SB Financial Group, Inc. (NASDAQ:SBFG) Q2 2023 Earnings Conference Call July 28, 2023 11:00 AM ET

Company Participants

Sarah Mekus - Executive Assistant and Corporate Secretary

Mark Klein - Chairman, President and Chief Executive Officer

Anthony Cosentino - Executive Vice President and Chief Financial Officer

Steven Walz - Executive Vice President and Chief Lending Officer

Conference Call Participants

Brian Martin - Janney Montgomery Scott LLC

Operator

Good morning, everyone, and welcome to the SB Financial's Second Quarter 2023 Conference Call and Webcast. I would like to inform you that this conference call is being recorded and that all participants are currently in a listen-only mode. We will begin with remarks by management and then open the conference up to the investment community for questions and answers.

I would now like to turn the floor over to Sarah Mekus with SB Financial. Ma'am, please go ahead.

Sarah Mekus

Thank you, and good morning, everyone. I would like to remind you that this conference call is being broadcast live over the Internet, and will be archived and available on our website at ir.yourstatebank.com.

Joining me today are Mark Klein, Chairman, President and CEO; Tony Cosentino, Chief Financial Officer; and Steve Walz, Chief Lending Officer.

Today's presentation may contain forward-looking information. Cautionary statements about this information as well as reconciliations of non-GAAP financial measures are included in today's earnings release materials as well as our SEC filings and other investor materials. These materials are available on our website and we encourage participants to refer to them for a complete discussion of risk factors and forward-looking statements. These statements speak only as of the date made and SB Financial undertakes no obligation to update them.

I will now turn the call over to Mr. Klein.

Mark Klein

Thank you, Sarah, and good morning, everyone. Highlights of this quarter's results include net income of $3.1 million, up $241,000 or 8.5% from the prior year quarter, but would be up $443,000 or 16.7%, excluding the effects of the OMSR recapture for both years. Year-to-date, adjusted net income is up $738,000 or approximately 15.5%. Return on average assets of 91 basis points with return on tangible common equity, 12.4%.

Net interest income of $9.8 million was up $200,000 or 2.5% from the prior year as loan growth and better asset mix have offset higher funding costs. However, compared to the linked quarter, margin income was down 4.8% as the betas on funding costs have begun to exceed those on the asset side. Loan balances were higher from the linked quarter by just $8.5 million, but have now risen over $89 million or 10% over the prior year quarter. Deposits were down from both the linked and prior year quarters, and challenges to identify funding at or below the margin continued.