Sb Financial Group, Inc. · NASDAQ:SBFG
Sb Financial — Janney Montgomery Conference 2020
42 slides from Sb Financial's conference presentation, Jan 29, 2020
Slide 1: January 29, 2020 Janney
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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 uncert
Slide 3: 2019 Highlights
SB FINANCIAL GROUP, INC. 2019 HIGHLIGHTS • Net income of $12.8** million or $1.62**/share • Achieved our Vision of a $1 Billion Balance Sheet • $508 Million in Wealth Assets Under Care • ROAA 1.25%**-- 77th percentile (15th)* • Rank 94 out of 200 Banks According to ABA • Assets Grew By $52 million o
Slide 4: Our Vision
SB FINANCIAL GROUP, INC. OUR VISION Our Vision over the next five years is to become a Russell 2000, integrated, diversified financial services conglomerate with high- performing affiliates, as we balance the needs of our shareholders, clients, staff and communities. 4
Slide 5: Return on Average Assets (ROAA)
SB FINANCIAL GROUP, INC. RETURN ON AVERAGE ASSETS (ROAA) 1.50 1.25% ** 77th Percentile 1.25 1.00 ROAA 0.75 0.50 0.25 0.00 2015 2016 2017 2018 2019** SBFG Peer Group Top Quartile* Peer Ranking 88th 88th 94th 83rd 77th * Peer group consists of SNL 3Q 2019 data for 65 publicly traded bank holding compa
Slide 6: Corporate Overview
SB FINANCIAL GROUP, INC. CORPORATE OVERVIEW • NASDAQ: SBFG • Defiance, Ohio - Headquarters Since 1902 • Corporate Staff Members - 252 • Average Daily Share Volume for 2019-7,900; 7.8 Million Common shares • Institutional Ownership: 49.6% • Market Cap: $153 million ($19.69 share 12/31/2019) 6
Slide 7: Our Organization & Leadership
SB FINANCIAL GROUP, INC. OUR ORGANIZATION & LEADERSHIP CORPORATE LEADERSHIP • Mark Klein – Chairman, President/CEO • Tony Cosentino – EVP/CFO • Ernesto Gaytan – EVP/Chief Technology Innovation and SB FINANCIAL Operations Officer GROUP • Keeta Diller – EVP/Chief Risk Management Officer REGIONAL/COMME
Slide 8: Unique Qualities
SB FINANCIAL GROUP, INC. UNIQUE QUALITIES 2019 ASSETS UNDER MANAGEMENT $2.7 BILLION COMPRISED OF: • $1,039M Commercial Bank NET INCOME • $1,199M Residential Sold Portfolio CONTRIBUTIONS • $508M Wealth Management RRE WM $0.7M/ 5% $1.7M / 14% Commercial 2019 $5.8M / NET INCOME 46% Retail/PCG $12.8** $
Slide 9: Key Initiatives
SB FINANCIAL GROUP, INC. KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains i
Slide 10: Revenue Diversity Highlights
SB FINANCIAL GROUP, INC. REVENUE DIVERSITY HIGHLIGHTS • Expanded Operating Revenue • Maintained an Asset Sensitive Balance Sheet • Grew our Fee-Based Business Lines • Generated market-leading Non- Interest Income 10
Slide 11: Increase Profitability Through Diversification of Revenue Streams
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS TOTAL REVENUE/NET INCOME Title Revenue $55 $12.8 $14 Other $50 $11.6 $11.1 $12 $45 SBA $40 NET INCOME (MIL) $8.8 $10 REVENUE (MIL) $35 $7.6 Mortgage $30 $8 $25 $6 Service Charges $20 $15 $4 Wealth Management $10 $2 $5 Net Interest $39
