Sb Financial Group, Inc. · NASDAQ:SBFG
Sb Financial — Raymond James (September 2019)
45 slides from Sb Financial's conference presentation, Sep 5, 2019
Slide 1: pass ac
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Slide 2: Safe Harbor Statement
SB FINANCIAL GROUP, INC. SAFE HARBOR STATEMENT 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 uncertai
Slide 3: 2018 Highlights
SBFINANCIALGROUP, INC. 2018 HIGHLIGHTS ct reg parr mending prac ve eericidarata | ] I partr imawledgeahle r Borsiivel cone ciency: caseiouate conessible Heliie ierirentenct * Net Income of $11.6 Million or $1.51/share enc isaeeel PEER] Rnd geshIe BN famaval * Achieved our Vision of a $1 Billion Bala
Slide 4: Our Vision
SB FINANCIAL GROUP, INC. OUR VISION Our Vision over the next three years is to become a $2 Billion, Russell 2000, high-performing (>90th percentile), independent, diversified, financial PASSION FOR services company. Our performance will SERVICE be set apart by our staff and their SOW MIGMENT passion
Slide 5: Return on Average Assets (ROAA)
SB FINANCIAL GROUP, INC. RETURN ON AVERAGE ASSETS (ROAA) 1.50 1.07% 62nd Percentile 1.25 1.00 +4 = |__ —_ = | 0.75 +4 = = |__| |} — 0.50 +4 — — |__| }__ = 0.25 44 — | __ = = = 0.00 2015 2016 2017 2018 6/2019** SBFG @ Peer Group Top Quartile* Annualized * Peer group consists of SNL 2Q 2019 data for 6
Slide 6: Corporate Overview
SB FINANCIAL GROUP, INC. CORPORATE OVERVIEW) NASDAQ: SBFG : Defiance, Ohio - Headquarters Since 1902 : Corporate Staff Members - 250 ° Average Daily Volume for 2019-9,500; 6.5 Million Common shares; 1.5 Million shares of SBFGP ° Institutional Ownership: 49.6% : Market Cap: $106 million ($76.46/share
Slide 7: Our Organization & Leadership
SB FINANCIAL GROUP, INC. OUR ORGANIZATION & LEADERSHIP CORPORATE LEADERSHIP * Mark Klein — Chairman, President and CEO * Tony Cosentino — EVP and CFO SB FINANCIAL * Ernesto Gaytan — EVP and Chief Technology GROUP Innovation and Operations Officer * Keeta Diller — EVP, Chief Enterprise Risk Managemen
Slide 8: Unique Qualities
SB FINANCIAL GROUP, INC. UNIQUE QUALITIES 2019 ASSETS UNDER MANAGEMENT $2.6 BILLION S Giezs commer Bank NET INCOME $1,113 MM Residential Sold Portfolio CONTRIBUTIONS $479 MM Wealth Management $1.0 MM / 9% Commercial $5.8 MM / 49% 2019 Retail/PCG $3.8 MM / 31% NET INCOME $11.9** MILLION **2019 SBFG r
Slide 9: Key Initiatives
SB FINANCIAL GROUP, INC. re KEY INITIATIVES Sie ein pr alae F iderat aging | artner knowledgeabl Become a Top-Decile, Independent ee rapes aaa Financial Services Company 1g bal partner active i Increase profitability through ongoing saieceee acer coheporenve diversification of revenue streams ' ca ‘
Slide 10: Revenue Diversity
SB FINANCIAL GROUP, INC. 2 REVENUE DIVERSITY ee entrepreneurial HIGHLIGHTS sie nc pa eA partner wler t c i nate accessible holistic entrepreneui inovat 7 aging balanced partner kno' 'c collaborative le Ff ¢ Expanded Operating Revenue borative eonsisteney sassicnat ssible he ntrepreneur Jerate Waging
Slide 11: Increase Profitability: Total Revenue/Net Income
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS TOTAL REVENUE/NET INCOME $55 $50 $45 ay $40 = $35 Ww $30 a $25 i $20 © $15 $10 $5 $0 $39.1 $43.7 | $45.6 | $49.9 | $50.5 2015 2016 2017 2018 2019 YTD Annualized* *2019 SBFG results reflect six month annualized (excluding OMSR impairme
Slide 12: Increase Profitability: Revenue/Net Income by Business Line
