SB Financial Group Announces Second Quarter 2020 Results

Rhea-AI Summary

SB Financial Group reported strong earnings for Q2 2020, achieving net income of $3.7 million and diluted EPS of $0.47, a 39.1% increase from last year. Adjusted net income increased 73.2% to $5.5 million, with adjusted EPS rising 78% to $0.71. Mortgage origination volume surged 127.2% year-over-year to $223.7 million, reflecting increased demand. However, the company faced a $1.1 million OMSR impairment and merger costs of $1.2 million. Nonperforming assets rose to $7.7 million, an 18.7% increase from the previous quarter.

Positive

• Net income rose to $3.7 million, a 39.1% increase year-over-year.
• Adjusted net income increased 73.2% to $5.5 million, supported by strong mortgage origination.
• Mortgage origination volume surged 127.2% to $223.7 million.
• Noninterest income increased by 133.4% year-over-year to $8.6 million.

Negative

• OMSR impairment of $1.1 million and merger costs of $1.2 million impacted earnings.
• Nonperforming assets increased to $7.7 million, up 18.7% from the previous quarter.

DEFIANCE, Ohio, July 27, 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 second quarter and six months ended June 30, 2020.

Second quarter 2020 highlights over prior-year second quarter include:

• Net income of $3.7 million; diluted earnings per share ("EPS") of $0.47
• Adjusted net income, excluding the impact of the Originated Mortgage Servicing Rights ("OMSR") impairment of $1.1 million and Edon merger costs of $1.2 million with a combined after-tax impact of $1.8 million, was $5.5 million, with EPS of $0.71
• Mortgage origination volume of $223.7 million, an increase of $125.2 million, or 127.2 percent

Six months ended June 30, 2020, highlights over prior-year six months include:

• Net income of $4.3 million; adjusted for OMSR and merger costs of $3.6 million after-tax net income rises to $7.9 million, which was up $2.0 million, or 33.0 percent
• Diluted EPS of $0.56; adjusted EPS of $1.03
• Return on Average Assets ("ROA") of 0.78 percent; adjusted ROA of 1.42 percent

Second quarter 2020 trailing twelve-month highlights include:

• Loan growth of $87.0 million, or 10.7 percent, which includes Paycheck Protection Program ("PPP") loan balances of $82.9 million and loans acquired in the Edon acquisition of $16.3 million.
• Deposit growth of $151.2 million, or 18.0 percent, driven by PPP balances and the Edon acquisition
• Mortgage origination volume of $620.5 million; servicing portfolio of $1.26 billion, which is up $0.15 billion, or 13.4 percent

Highlights	Three Months Ended				Six Months Ended
($ in thousands, except per share & ratios)	Jun. 2020	Jun. 2019	% Change		Jun. 2020	Jun. 2019	% Change
Operating revenue	$      17,487	$      12,523	39.6%		$      28,196	$      23,863	18.2%
Interest income	10,595	11,151	-5.0%		21,239	21,649	-1.9%
Interest expense	1,723	2,319	-25.7%		3,819	4,477	-14.7%
Net interest income	8,872	8,832	0.5%		17,420	17,172	1.4%
Provision for loan losses	1,300	200	550.0%		1,900	200	850.0%
Noninterest income	8,615	3,691	133.4%		10,776	6,691	61.1%
Noninterest expense	11,662	9,108	28.0%		21,068	17,734	18.8%
Net income	3,655	2,627	39.1%		4,336	4,853	-10.7%
Earnings per diluted share	0.47	0.33	42.4%		0.56	0.61	-8.2%
Return on average assets	1.25%	1.03%	21.4%		0.78%	0.96%	-18.8%
Return on average equity	10.31%	7.92%	30.2%		6.22%	7.36%	-15.5%
Non-GAAP Measures
Adjusted net income	$        5,495	$        3,172	73.2%		$        7,923	$        5,958	33.0%
Adjusted diluted EPS	0.71	0.40	77.5%		1.03	0.75	37.3%
Adjusted return on average assets	1.88%	1.09%	72.5%		1.42%	1.18%	20.3%
Adjusted pre-tax, pre-provision income	8,154	4,105	98.6%		11,668	7,527	55.0%

"SB Financial's second quarter results reflect the efforts of our staff working at full capacity to best serve our residential mortgage and small business clients and to integrate the Edon acquisition.  Despite an OMSR impairment of $1.1 million and merger costs of $1.2 million, our GAAP diluted EPS were up 42 percent from the prior year.  Adjusting for those events, EPS of $0.71 were up 78 percent from $0.40 in the prior year, reflecting the success of our balance sheet growth and revenue diversity strategies" said Mark A. Klein, Chairman, President, and CEO of SB Financial.   "Our offices are back open and we remain committed to serving all of our clients in a safe and productive manner as we monitor the COVID-19 situation."

