SB Financial Group Announces Third Quarter 2020 Results

DEFIANCE, Ohio, Oct. 29, 2020 /PRNewswire/ -- SB Financial Group, Inc. (NASDAQ: SBFG) ("SB Financial" or the "Company"), a diversified financial services company providing full-service community banking, mortgage banking, wealth management, private client and title insurance services today reported earnings for the third quarter and nine months ended September 30, 2020.

Third quarter 2020 highlights over prior-year third quarter include:

• Net income of $5.3 million up $1.5 million or 39.6 percent; diluted earnings per share ("EPS") of $0.69 up $0.21 per share or 43.8 percent
• Adjusted net income, excluding for the impact of the Originated Mortgage Servicing Rights ("OMSR") recapture of $0.3 million, of $5.0 million, with adjusted EPS of $0.65
• Mortgage origination volume of $200.2 million, an increase of $42.2 million, or 26.7 percent
• Pre-tax, pre-provision income of $8.3 million up $2.5 million or 43.2 percent

The nine months ended September 30, 2020, highlights over the prior-year nine months include:

• Net income of $9.6 million; diluted EPS of $1.25
• Adjusted net income, excluding the impact of OMSR and merger costs of $3.3 million after- tax, rose to $12.9 million, up $3.2 million or 32.9 percent, with adjusted EPS of $1.67
• Return on Average Assets ("ROA") of 1.12 percent; adjusted ROA of 1.41 percent

Third quarter 2020 trailing twelve-month highlights include:

• Loan growth of $62.5 million, or 7.6 percent, which includes Paycheck Protection Program ("PPP") loan balances of $82.1 million and loans acquired in the Edon acquisition of $15.7 million.
• Deposit growth of $166.1 million, or 19.6 percent, driven by PPP balances and the Edon acquisition
• Mortgage origination volume of $662.7 million; servicing portfolio of $1.29 billion, which is up $140.0 million, or 12.1 percent

 

Highlights	Three Months Ended				Nine Months Ended
($ in thousands, except per share & ratios)	Sep. 2020	Sep. 2019	% Change		Sep. 2020	Sep. 2019	% Change
Operating revenue	$       19,677	$      14,424	36.4%		$      47,873	$      38,287	25.0%
Interest income	10,807	11,546	-6.4%		32,046	33,195	-3.5%
Interest expense	1,548	2,488	-37.8%		5,367	6,965	-22.9%
Net interest income	9,259	9,058	2.2%		26,679	26,230	1.7%
Provision for loan losses	1,800	300	500.0%		3,700	500	640.0%
Noninterest income	10,418	5,366	94.1%		21,194	12,057	75.8%
Noninterest expense	11,335	9,500	19.3%		32,403	27,234	19.0%
Net income	5,250	3,762	39.6%		9,586	8,615	11.3%
Earnings per diluted share	0.69	0.48	43.8%		1.25	1.08	15.7%
Return on average assets	1.73%	1.44%	20.1%		1.12%	1.13%	-0.9%
Return on average equity	15.01%	11.24%	33.5%		9.74%	8.67%	12.3%
Non-GAAP Measures
Adjusted net income	$        4,992	$        3,762	32.7%		$      12,916	$        9,720	32.9%
Adjusted diluted EPS	0.65	0.48	35.4%		1.67	1.22	36.9%
Adjusted return on average assets	1.64%	1.44%	13.9%		1.41%	1.23%	14.6%
Adjusted pre-tax, pre-provision income	8,016	4,924	62.8%		19,685	12,451	58.1%

"Mortgage volume continued its strong growth in the third quarter, which resulted in our net income rising from the prior year by over 40 percent." said Mark A. Klein, Chairman, President, and CEO of SB Financial.   "Our revenue diversification strategy continues to drive EPS and tangible book value growth despite the headwinds that the economy is facing in all of our markets.  We continued to return capital to our shareholders in the quarter through stock buybacks and a cash dividend of nearly 15 percent of earnings."

RESULTS OF OPERATIONS

Consolidated Revenue

Total operating revenue, consisting of net interest income and noninterest income, was up 36.4 percent from the third quarter of 2019, and up 12.5 percent to the linked quarter.

• Net interest income was up 2.2 percent from the year-ago quarter, and up 4.4 percent from the linked quarter.
• Net interest margin on a fully taxable equivalent basis (FTE) was down from the year-ago quarter by 52 basis points but up 9 basis points from the linked quarter as transactional cash balances were higher and PPP loans made marginal contribution.
• Noninterest income was up 94 percent year over year and 21 percent from the linked quarter.

Mortgage Loan Business

Mortgage loan originations for the third quarter of 2020 were $200.2 million, up $42.2 million, or 26.7 percent, from the year-ago quarter.  Total sales of originated loans were $166.2 million, up $40.8 million, or 32.6 percent.  For the first nine months, SB Financial had total volume of $525.2 million, of which $210.2 million (40 percent) was new purchase/construction lending, $169.2 million (32 percent) was internal refinance, and the remaining $145.8 million (28 percent) was new customer refinance volume.

