Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net income increased to $3.1 million, up 1.2{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} from the prior-year quarter.
- Diluted earnings per share rose to $0.47, a 6.8{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} increase from $0.44 in the prior-year quarter.
- Total loans grew to $1.01 billion, up 2.1{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} from the prior-year quarter.
- Mortgage banking revenue increased by 18.8{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} to $1.8 million.
- Asset quality metrics improved, with a low non-performing asset ratio of 0.39{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} of total assets.
Negative Points
- Net interest income decreased by 1.7{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} from the prior-year quarter.
- Return on average equity declined slightly to 10.16{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}, down 16 basis points.
- Total operating revenue experienced a slight downturn, declining by 1{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} year-over-year.
- Non-interest expenses increased by 3.2{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} compared to the prior-year quarter.
- Loan growth, while positive, did not meet historical standards of high single-digit growth.
Q & A Highlights
Highlights from SB Financial Group Inc (SBFG, Financial) Q2 2024 Earnings Call
Q: Can you discuss your loan growth outlook for the back half of the year and into next year?
A: Mark Klein, CEO: We are optimistic about loan growth, particularly in the CRE sector. With new leadership and support staff in Columbus, we aim to return to mid-to-upper single-digit growth levels. Steve Walz, Chief Lending Officer, added that the pipeline looks strong, and they expect a good start into Q3.
Q: What are your expectations for the mortgage business, especially with the new Cincinnati market entry?
A: Mark Klein, CEO: We are targeting a $300 million run rate, with the Cincinnati initiative showing significant potential. The new market leader is expected to produce and build a team, similar to our success in Columbus and Indianapolis. Anthony Cosentino, CFO, added that if rates drop below 6{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}, it could add another $35-$40 million in volume by year-end.
Q: How do you see the net interest margin (NIM) evolving, given the current market conditions?
A: Anthony Cosentino, CFO: We are more optimistic about NIM improvement. With loan repricing and stable deposit costs, we expect positive margin movements each quarter. We aim for mid-3{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} NIM as we move into 2025.
Q: What is the outlook for credit quality and reserve levels?
A: Mark Klein, CEO: We are optimistic about our portfolio’s credit quality. While there are a few stressed relationships, they are well-secured. Steve Walz, Chief Lending Officer, noted that the uptick in delinquency was anticipated and manageable. Anthony Cosentino, CFO, added that the reserve levels are expected to remain strong, providing solid coverage.
Q: How do you plan to manage wholesale funding and deposit growth?
A: Anthony Cosentino, CFO: We have effectively managed wholesale funding, eliminating over $46 million in high-cost FHLB borrowings. Deposit growth has been strong, supported by programs like Homebuyer Plus, which we expect to continue expanding.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
