SB Financial Group, Inc. Q4 FY2025 earnings call

• Strong execution across the franchise led to one of the strongest earnings quarters and years in history, with net income of $3.9 million and diluted EPS of $0.63, up 15% from the prior year quarter.
• Loan growth of $133.9 million or 12.8% year-over-year, marking 7 consecutive quarters of sequential loan growth, driven by commercial lending in the Greater Columbus market and a new ag lender in Northern Ohio.
• Deposit growth of nearly $155 million or 13% year-over-year, including $47 million related to the Marblehead acquisition, with stable deposit balances and client relationships at Marblehead.
• Asset quality metrics remained strong, with nonperforming loans to total loans declining to 0.39%, and nonperforming assets decreasing sequentially and year-over-year.
• Strategic initiatives include growing and diversifying revenue, expanding footprint and scale for efficiency, increasing client wallet share, operational excellence, and maintaining strong asset quality. The Marblehead acquisition is fully integrated, and the Wealth Management group has new initiatives with Advisory Alpha.

In the fourth quarter of 2025, net interest income totaled $12.7 million, an increase of nearly 17% from the fourth quarter of 2024. Loan growth for the quarter was $70 million or an increase of 25% on an annualized basis, marking 7 consecutive quarters of sequential loan growth. Total deposits increased by $45 million or 14% on an annualized basis in the quarter. Mortgage originations for the quarter were $72.4 million. Noninterest income was down by 18.6% from the prior year quarter. Recurring net interest margin revenue represents nearly 75% of total revenue, while fee-based business line revenue pulled back to 26%.

• Margin is forecasted to gradually move down by 5 to 7 basis points in 2026 due to higher funding cost mix.
• Mortgage production is expected to climb in 2026 by low to mid-double digits while maintaining a traditional sales level of 85%.
• Expense growth is expected to be in the 3.5% to 4% range in 2026, with positive operating leverage of 1.5 to 2x.
• Goal to drive net income to the $15 million mark in 2026 by focusing on disciplined execution, cross-sales, and optimizing lending team production capacity.

• Deposit pricing pressure and competitive environment could impact margin.
• Delays in resolving certain credit exposures could affect asset quality.
• Interest rate fluctuations may impact net interest income and funding costs.

Q: Comment on margin and deposit pricing outlook A: Tony Cosentino mentions deposit pricing showed stress, NIM at 3.51% forecasted to gradually move down by 5-7 basis points in 2026 due to higher funding cost mix, and there's $125-140 million of remaining loans contractually slated to reprice in the first 9 months of 2026 Q: What's the outlook for mortgage production in 2026 A: Anthony Cosentino expects low to mid-double digit growth in mortgage production in 2026, with Mark Klein adding they're committed to finding additional mortgage lenders and have capacity to handle higher volume if rates drop Q: Thoughts on expense growth in 2026 A: Anthony Cosentino states expense growth will be in the 3.5%-4% range in 2026, with positive operating leverage of 1.5-2x expected Q: Update on loan pipeline and credit quality A: Steven Walz mentions the pipeline remains stable, especially in Columbus and new markets like Fort Wayne, while Steven Walz also notes credit quality improvement has been slower than desired but expects continued improvement in 2026 as credits are resolved