Net mortgage banking revenue, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $7.9 million for the third quarter of 2020, compared to $2.5 million for the year-ago quarter.  The mortgage servicing valuation adjustment for the third quarter of 2020 was a positive $0.3 million, compared to no adjustment for the third quarter of 2019.  For the first nine months, the impairment on servicing rights was $3.0 million, compared to $1.4 million for the prior year nine months.  The aggregate servicing valuation impairment ended the quarter at $4.3 million.  The servicing portfolio at September 30, 2020, was $1.29 billion up $140.0 million or 12.1 percent, from $1.15 billion at September 30, 2019.  Normal amortization is up 87 percent from the prior year due to higher refinance activity.

Mr. Klein noted, "Mortgage volume was steady in the quarter as we originated over $200 million in volume.  In addition to strong origination levels, our pricing and hedging strategies enabled us to deliver additional mortgage banking revenue of $5.4 million or a year over year increase of over 200 percent.  We were also pleased to recapture a small amount of our prior quarter's impairment on our servicing rights."

Mortgage Banking
($ in thousands)	Sep. 2020	Jun. 2020	Mar. 2020	Dec. 2019	Sep. 2019
Mortgage originations	$     200,158	$     223,671	$     101,365	$     137,528	$     157,947
Mortgage sales	166,201	204,628	84,476	127,441	125,386
Mortgage servicing portfolio	1,293,037	1,261,746	1,216,292	1,199,107	1,153,020
Mortgage servicing rights	8,535	8,168	8,974	11,017	10,447
Mortgage servicing revenue
Loan servicing fees	813	782	757	740	709
OMSR amortization	(1,308)	(1,574)	(597)	(709)	(701)
Net administrative fees	(495)	(792)	160	31	8
OMSR valuation adjustment	326	(1,088)	(2,212)	303	-
Net loan servicing fees	(169)	(1,880)	(2,052)	334	8
Gain on sale of mortgages	8,085	8,119	1,949	3,048	2,495
Mortgage banking revenue, net	$         7,916	$         6,239	$          (103)	$         3,382	$         2,503

Noninterest Income and Noninterest Expense

SB Financial's noninterest income includes revenue from a diverse group of services, such as wealth management, deposit fees, residential loan sales and the sale of Small Business Administration (SBA) and U.S. Department of Agriculture (USDA) loans.  Wealth management assets under the Company's care were $522.4 million as of September 30, 2020, up $38.1 million or 7.9 percent compared to the prior year.  For the third quarter of 2020, noninterest income as a percentage of total operating revenue was 52.9 percent.  Reflective of the robust mortgage market, SB Financial's Title Agency provided revenue in the quarter of $0.5 million, up 29 percent from the prior year. 

For the third quarter of 2020, noninterest expense of $11.3 million was up $1.8 million year over year or 19.3 percent reflecting a 1.9 times positive operating leverage.  On a year-to-date basis, when adjusted for the Edon merger costs, noninterest expense is up 14.4 percent compared to the prior year nine-month period.  Operating leverage for the year is a positive 1.3 times, which will improve to 1.7 times when the merger costs are removed.

Mr. Klein stated, "Revenue growth was up over 36 percent from the prior year compared to operating expense growing 19 percent.  We had the lowest net, noninterest expense to average assets in our history this quarter and the significant positive operating leverage was key to our earnings growth. We remain optimistic that the consumer and business momentum from this quarter will continue into the fourth quarter and translate into improved loan pipelines."

Noninterest Income / Noninterest Expense
($ in thousands, except ratios)	Sep. 2020	Jun. 2020	Mar. 2020	Dec. 2019	Sep. 2019
Noninterest Income (NII)	$       10,418	$         8,615	$         2,161	$         5,959	$         5,366
NII / Total Revenue	52.9%	49.3%	20.2%	40.9%	37.2%
NII / Average Assets	3.4%	3.0%	0.8%	2.3%	2.1%
Total Revenue Growth	36.4%	39.6%	-5.6%	16.0%	-1.2%
Noninterest Expense (NIE)	$       11,335	$       11,662	$         9,406	$       10,176	$         9,500
Efficiency Ratio	57.5%	66.7%	87.8%	69.9%	65.9%
NIE / Average Assets	3.7%	4.0%	3.5%	3.9%	3.6%
Net Noninterest Expense/Avg. Assets	-0.3	-1.0%	-2.7%	-1.6%	-1.6%
Total Expense Growth	19.3%	28.0%	9.0%	15.0%	6.2%
Operating Leverage	1.9	1.4	-0.6	1.1	-0.2

Balance Sheet

Total assets as of September 30, 2020, were $1.22 billion, up $175.5 million, or 16.8 percent, from the year ago quarter due to the impact of the Edon acquisition and the PPP activity.  Total equity as of September 30, 2020, was $141.3 million, up 5.3 percent from a year ago, and comprised 11.6 percent of total assets. 

Total loans held for investment were $885.9 million at September 30, 2020, up $62.5 million, or 7.6 percent, from September 30, 2019.  Commercial loans were up $71.5 million, or 49.3 percent, commercial real estate up $9.4 million or 2.6 percent and agricultural loans increasing $5.5 million or 10.5 percent.   Absent the effects of the Edon acquisition and PPP loans, loan balances were down $35.4 million from the year ago quarter.