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS 2019 REVENUE/NET INCOME BY BUSINESS LINE* 100% - 90% - 80% - mSBA 70% - ma Wealth 60% - Management 50% - ™ Mortgage 40% + m@ Retail/PCG 30% - 20% - = Commercial 10% + 0% + Revenue Net Income *2019 SBFG results reflect six month annual
Slide 13: Increase Profitability: NII/Revenue
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS NII/TREVENUE 45.0% 40.0% 35.0% LW 30.0% S 25.0% S 20.0% W415 0% 10.0% 5.0% 0.0% : f a o— 7 ¢ é 2015 2016 2017 2018 6/2019** 4BSBFG -@Peer Median -*-Peer 75th * Peer group consists of SNL 2Q 2019 data for 65 publicly traded bank holdin
Slide 14: Increase Profitability: Mortgage Gain on Sale
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS PF PF HF kL oa DD Pn HF = No n n MORTGAGE GAIN ON SALE (MIL) an fn oO oo MORTGAGE GAIN ON SALE/VOLUME 2015 2016 2017 2018 6/2019 YTD Annualized* tea NVV Ohio mea Columbus ed Findlay ee=T otal $ Originations *2019 SBFG results reflect
Slide 15: Increase Profitability: SBA Gain on Sale
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS SBA GAIN ON SALE $11.6 $12.2 & IN J 1 $14 + $12 ~ $10 ~ $8 + $6 ~ $4 ~ $2 + $0 MIL) ~~ SOLD VOLUME 2015 2016 2017 2018 6/2019 YTD i Annualized HaSBA Gains Loan Volume nnualize 15
Slide 16: Increase Profitability: Wealth Management AUM
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS AUM in (MIL) $600 4 $500 + $400 + vf wo Oo oO $200 + $100 + $0 3 Wealth Management 2015 2016 2017 2018 6/2019 16
Slide 17: 2019 Non-Interest Income
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS 2019 NON-INTEREST INCOME $16.2 MILLION** e Non-Interest Income to Total Revenue at 32% (92 Percentile) - Peer* Median 18% - Top Quartile 25% = Mortgage Banking $7.1M m Service Fees $2.6M = Wealth Management $3.0 M mSBA $0.9M m Other $
Slide 18: Noninterest Income and Expense/Average Assets
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS NONINTEREST INCOME AND 5.09% -EXPENSE/AVG. ASSETS 40% 43.7% 38% _3.7% 3.7% 4.2 NET NONINTEREST EXPENSE/ 3.0% + AVG. ASSETS 22% 2.3% 3.0% 4 2.0% ; 2.0% + — 2.5% 4 2.2% 2.2% 2.1% 1% 9 10% 2.1% 2.1% 2015 2016 2017 2018 2019 YTD 2.0% Annu
Slide 19: Key Initiatives
SB FINANCIAL GROUP, INC. re KEY INITIATIVES Sie ein pr alae F iderat aging | artner knowledgeabl Become a Top-Decile, Independent ee rapes aaa Financial Services Company 1g bal partner active i Increase profitability through ongoing saieceee acer coheporenve diversification of revenue streams ' ca ‘
Slide 20: Scale Through Organic Growth Highlights
SBFINANCIALGROUP,INC. SCALE THROUGH cu arose ator Enlameed trnaiaode pact wah ORGANIC GROWTH mrtotes oltaate HIGHLIGHTS ren pene srl ihe etepurer robe be entrepreneurial \0\\st * Grew Balance Sheet tive collaborat onsiderate en \geable proactive collaborati innovative considerate engaging balanced p
Slide 21: Strengthen Market Penetration
STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED 78 30,000 a Households &” 250 Staff $1Billion Bank Memebers al fl oow $2.6 Billion in € financialgroup | a Managed Assets 7 Loan Production ca 8 Distinct Business Line 15 Counties 3 States
Slide 22: Strengthen Market Penetration: Markets and Growth
STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED Defiance $100M . Toledo $120M Ft. Wayne $ Total Loan and Deposit bus $175M Growth Over Last 5 Years: $580M 22
Slide 23: Strengthen Market Penetration: Loan Portfolio
STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED Cash & Other Due ” 4% ~ Securities 8% Loans (Net) 79% Loan to Deposit June 2019 — 97% Top Quartile Performance LOAN PORTFOLIO = $815 MILLION Consumer & Other Commercial Cal 1% RE 18%, 44% Agriculture 7% Nn Family 23% HELOC 7% 23
