SB FINANCIAL GROUP, INC. Q4 FY2024 earnings call

• Successfully closed the acquisition of Marblehead Bank on January 17, 2025, expanding presence in Ottawa County, Ohio.
• Net income for the quarter was $3.6 million, diluted EPS $0.55, with adjusted EPS up 16.7% from the prior quarter.
• Net interest income increased 13.7% in Q4 2024 compared to Q4 2023.
• Loan growth of $46.5 million in Q4, third consecutive quarter of sequential growth, led by Columbus region with $57 million.
• Deposits stable to linked quarter, up over $82 million to $1.15 billion, 80% of offices had higher deposits.
• Mortgage originations $261 million for the year, a 21% increase from 2023.
• Noninterest income improved with wealth and title businesses, brokerage revenue up over 73% from prior year.
• Focus on strategic initiatives: growing/diversifying revenue, scale for efficiency, deeper relationships, operational excellence, asset quality.

Net interest income totaled $10.9 million in the fourth quarter of 2024, an increase of 13.7% from the $9.6 million in the fourth quarter of 2023. Loan growth for the fourth quarter was $46.5 million, up 4.7%, marking the third consecutive quarter of sequential loan growth. The Columbus region led loan growth with $57 million. Deposits were stable to the linked quarter and were up over $82 million to $1.15 billion, with 80% of offices reporting higher deposit levels. Mortgage originations for the quarter were $73 million, and for the year, $261 million, a 21% increase from 2023. Noninterest income for the quarter was $4.6 million, up 10.5% from the linked quarter, while full-year noninterest income declined 4% but accounted for 29.5% of total revenue. Tangible book value per share ended the quarter at $16, up from $14.98, a 7% increase.

• Aim for mortgage production near $400 million in 2025, with Cincinnati and Indiana markets contributing. Cincinnati has 9 MLOs and aims to add more, with each potentially contributing $10-11 million.
• Q4 margin was 3.35%, anticipating margin expansion to 3.50%-3.55% by end of 2025. Marblehead acquisition brings $22 million of loans with high pricing and $55 million of funding.
• Loan growth expected in high-single-digit, 8% range, with Central Ohio region showing momentum, including $30 million of approved and closed loans yet to draw.

• Credit quality: Charge-offs spiked to 7 basis points in Q4, but expected to improve with resolution of commercial credits. Non-performing levels expected to improve going forward.
• Interest rate risk: Mortgage production tied to 10-year treasury rates and market conditions.
• Deposit funding risk: Need to raise deposits to fund loan growth, with some uncertainty on the impact of the Ohio Homebuyer Plus program in year two.

Q: Brian Martin asks about mortgage production potential in 2025 with new talents in Indiana and Cincinnati.

A: Mark Klein says aiming for $400 million in 2025, with Cincinnati team expansion, expecting 2-4 additional MLOs in Cincinnati, where each could contribute $10-11 million on average.

Q: Brian Martin asks about loan growth and margin with Marblehead.

A: Tony Cosentino mentions Q4 margin was 3.35%, expecting improvement, and Marblehead's contribution to loan growth, with $22 million of loans and $55 million of funding driving potential EPS accretion.

Q: Brian Martin asks about credit quality and deposit growth.

A: Steve Walz states credits are being monitored with a robust loan review process, expecting improvement in non-performing numbers. Tony Cosentino notes need for $30 million deposit raise throughout network to fund loan growth, with some uncertainty on the Homebuyer program's impact in year two.