RESULTS OF OPERATIONS

Consolidated Revenue

Total operating revenue, consisting of net interest income and noninterest income, was up 39.6 percent from the second quarter of 2019, and up 63.3 percent to the linked quarter.

• Net interest income was flat from the year-ago quarter, and up 3.8 percent from the linked quarter. 
• Net interest margin on a fully taxable equivalent basis (FTE) was down from both year-ago and linked quarters by 56 and 16 basis points, respectively as cash balances were higher and the PPP loans held down loan yields.  
• Noninterest income was up 133 and 299 percent from the year ago and linked quarters, respectively.       

Mortgage Loan Business

Mortgage loan originations for the second quarter of 2020 were $223.7 million, up $125.2 million, or 127.2 percent, from the year-ago quarter.  Total sales of originated loans were $204.6 million, up $133.6 million, or 188.2 percent, from the year-ago quarter.  Refinance activity accelerated in the quarter, with total internal refinance volume of $88.4 million or 39 percent, compared to 19 percent for all of 2019.  For the first six months, SB Financial had total volume of $325.0 million, of which $113.1 million (35 percent) was internal refinance, $100.7 million was external refinance (31 percent), and the remaining $111.2 million was new purchase/construction lending.

Net mortgage banking revenue, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $6.2 million for the second quarter of 2020, compared to $1.2 million for the year-ago quarter.  The mortgage servicing valuation adjustment for the second quarter of 2020 was a negative $1.1 million, compared to a negative adjustment of $0.7 million for the second quarter of 2019.  For the first six months, the impairment on servicing rights was $3.3 million compared to $1.4 million for the prior year six months.  The aggregate servicing valuation impairment ended the quarter at $4.6 million.  The servicing portfolio at June 30, 2020, was $1.26 billion, up $0.15 billion, or 13.4 percent, from $1.11 billion at June 30, 2019.  Normal amortization is up 242 percent from the prior year due to higher refinance activity.

Mr. Klein noted, "Mortgage volume accelerated again in the quarter as we originated over $223 million in volume.  Given the volatility in the mortgage markets early in the quarter, our disciplined approach was critical in achieving the record number of originations and sales in the quarter.  We remain very bullish on the mortgage business and our pipelines in all markets are near capacity."

Mortgage Banking
($ in thousands)	Jun. 2020	Mar. 2020	Dec. 2019	Sep. 2019	Jun. 2019
Mortgage originations	$      223,671	$      101,365	$      137,528	$      157,947	$       98,447
Mortgage sales	204,628	84,476	127,441	125,386	70,993
Mortgage servicing portfolio	1,261,746	1,216,292	1,199,107	1,153,020	1,112,857
Mortgage servicing rights	8,168	8,974	11,017	10,447	10,264
Mortgage servicing revenue
Loan servicing fees	782	757	740	709	691
OMSR amortization	(1,574)	(597)	(709)	(701)	(460)
Net administrative fees	(792)	160	31	8	231
OMSR valuation adjustment	(1,088)	(2,212)	303	-	(690)
Net loan servicing fees	(1,880)	(2,052)	334	8	(459)
Gain on sale of mortgages	8,119	1,949	3,048	2,495	1,678
Mortgage banking revenue, net	$         6,239	$           (103)	$         3,382	$         2,503	$         1,219

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.  SBA and USDA activity outside of the PPP program for the quarter consisted of total origination volume of $0.1 million, with sales volume of $0.4 million resulting in gains of $0.07 million.  Wealth management assets under the Company's care rebounded to $495.0 million as of June 30, 2020.  For the second quarter of 2020, noninterest income as a percentage of total operating revenue was 49.3 percent.  Reflective of the robust mortgage market, SB Financial's Title Agency provided revenue in the quarter of $0.6 million, up 98 percent from the prior year. 

For the second quarter of 2020, noninterest expense of $11.7 million was up $2.6 million compared to the prior year or 28.0 percent.  Excluding the $1.2 million of legal, technology and processing costs incurred for the Edon merger, year-over-year growth was 15.4 percent, which is driven by higher mortgage commission and higher expenses in the Title Agency.

Mr. Klein stated, "We actively participated in the SBA's PPP program and helped nearly 650 small business clients with $83 million in loans on our way to help preserve over 9,000 jobs.  Our efforts rested exclusively with the small business owner as our average loan size was $124 thousand and our median loan size was $42 thousand;  just 15 clients borrowed in excess of $1.0 million.  Interest and fees from these loans increased revenue in the quarter by $450,000; the remaining deferred fees associated with the PPP initiative now stands at $2.7 million.  We were especially pleased with the nearly 200 new relationships we were able to garner by our participation in the program.  In the aggregate, net non-interest expense was the lowest ever at -1.0 percent and led to a positive adjusted operating leverage for the first half of 2020."