The investment portfolio of $135.6 million, including shares in the Federal Reserve Bank and Federal Home Loan Bank, represented 11.1 percent of assets at September 30, 2020, and was up 66.0 percent from the year-ago period.  Deposit balances of $1.01 billion at September 30, 2020, increased by $166.1 million, or 19.6 percent, since September 30, 2019.  Growth from the prior year included $104.7 million in checking and $61.4 million in savings and time deposit balances.

Mr. Klein continued, "Asset quality was largely stable in the quarter.  Our number and dollar of loans on forbearance were down 60 and 75 percent respectively from the linked quarter.  We are encouraged by these trends but we also understand that further weakness is possible.  To prepare for these unknowns, we decided to allocate some of our higher than expected mortgage revenue into provision this quarter.  We expect to begin the PPP forgiveness process in the fourth quarter, which will help all of our 700 PPP clients who were impacted by the pandemic."

Loan Balances
($ in thousands, except ratios)	Sep. 2020	Jun. 2020	Mar. 2020	Dec. 2019	Sep. 2019	Annual Growth
Commercial	$       216,667	$       222,108	$       151,538	$       151,018	$       145,147	$         71,520
% of Total	24.5%	24.6%	18.2%	18.3%	17.6%	49.3%
Commercial RE	371,947	375,450	378,212	369,962	362,580	9,367
% of Total	42.0%	41.6%	45.5%	44.8%	44.0%	2.6%
Agriculture	57,420	58,817	47,660	50,994	51,946	5,474
% of Total	6.5%	6.5%	5.7%	6.2%	6.3%	10.5%
Residential RE	178,393	184,684	189,738	189,290	199,036	-20,643
% of Total	20.1%	20.6%	22.9%	22.9%	24.2%	-10.4%
Consumer & Other	61,423	60,489	63,616	64,246	64,658	-3,235
% of Total	6.9%	6.7%	7.7%	7.8%	7.9%	-5.0%
Total Loans	$       885,850	$       901,548	$       830,764	$       825,510	$       823,367	$         62,483
Total Growth Percentage						7.6%
Deposit Balances
($ in thousands, except ratios)	Sep. 2020	Jun. 2020	Mar. 2020	Dec. 2019	Sep. 2019	Annual Growth
Non-Int DDA	$       225,003	$       229,042	$       170,920	$       158,357	$       152,932	$         72,071
% of Total	22.2%	23.1%	19.8%	18.8%	18.0%	47.1%
Interest DDA	164,248	154,143	133,722	131,084	131,655	32,593
% of Total	16.2%	15.6%	15.5%	15.6%	15.5%	24.8%
Savings	169,474	161,182	138,863	119,359	121,991	47,483
% of Total	16.7%	16.3%	16.0%	14.1%	14.3%	38.9%
Money Market	204,862	189,380	169,209	173,666	173,237	31,625
% of Total	20.2%	19.1%	19.6%	20.7%	20.4%	18.3%
Time Deposits	250,428	256,840	251,177	257,753	268,139	(17,711)
% of Total	24.7%	25.9%	29.1%	30.8%	31.8%	-6.6%
Total Deposits	$    1,014,015	$       990,587	$       863,891	$       840,219	$       847,954	$       166,061
Total Growth Percentage						19.6%

Asset Quality

SB Financial reported nonperforming assets of $7.3 million as of September 30, 2020, up $2.7 million from the year-ago quarter.  The coverage of nonperforming loans by the loan loss allowance was at 164 percent at September 30, 2020, down from 207 percent at September 30, 2019.  

Nonperforming Assets						Annual Change
($ in thousands, except ratios)	Sep. 2020	Jun. 2020	Mar. 2020	Dec. 2019	Sep. 2019
Commercial & Agriculture	$          1,140	$          1,204	$          1,309	$          1,772	$             834	$             306
% of Total Com./Ag. loans	0.42%	0.43%	0.66%	0.88%	0.42%	36.7%
Commercial RE	2,475	2,484	1,816	1,826	262	2,213
% of Total CRE loans	0.67%	0.66%	0.48%	0.49%	0.07%	844.7%
Residential RE	2,481	2,538	2,330	1,635	1,763	718
% of Total Res. RE loans	1.39%	1.37%	1.23%	0.86%	0.89%	40.7%
Consumer & Other	313	308	327	267	416	(103)
% of Total Con./Oth. loans	0.51%	0.51%	0.51%	0.42%	0.64%	-24.8%
Total Nonaccruing Loans	6,409	6,534	5,782	5,500	3,275	3,134
% of Total loans	0.72%	0.72%	0.70%	0.67%	0.40%	95.7%
Accruing Restructured Loans	789	804	816	874	825	(36)
Total Change (%)						-4.4%
Total Nonaccruing & Restructured Loans	7,198	7,338	6,598	6,374	4,100	3,098
% of Total loans	0.81%	0.81%	0.79%	0.77%	0.50%	75.6%
Foreclosed Assets	76	382	85	305	489	(413)
Total Change (%)						-84.5%
Total Nonperforming Assets	$          7,274	$          7,720	$          6,683	$          6,679	$          4,589	$          2,685
% of Total assets	0.60%	0.64%	0.61%	0.64%	0.44%	58.5%

The Company continued to provide payment relief to clients as needed, with total forbearance as of September 30, 2020 of 204 loans at $80.7 million.  The detail on these deferrals; 19 commercial at $36.4 million down $106.3 million or 74.5%, 7 portfolio residential and consumer at $2.0 million down $8.6 million or 81.3 percent and 178 sold residential real estate at $42.3 million up $0.6 million or 1.4 percent. 