Slide 24: Strengthen Market Penetration: Deposit Portfolio
STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED DEPOSIT PORTFOLIO = $839 MILLION Non-Interest Capital 49 Borrowings 17% \ (o) 19% i a Time » 33% Interest Bearing 15% Deposits 82% Savings 14% 21% Transactional deposits = 67% of total deposits Weighted average cost of deposits = 101 bps* 24 *MRQ
Slide 25: Key Initiatives
SB FINANCIAL GROUP, INC. re KEY INITIATIVES Sie ein pr alae F iderat aging | artner knowledgeabl Become a Top-Decile, Independent ee rapes aaa Financial Services Company 1g bal partner active i Increase profitability through ongoing saieceee acer coheporenve diversification of revenue streams ' ca ‘
Slide 26: Added Scope
SB FINANCIAL GROUP, INC. ADDED SCOPE HIGHLIGHTS Business Line Leadership ¢ Added more Services and more Households * Defined Communication Channels ¢ Worked Interdependently - Referrals * Client Interaction © financialgrou ve engaging « jerate balanced partne Jer ngagir ariner balanced \: Jgeab sist
Slide 27: Business Line Leadership
SB FINANCIAL GROUP, INC. BUSINESS LINE LEADERSHIP RETAIL BANKING Laura Kline — SVP, Client Experience Officer Nancy Rankin — VP, Head of Retail WEALTH MANAGEMENT Chris Jakyma— EVP, Chief Wealth Management Officer David Bell— EVP, Retirement Services rst) financial PRIVATE BANKING Michelle Zeedyk — V
Slide 28: Expand Product Utilization: Products & Households
EXPAND PRODUCT UTILIZATION BY NEWAND EXISTING CUSTOMERS PRODUCTS & SERVICES 87,202 89,069 83,593 : | 76,847 a T T T T 2015 2016 2017 2018 6/2019 Products & Services SeHiousehak S Increase in total number of products from 2015 to 2019 - 15% Increase of households from 2015 to 2019 - 16% HOUSEHOLDS 28
Slide 29: Expand Product Utilization: Electronic Transactions
EXPAND PRODUCT UTILIZATION BY NEW AND EXISTING CUSTOMERS ELECTRONIC TRANSACTIONS /IN-OFFICE TRANSACTIONS 2010 «2011 «2012 = 2013 Electronic Transactions ¢ Acceleration of electronic transaction versus in-store transactions 2014 Ss x 3,000 Lu a Y 4,000 © | ed 4 = 3,000 ra = & 2,000 18% Po INCREASE a
Slide 30: Expand Product Utilization: Referrals/New Business
EXPAND PRODUCT UTILIZATION BY NEWAND EXISTING CUSTOMERS REFERRALS/NEW BUSINESS $103.5 2,800 $120 $100 2,100 a 4 $80 = é 2 a 1,400 $60 uw 2 i 7] or $40 2 700 + > $20 W 04 - $0 2015 2016 2017 2018 2019* mmGross mmiClosed =tNew Business *Estimated 2019 Impact 30
Slide 31: EXPAND PRODUCT UTILIZATION
EXPAND PRODUCT UTILIZATION BY NEWAND EXISTING CUSTOMERS 40 (sb financial 0. 2 31
Slide 32: Key Initiatives
SB FINANCIAL GROUP, INC. re KEY INITIATIVES Sie ein pr alae F iderat aging | artner knowledgeabl Become a Top-Decile, Independent ee rapes aaa Financial Services Company 1g bal partner active i Increase profitability through ongoing saieceee acer coheporenve diversification of revenue streams ' ca ‘
Slide 33: Deliver Gains in Operational Excellence
SB FINANCIAL GROUP, INC. _ DELIVER GAINS IN _ sine Senta tein me tate ions viner balanced {i OPERATIONAL eee eet EXCELLENCE noe ee eee rees HIGHLIGHTS i St 1owlec k ict be entrepreneurial | * New Chief Technology Innovation Officer ngaging balanced partner knowledgeable proactive innovative consider
Slide 34: Mortgage Servicing Portfolio
$ OF LOANS ($000s) DELIVER GAINS IN OPERATIONAL EXCELLENCE Products & Services Per Mortgage Households: 2.73 MORTGAGE SERVICING PORTFOLIO “08 $899,710 7,586 é $1,250,000 ae 8,000 $1,000,000 6,300 a <= $750,000 4,600 © rs) é 1,112,857 ra] $500,000 $994,915 1084, vidas 2,900 — iz $250,000 1,200 $0 -50
