Sb Financial Group, Inc. · NASDAQ:SBFG
Sb Financial — FY2019 Earnings Presentation
42 slides from Sb Financial's earnings presentation, Feb 4, 2020
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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 unce
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%** -- 77 th percentile (15 th )* • Rank 94 out of 200 Banks According to ABA • Assets Grew By $52 milli
Slide 4: 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. SB FINANCIAL GROUP, INC. OUR VISION 4
Slide 5: Return on Average Assets (ROAA)
SB FINANCIAL GROUP, INC. RETURN ON AVERAGE ASSETS (ROAA) 1 . 2 5 1 . 0 0 0 . 7 5 0 . 5 0 0 . 2 5 0 . 0 0 1 . 5 0 201 5 201 6 2019 * * R O A A SBFG 2017 2018 Peer Group Top Quartile* 1.25% ** 5 77th Percentile * Peer group consists of SNL 3Q 2019 data for 65 publicly traded bank holding companies in
Slide 6: 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) SB FINANCIAL GROUP, INC. CORPORATE OVERVIEW 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 Operations Officer • Keeta Diller – EVP/Chief Risk Management Officer REGIONAL/COMMERCIAL LEADERSHIP •
Slide 8: Net Income Contributions
8 RRE $1.7M / 14% Retail/PCG $4.0M / 31% C o mm e rc i a l $5.8M / 46% WM $0.7M/ 5% SBA $0.6M / 4% NET INCOME CON T R IB U TI ONS 2019 NET INCOME $ 12.8** MI LL I ON 2019 ASSETS UNDER MANAGEMENT $2.7 BILLION COMPRISED OF: • $1,039M Commercial Bank • $1,199M Residential Sold Portfolio • $508M Wealth
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
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: Total Revenue/Net Income
INCREASE PROFITABILITY $7.6 $8.8 $ 1 1.1 $ 1 1.6 $12.8 $0 $2 $4 $6 $8 $10 $12 $14 $55 $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 NET INCOME (MIL) REVENUE (MIL) THROUGH DIVERSIFICATION OF REVENUE STREAMS TOTAL REVENUE/NET INCOME Title Revenue Ot h e r S B A M o rt gag e Service C h a r ge s Wealth M a
Slide 12: Revenue/Net Income by Business Line
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS 10 0 % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Revenue** Net Income** 2019 REVENUE/NET INCOME BY BUSINESS LINE** 3% 2% Title Revenue S B A Wealth M a nag e m ent M o rt gag e Retail/PCG Commercial ** 2019 SBFG results exclude OMSR impa
Slide 13: Increase Profitability: NII/Revenue vs Peers
INCREASE PROFITABILITY * 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 **2019 SBFG results excluded OMSR impairment 45. 0 % 40. 0 % 35. 0 % 30. 0 % 25. 0 % 20. 0 % 15. 0 % 10.
Slide 14: Mortgage Volume and Gain on Sale
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS $323 $383 $316 $342 $445 $5 0 0 $4 5 0 $4 0 0 $3 5 0 $3 0 0 $2 5 0 $2 0 0 $1 5 0 $1 0 0 $50 $0 $9 $8 $7 $6 $5 $4 $3 $2 $1 $0 2 0 15 2 0 16 2 0 17 2 0 18 2 0 19 MORTGAGE VOLUME (MIL) MORTGAGE GAIN ON SALE (MIL) MORTGAGE GAIN ON SALE/VO
Slide 15: SBA Sold Volume and Gain on Sale
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS $7.5 (9.4) $6.4 (8.4) $11.6 (15.6) $12.2 (16.4) $8.1 (11.8) $ 0 .0 $ 2 .0 $ 1 2 .0 $ 1 0 .0 $8.0 $6.0 $4.0 $ 1 4 .0 $ 0 .0 $ 0 .2 $ 0 .4 $ 1 .2 $ 1 .0 $ 0 .8 $ 0 .6 $ 1 .4 SOLD VOLUME (MIL) GAIN ON SALE (MIL) 2015 2016 2017 2 0 18 201