Loans in Deferral Status				Linked Qtr. Change
($ in thousands, except ratios)	Sep. 2020	Jun. 2020
Total Commercial	$            36,366	$           142,682		$          (106,316)
Total Consumer	28	350		(322)
Total Portfolio Mortgage	1,959	10,274		(8,315)
Total Balance Sheet Deferrals	$            38,353	$           153,306		$          (114,953)
% of Total loans	4.33%	17.00%		-12.68%
Total Sold Mortgage	$            42,317	$            41,751		$                 566
Commercial High Sensitivity
Portfolio Update				Linked Qtr. Change
($ in thousands, except ratios)	Sep. 2020	Jun. 2020
Hotel/Travel Accomodation	$                 32,475	$                 32,758		$                     (283)
Food Service/Restaurant	9,698	10,480		(782)
Elder/Child Care	7,188	7,302		(114)
Arts/Entertainment/Recreation	6,614	5,698		916
Education/Religious	13,412	15,083		(1,671)
Energy	-	-		-
Total	$                 69,387	$                 71,321		$                 (1,934)
% of Total loans	7.83%	7.91%		-0.08%

Webcast and Conference Call

The Company will hold a related conference call and webcast on October 30, 2020, at 11:00 a.m. EDT.  Interested parties may access the conference call by dialing 1-888-338-9469.  The webcast can be accessed at ir.yourstatebank.com.  An audio replay of the call will be available on the Company's website.

About SB Financial Group                                                                          

Headquartered in Defiance, Ohio, SB Financial is a diversified financial services holding company for the State Bank & Trust Company (State Bank) and SBFG Title, LLC dba Peak Title (Peak Title).  State Bank provides a full range of financial services for consumers and small businesses, including wealth management, private client services, mortgage banking and commercial and agricultural lending, operating through a total of 22 offices; 21 in nine Ohio counties and one in Fort Wayne, Indiana, and 23 full-service ATMs. State Bank has five loan production offices located throughout the Tri-State region of Ohio, Indiana and Michigan.  Peak Title provides title insurance and opinions throughout the Tri-State region. SB Financial's common stock is listed on the NASDAQ Capital Market under the symbol "SBFG".

In May 2020, SB Financial was ranked #125 on the American Banker Magazine's list of Top 200 Publicly Traded Community Banks and Thrifts based on three-year average return on equity ("ROE").

Forward-Looking Statements

Certain statements within this document, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties and actual results may differ materially from those predicted by the forward-looking statements. These risks and uncertainties include, but are not limited to, the duration and scope of the COVID-19 outbreak in the United States and the market areas in which SB Financial and its subsidiaries operate, including the impact to the state and local economies of prolonged shelter in place orders and the pandemic generally, risks and uncertainties inherent in the national and regional banking industry, changes in economic conditions in the market areas in which SB Financial and its subsidiaries operate, changes in policies by regulatory agencies, changes in accounting standards and policies, changes in tax laws, fluctuations in interest rates, demand for loans in the market areas in SB Financial and its subsidiaries operate, increases in FDIC insurance premiums, changes in the competitive environment, losses of significant customers, geopolitical events, the loss of key personnel and other risks identified in SB Financial's Annual Report on Form 10-K and documents subsequently filed by SB Financial with the Securities and Exchange Commission.  Forward-looking statements speak only as of the date on which they are made, and SB Financial undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made, except as required by law. All subsequent written and oral forward-looking statements attributable to SB Financial or any person acting on its behalf are qualified by these cautionary statements.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles ("GAAP"). Non-GAAP financial measures, specifically pre-tax, pre-provision income, tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common equity, total interest income – FTE, net interest income – FTE and net interest margin – FTE are used by the Company's management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders.  In addition, the Company excludes the non-GAAP items of OMSR impairment and merger related costs from net income to report an adjusted net income level.  Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Investor Contact Information:
Mark A. Klein
Chairman, President and
Chief Executive Officer
Mark.Klein@YourStateBank.com

Anthony V. Cosentino
Executive Vice President and
Chief Financial Officer
Tony.Cosentino@YourStateBank.com

