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TranslateDEFIANCE, Ohio, Oct. 28, 2019 /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, 2019.
Third-quarter 2019 highlights over prior-year third quarter include:
Nine months ended September 30, 2019, highlights over prior-year nine months include:
Third quarter 2019, trailing twelve-month highlights include:
"This quarter, we delivered record core quarterly earnings of $0.48 per diluted share, which is up 23 percent from the prior year," said Mark A. Klein, Chairman, President and CEO of SB Financial. "We originated $158 million in residential mortgage loans, also a quarter record, while growing our loan portfolio nearly $9 million."
RESULTS OF OPERATIONS
Consolidated Revenue
Total operating revenue, consisting of net interest income and noninterest income, was up 13.3 percent from the third quarter of 2018, and up 15.2 percent from the linked quarter.
Funding costs, primarily from retail deposits have increased from the prior year and from the linked quarter. Deposit cost of funds for the most recent quarter of 1.06 percent are up from 0.77 percent in the prior-year quarter. From the linked quarter, deposit cost of funds are up five basis points from 1.01 percent.
Mortgage Loan Business
Mortgage loan originations for the third quarter of 2019 were $157.9 million, up $62.6 million, or 65.7 percent, from the year-ago quarter. Total sales of originated loans were $125.4 million, up $44.8 million, or 55.6 percent from the year-ago quarter.
Net mortgage banking income, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $2.5 million for the third quarter of 2019, compared to $2.3 million for the year-ago quarter. The mortgage servicing valuation adjustment for the third quarter of 2019 was zero, compared to a negative adjustment of $0.01 million for the third quarter of 2018. The aggregate servicing valuation impairment ended the quarter at $1.6 million. The mortgage servicing portfolio at September 30, 2019, was $1.15 billion, up $0.09 billion, or 8.1 percent, from $1.07 billion at September 30, 2018.
Mr. Klein noted, "Our origination and processing teams achieved record numbers in the quarter as we originated $158 million in volume from nearly 700 clients. The number of closings in the quarter was higher by 44 percent from the linked quarter and 27 percent higher compared to the prior year third quarter. We did not book any temporary impairment this quarter, as compared to the $1.4 million we incurred in the first half of 2019. We are encouraged by current trends and expect the strong volume in the residential business to continue for the remainder of this year."
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, title insurance revenue and the sale of Small Business Administration (SBA) loans. SBA activity for the quarter consisted of total loan sales of $2.8 million generating gains of $0.3 million. Wealth management assets under the Company's care stood at $484.3 million as of September 30, 2019, and the title insurance business delivered revenue of $0.4 million. For the third quarter of 2019, noninterest income as a percentage of total revenue was 37.2 percent, with the YTD percentage at 33.9 percent when adjusted for the impairment.
For the third quarter of 2019, noninterest expense (NIE) of $9.5 million was up $0.7 million, or 8.1 percent, compared to the same quarter last year. Compared to the linked quarter, NIE was also up $0.4 million. Expense growth was the result of higher mortgage commissions and the addition of our title agency. We continue to add resources of both technology and personnel in order to meet the expanded needs of our operations, information technology and risk management functions.
Balance Sheet
Total assets as of September 30, 2019, were $1.04 billion, up $63.6 million, or 6.5 percent, from a year ago. Total equity as of September 30, 2019, was $134.2 million, up 5.6 percent from a year ago, and comprised 12.9 percent of total assets.
Total loans held for investment were $823.4 million at September 30, 2019, up $51.7 million, or 6.7 percent, from September 30, 2018, and up $8.9 million for the quarter. From the prior year, commercial loans were up $25.3 million, or 21.1 percent, with residential real estate rising $21.0 million, or 11.8 percent.
The investment portfolio of $81.7 million, including Federal Reserve Bank and Federal Home Loan Bank stock, represented 7.8 percent of assets at September 30, 2019. Deposit balances of $848.0 million at September 30, 2019, increased by $58.5 million, or 7.4 percent, since September 30, 2018. Growth from the prior year included $18.9 million in checking and $39.6 million in savings, money market and time deposit balances.
Mr. Klein stated, "We took payoffs in our commercial real estate portfolio due to competitive pressure on loan pricing. We expect to see additional challenges in matching pricing over the coming quarters and continue to experience peer- leading metrics in asset quality, despite a small number of SBA credits that weakened in the quarter."
Asset Quality
SB Financial's nonperforming assets to total assets ratio of 0.44 percent continues to be in the top quartile of its 65-bank peer group. The coverage of non performing loans by the loan loss allowance was at 207 percent at September 30, 2019, down from 256 percent at September 30, 2018.
Webcast and Conference Call
The Company will hold a related conference call and webcast on October 29, 2019, at 9:30 a.m. EDT. Interested parties may access the conference call by dialing 1-888-338-9469. The webcast can be accessed at http://www.yoursbfinancial.com/investorrelations.html. An audio replay of the call will be available on the SB Financial 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 20 offices; 19 in nine Ohio counties and one in Fort Wayne, Indiana, and 25 full-service ATMs. State Bank has seven 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". SB Financial's preferred stock is listed on the NASDAQ Capital Market under the symbol "SBFGP".
In May 2019, SB Financial was ranked #94 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, 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
In addition to results presented in accordance with GAAP, this release contains certain non-GAAP financial measures. Management believes that including certain non-GAAP financial measures will provide investors with information useful in understanding the Company's financial performance, its performance trends and financial position. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results.
Investor Contact Information: Anthony V. Cosentino Executive Vice President and Chief Financial OfficerTony.Cosentino@yoursbfinancial.com
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SOURCE SB Financial Group, Inc.
