SB Financial tops estimates with 12.8% loan growth
Net interest margin expanded 16 basis points to 3.5% as Ohio lender marks seventh consecutive quarter of loan portfolio expansion
SB Financial Group reported fourth-quarter earnings that beat analyst expectations, driven by the seventh consecutive quarter of loan growth and expanding net interest margins that underscore the Ohio-based lender's ability to navigate a challenging rate environment.
The company reported diluted earnings per share of $0.63 for the quarter, adjusted to $0.65, surpassing the consensus estimate of $0.62 to $0.64. Revenue reached $16.4 million, according to the company's earnings announcement, marking a 6.3% increase from the prior year's $15.5 million. The shares rose 1.1% to $22.83 on trading volume that doubled the typical daily level.
Net interest income surged 16.7% year-over-year to $12.7 million, up from $10.9 million in the fourth quarter of 2024. The increase was driven by higher interest income on loans, which rose by $2.3 million to $17.3 million, while funding costs remained relatively stable. The net interest margin expanded 16 basis points to 3.5%, a positive sign for profitability as regional banks nationwide face compression from rising deposit costs.
"Net interest income for the quarter grew by $1.8 million to $12.7 million compared to the previous year, driven by strong loan growth, rising loan yields, and more stable funding costs," said Mark Klein, chairman, president and chief executive officer of SB Financial. The results marked 60 consecutive quarters of profitability for the Defiance, Ohio-based institution.
Loan balances increased by $133.9 million, or 12.8%, compared to the prior year quarter, representing the seventh straight quarter of sequential growth. From the linked quarter, loans grew by $70 million, or 6.3%. Adjusting for the Marblehead acquisition completed in 2025, organic loan growth reached $115.7 million from the prior year, demonstrating core expansion beyond the transformative deal that extended the bank's presence into Northern Ohio.
Deposits increased by $154.6 million, or 13.4%, to $1.31 billion. Excluding acquired deposits, organic growth totaled $107.5 million, what Klein characterized as evidence of "the Bank's ability to sustain long-standing client relationships while continuing to source additional deposit balances."
Tangible book value per share ended the quarter at $18.00, up $2.00 per share or 12.5% from the prior-year quarter, reflecting capital accumulation through retained earnings. Adjusted tangible book value reached $21.44 per share.
For the full year 2025, SB Financial reported net income of $14.0 million, up 21.8% from $11.5 million in the prior year. Operating revenue for the year reached $65.56 million, a 15.1% increase from 2024's $56.94 million. Full-year diluted EPS rose 27.3% to $2.19, with adjusted EPS up 35.1% to $2.31.
Noninterest income presented a contrast to the strong core banking performance, declining $849,000, or 18.6%, from the prior-year quarter to $3.7 million. Klein attributed the decline to "lower activity in certain fee-based businesses," specifically mortgage loan servicing fees. However, gains on the sale of mortgage loans increased $76,000 and customer servicing fees rose $50,000, partially offsetting the weakness in other fee-based categories.
"Our results this quarter reflect continued balance sheet discipline, with funding cost management supporting margin expansion, while noninterest income was impacted by lower activity in certain fee-based businesses," Klein said. "We remain focused on maintaining a diversified revenue mix and executing on long-term growth priorities."
The earnings beat came as analysts had expected EPS of $0.64 on revenue of approximately $12.3 million, according to consensus estimates compiled by financial data providers. The company's price-to-earnings ratio stands at 10.3 times trailing earnings, with an analyst target price of $23.00, representing modest upside from current levels.
SB Financial's performance reflects broader trends in the regional banking sector, where lenders with disciplined balance sheet management and strong core deposit franchises have been better positioned to maintain profitability amid interest rate volatility. The company's ability to grow loans while expanding margins places it among the better-performing small-cap banks in the current environment.