		SB FINANCIAL GROUP, INC.
		CONSOLIDATED BALANCE SHEETS - (Unaudited)
					September		June		March		December		September
			($ in thousands)		2020		2020		2020		2019		2019
ASSETS
	Cash and due from banks				$       94,641		$       85,661		$       56,393		$       27,064		$       49,824
	Interest bearing time deposits				8,956		10,542		-		-		-
	Available-for-sale securities				130,315		104,289		107,727		100,948		77,029
	Loans held for sale				13,943		13,742		11,328		7,258		13,655
	Loans, net of unearned income				885,850		901,548		830,764		825,510		823,367
	Allowance for loan losses				(11,793)		(10,013)		(8,958)		(8,755)		(8,492)
	Premises and equipment, net				23,785		23,662		23,599		23,385		23,898
	Federal Reserve and FHLB Stock, at cost				5,303		4,837		4,648		4,648		4,648
	Foreclosed assets held for sale, net				76		382		85		305		489
	Interest receivable				4,159		4,272		2,940		3,106		3,176
	Goodwill and other intangibles				22,763		22,813		17,830		17,832		17,834
	Cash value of life insurance				17,453		17,375		17,299		17,221		17,137
	Mortgage servicing rights				8,535		8,168		8,974		11,017		10,447
	Other assets				14,255		15,658		15,684		9,038		9,749
			Total assets		$  1,218,241		$  1,202,936		$  1,088,313		$  1,038,577		$  1,042,761
LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits
		Non interest bearing demand			$     225,003		$     229,042		$     170,920		$     158,357		$     152,932
		Interest bearing demand			164,248		154,143		133,722		131,084		131,655
		Savings			169,474		161,182		138,863		119,359		121,991
		Money market			204,862		189,380		169,209		173,666		173,237
		Time deposits			250,428		256,840		251,177		257,753		268,139
			Total deposits		1,014,015		990,587		863,891		840,219		847,954
	Short-term borrowings				20,710		23,826		36,881		12,945		14,659
	Federal Home Loan Bank advances				8,000		13,000		16,000		16,000		16,000
	Trust preferred securities				10,310		10,310		10,310		10,310		10,310
	Interest payable				946		929		1,131		1,191		1,391
	Other liabilities				22,913		26,403		24,195		21,818		18,201
			Total liabilities		1,076,894		1,065,055		952,408		902,483		908,515
	Shareholders' Equity
		Preferred stock			-		-		-		-		13,241
		Common stock			54,463		54,463		54,463		54,463		41,223
		Additional paid-in capital			14,782		14,780		14,655		15,023		15,219
		Retained earnings			80,012		75,526		72,641		72,704		70,184
		Accumulated other comprehensive income (loss)			2,221		2,320		2,049		659		900
		Treasury stock			(10,131)		(9,208)		(7,903)		(6,755)		(6,521)
			Total shareholders' equity		141,347		137,881		135,905		136,094		134,246
			Total liabilities and shareholders' equity		$  1,218,241		$  1,202,936		$  1,088,313		$  1,038,577		$  1,042,761

 

	SB FINANCIAL GROUP, INC.
	CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
($ in thousands, except per share & ratios)				At and for the Three Months Ended											Nine Months Ended
				September		June		March		December		September			September		September
Interest income				2020		2020		2020		2019		2019			2020		2019
	Loans
	Taxable			$     10,179		$        9,945		$        9,795		$     10,313		$     10,607			$     29,919		$     30,216
	Tax exempt			47		59		79		83		82			185		217
	Securities
	Taxable			494		510		692		737		776			1,696		2,489
	Tax exempt			87		81		78		72		81			246		273
		Total interest income		10,807		10,595		10,644		11,205		11,546			32,046		33,195
Interest expense
	Deposits			1,423		1,549		1,880		2,392		2,258			4,852		6,268
	Repurchase agreements & other			12		20		28		17		22			60		65
	Federal Home Loan Bank advances			59		92		100		101		101			251		301
	Trust preferred securities			54		62		88		99		107			204		331
		Total interest expense		1,548		1,723		2,096		2,609		2,488			5,367		6,965
Net interest income				9,259		8,872		8,548		8,596		9,058			26,679		26,230
	Provision for loan losses			1,800		1,300		600		300		300			3,700		500
Net interest income after provision
for loan losses				7,459		7,572		7,948		8,296		8,758			22,979		25,730
Noninterest income
	Wealth management fees			839		775		768		801		775			2,382		2,292
	Customer service fees			730		667		682		712		729			2,079		2,049
	Gain on sale of mtg. loans & OMSR			8,085		8,119		1,949		3,048		2,495			18,153		5,365
	Mortgage loan servicing fees, net			(169)		(1,880)		(2,052)		334		8			(4,101)		(731)
	Gain on sale of non-mortgage loans			119		107		104		250		462			330		1,005
	Title insurance revenue			517		609		265		393		400			1,391		727
	Net gain on sales of securities			-		-		-		-		-			-		206
	Gain (loss) on sale of assets			(52)		(80)		(46)		1		1			(178)		(6)
	Other			349		298		491		420		496			1,138		1,150
		Total noninterest income		10,418		8,615		2,161		5,959		5,366			21,194		12,057
Noninterest expense
	Salaries and employee benefits			6,995		6,419		5,427		6,142		5,715			18,841		15,922
	Net occupancy expense			736		675		698		675		656			2,109		1,928
	Equipment expense			888		780		700		764		688			2,368		2,064
	Data processing fees			586		1,288		548		543		499			2,422		1,430
	Professional fees			695		1,224		757		639		571			2,676		1,837
	Marketing expense			137		141		208		171		239			486		724
	Telephone and communication expense			142		122		115		121		118			379		345
	Postage and delivery expense			96		96		115		86		89			307		254
	State, local and other taxes			331		262		254		347		243			847		745
	Employee expense			155		93		184		207		199			432		588
	Other expenses			574		562		400		481		483			1,536		1,397
		Total noninterest expense		11,335		11,662		9,406		10,176		9,500			32,403		27,234
Income before income tax expense				6,542		4,525		703		4,079		4,624			11,770		10,553
	Income tax expense			1,292		870		22		721		862			2,184		1,938
Net income				$        5,250		$        3,655		$           681		$        3,358		$        3,762			$        9,586		$        8,615
Preferred share dividends				-		-		-		230		233			-		720
Net income available to common shareholders				5,250		3,655		681		3,128		3,529			9,586		7,895
Common share data:
	Basic earnings per common share			$          0.69		$          0.47		$          0.09		$          0.48		$          0.55			$          1.25		$          1.22
	Diluted earnings per common share			$          0.69		$          0.47		$          0.09		$          0.42		$          0.48			$          1.25		$          1.08
Average shares outstanding (in thousands):
	Basic:			7,607		7,708		7,756		6,445		6,397			7,700		6,459
	Diluted:			7,607		7,708		7,756		7,799		7,876			7,700		7,955

