. the capacity acquired the continued to existing Operational and

total own of $XXX $XXX new $XXX outside from For refinancings. XX% activity, our from competitive remaining from million, the or XX% million or full was internally, and construction year, our million the volume or purchases refinancing mortgages XX%

our increase successes, servicing growth. path these our quarter from the to non-interest of This growth for due operating recent year. for an at times best expense our to at result But over Expense level a I As and now our this revenue the also portfolio $X.X prior the levels improved as were negative $XXX mentioned, a for in net of the million leverage provided billion X.X%. X,XXX year. quarter loans stands up

our to Remaining $XX forbearance, quarter. this or of the which from Of examine exposure full and X.X the these hospitality impairment by X.X impacted remaining reported linked the items, XX%. our trend, the we've the feel from or and million extend strongly were and COVID-XX in industry. cost. clients To due to expenses to the we When balances $XX.X year improved weather Edon and was leverage merger exposure a For storm hotel adjust underwriting year operating we servicing times our our loans, embraced portfolio this continue second for for non-GAAP the the revenue this the to the of $XX.X XX% times. quality. quarter-end, mortgage XXX total to loans reduces in industry of XX% our $XX dollar million these said, That arrived. was from At to related COVID-XX down decade. place amount control in down sheet process million that a $XX in all for prudent put million, of will on-balance nearly when by forbearance expense is and continue well quarter loans we to earlier the XX over million to the particular in the million totals and asset were initiatives past our final in sold had which we Fifth continue that rights and year we $XX quality

now mentioned should our the made we to to $X.X quarter, However, this I increased unexpected bolster our as we Back for have allocation. million. loss surface year stress provisions provision $XXX,XXX

and the the was increases Our adjust reserve PPP loss from is points it year balances, loan X.X%. million up for ratio X.XX%. prior now $XX.X basis to If we reserve XX to

our of just or will Our our levels We $XX,XXX, from market coverage now approach feel ratio at in well borrowers. just was basis quarter non-performing for and reserve bode the our our of two charge-off XXX% group. and above $XXX,XXX and points, peer at year stands historical of performance stress above to slightly stay essentially for this future the build Charge-offs eight median year-to-date quarters. were remains ahead loan loans our

to on prior announcement our per it year. past for turn $X.XXX do Tony Cosentino want I before of color our note a over our more make week CFO, and over year XX% I up to of dividend this quarter, share, some Finally, the

balance our to if and us return program. review shareholders stock not only our and fund to current our our buyback also some give could details growth Tony sheet prudently, performance. you continue via on capital to more quarterly capital We but allocation dividends

Tony Cosentino

Thanks Mark.

$X.XX were the from from adjust gains of delivering Operating we XX.X% further When EPS strong from in the a adjust again costs, costs. our for and up EPS XX% reductions was prior the for this for XX.X% continue up X.X%, full documented for small call, full $X.XX increase, were with share to XXXX. as from of the which the we impairment. to the XX% prior have year in release opened Mark revenue and quarter, million some Margin $X.XX $X.X year merger in leading offset quarter As the from revenue XXXX OMSR up year our up business prior per we XXXX. delivered up reductions up year. interest when year funding agriculture Loan loans, million $X sales we mortgage income we

for PPP yields basis Mark one obviously receive those with break yield starting were X.XX%, yield decreased PPP was XXX while mentioned, by year, loan interest prior for And to from Now, the overall statement, from fourth the forgiveness, portfolio portfolio. XX XX% has SBA. the by the payoffs was as and quarter. year, and yield close level of linked the income down yet basis prior the impacted margin. earning but Loan as points asset to points of Average X% bulk Net prior the in we our asset quarter the applied we've income year. really the the to the PhaseX full down of in up earning quarter

$X.X As with To for more X, $XX have point entire we funded from we fees basis additional on we total Phase we million one in margin, $XXX,XXX fees those of get by the interest booked in date, $X.X an just and have income. If risen realized PPP of loans exclude year. would had expected initiative the detailed the million million. NIM

interest-bearing year. our from the liabilities again as the we expected, On the reduced of funding side prior cost