Noninterest Income / Noninterest Expense
($ in thousands, except ratios)	Jun. 2020	Mar. 2020	Dec. 2019	Sep. 2019	Jun. 2019
Noninterest Income (NII)	$          8,615	$          2,161	$          5,959	$          5,366	$          3,691
NII / Total Revenue	49.3%	20.2%	40.9%	37.2%	29.5%
NII / Average Assets	3.0%	0.8%	2.3%	2.1%	1.5%
Noninterest Expense (NIE)	$        11,662	$          9,406	$        10,176	$          9,500	$          9,108
Efficiency Ratio	66.7%	87.8%	69.9%	65.9%	72.7%
NIE / Average Assets	4.0%	3.5%	3.9%	3.6%	3.6%
Net Noninterest Expense/Avg. Assets	-1.0%	-2.7%	-1.6%	-1.6%	-2.1%

Balance Sheet

Total assets as of June 30, 2020, were $1.2 billion, up $173.8 million, or 16.9 percent, from the year ago quarter due to the impact of the Edon acquisition ($68.1 million) and the PPP activity.  Total equity as of June 30, 2020, was $137.9 million, up 2.9 percent from a year ago, and comprised 11.5 percent of total assets. 

Total loans held for investment were $901.5 million at June 30, 2020, up $87.0 million, or 10.7 percent, from June 30, 2019.  Commercial loans were up $78.3 million, or 54.5 percent, commercial real estate up $15.0 million or 4.1 percent and agricultural loans increasing $4.5 million or 8.3 percent.   The Edon acquisition added $16.3 million in loan balances.  Absent the effects of the Edon acquisition and PPP loans, loan balances were down $12.0 million from the year ago quarter.

The investment portfolio of $109.1 million, including shares in the Federal Reserve Bank and Federal Home Loan Bank, represented 9.1 percent of assets at June 30, 2020, and was up 21.4 percent from the year-ago period.  Deposit balances of $990.6 million at June 30, 2020, increased by $151.2 million, or 18.0 percent, since June 30, 2019.  Growth from the prior year included $112.2 million in checking and $39.0 million in savings and time deposit balances. The Edon acquisition added $52.3 million in deposit balances and retention of PPP funding in the Bank increased checking deposits significantly.

Mr. Klein continued, "A large percentage of our PPP clients have retained their loan balances in their operating accounts and the successful integration of the Edon acquisition added to our deposit balances in the quarter.  Like all banks we have seen some weakness in certain industries and our nonperforming assets to total assets increased to 64 basis points at quarter end, up 21 basis points from the prior year.  We did set aside much higher reserves in the quarter, totaling $1.3 million."

Loan Balances
($ in thousands, except ratios)	Jun. 2020	Mar. 2020	Dec. 2019	Sep. 2019	Jun. 2019	Annual Growth
Commercial	$       222,108	$       151,538	$       151,018	$       145,147	$       143,798	$         78,310
% of Total	24.6%	18.2%	18.3%	17.6%	17.7%	54.5%
Commercial RE	375,450	378,212	369,962	362,580	360,491	14,959
% of Total	41.6%	45.5%	44.8%	44.0%	44.2%	4.1%
Agriculture	58,817	47,660	50,994	51,946	54,317	4,500
% of Total	6.5%	5.7%	6.2%	6.3%	6.7%	8.3%
Residential RE	184,684	189,738	189,290	199,036	191,642	-6,958
% of Total	20.6%	22.9%	22.9%	24.2%	23.5%	-3.6%
Consumer & Other	60,489	63,616	64,246	64,658	64,261	-3,772
% of Total	6.7%	7.7%	7.8%	7.9%	7.9%	-5.9%
Total Loans	$       901,548	$       830,764	$       825,510	$       823,367	$       814,509	$         87,039
Total Growth Percentage						10.7%
Deposit Balances
($ in thousands, except ratios)	Jun. 2020	Mar. 2020	Dec. 2019	Sep. 2019	Jun. 2019	Annual Growth
Non-Int DDA	$       229,042	$       170,920	$       158,357	$       152,932	$       141,216	$         87,826
% of Total	23.1%	19.8%	18.8%	18.0%	16.8%	62.2%
Interest DDA	154,143	133,722	131,084	131,655	129,710	24,433
% of Total	15.6%	15.5%	15.6%	15.5%	15.5%	18.8%
Savings	161,182	138,863	119,359	121,991	118,931	42,251
% of Total	16.2%	16.0%	14.1%	14.3%	14.1%	35.5%
Money Market	189,380	169,209	173,666	173,237	175,455	13,925
% of Total	19.1%	19.6%	20.7%	20.4%	20.9%	7.9%
Time Deposits	256,840	251,177	257,753	268,139	274,062	(17,222)
% of Total	25.9%	29.1%	30.8%	31.8%	32.7%	-6.3%
Total Deposits	$       990,587	$       863,891	$       840,219	$       847,954	$       839,374	$       151,213
Total Growth Percentage						18.0%

