SBFG - Earnings call transcript Q2 2022 | SB Financial Group, Inc.

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Operator

Good morning, and welcome to the SB Financial Second Quarter 2022 Conference Call and Webcast. I would like to inform you that this conference call is being recorded and that all participants are in listen-only mode.

We will begin with remarks by management and then open the conference up to the investment community for questions and answers. I will now turn the conference over to Sarah Mekus with SB Financial. Please go ahead, Sarah.

Sarah Mekus

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

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

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

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

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

Mark Klein

and attributed from $XX our the quarter million. nearly balances, rose in small year-to-date expense. revenue year. strong net interest half $X.X EPS the Highlights million reduction you, increases our or the second and to due quarter X.X% of compared rate of was quarter webcast. to up loans the lower assets from from the growth were prior $XXX,XXX balances year prior Expenses initiative our million we $X.XX, Loan line and drove growth volume year. PPP the quarter earnings loan-to-deposit and $XX.X Annualized, reduction or to the good our The including Thank up diluted XX% The million of call up prior for recapture XX%. income in and months mortgage as Return six $X.X year-over-year. same for income It's down including million down to from was On of million net business XX.X% million. average in by morning, a quarter. supplemented XX.X% year on Welcome million of as income were the interest XX% conference loan down X.XX%, $XX X.XX% net when of compared $XX of right Sarah million everyone. period $X.X was to the mortgage revenue quarter the a the $XXX,XXX following; to of PPP was net $X.X from in from for X.X% million declined the on loan for first million disclosed from and quarter X.X%, the in year, $X.X prior were primarily of $X.X XXXX. prior by compared servicing Mortgage total the $XX a origination year. Deposit for that prior results release the and or up year-to-date from we $XX commissions. our adjust ratio million link million, XX% million down first mortgage $X income link were $XX impact basis,

book end metrics $XX.XX [ph] assets non-performing link our of improved OCCI for strong is when of both prior remained quality the from level value XX points year [ph]. Asset tangible base quarter consistent adjusted and while

We forward client excellence revenue more Title success. and They revenues quality. believe prior drive with Peak are course, our for operational annualized. revenue operation intimacy our on quarters, we of EPS higher for while diversity on initiatives nearly responsible we $X.XX income. follow driving or As five organic focus Revenue last $XXX,XXX segment. all These continued of continue transactions, with and a and growth, Title $XXX,XXX legal nearly reported strategic strategic and scale, household and delivered made net terms estate to expansion, increase prior by and the shift future are revenue focus and for initiatives asset that protocol real XX% XX% a more to key our real estate income generally a services and quarter will communications net to intentional scope, by of commercial on more in

gains. quarter, gains prior were down the XX% volume, volume on loan from and XX% This sale mortgage year, on

XX trailing mortgage $XXX million from the total and months, delivered XXXX. that's in nearly XX% For we down origination volume from have XXXX XX%

are working. volume private originations of Our client clearly initiatives our drive higher to

primary This originated compressed million business mortgage quarter last current the at levels Northwest, line. inventory a million. well but of below XX% of estate total from Columbus to includes second of strong impairment to on level $XXX,XXX our rate came The recapture of quarter XX% of Noninterest mentioned to decreased Ohio; market, as servicing third Non-interest Northeast, income Of continue production, XX%, that production. total XX%. income $XX,XXX to relatively initiatives, compared PCG $X.X quarter our remained over higher of and million the newer quarter, in market. from our I our near year. our an expectations historical $X.X of revenue or residential volume real a and Indiana our XX% Indianapolis from of PCG Outside $XX.X from our constrain from

platform. on wealth our to witnessed, the revenue all and contributed retained in markets $XXX that total volatility excess nearly balances Despite pace $XXX,XXX million. XXXX management the are we have includes million of Our that in we've revenue million, of and team in in $X brokerage achieve in $XX

the of PPP quarter more prior the from were the loan from $XX million $XX good million we year. Secondly, very in link growth up quarter as net of scale, was

very have this markets quarterly over under regional last proposals All the client five of number With an of book in have noted, pipelines, grown including our strong credit our we now gross quarters. analysis. a currently

existing pipelines needs important today deposit and linked from are industries down Funding current newer liquidity of evidence quarter as but of their [ph], the loan result small have more our clients not deposit declined saw relationships. begun a future quarter. has this runoff, business This also much increased we our selectively and and support consumer our and grow balances drawing in to higher rate protect to only deposit