Net quarter, those is additional are from down headwinds points. X.XX%, XX% the basis costs from down XX% Edon prior at which as was the the quarter. year by interest was XX and of For basis points the the our linked an basis year cash X.XX% rate margin quarter from Interest points linked prior XX by liabilities down to impact and on and expense excess from prior the PPP, margin. by the the were down year XX from down

continue loan the $XX.X our up repricing nearing XX% expect million the which million mortgage from origination We expense are volume, on income prior portfolio, certainly interest the of impairment. to bottom we on into year, XXXX. rights the reflecting overcame and reductions, or non-interest $X.X was on servicing asset however Total

the X% million which robust million. $XXX of in continued $X.X a a Yields exceeding with our was prior from that The volume. As sales the XX% And to on mortgage be XXXX $XXX,XXX, quarter, sales were very percentage volume our transactions Mark XX% Total quarter. level in in of XX% volume. a which quarter for our sales gains came indicated, revenue of closing originated fourth Agency strong delivering had year. Title large from sale volume and refinance $XXX our the also up quarter purchase volume. of number record to million, the continued in sold of supplemented achieved shift We sale volume of on at our fourth

as million in gains the The on X.X%, yielding made secondary, with XXXX, we for change way focus gain yielding become indicated, our all pipeline $XXX to paved and to hedge. numbers. roughly gains after years and sold total more higher-than-expected $XX.X million ago these For in hedge of aggressive close we XX% sale I our or total several

million from December declined quarter six quarter. servicing linked value, XXXX, servicing the resulted from $X.X XX $XXX,XXX. we slightly Market of which we quarter. and year, quarter, Our rights for down the our sheet, our the past $X.X And million on full servicing down down for from XX and XX, value revenue. indicated this which in mortgage the points At of was year the of prior is impairment. for were points $XXX,XXX revenue points balance the total quarter rights down the provided basis The the XX% as fair linked X% XXXX servicing basis calculated from basis realized portfolio in fourth

of to $XXX,XXX impairment recapture, for to year, compared is down but quarter. from The $X.X drove or expense $XX.X realized, an the million X% million, share if quarter, the total tangible the increase the compensation from mortgage but year-over-year, which X%. future linked per book X.X% or higher potential of contributed by Our increase $X.XX level quarter. remaining value for would the approximately up linked prior or decline volume $XXX,XXX higher Operating

year, operating the million expense or up For is $X.X XX%.

the growth mortgage $X.X and if we However, would in XX%. year-to-date normalize million merger Edon similar or for volume is costs,

sheet, at XX, of the million asset the stood growth growth year. of and $XXX total We As loan million, of balance prior we the December from assets turn company. XX.X% of loan to $XXX outstandings deposit of at XXXX $XXX the had growth million $XX million

All those consumer history, merger. the of pandemic, recent they in were the were and by unlike we these liquidity PPP, our experienced growth impacted course of have levels as

per which our $XXX.X basis, or was As share up of $X.X per we XX.X%, increases fourth to or finished at $X.XX a exclude the look the at our when up the from million value On PPP XX.X%. capital quarter we at X% the position, XX% year from XXXX year prior balances. share with ratio million, we standing equity-to-asset book

elevate our those $XXX,XXX non-performing linked-quarter. to our Including our non-performing price reduce buyback which accruing up authorization. continue at an credits, buy shares basis seven And restructured basis back assets year the prior $X.X restructured of the Total were book value. by $XXX,XXX or asset to in our points. XX% are credits to XXXX And basis of shares during our absent in flat we XX repurchased We non-performing roughly under of ratio XXX,XXX points. million, XX from numbers and would total points level average accruing

our positive in at-risk trend quality. asset forbearance in continue We balances monitor the of a And loan portfolio. our is improvement the segments to

the Mark $XXX,XXX Finally, $X from mentioned for the expense from year, prior quarter linked-quarter. but provision down was up as million the

the level allowance the at million back now Our from turn million loss or of absolute year to $X.X XX%. $XX.X loan up was call I'll over by prior Mark.

