Melissa Martin - Investor Relations Mark Klein - Chairman, President and CEO Anthony Cosentino - Chief Financial Officer

Good morning and welcome to the SB Financial Group Third Quarter 2017 Conference Call and Webcast. I would like to inform you that this conference call is being recorded and that all participants are in a listen-only mode. We will begin remarks by management and then open the conference up to the investment community for questions and answers. I would now turn the conference over to Melissa Martin with SB Financial. Please go ahead Melissa.

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 Web site at www.yoursbfinancial.com under Investor Relations. Joining me today are Mark Klein, Chairman, President and CEO; Tony Cosentino, Chief Financial Officer; and Jon Gathman, Senior Lending Officer. Before I turn the call over to Mr. Klein, let me add that this call may contain forward-looking statements regarding SB Financial Group's financial performance, anticipated plans, operational results and objectives. Forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied on our call today. We have identified a number of different factors within the forward-looking statements at the end of our earnings release and you are encouraged to review those factors. SB Financial Group undertakes no obligation to update any forward-looking statement except as required by law after the date of this call. In addition to the financial results presented in accordance with GAAP, this call will also contain certain non-GAAP financial measures. I will now turn the call over to Mr. Klein.

Thank you, Melissa, and good morning, everyone, welcome to our third quarter 2017 webcast. As you all know, we filed our earnings release yesterday and certainly provide additional depth and details for follow-up to our comments today. Our highlights for the quarter include the GAAP net income was $2.7 million, a 7% improvement over the prior year quarter representing return average assets of 1.27% additionally. It was an 18% improvement over the linked quarter. Net income available to common shares for the quarter was $2.48 million or $0.43 per share representing a 7.6% improvement over the prior year quarter. Trailing 12 months EPS now stands at $1.48, a 13.8% improvement over prior year. Loan balances have been robust and have expanded nearly $24 million or 3.6%. Top-line revenue for the quarter expanded approximately 3.8% from the year ago quarter. Expenses increased 4.5% from the year ago quarter reflecting, production and regulatory staffing expansions. Expenses in revenue increased 6% from the linked quarter. Assets under management expanded this quarter to $430 million, a $53 million increase over the prior year quarter or 14.4% and a 5.5% increase from the linked quarter. Mortgage origination volume for the quarter was approximately $89 million, a decline of $28 million from the year ago quarter and a $9 million reduction from the linked quarter due to lower market activity reflecting the limited availability of inventory and nearly all markets. We improved profitability however, from the linked quarter through better pricing and pipeline management and over 95% of our year-to-date production of $243 million has come from new client relationships to State Bank. Asset quality continues to be a strengthen of our company, and finally, SBA loan volume for the quarter robust at $4.1 million. Our relentless focus on our five key strategic initiatives continues to…

Thanks Mark, and good morning, everyone. For the quarter as Mark said, we had net income of $2.7 million, $0.43 per diluted earnings per share. Our EPS was up $0.03 or 7.5% from the prior year and up $0.06 or 16.2% from the linked quarter. Some highlights include operating revenue up 3.8% from the prior year and up 6.1% from the linked quarter. Loan growth up $56 million for the prior year or 9%. Loan sales delivered gains of $2.5 million all in for mortgage small business and agriculture. And lastly, we continue to reduce our non-performing ratio as Mark said, now down to 43 basis points. As we look further in the income statement, starting with margin, net interest income was up from the prior year by 8.9% and up from the linked quarter by 4.3%, end of period loan balances were up $55.7 million an increase of 9%. And in this third quarter, we increased our loan balances by $23.5 million. Average loan yield of 4.6% increased by 5 basis points from the prior year, and overall, earning asset yield was up 7 basis points compared to the prior year. On the funding side, we continued to experience an increase in the cost of our interest bearing liabilities, coming in at 68 basis points for the quarter, up 12 basis points from the prior year, and up 4 basis points from the linked quarter. We continue to fund anticipated loan volume with retail deposits priced at the market. Net interest margin at 3.81%, was down just 1 basis points from the prior year but was up from the linked quarter by 8 basis points. This reflected higher loan fees compared to the prior year and the linked quarter. In total interest expense cost have risen by nearly 30%…

Thank you, Tony. As you’ve heard, we continue our strong performance trend with another solid quarter, clearly highlighted by our ROAA of 1.27%, loan growth of 4%, $89 million in residential real estate loans, continued excellent loan quality metrics and SBA loan sale gains. With more scale and our newer lower share higher growth markets, and a greater scope of services in existing household of prospects for that covered top-decile performance for the year remains insight. We are pleased with our third quarter performance and have set the stage clearly for a strong finish of 2017. Now, I’ll turn the call back to Melissa for questions and answers. Melissa?

Thank you, Mark. Operator, we’re now ready for our first question.

We will now begin the question-and-answer session. [Operator Instructions].

While we’re waiting for questions, I would like to remind you that today’s call will be accessible on our website at www.yoursbfinancial.com under Investor Relations.

At this time, we have no questions.

I’ll now turn the call back over to Mr. Klein.

Well, once again, thank you all for joining us this morning. Again a great quarter, we’re pleased with our results. Looking forward to a strong fourth quarter and another great year for SBFG. We look forward to speaking with you in January and reporting our yearend results. Again, thanks for joining us. Good bye.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.