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SB FINANCIAL GROUP, INC. (SBFG)·Q1 2025 Earnings Summary

Executive Summary

  • Adjusted EPS of $0.42 beat S&P Global consensus of $0.40; GAAP EPS of $0.33 was down year over year due to $0.7M merger-related expenses; operating revenue strength and NIM expansion were notable . EPS and revenue estimates from S&P Global; values retrieved from S&P Global.*
  • Revenue outperformed consensus materially: $14.99M vs $11.30M estimate; company-reported operating revenue was $15.39M, with the difference likely due to S&P revenue definition; net interest margin expanded to 3.40% from 3.35% in Q4 and 3.17% in Q3 . Revenue estimates from S&P Global; values retrieved from S&P Global.*
  • Loan growth of $96.7M (+9.8% YoY) and deposits +$158.9M (+14.3% YoY), aided by the Marblehead Bank acquisition ($56M deposits, $19M loans), strengthened liquidity and lowered loan/deposit ratio to ~86% .
  • Management expects NIM to trend higher by ~4–5 bps per quarter to ~3.55–3.60% by Q4 2025, supported by ~$90M of scheduled loan repricing (+140 bps on average) and redeployment of liquidity into loans; dividend raised to $0.15 per share (payout expected to normalize toward ~30%) .
  • Near-term stock reaction catalysts: accelerating margin trajectory, integration synergies, and loan pipeline conversion vs. temporary deposit seasonality and modest uptick in NPAs; buyback paused above TBV ~130% but may resume at lower price/tangible book .

What Went Well and What Went Wrong

What Went Well

  • Margin and revenue momentum: NIM rose to 3.40% (Q1) vs. 3.35% (Q4) and 3.17% (Q3), with net interest income +22.9% YoY; CEO: “Merger adjusted net income… up 22.3%… successful closing… strengthened our liquidity position” .
  • Deposit and loan growth: Deposits reached a record $1.27B (+14.3% YoY) and loans $1.09B (+9.8% YoY), with Marblehead adding $56M deposits and $19M loans; CFO: Marblehead deposits averaged 1.53% cost .
  • Title and mortgage sale gains supported diversified fee income; title revenue up ~50% YoY contribution in quarter; “Peak’s title revenue business… helped drive… 31%” .

What Went Wrong

  • GAAP EPS declined YoY to $0.33 vs $0.35 (Q1’24) due to $726K merger costs and $387K provision; efficiency ratio elevated at 80.0% (76% ex-merger costs) .
  • Nonperforming assets increased to $6.1M (0.41% of assets) from $5.5M (Q4) and $2.9M (Q1’24), driven by three credits; reserve coverage dipped vs. prior quarter (ACL/NPL 254% vs. 274%) .
  • Mortgage banking revenues softened sequentially ($1.46M vs $2.01M in Q4) amid lower originations; pipeline recovery expected for Q2–Q3, but near-term noninterest income mix skewed lower vs. historical .

Financial Results

Headline Financials vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Operating Revenue ($USD Millions)$14.309 $15.454 $15.386
Diluted EPS (GAAP, $USD)$0.35 $0.55 $0.33
Adjusted Diluted EPS ($USD)$0.41 (OMSR-adjusted) $0.52 (OMSR-adjusted) $0.42 (merger/OMSR-adjusted)
Net Interest Margin (%)3.17% 3.35% 3.40%
Efficiency Ratio (%)76.78% 71.09% 80.00% (76% ex-merger)
Noninterest Income ($USD Millions)$4.123 $4.557 $4.107

Consensus vs Actuals (Q1 2025)

MetricConsensusActualSurprise
Primary EPS (Normalized) ($USD)$0.40*$0.42*+$0.02; +5% (beat)
Revenue ($USD Millions)$11.30*$14.99*+$3.69; +33% (beat)

Values with asterisk (*) retrieved from S&P Global.

Note: Company-reported operating revenue was $15.39M; S&P’s “Revenue” actual of $14.99M reflects a differing revenue definition vs. company “total operating revenue” (net interest income plus noninterest income) .

Segment and Revenue Mix

Noninterest Income Category ($USD Thousands)Q3 2024Q4 2024Q1 2025
Wealth Management Fees882 916 864
Customer Service Fees870 842 879
Gain on Sale of Mtg. Loans & OMSR1,311 1,196 849
Mortgage Loan Servicing Fees, Net39 816 611
Title Insurance Revenue485 478 397
Other316 299 492
Total Noninterest Income4,123 4,557 4,107

Balance Sheet KPIs

KPIQ3 2024Q4 2024Q1 2025
Loans ($USD Millions)$1,029.955 $1,046.735 $1,088.274
Deposits ($USD Millions)$1,159.533 $1,152.605 $1,271.220
Loan/Deposit Ratio (%)88.82% 90.81% 85.61%
ROAA (%)0.68% 1.04% 0.60%
ROE (%)7.32% 11.13% 6.63%
Tangible Book Value/Share ($USD)$16.49 $16.00 $15.79
NPLs / Total Loans (%)0.54% 0.53% 0.56%
ACL / NPL Coverage (%)276.83% 273.68% 254.35%
Net Charge-offs (annualized %)0.01% 0.07% 0.03%

Loan and Deposit Composition

Loans by Category ($USD Thousands)Q3 2024Q4 2024Q1 2025
Commercial123,821 125,014 125,878
Commercial Real Estate459,449 479,573 509,518
Agriculture64,887 64,680 61,443
Residential Real Estate314,010 308,378 319,307
Consumer & Other67,788 69,340 72,128
Total Loans1,029,955 1,046,735 1,088,274
Deposits by Category ($USD Thousands)Q3 2024Q4 2024Q1 2025
Non-Interest DDA222,425 232,155 240,446
Interest DDA202,097 201,085 208,583
Savings241,761 237,987 285,902
Money Market228,182 222,161 257,013
Time Deposits265,068 259,217 279,276
Total Deposits1,159,533 1,152,605 1,271,220