Mark Klein

tremendous net past it's milestones was year, and achievements accomplishment about year certainly income other delivering you, In Thank summary, the record proud. a us this we're clearly that for all equally Tony. this but

to households embrace close Edon still to with the to XX,XXX-plus acquisition. channels program transaction the market alternative expand connected an share and through and continue M&A remain our PPP communication We

liquidity our strongest Additionally, quarters for dealt requests and operation of base those to discussed our certainly our provide to we've over nearly this applications year, across with our team, two challenges one ways approved we mortgage expanded of lending was XXX unique history. earnings PPP significant stepped shareholder and that the X,XXX homeowners in entire to forbearance XXXX. delivered expanded footprint meet record in It up many our literally and

subside expect the we lines. our liquidity delivered yet business steadily page will a others our with certainly said, some product the welcome open, That bank to certainly XX and markets as ours As pent-up we like believe a challenges to seven turn community partnership XX, base we will diverse unknown of emerge. demand through key

I'll for Now over to the turn questions. Sarah? call Sarah back

Sarah Mykus

Thank you, Mark.

now are for ready our question. first We

on additional you For call like that will today’s ir.yourstatebank.com. be would our accessible at to remind website I questions,

Operator

comes first Thank Instructions] Janney you. [Operator question Montgomery. Our ahead. go Brian Please Martin from with

Brian Martin

guys. morning, good Hey,

Mark Klein

Good morning, Brian.

Tony Cosentino

Hi, Brian. Welcome

Brian Martin

Year. Mark we least -- this we new pricing, Tony maybe which at outlook. how start first then we should go just adding the year? was mortgage bit about appreciate the Well, kind as -- just into think production little levels if this -- and getting should And robust very of how be just of the as some of geography year? obviously maybe maybe Indiana the a the on mentioned that thinking you the New about the the Just markets. Happy could half in kind comments on the I just just

Mark Klein

Yes. Thanks, Brian.

operation. our to important increasingly become has mortgage know all we As

But but they might hedging stability margins going a some to per continue have going net XXXX. in and know particularly look to that we're We additional drive a to move discussed and robust our income. And we to to to similar we our had to volume, that happen, as add that know Brian led not we're MLOs as success think pipeline? some make and level arena. $XXX how keep earnings process on million might some as to have know if us good share to were And rates I and that expecting have perspective to those some before XXXX levels And us. I additional million Tony reasons some comparable we've robust expect we pretty be As before. all has on $XXX certainly that's

Tony Cosentino

Yes.

we'll I fairly quarter think We XX-ish Brian, quarter in I would good had plus were a pace we're through and a volume a certainly we to year throughout yields how Yes first fairly premium the be that things here XXXX. the on to first that half on weak of XXXX. percent go pricing, on look XXXX. from relative think a see of basis. at

Our will expectation yields in a that is XXXX. bit constrict

of that exposure at producers. employees lot people their We have started coming after looked and know the pressure increase competitive out a our I the have of nature and think to high banks to margin business. reached mortgage

don't from away pricing maintain bit to to which infrastructure XXXX. constrict in that. there's going manage I volume yields walk to will And potentially I think think on So think some stretch I to just going they're some and price be that a

Brian Martin

in mean, given were you levels to I of at if closer half north saw of the back I levels -- I this when the half But f-X%? where they year, we of the year? Okay. maybe of And saw to versus it the on in higher guess I of mean, is X% ever XXXX or is premiums? type maybe second does it what it back we're closer you back first today look I of I XXXX sub-X% to kind guess then Tony they even the versus the at where does were or to on the mean go kind it guess go

Tony Cosentino

XXXX upon of see think Xs of Yes. to the consistently think we're would the how first the back to to at range X.X% probably guess the I'm XXXX, I the X.X% and today. we'll would returns second range. of seeing for long towards we've based I back fairly going that been right XXXX, it XXXX I now. that And been half is the Xs lasts. I kind going what from still probably half mean best to But kind X.XX% XXXX. range, would excluding historically be to we've as above trending be first half of the think But year that my we probably X% see --

