DEFIANCE, Ohio, April 18, 2024 (GLOBE NEWSWIRE) -- 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 first quarter and ended March 31, 2024. First Quarter 2024 Highlights Over the First Quarter Prior Year Include: Net income of $2.4 million down 3.3 percent from $2.5 million in the same quarter last year. Diluted Earnings Per Share ("EPS") remained steady at $0.35. Net interest income totaled $9.2 million, a 11.1 percent decrease from the $10.3 million reported in the first quarter of the prior year. Loan growth saw an increase to $991.6 million, up by $15.2 million or 1.6 percent from the $976.3 million in the first quarter of the previous year. Nonperforming assets improved to 0.22 percent of total assets, down from 0.30 percent in the same quarter of the prior year. Trailing Twelve Months Ended March 31, 2024 Highlights Compared to the Prior Year Include: EPS was $1.75 for the twelve months ended March 2024, an increase of 1.7 percent from the prior twelve months of $1.72. Total deposits were $1.112 billion at the end of March 2024, representing a marginal increase of 0.2 percent from $1.110 billion at the end of March 2023. Mortgage origination volume was $209.1 million for the trailing twelve months, with a servicing portfolio of $1.37 billion, which increased by 2.1 percent from the prior year. Earnings Highlights Three Months Ended ($ in thousands, except per share & ratios) Mar. 2024   Mar. 2023   % Change Operating revenue $ 13,131     $ 13,990     -6.1 % Interest income 15,300     13,824     10.7 % Interest expense 6,120     3,500     74.9 % Net interest income 9,180     10,324     -11.1 % Provision for credit losses -     250     -100.0 % Noninterest income 3,951     3,666     7.8 % Noninterest expense 10,282     10,773     -4.6 % Net income 2,368     2,450     -3.3 % Earnings per diluted share 0.35     0.35     0.0 % Return on average assets 0.71 %   0.73 %   -2.7 % Return on average equity 7.70 %   8.22 %   -6.3 %                   "SB Financial Group has demonstrated operational resilience and a keen strategic focus amid the challenging economic conditions during the quarter ended March 31, 2024," stated Mark A. Klein, Chairman, President, and CEO. "Despite a marginal decline in net income from $2.5 million last year to $2.4 million, our operational adaptability ensured solid profitability, with diluted earnings per share consistently at $0.35. This consistency reflects our unwavering commitment to shareholder value even as we navigate through economic headwinds." "Our loan portfolio expanded to $991.6 million, an increase of $15.2 million, underscoring our disciplined approach to growth and the deep trust our clients place in us. Despite broader market challenges, our deposit base remained stable at $1.11 billion, showcasing our effective management and the enduring strength of our customer relationships. We maintained a conservative risk profile, with notable improvements in asset quality and no significant charge-offs," Mr. Klein noted. RESULTS OF OPERATIONS Consolidated Revenue In the first quarter of 2024, SB Financial Group's total operating revenue, encompassing net interest income before provision for credit losses and noninterest income, faced significant economic headwinds. Our operating revenue saw a decline of 6.1 percent from the prior year quarter and 13.1 percent from the linked quarter. Although robust, net interest income decreased by 11.1 percent compared to the same period last year, primarily due to increased deposit and funding costs. This also contributed to a 38 basis-point reduction in our net interest margin 1Q 2024 compared to 1Q2023. Noninterest income, however, showed a positive trajectory, increasing by 7.8 percent from the same quarter last year. This growth was significantly bolstered by a 30.4 percent increase in gains from the sale of mortgages and OMSR. Additionally, mortgage loan servicing fees saw a substantial increase of 25.5 percent. These gains, along with steady customer service fees, built a solid revenue foundation. Despite these strengths, we