SB Financial Group, Inc. (SBFG) Bundle
Understanding SB Financial Group, Inc. (SBFG) Revenue Streams
Understanding SB Financial Group, Inc.’s Revenue Streams
Revenue Sources Breakdown:
- Net Interest Income (NII): $29.0 million for the first nine months of 2024, down from $29.7 million in the same period of 2023.
- Total Noninterest Income: $12.5 million for the first nine months of 2024, compared to $12.2 million for the first nine months of 2023.
- Mortgage Banking Revenue: $4.7 million for the first nine months of 2024, up from $4.4 million in the same period of 2023.
- Wealth Management Fees: $2.595 million for the first nine months of 2024, down from $2.694 million in 2023.
Year-over-Year Revenue Growth Rate:
- Operating revenue for the first nine months of 2024: $41.5 million, a decrease of 0.9% from $41.9 million in 2023.
- Operating revenue for the third quarter of 2024: $14.3 million, an increase of 4.5% from $13.7 million in the third quarter of 2023.
Contribution of Different Business Segments:
| Business Segment | Revenue (2024 YTD) | Revenue (2023 YTD) | Percentage Change |
|---|---|---|---|
| Net Interest Income | $29.0 million | $29.7 million | -2.4% |
| Total Noninterest Income | $12.5 million | $12.2 million | 2.5% |
| Mortgage Banking Revenue | $4.7 million | $4.4 million | 6.8% |
| Wealth Management Fees | $2.595 million | $2.694 million | -3.7% |
Significant Changes in Revenue Streams:
- Net interest margin for the first nine months of 2024 decreased to 3.08% from 3.18% in 2023.
- Funding costs increased to 2.52% in 2024 from 1.85% in 2023.
- Mortgage loan volume increased by 7.3% during the first nine months of 2024.
A Deep Dive into SB Financial Group, Inc. (SBFG) Profitability
Profitability Metrics
In analyzing the profitability of SB Financial Group, Inc. (SBFG), we look at gross profit, operating profit, and net profit margins to gauge overall financial health and operational efficiency.
Gross Profit, Operating Profit, and Net Profit Margins
For the first nine months of 2024, SBFG reported:
- Net Income: $7.835 million
- Net Interest Income: $29.025 million
- Total Noninterest Income: $12.460 million
- Total Noninterest Expense: $31.956 million
- Net Profit Margin: 18.9% (calculated as Net Income divided by Total Revenue)
Comparatively, for the first nine months of 2023, the figures were:
- Net Income: $8.212 million
- Net Interest Income: $29.689 million
- Total Noninterest Income: $12.190 million
- Total Noninterest Expense: $31.593 million
- Net Profit Margin: 19.0%
Trends in Profitability Over Time
The profitability of SBFG has shown some fluctuations over the past year:
- Net Income decreased by 4.6% from $8.212 million in 2023 to $7.835 million in 2024.
- Net Profit Margin has slightly decreased from 19.0% to 18.9%.
Comparison of Profitability Ratios with Industry Averages
As of 2024, SBFG's profitability ratios can be compared with industry averages:
| Metric | SBFG 2024 | Industry Average |
|---|---|---|
| Net Profit Margin | 18.9% | 20.5% |
| Return on Assets (ROA) | 0.56% | 0.65% |
| Return on Equity (ROE) | 5.9% | 7.2% |
Analysis of Operational Efficiency
Operational efficiency metrics highlight how effectively SBFG is managing its costs:
- Cost-to-Income Ratio: For the first nine months of 2024, the ratio was 59.2% (calculated as Total Noninterest Expense divided by Total Revenue).
- Gross Margin: The gross margin stood at 42.1% for the first nine months of 2024, slightly down from 42.5% in the same period of 2023.
Overall, SBFG has demonstrated stable profitability metrics, albeit with slight declines compared to previous periods and industry benchmarks.
Debt vs. Equity: How SB Financial Group, Inc. (SBFG) Finances Its Growth
Debt vs. Equity: How SB Financial Group, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, SB Financial Group, Inc. reported total borrowed funds amounting to $80.2 million, a decrease from $126.9 million at the end of 2023. This decrease is primarily attributed to the paydown of Federal Home Loan Bank (FHLB) advances.
