10-K: SB Financial Group Reports 2024 Results, Cites Strategic Growth and Strong Asset Quality

Sentiment:

Annual Report 7 March 2025 2:36 PM

📋All filings for Sb Financial Group, INC

SB Financial Group's 2024 results highlight strategic growth initiatives and sustained asset quality, despite a slight dip in net income compared to the previous year.

Worse than expectedNet income decreased from $12.1 million in 2023 to $11.5 million in 2024.Earnings per diluted share were $1.72 in 2024, compared to $1.75 in 2023.

Summary

SB Financial Group, Inc. reported a net income of $11.5 million for 2024, a decrease from $12.1 million in 2023.
Earnings per diluted share were $1.72 in 2024, compared to $1.75 in 2023.
The State Bank and Trust Company's net income was $13.0 million in 2024, slightly down from $13.3 million in 2023.
SBFG Title, LLC's net income increased to $0.36 million in 2024 from $0.24 million in 2023.
Loans grew by $46.5 million, and deposits increased by $82.4 million.
The company participated in the State of Ohio's Homebuyer Plus program, boosting deposit growth.
Residential real estate loan production reached $261.3 million in 2024, generating $4.6 million in revenue from gains on sale.
Loans serviced for others ended the year at $1.427 billion, up from $1.367 billion at the end of 2023.
Operating revenue remained steady at $57.0 million, with increased mortgage volume offsetting the sale of Visa B shares in 2023.
Operating expenses increased by $1.0 million, or 2.4 percent, to $43.0 million in 2024, driven by higher incentive and commission levels.

Sentiment

Score: 6

Explanation: The document presents a mixed picture, with positive aspects like loan and deposit growth offset by a decrease in net income and an increase in operating expenses. The sentiment is neutral to slightly positive.

Positives

Loan growth of $46.5 million indicates strong lending activity.
Deposit growth of $82.4 million reflects increased customer deposits.
Increased residential real estate loan production and gains on sale demonstrate strength in the mortgage business.
The company's participation in the State of Ohio's Homebuyer Plus program contributed to deposit growth.
Strong asset quality metrics, with nonperforming assets at 0.40 percent of total assets.

Negatives

Net income decreased from $12.1 million in 2023 to $11.5 million in 2024.
Operating expenses increased by $1.0 million, or 2.4 percent, to $43.0 million in 2024.
Total noninterest income was down from $17.7 million in 2023 to $17.0 million in 2024.
Nonperforming assets increased by $2.2 million, or 65.7 percent from 2023.
Total delinquent loans at December 31, 2024 were 0.63 percent of total loans, up from 0.15 percent at December 31, 2023.

Risks

Changes in economic and political conditions could adversely affect earnings.
Instability in global economic conditions and geopolitical matters could have a material adverse effect on results.
Inability to manage interest rate risks could reduce net interest income.
If actual credit losses exceed the allowance for credit losses, net income will decrease.
An unexpected inability to obtain needed liquidity could adversely affect business, profitability, and viability as a going concern.
Information systems may experience an interruption or security breach.
Strong competition within the market area may reduce the ability to attract and retain deposits and originate loans.
Climate change, severe weather, natural disasters, acts of war or terrorism and other external events could significantly impact business.

Future Outlook

The focus and strategic goal of the Company is to grow into and remain a top decile (>90th percentile) independent financial services company. The Company intends to achieve and maintain that goal by executing our five key initiatives.

Management Comments

Our management team believes that becoming and remaining a high-performance financial services company will depend upon seamlessly and consistently delivering operational excellence, as demonstrated by the Companys leadership in the origination and servicing of residential mortgage loans.

Industry Context

The company experiences significant competition in attracting depositors and borrowers. Competition in lending activities comes principally from other commercial banks in the lending areas of State Bank, and to a lesser extent, from savings associations, insurance companies, governmental agencies, credit unions, securities brokerage firms, finance companies, financial technology companies (fintechs) and pension funds.

Comparison to Industry Standards

The document does not provide specific comparisons to industry standards or comparable companies.
The document does not provide specific comparisons to global benchmarks.

Legal Proceedings

In the ordinary course of our business, the Company and its subsidiaries are parties to various legal actions, which we believe are incidental to the operation of our business.