observed a downturn in revenues from wealth management and title insurance, illustrating the varied performance across our noninterest income streams. Amid these variances, our strategic focus remains firm. We are dedicated to maintaining a balanced revenue portfolio and dynamically adjusting our strategies to effectively respond to the economic environment. This approach is vital for continuing to create value for our clients and shareholders and demonstrates our commitment to navigating cyclical economic challenges with resilience and foresight. Mortgage Loan Business Mortgage loan originations for the first quarter of 2024 totaled $42.9 million, experiencing a contraction from the $49.4 million recorded in the same quarter of the previous year. This downturn reflects the cooling trends within the housing market, indicative of broader economic shifts. Despite this challenging environment, SB Financial Group's strategic agility was evident, with mortgage sales climbing to $36.6 million, or 85 percent of production. This represents an increase of $10.8 million, or approximately 41.9 percent, from the $25.8 million recorded in the prior year quarter, showcasing our ability to capitalize on opportunities within the purchase market. For this quarter, our mortgage banking net revenue stood at $1.5 million, demonstrating solid performance and an improvement of $0.2 million, or 20.3 percent, from the prior year. This growth, indicative of the robustness of our mortgage servicing operations, is further underscored by the consistent expansion of our servicing portfolio, which grew by 2.0 percent compared to the prior year period, reaching $1.37 billion. "In a period marked by variable interest rates and a cautious market, SB Financial Group's mortgage banking sector has continued to demonstrate resilience," said Mr. Klein. "The upward trend in mortgage sales, despite a decrease in originations, attests to our team's market presence and strong brand. Our increased net mortgage banking revenue and the expansion of our servicing portfolio reflect our ongoing commitment to this business line." Mortgage Banking                                   ($ in thousands) Mar. 2024   Dec. 2023   Sep. 2023   Jun. 2023   Mar. 2023   Prior Year Growth Mortgage originations $ 42,912     $ 39,566     $ 61,200     $ 65,387     $ 49,366     $ (6,454 ) Mortgage sales 36,623     33,362     54,085     47,933     25,803     10,820   Mortgage servicing portfolio 1,371,713     1,366,667     1,367,209     1,353,904     1,344,158     27,555   Mortgage servicing rights 14,191     13,906     13,893     13,723     13,548     643                                                                           Revenue                                   Loan servicing fees 763     855     850     844     844     (81 ) OMSR amortization (273 )   (282 )   (334 )   (334 )   (292 )   19   Net administrative fees 490     573     516     510     552     (62 ) OMSR valuation adjustment 181     (12 )   (78 )   (16 )   56     125   Net loan servicing fees 671     561     438     494     608     63   Gain on sale of mortgages 781     747     1,207     1,056     599     182   Mortgage banking revenue, net $           1,452     $           1,308     $           1,645     $           1,550     $           1,207     $             245                                       Noninterest Income and Noninterest Expense For the first quarter of 2024, noninterest income at SB Financial Group surged to $4.0 million, marking a 7.8% increase from the $3.7 million recorded in the prior year quarter. This notable growth is primarily attributable to our strategic initiatives, including enhanced gain-on-sale yields from mortgage loans and higher recapture of servicing rights, which significantly contributed to our financial performance. Additionally, customer service fees rose by $55,000, or 6.7 percent, further reinforcing our strategic focus in this area. Noninterest expenses for the first quarter were reported at $10.3 million, a reduction of 4.6 percent from the previous year's $10.8 