Brian Martin

Yes.

the Okay. add markets year expectations - Indiana No -- is Northeast that's to I there build year? are mentioned be out staff you in folks is helpful. And what this just adding or remind this guess Mark, to intend you the me this

Mark Klein

know to going than we we that And and anticipated bit as an the market. committed out we're million who build of Indiana had going up lower we've side of and can $XXX team, to going here. this the of And of Brian Northeast gone happen. we lift is team replicate. market and built around but MLOs those lakes certainly a committed we're to and the we've in to a Well, continue so along Northeast lots in little properties $XXX million stride on and to lead But Columbus to model Indiana. a to have little to eastern had well to make push that the had retool to speak a strategy like finally clearly, that as to find thought team. million it $XX as is of We've and aberration slower getting a that record we're we lots the Michigan. we team support lakes Indiana caught of we in think We've We we Indianapolis, start with we're but rich nice expensive the

Brian Martin

Got you.

things -- Or unfold are? this I in helpful. kind given of what then little of maybe to growth expecting you're year? the just liquidity customers mean, That's the just thought outlook. just like market kind your loan of today? the look How Perfect. you're bit a how And of Okay. on the what kind pipelines

Mark Klein

you've custom get We growth. as as be we like brand over sure. out times. want a that growth. don't loan that to number been in high as with of result the real generally be times of with regard a to and clients we've GDP of a quality But like And to these sensitivity competitive. on that player in interest asset said a to skis Yes like or no got a top very witnessed, we that player We median speaking, low decile median We've to level we've know that. rates GDP world, be our in

And we've so, albeit a developed middle with fairly aggressive And to lending markets have fairly of know Jon, our is to target single-digit growth the very through in recent. interest some arena. I leadership, our some risk. robust upper our pipelines hit Jon's little competitive of duration back some get with been to of programs that range to But rates, goal bit

Jon Gathman

think I fair assessment. that's a Yes,

As not the any Mark enter in pie the really we GDP said, XXXX, we've developed limited liquidity is with you growth some begun getting as programs. market. bigger Brian We've said as and thinking

working the round, robust a pipeline, say, we’ve out the a So, other we lenders acquisition that's quarter, we're has share things running program talking client first nice a of there banks. good for We we're in here coming did I prospects just that But institution business, on that and financial some The make of been well. on doing from growth the most more quarter get focused really about there from to returned in our but through PPP like any in level anticipate programs again Mark that significantly client optimistic addition very and in probably other sure the to some competitors. up nice the the obtained economic acquisition first job boost with in and some and us. from of second the trying we're second that mentioned. that's frankly primarily fourth round as to quarter of seeing third the would

Brian Martin

Okay. it's pipelines and a the good. headwind And I the are production mean,

any is little as payoffs bit a to be far the slowing? are that there continuing trend And elevated? seeing you're Just those as

Jon Gathman

I it see slowing. do

I think I last said that quarter.

-- we throughout far January a And of borrower pipeline pay properties We remainder going in just have we into already so of and and know we the early opportunities because that companies a to their estate REIT. of in to in we're XXXX, the here kind real really, or quarter, the advantage slow the more. that first to some for first continue see December, to those, advance, taken or as quarter in think couple saw many of those to I a particularly see they But sell request expect whatever. sell of us today here those operation February,

So no, in of I remainder considerably XXXX. the first expect that to and the quarter slow here later

Brian Martin

to of loan the kind deploy guess look materializing? doing the Or isn't of of just I Got think -- proceeds you, if given at just the would And okay. Tony some else, That's guess, of liquidity you're somebody helpful. levels margin just type just about -- on that you And kind growth for kind about the with to how that? that? growth thinking and maybe or loan how the outlook about I and I getting something how guess of

Tony Cosentino

that's liquidity, Yes, that been has has our somewhat put. I been certainly this significant And well think alternatives liquidity year for limited. and

do decent I think of we in expect to here Phase a level PPP X.

