SB Financial Group, Inc. (NASDAQ:SBFG) Q2 2023 Earnings Call Transcript

Brian Martin: Okay. So not much in the way of securities. I guess the growth you do have in the back half of the year, there’s not much opportunity to fund it from the bond book at this point or even in the next year. So we should think about it being more growth in the balance sheet going forward?

Anthony Cosentino: Yes. I think we’re going to have kind of our normal $2 million to $3 million of amortization of the portfolio, some slight prepayments as we get to some rate notches and some maturities. But it’s going to be, like we said, $30 million to $40 million that the portfolio is going to decline, but that’s about it, not any kind of rapid prepayments.

Brian Martin: Yes. Okay. That’s perfect. And then maybe just a couple of others, just on – high level on the mortgage. I know you talked about, Tony, the gain – the margins sound like they’re at a bottom here, a trough and are either stable or up from here. That seems fair. And the sale volume seems pretty – definitely improved. Just as far as origination volume, how are you guys thinking about that? Just holistically over the next couple of quarters or just 18 months, just how you think, see things playing out there?

Anthony Cosentino: Well, I think we’ve done $114 million through the first half of the year, call it, 32%. I would think we’re comfortable that we’re probably in a $70 million to $80 million third quarter. I have a – I guess I’d lean more to the upside on that at this point of what we’re seeing. And then we’ll see how Q4 lands. So that kind of lands us somewhere between 2.50% to 2.85% for the full-year, which I think is still, as we’ve talked about, below that kind of 3.50% kind of Mendoza Line for us. But I think that lends towards a nice 2024.

Mark Klein: And Brian, just to comment, we – as I mentioned, we continue to be very bullish on this new in Indianapolis market that we’ve descended upon. We now have five producers there. Last month, they were at the top of the list on production. Still like some limited PCG kind of mortgages kind of thing, but we’re very bullish on that market. And as we’ve discussed before, we think it can be all of what Columbus has been in the past. But we have five high-level producers that get the concept, and we kind of like to classify them as self-propelled lawnmowers. They want to do as much as volume as we want to do. So we’re bullish on that, and we think that’s going to certainly help us going forward, to get back to where we used to be, which is somewhere around a $500 million – north of $500 million mark.

Brian Martin: Yes. Okay. That’s helpful. And maybe just jump into the margin for a moment. Just as far as how you’re seeing things play out here with the rate increase yesterday and then just the growth outlook going forward and just the funding cost, how should we think about the margin over the next couple of quarters? I mean, does it begin to trough? And then with the rate environment potentially being down next year, just trying to understand the dynamics near term and then how we should think about the balance sheet being positioned with potentially seeing rates drop.