Asset Quality

SB Financial reported nonperforming assets of $7.7 million as of June 30, 2020, up $3.3 million from the year-ago quarter.  The Company took $0.2 million in charge-offs in the quarter and expects further pressure on the portfolio due to the COVID-19 impact.  The coverage of problem loans by the loan loss allowance was at 136 percent at June 30, 2020, down from 212 percent at June 30, 2019.  The Company continued to provide payment relief to clients as needed, with total forbearance  as of June 30, 2020 of 510 loans at $195.1 million.  The detail on these deferrals; 200 commercial at $142.7 million, 62 portfolio residential and consumer at $10.6 million and 248 sold residential real estate at $41.8 million.  

Nonperforming Assets						Annual Change
($ in thousands, except ratios)	Jun. 2020	Mar. 2020	Dec. 2019	Sep. 2019	Jun. 2019
Commercial & Agriculture	$           1,204	$           1,309	$           1,772	$              834	$              674	$              530
% of Total Com./Ag. loans	0.43%	0.66%	0.88%	0.42%	0.34%	78.6%
Commercial RE	2,484	1,816	1,826	262	208	2,276
% of Total CRE loans	0.66%	0.48%	0.49%	0.07%	0.06%	1094.2%
Residential RE	2,538	2,330	1,635	1,763	1,768	770
% of Total Res. RE loans	1.37%	1.23%	0.86%	0.89%	0.92%	43.6%
Consumer & Other	308	327	267	416	456	(148)
% of Total Con./Oth. loans	0.51%	0.51%	0.42%	0.64%	0.71%	-32.5%
Total Nonaccruing Loans	6,534	5,782	5,500	3,275	3,106	3,428
% of Total loans	0.72%	0.70%	0.67%	0.40%	0.38%	110.4%
Accruing Restructured Loans	804	816	874	825	814	(10)
Total Change (%)						-1.2%
Total Nonaccruing & Restructured Loans	7,338	6,598	6,374	4,100	3,920	3,418
% of Total loans	0.81%	0.79%	0.77%	0.50%	0.48%	87.2%
Foreclosed Assets	382	85	305	489	530	(148)
Total Change (%)						-27.9%
Total Nonperforming Assets	$           7,720	$           6,683	$           6,679	$           4,589	$           4,450	$           3,270
% of Total assets	0.64%	0.61%	0.64%	0.44%	0.43%	73.5%

Webcast and Conference Call

The Company will hold a related conference call and webcast on July 28, 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 21 offices; 20 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)
					June		March		December		September		June
			($ in thousands)		2020		2020		2019		2019		2019
ASSETS
	Cash and due from banks				$       96,203		$       56,393		$       27,064		$       49,824		$       42,786
	Available-for-sale securities				104,289		107,727		100,948		77,029		85,261
	Loans held for sale				13,742		11,328		7,258		13,655		9,579
	Loans, net of unearned income				901,548		830,764		825,510		823,367		814,509
	Allowance for loan losses				(10,013)		(8,958)		(8,755)		(8,492)		(8,306)
	Premises and equipment, net				23,662		23,599		23,385		23,898		23,150
	Federal Reserve and FHLB Stock, at cost				4,837		4,648		4,648		4,648		4,648
	Foreclosed assets held for sale, net				382		85		305		489		530
	Interest receivable				4,272		2,940		3,106		3,176		3,209
	Goodwill and other intangibles				22,813		17,830		17,832		17,834		17,836
	Cash value of life insurance				17,375		17,299		17,221		17,137		17,051
	Mortgage servicing rights				8,168		8,974		11,017		10,447		10,264
	Other assets				15,658		15,684		9,038		9,749		8,606
			Total assets		$   1,202,936		$   1,088,313		$   1,038,577		$   1,042,761		$   1,029,123
LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits
		Non interest bearing demand			$     229,042		$     170,920		$     158,357		$     152,932		$     141,216
		Interest bearing demand			154,143		133,722		131,084		131,655		129,710
		Savings			161,182		138,863		119,359		121,991		118,931
		Money market			189,380		169,209		173,666		173,237		175,455
		Time deposits			256,840		251,177		257,753		268,139		274,062
			Total deposits		990,587		863,891		840,219		847,954		839,374
	Short-term borrowings				23,826		36,881		12,945		14,659		13,968
	Federal Home Loan Bank advances				13,000		16,000		16,000		16,000		16,000
	Trust preferred securities				10,310		10,310		10,310		10,310		10,310
	Interest payable				929		1,131		1,191		1,391		1,188
	Other liabilities				26,403		24,195		21,818		18,201		14,346
			Total liabilities		1,065,055		952,408		902,483		908,515		895,186
	Shareholders' Equity
		Preferred stock			-		-		-		13,241		13,978
		Common stock			54,463		54,463		54,463		41,223		40,486
		Additional paid-in capital			14,780		14,655		15,023		15,219		15,259
		Retained earnings			75,526		72,641		72,704		70,184		67,236
		Accumulated other comprehensive income (loss)			2,320		2,049		659		900		801
		Treasury stock			(9,208)		(7,903)		(6,755)		(6,521)		(3,823)
			Total shareholders' equity		137,881		135,905		136,094		134,246		133,937
			Total liabilities and shareholders' equity		$   1,202,936		$   1,088,313		$   1,038,577		$   1,042,761		$   1,029,123