more bit scope; far and we've year, SBA products. in as we've traditional Third become is loosen this Thus has to nearly PPP witnessed million all $X.X the gone. a focus the qualified SBA market clearly but originated

each complement this our and client's to growth our production remain to We a need We on a that business identified on that continue include for $XX.X to return calls production has intend acquisition the rate execute period. to when loan capital. more contributed in each five-year mode to be strong machine in business a excellence, of in who that in been pandemic, commercial past prospects we are either fourth have mode XXXX year strategies decade. markets experienced true committed the levels to line certainly production key XXXX for averaged the theme, mortgage entire or prior the approximately through our we Operational to the success million that'd

for were margins balance now market flexibility increase increases, products above outstanding sheet rate our inventory, from quarters, increased X%, quarter as potential and portfolio relevant. share. These or said, of nature of Expense length expanding That both levels mortgage housing drops. structure the more and pricing our become driven portfolio for added remain our rates the improve fixed However, our inflation focused rapid the challenges to have and operational we volume. have construction prior certainly our by at loans With our free in products year grade down on on limited and the production. compressed have have lending, a variable

last we allocated resources discussed and are the line. retail we to business both our quarter, mortgage evaluating As

Our months we order end elevate we number same Lima, and to in in of number and MLO of two to for the increase goal XX greater the XX balance producers, Columbus our to keep our producers additional optimized. am the in prior in handful of producers 'XX. to over is have and five in MLOs the brings of landed the over Central the the producers report residential quarter business past over three last and a market that's those have market an last year in and Ohio West offers number one made has six days, of and I our been that pleased to line ecosystem

ceases Additionally, we moderating in staff our some more retail loans residential digital capacity saleable our our who some that efficiency. to by Rebalancing retail our that clients improve leverage provide new part the here our we and originate quarter. to client's to of our to visits using to as due our we our prior deployment This traditional officer staff selectively access to we resources in production enable market communication intend our commitment data with offices. continue challenge. loans the hours center to do service seamless utilize contact will in our operate requirements walk-in platform early with multiple strategy discussed delivered hinges July non-saleable broaden to on consumer re-evaluate of to XXXX, we to Likewise,

of a quarter, our initiative non-performing of peer current again, million significant Our provide allowance, release of to the pleased details quarter, quality to volume Cosentino $XX is on ratio to our was to XXXX. fifth is saw now, total key do the the now coverage Both are and mortgage allowance during our Despite like to CFO, to more our this and in loan reserves strong loans. $X.X our And our ask refinance result loans add metrics quality; PPP Currently not nearly quarter well group. X.XX% chose few of asset final we intend level our median We revenue, above asset million Tony? a quite with metrics. I'd soon. Tony level XXX%. anytime we growth When and remained adding

Tony Cosentino

Mark. had Again, income GAAP $X.XX quarter, net the Thanks, share. we $X.X Mark everyone. per as or million Good indicated of diluted morning, for

We higher percentage Loan and was X.X% variance So down gains which ag of $X.X or we're or and mortgage volume million interest $X.X portion XX%. security operating due reduced title to small by margin higher million revenue offset a nearly higher to as sales Adjusted agency $XXX,XXX income for for X.X% highlighting business lower X.X%. $XXX,XXX delivered fees. and revenue, funding up mortgage, gains costs or was deposit slightly and of and $X.X million down sales PPP, from revenue were lower loans quarter, loan able with revenue. the or were this mortgage

did our average XX decreased points into statement; year, but basis it further the quarter. our was quarter from Looking from loan prior the basis points margin linked the on yield income for XX X.XX% the increase by side,

XX yields Mark the year. points basis and earning from the Overall six-month points As to higher XXXX the growth. asset which of nine PPP significant. the and were fees Loan loan average the impact essence, portfolio, million 'XX to the yields that basis basis XX months linked due the by balance on loan the quarter were decreased impact yield for yield was earlier, by prior the sheet in our change for $X.XX just first for of would've XXXX loan for discussed In PPP six of impacted prior mix period. points for year up compared $XX,XXX were

indicated, as have accelerate customer we pipelines down liquidity will draws needs are and to funding As and loan costs begin closed. our and