we've that fairly we some good think got feel loan about. I pipelines

we're whatever see do people to lot And is of then, that continue come to fast window we'll to of as to we've need go we that into extremely out try think high-cost like aggressive then I cost what We've together that. -- we're that little margin We've deposits. market that to we think doesn't of moved been going a bit. utilize supplement a on that got investment I side. But going if zero liquidity. expect looks kind We're the here a approaching. funding to

got how much do can to we've more the side of on and limited we're reduce on we we So understand sheet. asset the cost, balance

Mark Klein

that but just intent with which of all always down, Brian, growth might is have of out revenue. is having And the these why is the add one in comment. we conversation decrease, low-rate we're know that developed know very landscape to that that the the replace organic spirit buckets margin incrementally we've money going we to there We competitive, margin total that margin if increasing

So, income to as is ROA our ROE might go a down, result but sensitive increase a approach environment. to of more and and net that should the low client rate EPS

Brian Martin

Tony, your you. level got high the Yes, of on just kind And margin. on thought

sounded PPP If this think time the to you're -- some growth flattish is it level a little of not directionally, we this of absent -- asset I I still takes prepared on there's how still there. you remarks, liability room mean -- your continued do quarter kind side. at were the guess some kind said in sounds about like there's I bit together, like on if of you some loan kind the it of pressure come -- mean continued like side, there it from the acceleration there's here? but guess, much I

case? I goes is forgiveness margin percentage the that lower mean should absent Or So as not a the drift margin versus percentage dollars, here? the

Tony Cosentino

and we're I our think, be is the to our moving of absent generally, range of quarter fourth shakes going indication kind PPP. moves in forward,

its range of how going to is always that right really to big improve spend for going that XXXX. because liquidity away. to some deliver, is volume that very do with that go our going the factor because by be most to Is to a of just now. that's Mortgage X.XX% of just nature and fees think X.XX% is core of in anything start don't in consumer money going to I have liquidity to we we the much kind

there. a number of there's so And think I factors

first bottom this would I kind see quarter at the goes. but think we'll we're how So of end,

Brian Martin

you. Got

just And the your forgiveness the PPP increase right is further -- sheet there's I I process will of this the Okay. forgiveness, that guess balance now I size guess mean, as just liquidity begins? your with the expectation

Tony Cosentino

expect Yes, the on would received by X. or second million we've far, or I the Phase sub-$XX balances don't taken I mean, of down we've of Jon, part. pay million I be that absent at our what do Thus know million. XX million million time QX, in those don't to here $XX we've absolutely. XX original $XX I we will report applications know done so we

XX% is first somewhere going phase requirements. expectation different because we the to our of did to of potentially the volume the XX% in be So between

I is we've to maybe or SBA be put think we're lot I earnings loan more our current our is hope necessarily but So in liquidity sold. of in the going some We play. a bit be long-term traditionally -- real on categories. liquidity the the using a think down. may production trend play estate that on And cash maybe residential our better will to not books a smarter in absent whether keeping a but PPP of our depressing the of that that that securitizing, environment little at do and look that going that Because a short-term, form

Mark Klein

that Brian, just follow-up said And comment. a

and indicated as one of received received money. XX% of only for XX% Tony As our We've the round Jon indicated, we've forgiveness. applications

average an XXX so And amount and as field requests $XXX,XXX. five of it we into have the days on we requests, two round

with business And with continue the numbers prospects the per only of So but we've good we're in. those quarters minimum to not round And clients, received one here XXX some that subsequent we're with $XXXX back a on of and least our at for brought additional government's we prospects. we kind loan we'll commitment in. expand have from in of in

a thing. lemons using into on lemonade lever that we're turning it we're and as So

Brian Martin

Right. Got you.

just maybe last or two then And here. Okay. one

think for -- economy type should quality been pretty maybe kind post-COVID be COVID. aside is kind mean, But you The Just trends are reopening the there continues kind reserve and though I the of Is do as levels get with reserve? some maybe ability high fair? of guess, I the as strong -- that bit holding here, of it outlook that the given credit positive. about I on up sounds just as to visibility? we guess they've as of a to How deferral were credit. more lower trend put