 

	SB FINANCIAL GROUP, INC.
	CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
($ in thousands, except per share & ratios)				At and for the Three Months Ended											Six Months Ended
				June		March		December		September		June			June		June
Interest income				2020		2020		2019		2019		2019			2020		2019
	Loans
	Taxable			$        9,945		$        9,795		$      10,313		$      10,607		$      10,182			$      19,740		$      19,609
	Tax exempt			59		79		83		82		73			138		135
	Securities
	Taxable			510		692		737		776		802			1,202		1,713
	Tax exempt			81		78		72		81		94			159		192
		Total interest income		10,595		10,644		11,205		11,546		11,151			21,239		21,649
Interest expense
	Deposits			1,549		1,880		2,392		2,258		2,092			3,429		4,010
	Repurchase agreements & other			20		28		17		22		17			48		43
	Federal Home Loan Bank advances			92		100		101		101		100			192		200
	Trust preferred securities			62		88		99		107		110			150		224
		Total interest expense		1,723		2,096		2,609		2,488		2,319			3,819		4,477
Net interest income				8,872		8,548		8,596		9,058		8,832			17,420		17,172
	Provision for loan losses			1,300		600		300		300		200			1,900		200
Net interest income after provision
for loan losses				7,572		7,948		8,296		8,758		8,632			15,520		16,972
Noninterest income
	Wealth management fees			775		768		801		775		783			1,543		1,517
	Customer service fees			667		682		712		729		689			1,349		1,320
	Gain on sale of mtg. loans & OMSR			8,119		1,949		3,048		2,495		1,678			10,068		2,870
	Mortgage loan servicing fees, net			(1,880)		(2,052)		334		8		(459)			(3,932)		(739)
	Gain on sale of non-mortgage loans			107		104		250		462		216			211		543
	Title insurance revenue			609		265		393		400		308			874		327
	Net gain on sales of securities			-		-		-		-		206			-		206
	Gain (loss) on sale of assets			(80)		(46)		1		1		(5)			(126)		(7)
	Other			298		491		420		496		275			789		654
		Total noninterest income		8,615		2,161		5,959		5,366		3,691			10,776		6,691
Noninterest expense
	Salaries and employee benefits			6,419		5,427		6,142		5,715		5,305			11,846		10,207
	Net occupancy expense			675		698		675		656		627			1,373		1,272
	Equipment expense			780		700		764		688		665			1,480		1,376
	Data processing fees			1,288		548		543		499		488			1,836		931
	Professional fees			1,224		757		639		571		649			1,981		1,266
	Marketing expense			141		208		171		239		246			349		485
	Telephone and communication expense			122		115		121		118		112			237		227
	Postage and delivery expense			96		115		86		89		81			211		165
	State, local and other taxes			262		254		347		243		247			516		502
	Employee expense			93		184		207		199		236			277		389
	Other expenses			562		400		481		483		452			962		914
		Total noninterest expense		11,662		9,406		10,176		9,500		9,108			21,068		17,734
Income before income tax expense				4,525		703		4,079		4,624		3,215			5,228		5,929
	Income tax expense			870		22		721		862		588			892		1,076
Net income				$        3,655		$          681		$        3,358		$        3,762		$        2,627			$        4,336		$        4,853
Preferred share dividends				-		-		230		233		243			-		487
Net income available to common shareholders				3,655		681		3,128		3,529		2,384			4,336		4,366
Common share data:
	Basic earnings per common share			$         0.47		$         0.09		$         0.48		$         0.55		$         0.37			$         0.56		$         0.68
	Diluted earnings per common share			$         0.47		$         0.09		$         0.42		$         0.48		$         0.33			$         0.56		$         0.61
Average shares outstanding (in thousands):
	Basic:			7,708		7,756		6,445		6,397		6,454			7,750		6,469
	Diluted:			7,708		7,756		7,799		7,876		7,967			7,750		7,982

 