Slide 16: Wealth Management AUM and Revenue
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS $353 16 $378 $437 $423 $508 $ 2 .3 $ 2 .4 $ 2 .5 $ 2 .6 $ 2 .7 $ 2 .8 $ 2 .9 $ 3 .0 $ 3 .1 $ 3 .2 $0 $ 1 00 $ 2 00 $ 3 00 $ 4 00 $ 5 00 $ 6 00 2 0 15 2 0 16 2 0 17 2 0 18 2 0 19 AUM in (MIL) Wealth Management AUM/ Revenue Revenue in (
Slide 17: 2019 Non-Interest Income
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS 48% 14% 16% 5% 1 1 % 6% Mortgage Banking $9.1M Service Fees $2.8M Wealth M anage m e n t $3.1M SBA $1.0M Other $2.0M Title Revenue $1.1M 2019 NON - INTEREST INCOME $19.1 MILLION** • Non - Interest Income to Total Revenue at 35% (92 nd
Slide 18: Noninterest Income and Expense/Average Assets
1 . 5 % 1 . 5 % 1 . 7 % 1 . 9 % 1 . 6 % 2 . 2 % 2 . 1 % 2 . 1 % 2 . 2 % 2 . 1 % 1 . 0% 1 . 5% 2 . 0% 2 . 5% 3 . 0% 2 0 15 2 0 16 2 0 17 2 0 18 2 0 19 * * NET NONINTEREST EXPENSE/ AVG. ASSETS 3 . 7 % 3 . 8 % 3 . 7 % 3 . 7 % 3 . 6 % 2 . 2 % 2 . 3 % 2 . 0 % 1 . 8 % 2 . 0 % 1 . 0% 2 . 0% 3 . 0% 4 . 0% 2
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
20 STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED
Slide 21: Loan and Deposit Growth by Market
STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED Toledo $125M Findlay $66M Columbus $182M Ft. Wayne $31M Defiance $85M Total Loan and Deposit Growth Over Last 5 Years: $606M 21
Slide 22: Loan Portfolio
STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED Loans (Net) 80 % Cash & Due 3% S e c ur i t i es 10% O ther 7% Co mm er ci al RE 45% 22 H E L O C 6% 1 - 4 F ami l y 23% A gr ic u l tu r e 6% C&I 18% Con s u m er & Other 2% Loan to Deposit December 2019 – 98% Top Quartile Performance LOAN PORTFOL
Slide 23: Deposit Portfolio
STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED 2 3 Bo rr o w i ngs 4% D epo s i t s 81% C ap i t al 13% O t he r 2% T i m e 30% MMDA 21% Sa v i ng s 14% I n t e r e st Bea ri ng 16% N on - I n t e r e s t 19% DEPOSIT PORTFOLIO = $840 MILLION Transactional deposits = 70% of total deposits Weight
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 25 PRIVATE BANKING • Nancy Rankin – VP, Head of Retail MORTGAGE BANKING • Michelle Zeedyk – VP, Director of Private Banking • Mickey Cooper – SVP, Toledo • Kyle Frisch – AVP, Lima/Findlay • Susan West – VP, Columbus • Steve Watson – SV
Slide 26: Expand Product Utilization: Households and Products
EXPAND PRODUCT UTILIZATION 2 6 76 , 847 80 , 513 83 , 593 87 , 202 91 , 154 26 , 076 27 , 368 28 , 590 29 , 562 30 , 377 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 1 0 0 , 0 0 0 9 0 , 000 8 0 , 000 7 0 , 000 6 0 , 000 5 0 , 000 4 0 , 000 3 0 , 000 2 0 , 000 1 0 , 000 0 201 5 201
Slide 27: Expand Product Utilization: Electronic Transactions
EXPAND PRODUCT UTILIZATION 2 7 0 300 600 900 1 , 20 0 0 1 , 00 0 2 , 00 0 3 , 00 0 4 , 00 0 201 0 201 1 201 2 201 3 201 4 201 5 201 6 201 7 201 8 201 9 IN - OFFICE TRANSACTIONS PER YEAR (000’S) ELECTRONIC TRANSACTIONS PER YEAR (MIL) BY NEW AND EXISTING CUSTOMERS ELECTRONIC TRANSACTIONS /IN - OFFICE
Slide 28: Expand Product Utilization: Referrals and New Business