Related Party Transactions

Loans to directors and their related interests, including loans to companies for which directors are principal owners and executive officers are presented in the following table at December 31: ($ in thousands) 2024 2023 Balance at beginning of period $435 $521 Effect of change in compostion of directors and executive officers New Term Loans Repayment of term loans (33) (144) Changes in balances of revolving lines of credit 48 58 Balance at end of period $450 $435

Stakeholder Impact

The Company's performance impacts shareholders through earnings per share and dividend payments.
Employees are affected by compensation, benefits, and the overall financial health of the company.
Customers benefit from the availability of financial services and the stability of the institution.
The company's activities contribute to the economic well-being of the communities it serves.

Next Steps

The Company will continue to monitor future potential bank failures and/or volatility within the banking industry in general, along with any responsive measures taken by the banking regulators to mitigate or manage potential turmoil in the banking industry.
Management plans to continue from time to time to purchase additional premises and equipment and improve current facilities to meet the current and future needs of the Companys customers.

Key Dates

Date	Description
1983	SB Financial was organized.
1995	The Private Securities Litigation Reform Act of 1995 was enacted.
1999	The Gramm-Leach-Bliley Act of 1999 was enacted.
2001	The Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the Patriot Act) was enacted.
2005-08	Rurban Statutory Trust II (RST II) is a trust that was organized.
2005-09	RST II closed a pooled private offering of 10,000 Capital Securities.
2010	The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) was enacted.
2015-01-01	Community banking organizations, including the Company and State Bank, began transitioning to the new Basel III Capital Rules.
2016-06-16	The FASB issued Accounting Standard Update (ASU) 2016-13 Financial Instruments Credit Losses, which replaced the incurred loss model with an expected loss model and is referred to as the CECL model.
2018-05-25	The Economic Growth, Regulatory Relief and Consumer Protection Act (the Regulatory Relief Act) was enacted.
2019-01-02	SB Financial elected, and received approval from the FRB, to become a financial holding company.
2019-09	The FRB, along with other federal bank regulatory agencies, issued a final rule, effective January 1, 2020, that gave community banks, including State Bank, the option to calculate a simple leverage ratio to measure capital adequacy if the community banks met certain requirements.
2020-03-26	The FRB reduced reserve requirement ratios to 0 percent effective on March 26, 2020, to support lending to households and businesses.
2020-04	The FRB adopted a final rule to revise its regulations related to determinations of whether a company has the ability to exercise a controlling influence over another company for purposes of the Bank Holding Company Act.
2020-08-26	Pursuant to the CARES Act, on August 26, 2020, the federal banking agencies adopted a final rule that temporarily lowered the CBLR threshold and provided a gradual transition back to the prior level.
2020-10-01	This final rule became effective on October 1, 2020.
2021-01	The Anti-Money Laundering Act of 2020 (the AMLA), which amends the Bank Secrecy Act of 1970 (the BSA), was enacted.
2021-05-27	The Company issued and sold $20.0 million in aggregate principal amount of its 3.65% Fixed to Floating Rate Subordinated Notes due 2031.
2022-05	The OCC, the FRB and the FDIC issued a final rule, which became effective in May 2022, requiring banking organizations that experience a computer-security incident to notify certain entities.
2022-09-30	As of September 30, 2022, the DRR was 1.26%.
2022-10	The FDIC adopted a final rule in October 2022 increasing the assessment rate from three basis points to five basis points beginning with the first quarterly assessment period of 2023.
2023-01-01	The Company recognized a one-time cumulative effect adjustment (increase) to the ACL of $1.4 million upon adoption as of January 1, 2023.
2023-07-26	The SEC adopted final rules that require public companies to promptly disclose material cybersecurity incidents in Current Reports on Form 8-K and detailed information regarding their cybersecurity risk management, strategy, and governance on an annual basis in their Annual Reports on Form 10-K.
2023-10-24	The federal banking agencies, including the FRB, issued a final rule designed to strengthen and modernize the regulations implementing the CRA.
2024-12	The Company completed the dissolution of four of its inactive subsidiaries: RFCBC, Inc., Rurbanc Data Services Inc., Rurban Mortgage Company, and SBFG Mortgage, LLC.
2024-12-18	The Companys Board of Directors approved a share repurchase program authorizing the repurchase of 500,000 shares through December 31, 2026.
2025-01-17	The Company closed on an acquisition of another small community bank in Marblehead, Ohio.
2025-04-16	The Registrants definitive Proxy Statement for its Annual Meeting of Shareholders to be held on April 16, 2025 are incorporated by reference into Part III of this Annual Report on Form 10-K.

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