SB FINANCIAL GROUP, INC. Q1 FY2025 earnings call

• Started the year with focus on growth amid economic uncertainty, executed on growth plan including Marblehead acquisition. • Net income was $2.7 million with diluted earnings per share of $0.42, up $0.09 or ~27% y-o-y. Tangible book value per share ended at $15.79, up 5.8% y-o-y. • Net interest income up 23% y-o-y. Loan growth $97 million, 9.8% y-o-y. Deposits up over 10%. • Mortgage pipeline at $50 million, looking for vigorous summer volume. • Five key initiatives: growing/diversifying revenue, broader footprint, more scope, operational excellence, asset quality. • Marblehead acquisition added $56M deposits and $19M loan book. • Digital banking officer named to drive digital innovation. • Commercial real estate, C&I, consumer loans grew; total loan production $107M, up ~40% y-o-y. • Charge-offs fell to 3 basis points, non-performing assets $6.1M, criticized/classified loans down 18%.

Net interest income totaled $11.3 million, an increase of approximately 23% from $9.2 million in the first quarter of 2024. Non-interest income was up 3.9% from the prior year quarter at $4.1 million but down slightly from the linked quarter. Loan growth for the quarter was right at $97 million, up 9.8% from the prior year and this marks the fourth consecutive quarter of sequential loan growth. Deposits grew over 10%, including Marblehead deposits of $56 million, excluding Marblehead, 5.4%. Mortgage origination for the quarter were $40 million, down from the prior year and the linked-quarters, but pipeline is at approximately $50 million.

• Expect vigorous summer mortgage volume. • Loan pipeline healthy with $60M in 90-day window, confident in loan growth materializing. • Anticipate margin improvement with loan repricing and funding cost decrease. • Budgeted loan growth in Columbus and other markets, aiming for 8%-10% growth including Marblehead. • Hopeful to reach 100M-110M in mortgage volume in next two quarters, potentially above 300M-350M by year end. • Intend to reinstate share buyback when opportunity to repurchase at lower price to tangible book value arises.

• Economic uncertainty. • Potential pullback in loan growth due to tariffs or client pause. • Impact of tariffs on client liquidity and credit quality. • Liability sensitivity with deposits potentially costing less and loans rolling up, though asset quality is stable to improving but dependent on economic factors.

Q: Brian Martin asks about loan growth pipeline, concerns on tariffs, client pushback.

A: Tony Cosentino says confident in 90-day pipeline, Mark Klein mentions Columbus as strong, Steve Walz says no major pullback yet.

Q: Brian asks about mortgage pipeline and full year outlook.

A: Mark Klein says pipeline at ~$50M, bullish on attainable 380M+ volume.

Q: Brian asks about gain on sale margins, mortgage volume.

A: Tony Cosentino says margins holding in 220-225 range, expects 100M+ quarter.

Q: Brian asks about deposits, seasonality, funding loan growth.

A: Tony Cosentino says core deposits growing, liquidity from Marblehead helps fund pipeline.

Q: Brian asks about margin direction, rate cuts.

A: Tony Cosentino says margin expected to trend higher with loan repricing and funding cost decrease.

Q: Brian asks about reserve levels, credit quality.

A: Mark Klein says bullish on reserve levels, Tony Cosentino says asset quality stable to improving, Steve Walz says bullish on balance sheet size and margin