 

	SB FINANCIAL GROUP, INC.
	CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)
($ in thousands, except per share & ratios)		At and for the Three Months Ended											Nine Months Ended
		September		June		March		December		September			September		September
SUMMARY OF OPERATIONS		2020		2020		2020		2019		2019			2020		2019
Net interest income		$        9,259		$        8,872		$        8,548		$        8,596		$        9,058			$       26,679		$       26,230
Tax-equivalent adjustment		36		37		42		41		43			115		130
Tax-equivalent net interest income		9,295		8,909		8,590		8,637		9,101			26,794		26,360
Provision for loan loss		1,800		1,300		600		300		300			3,700		500
Noninterest income		10,418		8,615		2,161		5,959		5,366			21,194		12,057
Total operating revenue		19,677		17,487		10,709		14,555		14,424			47,873		38,287
Noninterest expense		11,335		11,662		9,406		10,176		9,500			32,403		27,234
Pre-tax pre-provision income		8,342		5,825		1,303		4,379		4,924			15,470		11,053
Pretax income		6,542		4,525		703		4,079		4,624			11,770		10,553
Net income		5,250		3,655		681		3,358		3,762			9,586		8,615
Net income available to common shareholders		5,250		3,655		681		3,128		3,529			9,586		7,895
PER SHARE INFORMATION:
Basic earnings per share (EPS)		0.69		0.47		0.09		0.48		0.55			1.24		1.22
Diluted earnings per share		0.69		0.47		0.09		0.42		0.48			1.24		1.08
Common dividends		0.100		0.100		0.095		0.095		0.090			0.295		0.265
Book value per common share		18.73		17.97		17.64		17.53		17.28			18.73		17.3
Tangible book value per common share (TBV)		15.72		15.00		15.32		15.23		16.23			15.72		16.2
Fully converted TBV per common share		-		-		-		-		14.98			-		15.0
Market price per common share		13.49		16.62		11.12		19.69		16.72			13.49		16.7
Market price per preferred share		-		-		-		-		16.50			-		16.5
Market price to TBV		85.8%		110.8%		72.6%		129.2%		103.0%			85.8%		103.0%
Market price to fully converted TBV		-		-		-		-		111.6%			-		111.6%
Market price to trailing 12 month EPS		8.0		11.4		8.4		13.0		11.5			8.0		11.5
PERFORMANCE RATIOS:
Return on average assets (ROAA)		1.73%		1.25%		0.26%		1.28%		1.44%			1.12%		1.13%
Pre-tax pre-provision ROAA		2.74%		1.99%		0.49%		1.67%		1.89%			1.81%		1.44%
Return on average equity		15.01%		10.31%		1.99%		9.93%		11.24%			9.74%		8.67%
Return on average tangible equity		17.93%		11.91%		2.29%		12.83%		14.67%			11.48%		11.35%
Efficiency ratio		57.48%		66.68%		87.81%		69.90%		65.85%			67.68%		71.12%
Earning asset yield		3.96%		3.95%		4.32%		4.80%		4.98%			4.08%		4.87%
Cost of interest bearing liabilities		0.75%		0.89%		1.12%		1.42%		1.33%			0.91%		1.27%
Net interest margin		3.39%		3.30%		3.47%		3.68%		3.91%			3.39%		3.85%
Tax equivalent effect		0.02%		0.02%		0.01%		0.02%		0.02%			0.02%		0.02%
Net interest margin, tax equivalent		3.41%		3.32%		3.48%		3.70%		3.93%			3.41%		3.87%
Non interest income/Average assets		3.42%		2.95%		0.81%		2.27%		2.06%			2.48%		1.58%
Non interest expense/Average assets		3.73%		3.99%		3.54%		3.87%		3.64%			3.79%		3.56%
Net noninterest expense/Average assets		-0.30%		-1.04%		-2.73%		-1.60%		-1.58%			-1.31%		-1.98%
ASSET QUALITY RATIOS:
Gross charge-offs		32		254		400		51		128			686		208
Recoveries		11		10		3		14		15			24		33
Net charge-offs		21		244		397		37		113			662		175