million. This decrease demonstrates our commitment to reducing costs and enhancing operational efficiency, even in a complex and challenging economic environment. "Our noninterest income has shown consistent growth compared to the same period last year." commented Mr. Klein. "The gains from both mortgage and mortgage servicing fees have been significant, reflecting our agility and expertise in capitalizing on favorable market conditions. On the expense front, we continued to reduce our noninterest expenses, reflecting a diligent and calculated approach to cost management. Our ongoing efforts are focused on maintaining an efficient operational structure, paramount in delivering sustained value to our stakeholders." Noninterest Income/Noninterest Expense                                    ($ in thousands, except ratios) Mar. 2024   Dec. 2023   Sep. 2023   Jun. 2023   Mar. 2023   Prior Year Growth Noninterest Income (NII) $ 3,951     $ 5,531     $ 4,163     $ 4,361     $ 3,666     $ 285   NII / Total Revenue 30.1 %   36.6 %   30.4 %   30.7 %   26.2 %   3.9 % NII / Average Assets 1.2 %   1.7 %   1.2 %   1.3 %   1.1 %   0.1 % Total Revenue Growth -6.1 %   3.4 %   -5.3 %   -0.5 %   -2.0 %   -6.1 %                                     Noninterest Expense (NIE) $ 10,282     $ 10,369     $ 10,481     $ 10,339     $ 10,773     $ (491 ) Efficiency Ratio 78.2 %   68.4 %   76.4 %   72.7 %   76.9 %   1.3 % NIE / Average Assets 3.1 %   3.1 %   3.1 %   3.1 %   3.2 %   -0.1 % Net Noninterest Expense/Avg. Assets -1.9 %   -1.4 %   -1.9 %   -1.8 %   -2.1 %   0.2 % Total Expense Growth -4.6 %   1.0 %   0.9 %   -4.3 %   -0.8 %   -4.6 %                                     Balance Sheet As of March 31, 2024, SB Financial Group has continued to exhibit financial stability, with total assets amounting to $1.34 billion, reflecting a marginal year-over-year decrease of 0.39 percent. Our loan portfolio, which notably surpassed the $1 billion mark in the linked quarter, adjusted to $991.6 million for the first quarter of 2024. Despite this slight retraction, the total loans have increased by $15.2 million, or 1.6 percent compared to the prior year, demonstrating our commitment to prudent lending and strategic asset management amid evolving economic conditions. Additionally, our cash and cash equivalents have been increasing, providing enhanced liquidity and further stabilizing our financial base. Shareholders' equity has slightly contracted by 0.5 percent to $123.7 million compared to the linked quarter. However, the 3.3% growth, year-over-year, is a positive testament to our ongoing efforts to enhance value for our shareholders. Mark Klein, remarked, "As we navigate the first quarter of 2024, SB Financial Group remains committed to a disciplined approach to growth, ensuring robust asset quality and maintaining a formidable loan portfolio. Despite a competitive landscape, our loan portfolio has demonstrated resilience, underlining the effectiveness of our relationship-driven lending strategy. This performance is anchored by our dedication to our shareholders, as evidenced by the annual increase in our dividend payout. We are poised to continue capitalizing on strategic opportunities to further strengthen our financial position and deliver sustained shareholder value." Loan Balances                                               ($ in thousands, except ratios) Mar. 2024   Dec. 2023   Sep. 2023   Jun. 2023   Mar. 2023   Annual Growth Commercial $ 120,016     $ 126,716     $ 120,325     $ 123,226     $ 126,066     $ (6,050 ) % of Total 12.1 %   12.7 %   12.2 %   12.5 %   12.9 %   -4.8 % Commercial RE 429,362     424,041     421,736     417,412     419,024     10,338   % of Total 43.3 %   42.4 %   42.6 %   42.4 %   42.9 %   2.5 % Agriculture 62,365     65,659     60,928     58,222     57,761     4,604   % of Total 6.3 %   6.6 %   6.2 %   5.9 %   5.9 %   8.0 % Residential RE 314,668     318,123     320,306     321,365     309,684     4,984   % of Total 31.7 %   31.8 %   32.4 %   32.6 %   31.7 %   1.6 % Consumer & Other 65,141     65,673     