	SB FINANCIAL GROUP, INC.
	CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)
($ in thousands, except per share & ratios)				At and for the Three Months Ended									Six Months Ended
		June		March		December		September		June			June		June
SUMMARY OF OPERATIONS		2020		2020		2019		2019		2019			2020		2019
Net interest income		$        8,872		$        8,548		$        8,596		$        9,058		$        8,832			$       17,420		$       17,172
Tax-equivalent adjustment		37		42		41		43		44			79		87
Tax-equivalent net interest income		8,909		8,590		8,637		9,101		8,876			17,499		17,259
Provision for loan loss		1,300		600		300		300		200			1,900		200
Noninterest income		8,615		2,161		5,959		5,366		3,691			10,776		6,691
Total operating revenue		17,487		10,709		14,555		14,424		12,523			28,196		23,863
Noninterest expense		11,662		9,406		10,176		9,500		9,108			21,068		17,734
Pre-tax pre-provision income		5,825		1,303		4,379		4,924		3,415			7,128		6,129
Pretax income		4,525		703		4,079		4,624		3,215			5,228		5,929
Net income		3,655		681		3,358		3,762		2,627			4,336		4,853
Net income available to common shareholders		3,655		681		3,128		3,529		2,384			4,336		4,366
PER SHARE INFORMATION:
Basic earnings per share (EPS)		0.47		0.09		0.48		0.55		0.37			0.56		0.68
Diluted earnings per share		0.47		0.09		0.42		0.48		0.33			0.56		0.61
Common dividends		0.100		0.095		0.095		0.090		0.090			0.195		0.175
Book value per common share		17.97		17.64		17.53		17.28		16.89			17.97		16.89
Tangible book value per common share (TBV)		15.00		15.32		15.23		16.23		15.83			15.00		15.83
Fully converted TBV per common share		-		-		-		14.98		14.64			-		14.64
Market price per common share		16.62		11.12		19.69		16.72		16.46			16.62		16.46
Market price per preferred share		-		-		-		16.50		16.10			-		16.10
Market price to TBV		110.8%		72.6%		129.2%		103.0%		104.0%			110.8%		104.0%
Market price to fully converted TBV		-		-		-		111.6%		112.4%			-		112.4%
Market price to trailing 12 month EPS		11.4		8.4		13.0		11.5		12.1			11.4		12.1
PERFORMANCE RATIOS:
Return on average assets (ROAA)		1.25%		0.26%		1.28%		1.44%		1.03%			0.78%		0.96%
Pre-tax pre-provision ROAA		1.99%		0.49%		1.67%		1.89%		1.34%			1.28%		1.22%
Return on average equity		10.31%		1.99%		9.93%		11.24%		7.92%			6.22%		7.36%
Return on average tangible equity		11.91%		2.29%		12.83%		14.67%		10.41%			7.17%		9.65%
Efficiency ratio		66.68%		87.81%		69.90%		65.85%		72.71%			74.71%		74.30%
Earning asset yield		3.95%		4.32%		4.80%		4.98%		4.88%			4.13%		4.82%
Cost of interest bearing liabilities		0.89%		1.12%		1.42%		1.33%		1.28%			1.00%		1.24%
Net interest margin		3.30%		3.47%		3.68%		3.91%		3.86%			3.39%		3.83%
Tax equivalent effect		0.02%		0.01%		0.02%		0.02%		0.02%			0.01%		0.01%
Net interest margin, tax equivalent		3.32%		3.48%		3.70%		3.93%		3.88%			3.40%		3.84%
Non interest income/Average assets		2.95%		0.81%		2.27%		2.06%		1.45%			1.93%		1.33%
Non interest expense/Average assets		3.99%		3.54%		3.87%		3.64%		3.58%			3.78%		3.52%
Net noninterest expense/Average assets		-1.04%		-2.73%		-1.60%		-1.58%		-2.13%			-1.85%		-2.19%
ASSET QUALITY RATIOS:
Gross charge-offs		254		400		51		128		20			654		80
Recoveries		10		3		14		15		5			13		18
