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SB FINANCIAL GROUP, INC. (SBFG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered a clean rebound in core profitability: operating revenue rose to $15.5M (+8% QoQ, +2% YoY) and NIM expanded 18 bps QoQ to 3.35% as funding costs eased, driving net interest income to $10.9M (+7% QoQ, +14% YoY) while EPS printed $0.55 (vs $0.35 in Q3; -$0.02 YoY) .
  • Mortgage momentum continued: originations $72.5M (+83% YoY), secondary sales $62.3M (+87% YoY), and net mortgage banking revenue $2.0M (+~$0.7M YoY), aided by positive OMSR valuation and stronger gain-on-sale .
  • Asset quality remained solid despite elevated NPLs (0.53% of loans): ACL/NPL coverage a robust 274% and full-year NCOs just 2 bps; management expects three problem credits to resolve favorably by mid-2025 .
  • Strategic catalyst: Marblehead acquisition closed Jan 17, 2025, adding ~two branches and meaningful low-cost liquidity; management targets 2025 EPS accretion of $0.15–$0.20 and NIM uplift toward 3.50–3.55 by Q4’25 on mix, repricing, and redeployment .

What Went Well and What Went Wrong

  • What Went Well

    • NIM inflected higher with deposit cost relief; Q4 NIM 3.35% vs 3.17% in Q3 and 3.10% in Q4’23; net interest income rose 13.7% YoY despite rate pressure .
    • Mortgage engine re-accelerated: originations $72.5M (+83% YoY), sales $62.3M (+87% YoY); net mortgage banking revenue $2.0M (+$0.7M YoY); servicing portfolio to $1.43B (+4.4% YoY) .
    • Capital return and TBV growth: tangible book value/share $16.00 (+6.8% YoY); ~130k shares repurchased in Q4; 2024 dividends totaled $0.56/share .

  • What Went Wrong

    • Headline EPS down modestly YoY ($0.55 vs $0.57) on lower noninterest income YoY (prior-year had $1.45M securities gains), and expenses +6.1% YoY on talent build; efficiency ratio 71.1% vs 68.4% in Q4’23 .
    • Nonperforming assets increased to $5.5M (0.40% of assets) vs $3.3M (0.25%) a year ago, tied to three credits; coverage remains strong but optics weighed on YoY credit metrics .
    • Deposits slightly down QoQ to $1.153B (from $1.160B) amid rate competition, though up 7.7% YoY; loan/deposit rose to ~91% .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Operating Revenue ($M)$15.115 $14.045 $14.309 $15.454
Net Interest Income ($M)$9.584 $9.659 $10.186 $10.897
Noninterest Income ($M)$5.531 $4.386 $4.123 $4.557
Net Income ($M)$3.883 $3.113 $2.354 $3.635
Diluted EPS ($)$0.57 $0.47 $0.35 $0.55
Net Interest Margin (%)3.10% 3.10% 3.17% 3.35%
Efficiency Ratio (%)68.44% 75.86% 76.78% 71.09%
ROAA (%)1.17% 0.93% 0.68% 1.04%

Segment/Revenue Mix (select noninterest lines, $000s)

Line ItemQ4 2023Q3 2024Q4 2024
Wealth Mgmt Fees$838 $882 $916
Title Insurance Revenue$378 $485 $478
Gain on Sale of Mtg Loans & OMSR$747 $1,311 $1,196
Mortgage Servicing Fees, net$561 $39 $816
Net Gain on Securities$1,453 $0 $0

Key KPIs and Balance Sheet

KPIQ4 2023Q3 2024Q4 2024
Total Loans (EOP, $M)$1,000.212 $1,029.955 $1,046.735
Total Deposits (EOP, $M)$1,070.205 $1,159.533 $1,152.605
Loan/Deposit Ratio (%)93.46% 88.82% 90.81%
NPLs/Total Loans (%)0.28% 0.54% 0.53%
ACL/NPL Coverage (%)560.18% 276.83% 273.68%
Tangible BV/Share ($)$14.98 $16.49 $16.00
Dividend/Share ($)$0.135 $0.140 $0.145

Mortgage Banking Detail (Q4 2024 vs prior)

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Originations ($000)$39,566 $75,110 $70,715 $72,534
Sales ($000)$33,362 $55,835 $61,271 $62,301
Servicing Portfolio ($000)$1,366,667 $1,389,805 $1,406,273 $1,427,318
Net Mtg Banking Revenue ($000)$1,308 $1,842 $1,350 $2,012