Nonaccruing loans/Total loans		0.72%		0.72%		0.70%		0.67%		0.40%			0.72%		0.40%
Nonperforming loans/Total loans		0.81%		0.81%		0.79%		0.77%		0.50%			0.81%		0.50%
Nonperforming assets/Loans & OREO		0.82%		0.86%		0.80%		0.81%		0.56%			0.82%		0.56%
Nonperforming assets/Total assets		0.60%		0.64%		0.61%		0.64%		0.44%			0.60%		0.44%
Allowance for loan loss/Nonperforming loans		163.84%		136.45%		135.77%		137.35%		207.12%			163.84%		207.12%
Allowance for loan loss/Total loans		1.33%		1.11%		1.08%		1.06%		1.03%			1.33%		1.03%
Allowance for loan loss/Total loans less PPP		1.47%		1.22%		1.08%		1.06%		1.03%			1.47%		1.03%
Net loan charge-offs/Average loans (ann.)		0.01%		0.11%		0.19%		0.02%		0.05%			0.10%		0.03%
Loan loss provision/Net charge-offs		8571.43%		532.79%		151.13%		810.81%		265.49%			558.91%		285.71%
CAPITAL & LIQUIDITY RATIOS:
Loans/ Deposits		87.36%		91.01%		96.17%		98.25%		97.10%			87.36%		97.10%
Equity/ Assets		11.60%		11.46%		12.49%		13.10%		12.87%			11.60%		12.87%
Tangible equity/Tangible assets		9.92%		9.75%		11.03%		11.59%		10.07%			9.92%		10.07%
Tangible equity adjusted for conversion		-		-		-		-		11.36%			-		11.36%
Common equity tier 1 ratio (Bank)		13.20%		11.97%		12.17%		12.46%		12.07%			13.20%		12.07%
END OF PERIOD BALANCES
Total assets		1,218,241		1,202,936		1,088,313		1,038,577		1,042,761			1,218,241		1,042,761
Total loans		885,850		901,548		830,764		825,510		823,367			885,850		823,367
Deposits		1,014,015		990,587		863,891		840,219		847,954			1,014,015		847,954
Stockholders equity		141,347		137,881		135,905		136,094		134,246			141,347		134,246
Goodwill and intangibles		22,763		22,813		17,830		17,832		17,834			22,763		17,834
Preferred equity		-		-		-		-		13,241			-		13,241
Tangible equity		118,584		115,068		118,075		118,262		103,171			118,584		103,171
Mortgage servicing portfolio		1,293,037		1,261,746		1,216,292		1,199,107		1,153,020			1,293,037		1,153,020
Wealth/Brokerage assets under care		522,360		495,025		427,129		507,670		484,295			522,360		484,295
Total assets under care		3,033,638		2,959,707		2,731,734		2,745,354		2,680,076			3,033,638		2,680,076
Full-time equivalent employees		251		254		253		252		247			251		247
Period end common shares outstanding		7,545		7,672		7,705		7,763		6,357			7,545		6,357
Period end outstanding (Series A Converted)		-		-		-		-		1,414			-		1,414
Market capitalization (all)		101,782		127,509		85,680		152,853		129,620			101,782		129,620
AVERAGE BALANCES
Total assets		1,216,843		1,169,030		1,061,365		1,051,071		1,043,791			1,141,008		1,020,074
Total earning assets		1,090,386		1,073,490		986,216		934,540		927,360			1,047,846		908,284
Total loans		907,483		898,216		832,975		828,108		829,699			879,536		803,431
Deposits		1,007,679		946,053		855,272		856,961		849,984			936,805		829,335
Stockholders equity		139,908		141,821		136,930		135,267		133,891			131,156		132,465
Goodwill and intangibles		22,787		19,066		17,831		17,833		17,835			19,813		17,518
Preferred equity		-		-		-		12,707		13,459			-		13,771
Tangible equity		117,121		122,755		119,099		104,727		102,597			111,343		101,176
Average basic shares outstanding		7,607		7,708		7,756		6,445		6,397			7,700		6,459
Average diluted shares outstanding		7,607		7,708		7,756		7,799		7,876			7,700		7,955