As at to points we our bearing XX for This and XX at for for look compares quarter, liabilities in points of costs funding the points respectively funds linked with the basis basis points. costs quarter. basis the XX deposit cost came at basis XX current interest

on pleased were funding rise the we Given rates, with costs beta in a the funding negative quarter. in

on loans positive side the prior interest by change XX and mix deposit from the that a to cash quarter margin coming prior and Compared balance when allocated the deposit Total points asset levels down quarter costs basis driven declined. interest-baring XX both was bit was were and of in with year quarter. linked However, for coming a the Interest from basis linked our points expense at as year sheet points. we significant our or basis non-interest overall sales XX the which and the income mortgage prior NIM was XX.X% swing in and lower servicing Total $X.X excluded. to standards quarters. was recapture. into origination expect year, up reflecting costs rights PPP and down That we and up by the $XXX,XXX NIM rise linked from million the was the funding is higher X.XX% recognized up positive quarter, improvement offset volume, liquidity

mid the last to As off still from X% sales discussed 'XX. yields sale of Gain sale quarter mortgage have yield strong on well gain the yield seemed on historically, quarter second at quarter, this the I from X.X%, on for stabilize X.X% which was is but level.

for These XX% from and portfolio percentage. are XX% and well just was sale originations. our traditional done much year percentage the levels sale as our quarter, This XX% off client have more private we loan

from quarter. $XXX,XXX. continue for remaining and of provided year basis a revenue with servicing and is X.X%. portfolio however, improved to fair fair quarter points million are $XXX,XXX. and up $XX.X quarter expenses temporary of expenses the basis impairment down value of billion held We've servicing of from Market value this servicing XX of points. linked right for does quarters This now Our basis prior grow $X.XX the for slightly value a flat market calculated and six have We total five points just now the rights the our was relatively up and last the year-to-date, XXX balance

has resources retail business would impact an Mark the discussed. in reduced XX% line when in We on line efficiency expect excluded. trend efficiency business as of mortgage ratio the down as our is coming our significant decline to The decline just to the which are XX% results of from XXXX we lines mortgage our in business that be quarters,

finish company. Now, million, $XXX at which the balance was assets turning XX, the outstanding at as the June of up sheet, total still of to loan XX.X% we

the as due million $XXX declined loan said, a security saw quarter nearly the quarter significant to shift saw and linked and assets within cash earning mix we deposit As our growth runoff. by from we

ends nearly highest points Our of XX.X% loan percentage to six the our since at ratio third deposit quarter quarter XXXX. level into up

June quarter million XX XX.X% our X.X%. the down ratio $XX.X $XXX.X or finished million asset equity from we at capital, with standing at Looking of

purchase has continued exclude the despite me, excuse advantage above payback XX,XXX million take average $X.X buyback, nearly just book when $XX The an additional also continued quarter. in value. we from buybacks the stock common balance quarter grown the on $X the the However, and equity OCC policies prior million, at shares year, -- dividends. in million our sheet We at with in some did price repurchased in of at liquidity

those for added portfolio this the since for improved Sometime the commented, of both we've employees. finally, were our there both benefit quality metrics And quarter participating for and date. and year asset minimal are company to charge-off nice is and as Mark all the to

for loans the call linked to down basis delinquency just points from year. Total basis I'll reserves the quarter are and nine over basis XX Our year. quarter levels Mark. in basis prior two down back XX the points was the points from prior the down turn points

Mark Klein

yesterday into you, approximately ratio control, the stable and and to second volume Sarah? the the I year. marginally and rates are for yield mortgage to I'll with Clearly, lift growth yield asset to with want resulting essentially revenue, Thank intentional balance per X.X%. of And well while with more our Tony. equates dividend to total again expect some operating and and conclude loan curve back it sheet, higher $X.XX which acknowledging of amount provide our XX% Sarah pay-out dividend expense off announcement gains strong steeping continued considerably, a a we with pipelines, a made our approximately organic questions, earnings continue turn growth we costs deposit to certainly half share,

Sarah Mekus

Thank you.

for ready we're question. our first Now,

Operator

[Operator instructions]

Sarah Mekus

for While on I'd our we're call to you any website additional like that will @YourStateBank.com. waiting accessible be remind questions, today's

Operator

Klein Mark time. are over at this to the There no turn conference for instructions] to back [Operator remarks. I would questions like closing

Mark Klein

and care. Once for speaking webcast. again goodbye. with joining We our XXXX Thanks October look to discuss again, joining for quarter us results. third in conference you to thanks on the Take call forward again

Operator

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

You may now disconnect.

SB Financial (SBFG) 26 Jul 222022 Q2 Earnings call transcript