Slide 12: 2019 Revenue/Net Income by Business Line
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS 2019 REVENUE/NET INCOME BY BUSINESS LINE** 100% 3% 2% Title Revenue 90% 80% SBA 70% Wealth 60% Management 50% Mortgage 40% Retail/PCG 30% 20% Commercial 10% $45.6 0% Revenue** Net Income** **2019 SBFG results exclude OMSR impairment 1
Slide 13: NII/Revenue
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS NII/ REVENUE 45.0% 40.0% 35.0% 30.0% PERCENTAGE 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2015 2016 2017 2018 2019** SBFG Peer Median* Peer 75th* * Peer group consists of SNL 3Q 2019 data for 65 publicly traded bank holding companies in the U
Slide 14: Mortgage Gain on Sale/Volume
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS MORTGAGE GAIN ON SALE/VOLUME $9 $500 $445 MORTGAGE VOLUME (MIL) $8 $450 MORTGAGE GAIN ON SALE (MIL) $383 $342 $400 $7 $323 $316 $350 $6 $300 $5 $250 $4 $200 $3 $150 $2 $100 $1 $50 $0 $0 2015 2016 2017 2018 2019 NW Ohio Columbus Findla
Slide 15: SBA Gains and Sold Volume
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS $1.4 $14.0 $11.6 (15.6) $12.2 (16.4) $1.2 $8.1 (11.8) $12.0 GAIN ON SALE (MIL) SOLD VOLUME (MIL) $1.0 $10.0 $6.4 (8.4) $7.5 (9.4) $0.8 $8.0 $0.6 $6.0 $0.4 $4.0 $0.2 $2.0 $0.0 $0.0 2015 2016 2017 2018 2019 SBA Gains Sold Volume 15
Slide 16: Wealth Management AUM/Revenue
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS Wealth Management AUM/ Revenue $600 $3.2 $3.1 $500 $3.0 Revenue in (MIL) $400 $2.9 AUM in (MIL) $2.8 $300 $2.7 $200 $2.6 $2.5 $100 $2.4 $353 $378 $437 $423 $508 $0 $2.3 2015 2016 2017 2018 2019 16
Slide 17: 2019 Non-Interest Income
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS 2019 NON-INTEREST INCOME $19.1 MILLION** Mortgage • Non-Interest Income to Banking $9.1M Total Revenue at 35% 6% Service Fees (92nd Percentile) $2.8M 11% - Peer Median* 18% Wealth 5% Management 48% $3.1M - Top Quartile* 26% SBA $1.0M
Slide 18: Noninterest Income and Expense/Avg. Assets
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS NONINTEREST INCOME AND EXPENSE/AVG. ASSETS 5.0% 3.7% 3.8% 3.7% 3.7% 4.0% 3.6% NET NONINTEREST EXPENSE/ 3.0% AVG. ASSETS 2.2% 2.3% 3.0% 2.0% 2.0% 2.0% 1.8% 2.5% 2.2% 2.1% 2.2% 2.1% 2.1% 1.0% 2015 2016 2017 2018 2019** 2.0% SBFG NIE SBF
Slide 19: Scale Through Organic Growth Highlights
SB FINANCIAL GROUP, INC. SCALE THROUGH ORGANIC GROWTH HIGHLIGHTS • Grew Balance Sheet • Expanded our Footprint • Built Market Share 19
Slide 20: Strengthen Market Penetration in All Markets Served
STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED 20
Slide 21: Strengthen Market Penetration in All Markets Served
STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED Toledo $125M Defiance $85M Ft. Wayne $31M Findlay $66M Total Loan and Deposit Columbus $182M Growth Over Last 5 Years: $606M 21
Slide 22: Loan Portfolio
STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED LOAN PORTFOLIO = $826 MILLION Consumer Cash & Other & Other Due 7% C&I 2% Commercial 3% 18% RE Securities 45% 10% Agriculture 6% Loans (Net) 80% 1-4 Family 23% HELOC Loan to Deposit December 2019 – 98% 6% Top Quartile Performance 22
