SB Financial Group, Inc. (NASDAQ:SBFG) Q4 2019 Earnings Conference Call - Final Transcript

Jan 24, 2020 • 11:00 am ET


SB Financial Group, Inc. (NASDAQ:SBFG) Q4 2019 Earnings Conference Call - Final Transcript


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Mark A. Klein

million for the quarter, provided 59% of our $14.6 million of total revenue. Our fee-based residential mortgage engine was again running at near full capacity this quarter as we achieved originations of $138 million from over 600 clients. We were up 74% from the prior-year quarter of $79 million. For the full year, we originated $445 million and achieved our first $400-million-year in total production.

The ability of our institution to generate this level of volume with multiple markets with generally decentralized processing was a tremendous accomplishment for our team. Our Columbus Group led the way again this year with $264 million, followed by our Defiance Group of $105 million, Finley region added $68 million, and our newest region Indianapolis with just $8 million with plans for many more millions.

Non-interest income to total revenue was 40.9% for the fourth quarter as we recaptured 19% of our impairment or $300,000 pre-tax. For the full year, the GAAP percentage came in at 34.1%, but would increase to 35.4% when we adjust for the servicing rights impairment.

Our non-interest income of $6 million was up $2 million or 51.6% from the prior year due to significantly higher mortgage revenue, revenue from our title agency, and higher wealth fees. Our title agency, Peak, completed a very successful year as the newest business line of our Company. Peak set a number of highs in 2019 and include total revenue of $1.1 million as well as the number of transactions of 868 and revenue in one month of $163,000. In addition to their full year bottom line impact to the corporation of $250,000, Peak increased their level of commercial title business by 20% over the prior year, installed a new operating system enabling them to work more efficiently, and expanded their territory from just Ohio to include also Indiana and Michigan.

For the year, nearly 25% of Peak's volume included assisting state bank clients with the purchase of a home or commercial real estate. SBA loan production for the quarter came in at $3 million with sales of $2.3 million, for full year of $11.8 million of production and $8.1 million in sales were certainly below our expectations, but we also recognize that the volatility in the rate markets added additional challenges to this line of business in 2019.

We continue to focus on the client's capital structure and prudent levels of leverage for each client to ensure they are properly funding their acquisitions and/or growth. In the last five years, our SBA bankers have provided capital for over $64 million of projects on our way to help 118 clients with their plans to expand. Our residual portfolio, the remaining unguaranteed portion on our books, now stands at approximately $12.3 million, and as before, continues nicely weighted yield of 7.1%.

Our Wealth Management group achieved a key milestone in the quarter with assets under our care now standing at an all-time high of $508 million, represents an increase over the prior-year quarter of $84.4 million