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (%)FY 2025 trajectoryPrior internal outlook reached ~3.40% by Q4’25 Now ~3.55%–3.60% by Q4’25; +4–5 bps per quarter Raised
Loan Growth (%)FY 2025Not formal prior; historical ~7–10% target 8%–10% for FY 2025, inclusive of $20M Marblehead loans Initiated/Confirmed
Deposit Growth (Core)Q2 2025Not specifiedCore deposits +4%–5%; headline deposits negative near term due to seasonal public fund outflows Clarified mix/seasonality
Repricing PipelineFY 2025Not specified~$90M loans to reprice +140 bps avg; funding ~$60M from liquidity redeployed at +150–175 bps spread New detail
Dividend per Share ($)Next declaration$0.145 (Q1 run-rate) $0.15 announced; payout expected to normalize near ~30% LT avg Raised
Buyback2025Active in Q4; paused Q1 late Paused above ~130% of TBV; may resume at lower price/TBV Maintained with trigger

No explicit revenue, OpEx, OI&E, tax-rate quantitative guidance was provided; management discussed directional drivers (margin, pipeline, deposits) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Margin trajectoryNIM 3.17% in Q3; expanding despite deposit cost pressure NIM 3.40%; guide to 3.55–3.60% by Q4’25 Improving
Loan growth & pipelineLoans +$40.9M YoY in Q3; +$46.5M YoY in Q4; CRE strength Loans +$96.7M YoY; ~$90M 30-day pipeline; repricing supports yields Accelerating
Deposits & liquidityDeposits +$74.2M YoY in Q3; +$82.4M YoY in Q4 Deposits +$158.9M YoY; Marblehead low-cost base; Q2 seasonality expected Strong; seasonal headwind
Mortgage bankingQ3 OMSR valuation drag; Q4 mortgage revenue recovered Q1 lower mortgage revenue; pipeline $50M+; aim for $100–110M quarterly Rebounding expected
Asset qualityNPLs 0.54% in Q3; coverage ~277% NPAs 0.41%; NPLs 0.56%; coverage ~254%; three credits expected to resolve Stable-to-improving outlook
M&A integrationMarblehead closing planned; TBV growth Marblehead closed; $56M deposits, $19M loans; goodwill $3.9M, deposit intangible $1.7M Executed; delivering
Digital/technologyNot highlightedNamed Digital Banking Officer; recommitted to Fiserv; cybersecurity, UX, cards Strategic build

Management Commentary

  • “Merger adjusted net income for the quarter was $2.7 million… GAAP EPS of $0.33 slightly down… The successful closing of the acquisition… strengthened our liquidity position… expanded our market presence in Northern Ohio.” — Mark Klein, CEO .
  • “Net interest margin improved… to 3.4%… we have approximately $90 million of loans… scheduled to reprice… drive loan yields higher by 140 basis points… margins up 4 to 5 bps a quarter… 3.55% to 3.60% best case in Q4.” — Tony Cosentino, CFO .
  • “We named a Digital Banking Officer to drive our digital innovation… recommitted to Fiserv… broaden credit card offering… enhance online banking.” — Mark Klein, CEO .

Q&A Highlights

  • Loan growth outlook: Management remains confident in upper-single-digit growth (8–10%), with strong Columbus contribution; tariffs viewed as a potential cloud but no borrower pullback yet .
  • Deposits: Expect Q2 headline deposits to be negative due to public fund seasonality, but core deposits up 4–5%; funding pipeline with liquidity redeployment at attractive spreads .
  • Margin trajectory: Assumes two Fed cuts; NIM guided to rise through year, aided by repricing and funding cost moderation .
  • Reserves and credit quality: Comfortable at ~1.40% ACL/loans; provisioning to keep pace with loan growth; asset quality described as stable to improving .
  • Capital allocation: CET1 >12%; buyback viable at lower P/TBV; dividend increased to $0.15, payout to normalize near ~30% .

Estimates Context

  • Q1 2025 EPS: $0.42 actual vs $0.40 consensus; beat of $0.02; consensus based on 1 estimate. S&P Global data; values retrieved from S&P Global.*
  • Q1 2025 Revenue: $14.99M actual vs $11.30M consensus; beat of $3.69M; consensus based on 1 estimate. S&P Global data; values retrieved from S&P Global.*
  • With only one covering estimate, Street dispersion is limited; given margin trajectory and pipeline, estimates may need upward revision for NIM and net interest income with some caution around noninterest income seasonality .

Key Takeaways for Investors

  • Adjusted EPS beat and pronounced revenue beat signal underlying strength despite merger costs; watch for continued margin expansion to drive earnings leverage . EPS/revenue consensus comparisons from S&P Global; values retrieved from S&P Global.*
  • Loan repricing and liquidity redeployment are tangible catalysts for NII/NIM over 2025; guided +4–5 bps per quarter toward ~3.55–3.60% .
  • Deposit mix improved with low-cost Marblehead base; near-term Q2 seasonal outflows should be transitory; core growth intact .
  • Asset quality remains solid with low net charge-offs; NPA uptick tied to known credits expected to resolve favorably in 2025; coverage remains robust .
  • Fee diversification via title services and mortgage sale gains provides ballast; mortgage pipeline implies stronger Q2–Q3 activity .
  • Capital deployment is disciplined: dividend raised to $0.15 and buyback opportunistic below ~130% TBV; CET1 >12% supports growth .
  • Trading lens: Near-term upside catalysts include margin beats and pipeline conversion; watch for any macro tariff impacts and Q2 deposit seasonality to avoid misreading transient headwinds .