Net charge-offs		244		397		37		113		15			641		62
Nonaccruing loans/Total loans		0.72%		0.70%		0.67%		0.40%		0.38%			0.72%		0.38%
Nonperforming loans/Total loans		0.81%		0.79%		0.77%		0.50%		0.48%			0.81%		0.48%
Nonperforming assets/Loans & OREO		0.86%		0.80%		0.81%		0.56%		0.55%			0.86%		0.55%
Nonperforming assets/Total assets		0.64%		0.61%		0.64%		0.44%		0.43%			0.64%		0.43%
Allowance for loan loss/Nonperforming loans		136.45%		135.77%		137.35%		207.12%		211.89%			136.45%		211.89%
Allowance for loan loss/Total loans		1.11%		1.08%		1.06%		1.03%		1.02%			1.11%		1.02%
Net loan charge-offs/Average loans (ann.)		0.11%		0.19%		0.02%		0.05%		0.01%			0.15%		0.02%
Loan loss provision/Net charge-offs		532.79%		151.13%		810.81%		265.49%		1333.33%			296.41%		322.58%
CAPITAL & LIQUIDITY RATIOS:
Loans/ Deposits		91.01%		96.17%		98.25%		97.10%		97.04%			91.01%		97.04%
Equity/ Assets		11.46%		12.49%		13.10%		12.87%		13.01%			11.46%		13.01%
Tangible equity/Tangible assets		9.75%		11.03%		11.59%		10.07%		10.10%			9.75%		10.10%
Tangible equity adjusted for conversion		-		-		-		11.36%		11.48%			-		11.48%
Common equity tier 1 ratio (Bank) 6/20 estimate		11.21%		12.17%		12.46%		12.07%		12.53%			11.21%		12.53%
END OF PERIOD BALANCES
Total assets		1,202,936		1,088,313		1,038,577		1,042,761		1,029,123			1,202,936		1,029,123
Total loans		901,548		830,764		825,510		823,367		814,509			901,548		814,509
Deposits		990,587		863,891		840,219		847,954		839,374			990,587		839,374
Stockholders equity		137,881		135,905		136,094		134,246		133,937			137,881		133,937
Goodwill and intangibles		22,813		17,830		17,832		17,834		17,836			22,813		17,836
Preferred equity		-		-		-		13,241		13,978			-		13,978
Tangible equity		115,068		118,075		118,262		103,171		102,123			115,068		102,123
Mortgage servicing portfolio		1,261,746		1,216,292		1,199,107		1,153,020		1,112,857			1,261,746		1,112,857
Wealth/Brokerage assets under care		495,025		427,129		507,670		484,295		479,442			495,025		479,442
Total assets under care		2,959,707		2,731,734		2,745,354		2,680,076		2,621,422			2,959,707		2,621,422
Full-time equivalent employees		254		253		252		247		250			254		250
Period end common shares outstanding		7,672		7,705		7,763		6,357		6,451			7,672		6,451
Period end outstanding (Series A Converted)		-		-		-		1,414		1,478			-		1,478
Market capitalization (all)		127,509		85,680		152,853		129,620		130,324			127,509		130,324
AVERAGE BALANCES
Total assets		1,169,030		1,061,365		1,051,071		1,043,791		1,016,493			1,115,527		1,008,559
Total earning assets		1,073,490		986,216		934,540		927,360		914,652			1,028,114		897,611
Total loans		898,216		832,975		828,108		829,699		804,716			865,595		790,080
Deposits		946,053		855,272		856,961		849,984		827,615			900,812		819,252
Stockholders equity		141,821		136,930		135,267		133,891		132,734			139,521		131,861
Goodwill and intangibles		19,066		17,831		17,833		17,835		17,837			18,537		17,359
Preferred equity		-		-		12,707		13,459		13,978			-		13,978
Tangible equity		122,755		119,099		104,727		102,597		100,919			120,984		100,524
Average basic shares outstanding		7,708		7,756		6,445		6,397		6,454			7,750		6,469
Average diluted shares outstanding		7,708		7,756		7,799		7,876		7,967			7,750		7,982