Tony Cosentino

Yes.

reserve in of lot a we've put function a I think really the of has Brian, been well, all, of money PPP revenue. first

a this aside set of decision what-if made scenario. to we a So money that for strategic lot

rated at and that said it's close borrowers is stimulus. we're I some enabled to a you bit we secondary various really amount tertiary return yes, in there are sources borrowers, And them. nicely due to a backing borrowers lot of repayment particularly underwriting And levels. mention talk have them. see has some the have issues And some substandard. luck -- this end here And storm, good year, but those pretty about the that is of pumped a so all adversely good to the on the COVID weather to standards hung weather liquidity tunnel. say, speak. whether starting and we've many really But function a to good And so pretty of the those can in returns of PPP have and things self-ingratiating storm, But As asset see little the starting at hotels, to pre-COVID them our there to of But thing has to strict and quality quarter such when a good our eye early about of if levels in a numbers. if not forbearance having guarantors keeping normalcy, special process, credits or second of our to have you us think good of that a pretty we're think third were see prepared led in, with place we just feel little that I we or speak. a to a five of of the it's in that government many that and them, our fair accounted light

to COVID. the back to some a if even in returned we're our in of ADRs better example, little middle near, For not hotels, levels see, bit starting breakeven

optimistic going So in that return, later with -- some in be year. we're the to over-reserved we're

Brian Martin

-- I -- the, instance a would I about change one but... at certainly It to it that's least or to would your be opposed mean into today? that for And provision Okay. growth guess, as if, hope reserve that grow loan think with negative plays seeing reserves? the all that thought be out, could the way to

Tony Cosentino

process, method Yes. That's positive yields our that income. terms of thought preferred because obviously and growth in things some and

Mark Klein

our parting have on of that It's COVID not work. metrics done in growth We've calls prior absent need same we loan we comment we work variable is to staff. got the credits is, that that don't hard just, as to to number conveyed and And that this the thing. want. get make hard the find last how twice to We've the Brian, volume the we've years, same

of constant. it the how and variables number get the remains So, quality we calls

Brian Martin

of activity you, more I on I conditions the then, -- I a And last area perspective, is from pretty kind it's still just And buyback M&A Got from I -- the is mean, or now? that? dialogue, guess, okay. the one guess just intact. capital in the guess, how how I two, a what just the your expectations guess market? right there I in standpoint, deployment been guess, -- that given the Or have has steady? been And

Tony Cosentino

the I want Mark then, bit on talk in can side. about a little And it M&A capital. to fill

between on the we in we side, preferred and about fairly of been we've our $XX And there. buyback. loan the probably million earnings have of spent dividend in buyback. in wasn't spent it XXXX, certainly to million million -- grow I would think, aggressive I yeah, think $XXX that but We $XX

that earned the of think capital. use I was So our best

transactions capital to how of think type appropriate and buyback we'll continue this we for of I got along lines at and think see the we're time. that we And think going I to, to where the manage continue of the goes. we we've plenty liquidity are. think that us And M&A are plenty of

So...

Brian Martin

that… to compare And

Mark Klein

follow-up… to Just

Brian Martin

go Oh, Mark. ahead,

Mark Klein

follow-up the table on might M&A With well, to get as here. just Brian. to, I Well, that regard the

think growth we organic on But M&A is of value. amount around growth is organic entire the certainly to poke continue where platform. immense We that deliver landscape of we the absent

We continue some to talk to opportunities.