Slide 23: Deposit Portfolio
STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED DEPOSIT PORTFOLIO = $840 MILLION Other Non-Interest Borrowings 19% Capital 2% Time 4% 13% 30% Interest Bearing 16% Deposits 81% MMDA Savings 21% 14% Transactional deposits = 70% of total deposits Weighted average cost of deposits = 104 bps* *2019 F
Slide 24: Added Scope Highlights
SB FINANCIAL GROUP, INC. ADDED SCOPE HIGHLIGHTS • Emphasized Business Line Leadership • Added more Services and more Households • Defined Communication Channels • Worked Interdependently - Referrals • Expanded Client Interaction 24
Slide 25: Business Line Leadership
SB FINANCIAL GROUP, INC. BUSINESS LINE LEADERSHIP RETAIL BANKING PRIVATE BANKING MORTGAGE BANKING • Nancy Rankin – VP, Head of • Michelle Zeedyk – VP, • Steve Watson – SVP, RRE Retail Director of Private Banking Manager, Columbus, OH • Mickey Cooper – SVP, • Pam Benedict – SVP, RRE WEALTH Toledo Man
Slide 26: Products & Services and Households
EXPAND PRODUCT UTILIZATION BY NEW AND EXISTING CUSTOMERS PRODUCTS & SERVICES 100,000 45,000 91,154 90,000 87,202 83,593 40,000 80,513 PRODUCTS & SERVICES 80,000 76,847 30,377 35,000 29,562 70,000 28,590 HOUSEHOLDS 27,368 30,000 26,076 60,000 25,000 50,000 20,000 40,000 15,000 30,000 20,000 10,000 10
Slide 27: Electronic vs In-Office Transactions
EXPAND PRODUCT UTILIZATION BY NEW AND EXISTING CUSTOMERS ELECTRONIC TRANSACTIONS /IN-OFFICE TRANSACTIONS 5,000 1,500 IN-OFFICE TRANSACTIONS PER ELECTRONIC TRANSACTIONS 4,000 1,200 PER YEAR (MIL) YEAR (000’S) 3,000 900 2,000 92% 600 INCREASE SINCE 2010 1,000 300 0 0 2010 2011 2012 2013 2014 2015 2016
Slide 28: Referrals / New Business
EXPAND PRODUCT UTILIZATION BY NEW AND EXISTING CUSTOMERS REFERRALS/ NEW BUSINESS $103.5 2,800 $92.8 $120 $61.9 $100 2,100 $64.9 $71.3 NEW BUSINESS (MIL) $80 REFERRALS 1,400 $60 1,099 1,140 $40 1,006 1,021 959 700 $20 2,182 2,416 1,805 1,857 1,712 0 $0 2015 2016 2017 2018 2019 Gross Closed New Busine
Slide 29: Deliver Gains in Operational Excellence
SB FINANCIAL GROUP, INC. DELIVER GAINS IN OPERATIONAL EXCELLENCE HIGHLIGHTS • Embraced New Technology Solutions • Deepened Bench with New Talent • Keyed on Process Improvement and Resource Optimization • Strengthened “Brand” of each Business line Ecosystem 29
Slide 30: Mortgage Servicing Portfolio
DELIVER GAINS IN OPERATIONAL EXCELLENCE MORTGAGE SERVICING PORTFOLIO 8,155 $1,250,000 7,586 7,051 6,414 6,800 $1,000,000 5,632 NUMBER OF LOANS $ OF LOANS ($000s) CAGR = 11.7% $750,000 5,100 $1,199,107 $1,084,678 3,400 $500,000 $994,915 $899,710 $772,533 $250,000 1,700 $0 0 2015 2016 2017 2018 2019 S
Slide 31: Loan Production/Loan Growth
DELIVER GAINS IN OPERATIONAL EXCELLENCE LOAN PRODUCTION/LOAN GROWTH $800,000 $100,000 LOAN PRODUCTION BY TYPE ($000s) $690,657 $90,000 $700,000 $80,000 LOAN GROWTH ($000s) $600,000 $509,633 $70,000 $570,631 $500,000 $468,627 $522,316 $60,000 $400,000 $50,000 $300,000 $40,000 $30,000 $200,000 $20,000