Slide 35: Loan Production by Type
LOAN PRODUCTION BY TYPE ($000s) DELIVER GAINS IN OPERATIONAL EXCELLENCE LOAN PRODUCTION/LOAN GROWTH $570,631 $100,000 $600,000 $500,000 $400,000 $325,332 $300,000 $200,000 $100,000 $0 2014 mg COMMERCIAL $468,627 2015 Mi MORTGAGE $509,633 $522,316 — $99,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30
Slide 36: Key Initiatives
SB FINANCIAL GROUP, INC. re KEY INITIATIVES Sie ein pr alae F iderat aging | artner knowledgeabl Become a Top-Decile, Independent ee rapes aaa Financial Services Company 1g bal partner active i Increase profitability through ongoing saieceee acer coheporenve diversification of revenue streams ' ca ‘
Slide 37: Asset Quality Highlights
SB FINANCIAL GROUP, INC. pong os ASSET QUALITY snl Lyrae peered aper H | G H _ | G HTS tie zaaieats * k r pe : aaniaiaaite . r pote corsiten sina ces hols entapone * Robust Loan-Review Process calce bulartiad eirien’ Uuewinted: mane beatin aoniien consistency Sassionat ssible he ntrepreneur * Dynami
Slide 38: Sustain Asset Quality: Loan Review Process
SUSTAIN ASSET QUALITY $500,000 $400,000 $300,000 $200,000 $ LOANS REVIEWED (000s) $100,000 $0 LOAN REVIEW PROCESS 682 702 $401,706 602 $339,229 $313,786 $301,782 2014 2015 2016 2017 mag $ Amount Loans Reviewed <G=# of Loans Revieweed 841 $415,864 2018 NUMBER OF LOANS REVIEWED 38
Slide 39: Non-Performing Assets / Total Assets
SUSTAIN ASSET QUALITY NON-PERFORMING ASSETS / TOTAL ASSETS 2.10 74.91 4 140 4 @ < Pa g * 0.70 4 0.00 2014 2015 2016 2017 2018 6/2019 Mmm SBFG m= Peer Group Median* == Top Quartile* * Peer group consists of SNL 2Q 2019 data for 65 publicly traded bank holding companies in the U.S. on a major exchange
Slide 40: NCOs/Average Loans
SUSTAIN ASSET QUALITY NCO's/AVERAGE LOANS 0.21% 0.11% — —— 0.00% 2015 2016 2017 2018 2019 Annualized** = SBFG == Peer Median* -®Top Quartile* group consists of SNL 2 2019 data for 65 publicly traded bank holding companies in the U.S. on a major exchange with assets between $500 million and $1.315 bi
Slide 41: Maximizing Shareholder Value
Maximizing Shareholder Value $21.00 $0.70 One-time tax cut impact. $18.00 $0.60 $15.00 $0.50 2 2 $12.00 $0.40 & i . © om ov Y $9.00 $0.30 a A $6.00 $0.20 $3.00 $0.10 $0.00 $0.00 2Q15 4Q15 2Q16 4Q16 2Q17 4Q17 2Q18 4Q18 2Q19* M@M—ESBFG = — Earnings Per Share Dividends Per Share * Adjusted for OMSR imp
Slide 42: Tangible Book Value per Share
Tangible Book Value per Share* $18.00 $16.00 $15.39 $15.83 $14.00 $13.27 $12.00 $10.39 puss $10.00 $8.00 $6.00 | ' $4.00 $2.00 $0.00 2015 2016 2017 2018 Q2 2019** Diluted EPS $2.00 $1.80 $u74 $1.60 case $1.51 $1.50 $140 $1.19 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 2015 2016 2017 2018 Q2 2019** *
Slide 43: Non-GAAP
Non-GAAP sin thousands, except per share data} For the Years Ended December 31, Tangible Common Equity Total Shareholder's Equity - GAAP Less: Preferred Equity Less: Goodwill and intangible Assets Tangible common equity [Adjusted Equity \Total Shares Outstanding Tangible book value per share [Fully
Slide 44: Key Initiatives
SB FINANCIAL GROUP, INC. ging 00 so KEY INITIATIVES jet onan parrer balaneed i F iderat aging | artner knowledgeabl Become a Top-Decile, Independent ee rapes aaa Financial Services Company 1g bal partner active i Increase profitability through ongoing saieceee acer coheporenve diversification of rev
Slide 45: @ |financialgroup
@ |financialgroup