EXPAND PRODUCT UTILIZATION 2,182 2,416 1,805 1,857 1,712 1,099 1,140 1,006 1,021 959 $61.9 $64.9 $92.8 $71.3 $0 $20 $40 $60 $80 $1 0 0 $1 2 0 0 700 1,4 0 0 2,1 0 0 2,8 0 0 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 NEW BUSINESS (MIL) R E F E RR A L S BY NEW AND EXISTING CUSTOMERS REFERRALS/ NEW BUSINESS $10
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 $772,533 $899,710 $994,915 $1,084,678 $1,199,107 5 , 63 2 6 , 41 4 7 , 05 1 7 , 58 6 8 , 15 5 0 1 , 70 0 3 , 40 0 5 , 10 0 6 , 80 0 $0 $250,000 $500,000 $750,000 $1,000,000 $1,250,000 NUMBER OF LOANS $ OF LOANS ($000s) MORTGAGE SERVICING PORTFOLIO 2015 2016 Se
Slide 31: Loan Production and Loan Growth
DELIVER GAINS IN OPERATIONAL EXCELLENCE $468,627 $570,631 $509,633 $522,316 $690,657 $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 LOAN GROWTH ($000s) LOAN PRODUCTION BY TYPE ($000s) LOAN
Slide 32: Technology Initiatives
SB FINANCIAL GROUP, INC. TE CHNO L OGY 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: Sustain Asset Quality: Loan Review Process
SUSTAIN ASSET QUALITY 3 4 $313,786 $301,782 $339,229 $401,706 $415,864 602 682 702 748 841 0 100 200 300 400 500 600 700 800 900 $ 0 $100,000 $200,000 $300,000 $400,000 $500,000 201 8 NUMBER OF LOANS REVIEWED $ LOANS REVIEWED (000s) LOAN REVIEW PROCESS 201 4 201 5 201 6 $ Amount Loans Reviewed 2017
Slide 35: Non-Performing Assets / Total Assets
SUSTAIN ASSET QUALITY 3 5 0 . 9 2 1 . 1 5 0 . 6 5 0.44 0 . 4 0 0 . 4 2 1 . 9 1 1 . 4 1 1 . 2 6 1 . 0 0 0 . 7 6 0 . 6 1 1 . 2 6 1 . 0 7 0 . 7 6 0 . 6 8 0 . 4 3 0 . 3 9 0 . 00 0 . 70 1 . 40 2 . 10 201 4 201 5 201 6 201 7 201 8 201 9 PERCENTAGE NON - PERFORMING ASSETS / TOTAL ASSETS SBFG Peer Group Med
Slide 36: NCOs / Average Loans
SUSTAIN ASSET QUALITY 3 6 0 . 0 0% 0 . 1 1% 0 . 2 1% 201 5 201 6 201 7 201 8 201 9 NCO’s/ AVERAGE LOANS 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
Slide 37: Maximizing Shareholder Value
$ 0 . 00 $ 0 . 20 $ 0 . 40 $ 0 . 60 $ 0 . 80 $ 1 . 00 $ 1 . 20 $ 1 . 40 $ 1 . 60 $ 1 . 80 $ 2 . 00 $ 0 . 00 $ 3 . 00 $ 6 . 00 $ 9 . 00 $12.00 $15.00 $18.00 $21.00 2 0 17 2 0 18 2 0 19 * * $ Earnings & Dividends per Share $Price per Share 2 0 1 5 2 0 16 SBFG Market Price Earnings Per Share Dividends
Slide 38: Diluted EPS and Tangible Book Value per Share
$1.19 $1.38 $1.74 $1.51 $1.62 $ 2 .00 $ 1 .80 $ 1 .60 $ 1 .40 $ 1 .20 $ 1 .00 $ 0 .80 $ 0 .60 $ 0 .40 $ 0 .20 $ 0 .00 2 0 15 2 0 16 2 0 17 2 0 18 2 0 19 * * Diluted EPS ** 2019 SBFG results exclude OMSR impairment $10.39 38 $11.59 $13.27 $15.39 $15.23 $ 1 8. 0 0 $ 1 6. 0 0 $ 1 4. 0 0 $ 1 2. 0 0 $ 1
Slide 39: Total Shareholder Return
Total Shareholder Return $1.68 $1.94 $5.15 $2.72 $0.32 $3.60 21.3% 20.6% 46.2% 16.9% 0.0% 21.9% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 2014 2015 2016 2017 2018 2019 Total Shareholder Return % Total Shareholder Return $ Axis Tit
Slide 40: Non-GAAP
40 Non - GAAP For the Years Ended December 31, 2019 2015 2016 2017 2018 Tangible Common Equity Total Shareholder's Equity - GAAP Less: Preferred Equity Less: Goodwill and intangible Assets Tangible common equity Total Shares Outstanding Tangible book value per share Fully Converted Tangible book val
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
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