Slide 32: Technology Initiatives
SB FINANCIAL GROUP, INC. TECHNOLOGY INITIATIVES • Precision Lender (A/I pricing tool) • nCino (Next generation loan origination system) • Sales Force (Company-wide CRM) • Consumer Connect (Mortgage POS) 32
Slide 33: Asset Quality Highlights
SB FINANCIAL GROUP, INC. ASSET QUALITY HIGHLIGHTS • Robust Loan-Review Process • Dynamic Loan-Approval Process • Portfolio Stress-Testing • Strong AQ Metrics 33
Slide 34: Loan Review Process
SUSTAIN ASSET QUALITY LOAN REVIEW PROCESS 841 900 $500,000 800 748 702 682 NUMBER OF LOANS REVIEWED $415,864 700 $401,706 $ LOANS REVIEWED (000s) $400,000 602 $339,229 600 $313,786 $301,782 $300,000 500 400 $200,000 300 200 $100,000 100 $0 0 2014 2015 2016 2017 2018 $ Amount Loans Reviewed # of Loan
Slide 35: Non-Performing Assets / Total Assets
SUSTAIN ASSET QUALITY NON-PERFORMING ASSETS / TOTAL ASSETS 2.10 1.91 1.41 1.40 1.26 1.26 PERCENTAGE 1.07 1.00 0.76 0.76 0.68 0.61 0.70 0.43 0.39 0.92 1.15 0.65 0.44 0.40 0.42 0.00 2014 2015 2016 2017 2018 2019 SBFG Peer Group Median* Top Quartile* * Peer group consists of SNL 3Q 2019 data for 65 pub
Slide 36: NCO's / Average Loans
SUSTAIN ASSET QUALITY NCO’s/ AVERAGE LOANS 0.21% Percentage 0.11% 0.00% 2015 2016 2017 2018 2019 SBFG Peer Median* Top Quartile* * Peer group consists of SNL 3Q 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 billion
Slide 37: Maximizing Shareholder Value
Maximizing Shareholder Value $21.00 $2.00 One-time tax cut impact $1.80 $18.00 $1.60 $ Earnings & Dividends per Share $15.00 $1.40 $Price per Share $1.20 $12.00 $1.00 $9.00 $0.80 $6.00 $0.60 $0.40 $3.00 $0.20 $0.00 $0.00 2015 2016 2017 2018 2019** SBFG Market Price Earnings Per Share Dividends Per S
Slide 38: Maximizing Shareholder Value
Maximizing Shareholder Value Tangible Book Value per Share $18.00 $15.39 $15.23 $16.00 $14.00 $13.27 $11.59 $12.00 $10.39 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 2015 2016 2017 2018 2019** Diluted EPS $2.00 $1.74 $1.80 $1.62 $1.60 $1.51 $1.38 $1.40 $1.19 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 ** 201
Slide 39: Total Shareholder Return
Total Shareholder Return $6.00 55.0% 50.0% $5.00 46.2% 45.0% Total Shareholder Return $ $5.15 40.0% Total Shareholder Return % $4.00 35.0% $3.60 30.0% $3.00 25.0% 21.3% 20.6% $2.72 21.9% 20.0% $2.00 $1.94 15.0% 16.9% $1.68 $1.00 10.0% $0.32 5.0% $0.00 0.0% 0.0% 2014 2015 2016 2017 2018 2019 Axis Tit
Slide 40: Non-GAAP
Non-GAAP ($'s in thousands, except per share data) For the Years Ended December 31, 2015 2016 2017 2018 2019 Tangible Common Equity Total Shareholder's Equity - GAAP $81,241 $86,548 $94,000 $130,435 $136,094 Less: Preferred Equity 13,983 13,983 13,983 13,979 0 Less: Goodwill and intangible Assets 16
Slide 41: Key Initiatives
SB FINANCIAL GROUP, INC. KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains i
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