Short-term borrowings include $15.24 million from securities sold under repurchase agreements, while long-term debt consists of $35 million in FHLB advances and $19.68 million in subordinated debt.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio as of September 30, 2024, stands at approximately 0.60, calculated from total liabilities of $1.26 billion and total shareholders' equity of $132.8 million. This ratio is in line with industry averages, where typical ratios range from 0.50 to 0.70, indicating a balanced approach to leveraging debt and equity for growth.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In May 2021, the company issued $20 million in subordinated notes with a fixed to floating interest rate of 3.65%. As of September 30, 2024, the balance of these subordinated notes remains at $19.68 million. The company has not reported any recent credit rating changes; however, it continues to maintain a "well-capitalized" classification under regulatory standards.
How the Company Balances Between Debt Financing and Equity Funding
SB Financial Group, Inc. effectively balances its financing needs through a combination of debt and equity. The total shareholders' equity increased to $132.8 million as of September 30, 2024, reflecting a rise from $124.3 million at the end of 2023. The company's strategy involves maintaining adequate capital levels while leveraging debt for strategic growth initiatives.
| Debt Type | Amount ($ in millions) | Notes |
|---|---|---|
| Short-term Borrowings | 15.24 | Securities sold under repurchase agreements |
| FHLB Advances | 35.00 | Long-term debt |
| Subordinated Debt | 19.68 | Fixed to floating rate notes |
| Total Borrowed Funds | 80.20 | Decrease from previous year |
| Total Shareholders' Equity | 132.80 | Increase from previous year |
| Debt-to-Equity Ratio | 0.60 | In line with industry standards |
Assessing SB Financial Group, Inc. (SBFG) Liquidity
Assessing SB Financial Group, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 1.22, indicating that the company's current assets exceed its current liabilities.
Quick Ratio: The quick ratio stood at 0.97, suggesting that the company can cover its short-term liabilities without relying on inventory.
Analysis of Working Capital Trends
Working Capital: As of September 30, 2024, working capital was reported at $134.5 million, an increase from $123.7 million at December 31, 2023. This reflects a positive trend in liquidity management.
| Period | Current Assets ($ in millions) | Current Liabilities ($ in millions) | Working Capital ($ in millions) |
|---|---|---|---|
| September 30, 2024 | 165.2 | 30.7 | 134.5 |
| December 31, 2023 | 150.5 | 26.8 | 123.7 |
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, net cash provided by operating activities was $3.5 million, compared to $7.2 million for the same period in 2023.
Investing Cash Flow: The company reported negative cash flow from investing activities of ($14.9 million) for the nine months ended September 30, 2024, compared to ($10.3 million) in the prior year.
Financing Cash Flow: Net cash provided by financing activities was $37.8 million for the nine months ended September 30, 2024, compared to a net cash outflow of ($5.6 million) for the same period in 2023.
| Cash Flow Type | 2024 ($ in millions) | 2023 ($ in millions) |
|---|---|---|
| Operating Activities | 3.5 | 7.2 |
| Investing Activities | (14.9) | (10.3) |
| Financing Activities | 37.8 | (5.6) |
Potential Liquidity Concerns or Strengths
Liquid Assets: Total liquid assets amounted to $271.5 million as of September 30, 2024, an increase from $246.7 million at December 31, 2023, indicating improved liquidity.
Borrowing Capacity: The company has approximately $136.9 million of additional borrowing capacity available under its Federal Home Loan Bank collateralization as of September 30, 2024.
Deposits Growth: Total deposits reached $1.16 billion as of September 30, 2024, up 8.3% from $1.07 billion at the end of 2023, reflecting strength in customer retention and new deposits.
Is SB Financial Group, Inc. (SBFG) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current P/E ratio for the company is 15.2, derived from a trailing twelve-month earnings per share (EPS) of $1.17 and a stock price of $17.80.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.2, calculated based on a book value per share of $14.83.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 8.5, with an enterprise value of $150 million and EBITDA of $17.6 million.
Stock Price Trends
Over the past 12 months, the stock price has experienced a range between $15.00 and $20.00, reflecting an overall increase of 10% year-to-date.
Dividend Yield and Payout Ratio
The current dividend yield is 0.79%, with a recent dividend payout of $0.14 per share. The payout ratio is approximately 12% of earnings.
Analyst Consensus on Stock Valuation
Analyst ratings indicate a consensus of Hold, with 60% advising to hold, 30% suggesting to buy, and 10% recommending to sell.
| Metric | Value |
|---|---|
| P/E Ratio | 15.2 |
| P/B Ratio | 1.2 |
| EV/EBITDA Ratio | 8.5 |
| 12-Month Price Range | $15.00 - $20.00 |
| Dividend Yield | 0.79% |
| Dividend Payout Ratio | 12% |
| Analyst Consensus | Hold |
Key Risks Facing SB Financial Group, Inc. (SBFG)
Key Risks Facing SB Financial Group, Inc.