We have bench. the

the products. quarterly And that us got control bench. which to We're that We've got hopefully And managerial be the sure give currency business have would just we can someday. working stronger We we've line. what a make earnings. will we

Brian Martin

was? And far of out what that remaining Yeah. the haven't completed going as what there, guess, I the as authorization me just Can back Tony, buyback Right. yet. remind to you you

Tony Cosentino

got lie look originally likely go think we We $XXX,XXX And mid we'll on to what approved And forward. based through runs when a Yeah. we've month, that don't would again. out that, going that. I between volume $XX,XXX that And of at upon think availability. XXXX, left opportunities and know as doing $XXX,XXX. $XX,XXX roughly And we're see I the I

Brian Martin

you. Got

out. mean, quarter about with thought along guess look is I the given And -- the with an some spot in you But environment Perfect. guys a And as expenses, -- expectations kind of called I on other in. just, of we're your were have items I XXXX? -- you Okay. guess just this then, we're expenses think your bright

Mark Klein

going Just the a high in don't operations business are Brian, mortgage arena. we allow level the at robust mortgage line continue And other certainly -- know we the compress. prudent overshadow that margins to to to want

we So ways in look at order. run operating and we offices people. We're look world different to and continuing meetings a them at we're all the new new to and as travel with and can continuing many arrangements need of drive-ins, do

can the balance higher in job broader thinner get headed on more we've a balance we're to done the a those margins the where spending, with a That eye is profits sheet going find difficult. more to is And sheet. So because margin be got with keen landscape we to push to scale. we continue by said know bigger we competitiveness think but albeit

Brian Martin

Got you.

other one like or was a And of and but... talked notable change about quarter? just then Okay. the criticized those on them earlier. little didn't sound any this classified a there lot the areas, there It way movement whole you level, bit Was

Mark Klein

those classified quarter. four And the have kind Well, a and we're are credits credits like watch, movement a just a of keeping total things -- but maintaining credits. level. special We very But I substandard. All in sort criticized did in many solid or said and some well, five preemptive of performing two just again, eye some those couple are one close on of of, doing well. mention about and

or increases haven't We delinquency any there. had

how and here shape and up and an just they the the how of again eye the ground hit second see to financial first in more XXXX quarter XXXX. Just running keep

Jon Gathman

off commercial And today. in QX credits we've really are. got one sit current all seven We six on expectations based come of Brian where here our forbearance upon expectation as will we is but and their expect them or we

have sit we the So on we worst-case still commercial on one forbearance a potentially at hotel here the scenario as today QX. at of end

So it's improve. to to we going think continue

Brian Martin

next half with the what think as Edon. I saw This type quarter into of this going or we we the of your that year level if Tony second of the to Perfect. call Okay. the is the level I year? at year bit about all variables? your this is expectation Is similar say into how run half it $XX think expenses second the that it to high mortgage is different expectation of pricing. million. should it's is guess, $XX.X the of, in be given kind we little the you million that rate, $XX in part I year, that's hope kind to kind rate million-ish is million mean, think -- is all And next volume was $XX that run as about albeit with the that from, -- expenses, about -- Would go what a

Tony Cosentino

Yes.

we're I nCino think onboard CIP I conversations a system come our general, that making in all technology platform. XXXX the loan for there. We're in mean, we've new our I commercial origination to investment moving our which caveat in one certainly sales would put calls have in will some teams. in forward of and Salesforce

variable kind the spend color going a is bit. out mortgage to expense But we XXXX will on of technology generally be will inflate have how get expenses So as some are higher we my quarter-by-quarter. that. level going which can some mind yes, year transition, one And I more to on be on of flow in that in

Brian Martin

Okay.

Tony, that. You know, that’s helpful. I appreciate

Nice guys. the appreciate nice year. and quarter questions, it. So I okay, thanks taking well, for

Tony Cosentino

Brian. Thanks,

Jon Gathman

Take care, Brian.

Operator

This to [Operator for Mark like Instructions] closing to the would session. concludes no Showing further remarks. our questions. over turn question-and-answer back any I conference Klein

Mark Klein

on face, with we but Thanks us. forward of with year. our challenges we'll first again We're albeit, care. for the look goodbye. that Once joining pleased report everyone up XXXX, going again, we you to know April to thanks Take the joining XXXX. we're in looking again We're quarter and to as forward

Operator

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

may disconnect. now You

SB Financial (SBFG) 29 Jan 212020 Q4 Earnings call transcript