65,726     64,599     63,777     1,364   % of Total 6.6 %   6.6 %   6.6 %   6.6 %   6.5 %   2.1 % Total Loans $ 991,552     $ 1,000,212     $ 989,021     $ 984,824     $ 976,312     $ 15,240   Total Growth Percentage                               1.6 %                                                                         Deposit Balances                                   ($ in thousands, except ratios) Mar. 2024   Dec. 2023   Sep. 2023   Jun. 2023   Mar. 2023   Annual Growth Non-Int DDA $ 219,395     $ 228,713     $ 224,182     $ 218,411     $ 237,175     $ (17,780 ) % of Total 19.7 %   21.4 %   20.7 %   20.4 %   21.4 %   -7.5 % Interest DDA 169,171     166,413     174,729     170,282     188,497     (19,326 ) % of Total 15.2 %   15.5 %   16.1 %   15.9 %   17.0 %   -10.3 % Savings 244,157     216,965     226,077     225,065     227,974     16,183   % of Total 21.9 %   20.3 %   20.8 %   21.0 %   20.5 %   7.1 % Money Market 221,362     202,605     216,565     217,681     222,203     (841 ) % of Total 19.9 %   18.9 %   20.0 %   20.3 %   20.0 %   -0.4 % Time Deposits 258,257     255,509     243,766     239,717     234,295     23,962   % of Total 23.2 %   23.9 %   22.5 %   22.4 %   21.1 %   10.2 % Total Deposits $ 1,112,342     $ 1,070,205     $ 1,085,319     $ 1,071,156     $ 1,110,144     $ 2,198   Total Growth Percentage                               0.2 %                                     Asset Quality SB Financial Group has consistently prioritized exceptional asset quality, a commitment that has remained steadfast through the first quarter of 2024. As of March 2024, our reports showcase a robust position, with nonperforming loans constituting a mere 0.25% of total loans—a clear testament to the enduring strength and soundness of our lending practices. This represents a significant improvement, with a 10 basis point reduction from the previous year, which reported nonperforming loans at 0.35% of total loans. Significantly, the allowance for credit losses to nonperforming loans ratio has reached a strong 643 percent. This not only emphasizes our proactive and preemptive measures in managing asset quality but also exceeds the performance benchmark set in the previous year. This ratio reflects our structured approach to risk management, which is aligned with the Current Expected Credit Loss (CECL) methodology, ensuring we remain well-prepared for any contingencies. Furthermore, the net loan charge-offs to average loans ratio, annualized at 0.02%, underlines our effective handling of loan repayments and the high quality of our credit portfolio. With such solid metrics, we continue to uphold our strong reputation for risk management and credit excellence. Mark A. Klein, Chairman, President, and CEO of SB Financial, noted, "Our commitment to asset quality is unwavering and clearly evident in our first-quarter performance. The strength of our loan portfolio is reflected in the low percentage of nonperforming loans and a substantial allowance for potential credit losses, demonstrating our vigilant approach to asset management and our resilience in the face of economic variables." Nonperforming Assets                                   ($ in thousands, except ratios) Mar. 2024   Dec. 2023   Sep. 2023   Jun. 2023   Mar. 2023   Annual Change Commercial & Agriculture $ 897     $ 748     $ 717     $ 170     $ 185     $ 712   % of Total Com./Ag. loans 0.49 %   0.39 %   0.40 %   0.09 %   0.10 %   384.9 % Commercial RE 49     168     222     192     199     (150 ) % of Total CRE loans 0.01 %   0.04 %   0.05 %   0.05 %   0.05 %   -75.4 % Residential RE 1,295     1,690     2,182     2,266     2,742     (1,447 ) % of Total Res. RE loans 0.41 %   0.53 %   0.68 %   0.71 %   0.89 %   -52.8 % Consumer & Other 193     212     208     282     270     (77 ) % of Total Con./Oth. loans 0.30 %   0.32 %   0.32 %   0.44 %   0.42 %   -28.5 % Total Nonaccruing Loans 2,434     2,818     3,329     2,910     3,396     (962 ) % of Total loans 0.25 %   0.28 %   0.34 %   0.30 %   0.35 %   -28.3 % Foreclosed Assets and Other Assets 510     511