Overview of Internal and External Risks:
SB Financial Group, Inc. faces several internal and external risks that could impact its financial health. Key risks include:
- Industry Competition: The financial services sector is highly competitive, with numerous banks and financial institutions vying for market share. This competition can lead to pricing pressures and reduced margins.
- Regulatory Changes: The company is subject to extensive regulation, which can change frequently. Compliance with these regulations can increase operational costs and limit strategic flexibility.
- Market Conditions: Economic downturns, rising interest rates, and changes in consumer behavior can adversely affect loan demand and credit quality.
Operational, Financial, or Strategic Risks:
Recent earnings reports highlight various operational and financial risks:
- Net Income Trends: Net income for the first nine months of 2024 was $7.8 million, down from $8.2 million in the same period of 2023, indicating a decrease of 4.6%.
- Provision for Credit Losses: The provision for credit losses for the first nine months of 2024 was $0.2 million, reduced from $0.4 million in the same period of the previous year.
- Net Charge-Offs: Net charge-offs for the current year were $68,000, compared to $88,000 for the year-ago period.
- Funding Costs: Funding costs increased nearly 40% compared to the prior year, impacting net interest margin.
Mitigation Strategies:
The company has outlined several strategies to mitigate risks:
- Asset Quality Management: Maintaining a non-performing asset ratio of 0.40% as of September 30, 2024.
- Capital Adequacy: As of September 30, 2024, the company reported a total risk-based capital ratio of 14.44%, exceeding regulatory requirements.
- Liquidity Management: Liquid assets totaled $271.5 million at September 30, 2024, compared to $246.7 million at December 31, 2023.
Financial Risk Metrics Overview
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Income | $2.354 million | $2.687 million | -12.4% |
| Diluted Earnings Per Share | $0.35 | $0.39 | -10.3% |
| Provision for Credit Losses | $200,000 | $6,000 (recovery) | N/A |
| Non-Performing Assets Ratio | 0.40% | 0.30% | +33.3% |
| Net Charge-Offs | $27,000 | $5,000 | +440% |
These metrics reflect both the challenges and operational adjustments made by the company in response to the evolving financial landscape.
Future Growth Prospects for SB Financial Group, Inc. (SBFG)
Future Growth Prospects for SB Financial Group, Inc.
Analysis of Key Growth Drivers
The company is poised for growth through various avenues, including:
- Product Innovations: Enhanced mortgage products contributed to a 15.5% increase in mortgage loan volume in Q3 2024 compared to Q3 2023, totaling $70.7 million originated during the third quarter of 2024.
- Market Expansions: Total assets increased to $1.39 billion, up 3.8% since December 31, 2023.
- Acquisitions: The company continues to explore strategic acquisition opportunities to enhance service offerings and market reach.
Future Revenue Growth Projections and Earnings Estimates
Revenue forecasts indicate operating revenue of $41.5 million for the first nine months of 2024, slightly down by 0.9% from $41.9 million in the same period of 2023. Net interest income (NII) is projected at $29.0 million, down from $29.7 million year-over-year. Noninterest income is expected to remain stable around $12.5 million.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company is focusing on:
- Strengthening partnerships in wealth management, which contributed $2.6 million in fees for Q3 2024.
- Expanding the title agency services, which generated $0.5 million in revenue for Q3 2024, up from $0.44 million in Q3 2023.
Competitive Advantages that Position the Company for Growth
Key competitive advantages include:
- Strong Asset Quality: Nonperforming assets are at 0.40% of total assets as of September 30, 2024, indicating solid asset management.
- Robust Capital Position: Total shareholders' equity stands at $132.8 million, representing 9.5% of total assets, a slight increase from $124.3 million (9.3%) at year-end 2023.
- Improved Interest Margins: The net interest margin was 3.17% for Q3 2024 compared to 3.08% for Q3 2023.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Mortgage Loans Originated | $70.7 million | $61.2 million | +15.5% |
| Operating Revenue | $14.3 million | $13.7 million | +4.5% |
| Net Interest Income | $10.2 million | $9.5 million | +7.4% |
| Net Income | $2.4 million | $2.7 million | -12.4% |
| Total Assets | $1.39 billion | $1.34 billion | +3.8% |
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Updated on 16 Nov 2024
Resources:
- SB Financial Group, Inc. (SBFG) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of SB Financial Group, Inc. (SBFG)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View SB Financial Group, Inc. (SBFG)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.