Estimates vs Actuals

  • S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable at the time of analysis due to data access limits; as a result, beat/miss versus Street cannot be determined from S&P Global data. Values not shown for estimates due to unavailability.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest MarginQ4 2025n/aTarget 3.50%–3.55% (baseline ~3.35% in Q4’24) New
Loan Growth (YoY)FY 2025n/a$80–$90M total, incl. ~$22M from Marblehead; ~$70M organic New
Deposit Funding NeedFY 2025n/a~$30M required across network; selective on pricing New
Mortgage OriginationsFY 2025n/a~$400M target (vs $261M in 2024) New
Operating Expense GrowthFY 2025n/a~2.5%–3.5% above Q4 run-rate; focus on positive operating leverage New
Marblehead EPS AccretionFY 2025n/a$0.15–$0.20 per share accretion in 2025 New
DividendOngoing$0.140 (Q3’24) $0.145 (Q4’24) declared Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
NIM & Funding CostsNIM 3.10%; first linked-quarter drop in interest expense; stabilization noted NIM 3.17%; deposit costs pressured but moderating NIM 3.35%; CFO sees path to 3.50%–3.55% by Q4’25 Improving
Mortgage BankingOriginations $75.1M; net mtg revenue up 18.8% YoY Originations $70.7M; OMSR drag; net servicing fees minimal Originations $72.5M; net mtg revenue $2.0M, OMSR positive Improving
Deposits/LiquidityDeposits +4.1% YoY; mix shifts to interest-bearing Deposits +6.8% YoY; liquidity solid Deposits +7.7% YoY; Marblehead adds low-cost liquidity Stable to improving
Asset QualityNPLs 0.47%; ACL/NPL >325% NPLs 0.54%; coverage 277% NPLs 0.53%; coverage 274%; 3 credits expected to resolve by mid-2025 Stabilizing
M&A/IntegrationMarblehead agreement announced (Aug 2024) On track; closing anticipated Closed Jan 17, 2025; EPS accretion expected Executed

Management Commentary

  • “Net income for the quarter was $3.6 million… Diluted EPS for the quarter was $0.55… [and] we were able to close on the Marblehead acquisition earlier this month. Their presence will add substantial liquidity via their low-cost deposit base and will expand our market presence in Northern Ohio.” – Mark A. Klein, CEO .
  • “With a substantial portion of loans repricing in 2025 and funding costs continuing to moderate, we anticipate gradual margin expansion… even with some anticipated Fed rate decreases.” – Anthony V. Cosentino, CFO .
  • “We are looking for something near the $400 million [in mortgage originations] in ’25… the 400 number would be a nice place for us to be in 2025.” – Mark A. Klein .
  • “We’re… confident… to have pretty strong EPS accretion from [Marblehead], $0.15 to $0.20 a share here in ’25.” – Anthony V. Cosentino .

Q&A Highlights

  • Mortgage origination outlook: Management targets ~$400M in 2025 on increased producers in Cincinnati/Indiana and healthy purchase/construction mix .
  • NIM trajectory: Q4 NIM 3.35% seen as baseline; CFO expects a few bps improvement in Q1 and progression toward 3.50%–3.55% by Q4’25 .
  • Funding and loan growth: 2025 plan contemplates ~$80–$90M loan growth (incl. $22M from Marblehead), with ~$30M deposit raise; selective on pricing above margin .
  • Marblehead synergy and liquidity: ~$30–$32M fresh liquidity to redeploy; Marblehead loans ~$22M at high-6s/low-7s rates; deposit base ~$185–$190M .
  • Credit quality: Three commercial credits drove higher NPLs; management expects favorable resolution by mid-2025 with minimal loss content; strong collateral positions cited .

Estimates Context

  • Street consensus from S&P Global for Q4 2024 EPS and revenue was unavailable due to access limits at the time of analysis; therefore, we cannot assess beat/miss versus consensus for this quarter. If needed, we can refresh and add comparisons when S&P Global data access is restored.

Key Takeaways for Investors

  • Core margin inflection is underway, aided by moderating funding costs and loan repricing; sustained NIM improvement is a 2025 driver, targeting 3.50%–3.55% by Q4’25 .
  • Diversified fee lines (mortgage, wealth, title) are re-accelerating, with mortgage banking delivering outsized YoY gains in Q4 on higher volumes and positive OMSR .
  • Asset quality remains resilient despite a temporary uptick in NPLs; high coverage and expected credit resolutions limit loss content risk into mid-2025 .
  • Marblehead is a tangible catalyst: low-cost liquidity, immediate redeployment, and 2025 EPS accretion of $0.15–$0.20 offer upside to earnings power and capital efficiency .
  • Expense discipline plus revenue growth should restore positive operating leverage in 2025; guidance calls for 2.5%–3.5% OpEx growth off Q4 run-rate .
  • Loan growth opportunity looks constructive (Columbus pipeline, additional draws, C&I focus), with management targeting $80–$90M YoY growth while preserving margin .
  • Dividend trajectory nudged higher ($0.145 in Q4), alongside buybacks and TBV growth, underscores balanced capital returns .

Sources: Q4 2024 8‑K press release and financials ; Q4 2024 earnings call transcript – –; Q4 2024 GlobeNewswire press release –; Q3 2024 8‑K and materials –; Q2 2024 8‑K and materials –; Marblehead closing press release –.