 

SB FINANCIAL GROUP, INC.
	Rate Volume Analysis - (Unaudited)
	At and for the Three Months Ended June 30, 2020 and 2019
	($ in thousands)		Three Months Ended Jun. 30, 2020					Three Months Ended Jun. 30, 2019
			Average		Average			Average		Average
Assets			Balance	Interest	Rate			Balance	Interest	Rate
	Taxable securities/Cash		$           168,373	$                  510	1.21%			$           100,768	$                  802	3.18%
	Nontaxable securities		6,901	81	4.69%			9,168	94	4.10%
	Loans, net		898,216	10,004	4.46%			804,716	10,255	5.10%
	Total earning assets		1,073,490	10,595	3.95%			914,652	11,151	4.88%
	Cash and due from banks		18,937					36,908
	Allowance for loan losses		(9,369)					(8,232)
	Premises and equipment		23,896					23,555
	Other assets		62,076					49,610
	Total assets		$         1,169,030					$         1,016,493
Liabilities
	Savings, MMDA and interest bearing demand		$           473,793	$               1,220	1.03%			$           422,327	$                  740	0.70%
	Time deposits		251,482	334	0.53%			261,746	1,352	2.07%
	Repurchase agreements & other		19,200	20	0.42%			13,645	17	0.50%
	Advances from Federal Home Loan Bank		24,472	92	1.50%			16,000	100	2.50%
	Trust preferred securities		10,310	62	2.41%			10,310	110	4.27%
	Total interest bearing liabilities		779,257	1,728	0.89%			724,028	2,319	1.28%
	Non interest bearing demand		220,778	-				143,542	-
	Total funding		1,000,035		0.69%			867,570		1.07%
	Other liabilities		27,174					16,189
	Total liabilities		1,027,209					883,759
	Equity		141,821					132,734
	Total liabilities and equity		$         1,169,030					$         1,016,493
	Net interest income			$               8,867					$               8,832
	Net interest income as a percent of average interest-earning assets - GAAP measure				3.30%					3.86%
	Net interest income as a percent of average interest-earning assets - non GAAP				3.32%					3.88%
	- Computed on a fully tax equivalent (FTE) basis
			Six Months Ended Jun. 30, 2020					Six Months Ended Jun. 30, 2019
			Average		Average			Average		Average
Assets			Balance	Interest	Rate			Balance	Interest	Rate
	Taxable securities		$           155,787	$               1,202	1.54%			$             98,203	$               1,713	3.49%
	Nontaxable securities		6,732	159	4.72%			9,328	192	4.12%
	Loans, net		865,595	19,878	4.59%			790,080	19,744	5.00%
	Total earning assets		1,028,114	21,239	4.13%			897,611	21,649	4.82%
	Cash and due from banks		12,693					41,724
	Allowance for loan losses		(9,118)					(8,258)
	Premises and equipment		23,797					23,536
	Other assets		60,041					53,946
	Total assets		$         1,115,527					$         1,008,559
Liabilities
	Savings, MMDA and interest bearing demand		$           458,116	$               2,303	1.01%			$           422,494	$               1,462	0.69%
	Time deposits		252,912	1,131	0.89%			255,734	2,548	1.99%
	Repurchase agreements & Other		20,868	48	0.46%			15,663	43	0.55%
	Advances from Federal Home Loan Bank		20,302	192	1.89%			16,133	200	2.48%
	Trust preferred securities		10,310	150	2.91%			10,310	224	4.35%
	Total interest bearing liabilities		762,508	3,824	1.00%			720,334	4,477	1.24%
	Non interest bearing demand		189,784		0.80%			141,024		1.04%
	Total funding		952,292					861,358
	Other liabilities		23,714					15,340
	Total liabilities		976,006					876,698
	Equity		139,521					131,861
	Total liabilities and equity		$         1,115,527					$         1,008,559
	Net interest income			$             17,415					$             17,172
	Net interest income as a percent of average interest-earning assets - GAAP measure				3.39%					3.83%
	Net interest income as a percent of average interest-earning assets - non GAAP				3.40%					3.84%
	- Computed on a fully tax equivalent (FTE) basis

 

Non-GAAP reconciliation		Three Months Ended				Six Months Ended
($ in thousands, except per share & ratios)		Jun. 30, 2020		Jun. 30, 2019		Jun. 30, 2020		Jun. 30, 2019
Total Operating Revenue		$          17,487		$          12,523		$          28,196		$          23,863
Adjustment to (deduct)/add OMSR impairment*		1,088		690		3,300		1,398
Adjusted Total Operating Revenue		18,575		13,213		31,496		25,261
Total Operating Expense		$          11,662		$           9,108		$          21,068		$          17,734
Adjustment for merger expenses**		(1,241)		-		(1,241)		-
Adjusted Total Operating Expense		10,421		9,108		19,827		17,734
Income before Income Taxes		4,525		3,215		5,228		5,929
Adjustment for OMSR & merger expense		2,329		690		4,541		1,398
Adjusted Income before Income Taxes		6,854		3,905		9,769		7,327
Provision for Income Taxes		870		588		892		1,076
Adjustment for OMSR & merger expense***		489		145		954		294
Adjusted Provision for Income Taxes		1,359		733		1,846		1,371
Net Income		3,655		2,627		4,336		4,853
Adjustment for OMSR & merger expense		1,840		545		3,587		1,104
Adjusted Net Income		5,495		3,172		7,923		5,958
Diluted Earnings per Share		0.47		0.33		0.56		0.61
Adjustment for OMSR & merger expense		0.24		0.07		0.46		0.14
Adjusted Diluted Earnings per Share		$             0.71		$             0.40		$             1.02		$             0.75
Return on Average Assets		1.25%		1.03%		0.78%		0.96%
Adjustment for OMSR & merger expense		0.63%		0.05%		0.64%		0.11%
Adjusted Return on Average Assets		1.88%		1.09%		1.42%		1.07%
*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-second-quarter-2020-results-301100464.html

SOURCE SB Financial Group, Inc.

FAQ

What were SBFG's earnings for the second quarter of 2020?

SB Financial Group reported net income of $3.7 million and diluted EPS of $0.47 for Q2 2020.

How did SBFG's mortgage origination volume perform in Q2 2020?

Mortgage origination volume increased 127.2% to $223.7 million in Q2 2020.

What is the adjusted net income for SBFG in the second quarter of 2020?

Adjusted net income for SBFG in Q2 2020 was $5.5 million.

What were the key financial impacts for SBFG in Q2 2020?

SBFG faced an OMSR impairment of $1.1 million and merger costs of $1.2 million.

What are SBFG's nonperforming assets as of June 30, 2020?

Nonperforming assets for SBFG rose to $7.7 million as of June 30, 2020.