 

SB FINANCIAL GROUP, INC.
	Rate Volume Analysis - (Unaudited)
	At and for the Three Months Ended September 30, 2020 and 2019
	($ in thousands)		Three Months Ended Sep. 30, 2020					Three Months Ended Sep. 30, 2019
			Average		Average			Average		Average
Assets			Balance	Interest	Rate			Balance	Interest	Rate
	Taxable securities/Cash		$           176,821	$                 494	1.12%			$            89,782	$                 776	3.46%
	Nontaxable securities		6,082	87	5.72%			7,879	81	4.11%
	Loans, net		907,483	10,226	4.51%			829,699	10,689	5.15%
	Total earning assets		1,090,386	10,807	3.96%			927,360	11,546	4.98%
	Cash and due from banks		53,532					55,039
	Allowance for loan losses		(10,448)					(8,392)
	Premises and equipment		23,968					23,855
	Other assets		59,405					45,929
	Total assets		$        1,216,843					$        1,043,791
Liabilities
	Savings, MMDA and interest bearing demand		$           531,913	$                 690	0.52%			$           434,190	$                 769	0.71%
	Time deposits		254,381	746	1.17%			272,433	1,489	2.19%
	Repurchase agreements & other		23,811	12	0.20%			15,948	22	0.55%
	Advances from Federal Home Loan Bank		8,272	59	2.85%			16,000	101	2.53%
	Trust preferred securities		10,310	54	2.10%			10,310	107	4.15%
	Total interest bearing liabilities		828,687	1,561	0.75%			748,881	2,488	1.33%
	Non interest bearing demand		221,385	-				143,361	-
	Total funding		1,050,072		0.59%			892,242		1.12%
	Other liabilities		26,863					17,658
	Total liabilities		1,076,935					909,900
	Equity		139,908					133,891
	Total liabilities and equity		$        1,216,843					$        1,043,791
	Net interest income			$              9,246					$              9,058
	Net interest income as a percent of average interest-earning assets - GAAP measure				3.39%					3.91%
	Net interest income as a percent of average interest-earning assets - non GAAP				3.41%					3.93%
	- Computed on a fully tax equivalent (FTE) basis
			Nine Months Ended Sep. 30, 2020					Nine Months Ended Sep. 30, 2019
			Average		Average			Average		Average
Assets			Balance	Interest	Rate			Balance	Interest	Rate
	Taxable securities		$           161,947	$              1,696	1.40%			$            96,013	$              2,489	3.46%
	Nontaxable securities		6,363	246	5.15%			8,840	273	4.12%
	Loans, net		879,536	30,104	4.56%			803,431	30,433	5.05%
	Total earning assets		1,047,846	32,046	4.08%			908,284	33,195	4.87%
	Cash and due from banks		28,040					46,797
	Allowance for loan losses		(9,560)					(8,303)
	Premises and equipment		23,855					23,643
	Other assets		50,827					49,653
	Total assets		$        1,141,008					$        1,020,074
Liabilities
	Savings, MMDA and interest bearing demand		$           483,156	$              2,550	0.70%			$           426,436	$              2,232	0.70%
	Time deposits		253,398	2,315	1.22%			261,362	4,036	2.06%
	Repurchase agreements & Other		21,856	60	0.37%			15,760	65	0.55%
	Advances from Federal Home Loan Bank		16,263	251	2.06%			16,088	301	2.49%
	Trust preferred securities		10,310	204	2.64%			10,310	331	4.28%
	Total interest bearing liabilities		784,983	5,380	0.91%			729,956	6,965	1.27%
	Non interest bearing demand		200,251		0.73%			141,537		1.07%
	Total funding		985,234					871,493
	Other liabilities		24,618					16,116
	Total liabilities		1,009,852					887,609
	Equity		131,156					132,465
	Total liabilities and equity		$        1,141,008					$        1,020,074
	Net interest income			$            26,666					$            26,230
	Net interest income as a percent of average interest-earning assets - GAAP measure				3.39%					3.85%
	Net interest income as a percent of average interest-earning assets - non GAAP				3.41%					3.87%
	- Computed on a fully tax equivalent (FTE) basis

 

	Non-GAAP reconciliation		Three Months Ended				Nine Months Ended
	($ in thousands, except per share & ratios)		Sep. 30, 2020		Sep. 30, 2019		Sep. 30, 2020		Sep. 30, 2019
	Total operating revenue		$         19,677		$         14,424		$         47,873		$         38,287
	Adjustment to (deduct)/add OMSR impairment*		(326)		-		2,974		1,398
	Adjusted total operating revenue		19,351		14,424		50,847		39,685
	Total operating expense		11,335		9,500		32,403		27,234
	Adjustment for merger expenses**		-		-		(1,241)		-
	Adjusted total operating expense		11,335		9,500		31,162		27,234
	Income before income taxes		6,542		4,624		11,770		10,553
	Adjustment for OMSR & merger expense		(326)		-		4,215		1,398
	Adjusted income before income taxes		6,216		4,624		15,985		11,951
	Provision for income taxes		1,292		862		2,184		1,938
	Adjustment for OMSR & merger expense***		(68)		-		885		294
	Adjusted provision for income taxes		1,224		862		3,069		2,233
	Net income		5,250		3,762		9,586		8,615
	Adjustment for OMSR & merger expense		(258)		-		3,330		1,104
	Adjusted net income		4,992		3,762		12,916		9,720
	Diluted earnings per share		0.69		0.48		1.25		1.08
	Adjustment for OMSR & merger expense		(0.04)		-		0.42		0.14
	Adjusted diluted earnings per share		$            0.65		$            0.48		$            1.67		$            1.22
	Return on average assets		1.73%		1.44%		1.12%		1.13%
	Adjustment for OMSR & merger expense		-0.08%		0.00%		0.29%		0.11%
	Adjusted return on average assets		1.64%		1.44%		1.41%		1.23%
	Pretax, preprovision income		8,342		4,924		15,470		11,053
	Adjustment for OMSR & merger expense		(326)		-		4,215		1,398
	Adjusted pretax, preprovision income		8,016		4,924		19,685		12,451
	*valuation adjustment to the Company's mortgage servicing rights
	**transactions costs related to the Edon acquisition
	***tax effect is calculated using a 21% statutory federal corporate income tax rate

 

View original content:http://www.prnewswire.com/news-releases/sb-financial-group-announces-third-quarter-2020-results-301163293.html

SOURCE SB Financial Group, Inc.