SBFG SB Finanical Group Inc

SB Financial Group, Inc. (NASDAQ: SBFG) (“SB Financial” or the “Company”), a diversified financial services company providing full-service community banking, mortgage banking, wealth management, private client and title insurance services today reported earnings for the first quarter ended March 31, 2023.

First quarter 2023 highlights:

• Net income of $2.5 million decreased 12.9 percent compared to the prior year with diluted earnings per share (“EPS”) of $0.35
• Adjusted for Mortgage Servicing Rights recapture (“OMSR”), net income is higher by 14.0 percent compared to the prior year
• Noninterest expense of $10.8 million declined 0.8 percent from the prior year
• Loan growth of $14.2 million from the linked quarter, or 5.9 percent annualized
• Deposit growth of $23.5 million from the linked quarter, or 8.6 percent annualized
• Stable asset quality with nonperforming assets at 35 basis points

Earnings Highlights	Three Months Ended
($ in thousands, except per share & ratios)	Mar. 2023		Mar. 2022		% Change
Operating revenue	$	13,990	$	14,279	-2.0%
Interest income		13,824		9,395	47.1%
Interest expense		3,500		918	281.3%
Net interest income		10,324		8,477	21.8%
Provision for credit losses		250		-	0.0%
Noninterest income		3,666		5,802	-36.8%
Noninterest expense		10,773		10,859	-0.8%
Net income		2,450		2,813	-12.9%
Earnings per diluted share		0.35		0.40	-12.5%
Return on average assets		0.73%		0.83%	-12.0%
Return on average equity		8.37%		8.08%	3.6%

“Our Company experienced the volatility of the banking sector this quarter and it has impacted our earnings results,” said Mark A. Klein, Chairman, President, and CEO of SB Financial. “Liquidity concerns resulted in a much more competitive arena for deposits and funding in the quarter, which drove our deposit beta significantly higher and reduced margin income. We still were able to add loan balances in the quarter even as we have begun to examine all of our credit underwriting standards.”

RESULTS OF OPERATIONS

Consolidated Revenue

Total operating revenue, consisting of net interest income and noninterest income, was down from both the linked quarter and the prior year quarter by 4.3 and 2.0 percent, respectively. Operating revenue was negatively impacted by the decline in mortgage banking revenue and higher funding costs.

• Net interest income was down 5.3 percent from the linked quarter but up 21.8 percent from the year ago quarter.
• Net interest margin was up from the prior year by 68 basis points, primarily from the shift in mix of our balance sheet with cash and securities reallocated to the loan portfolio offset by the shift in our funding mix to higher cost term deposits.      
• Noninterest income was down 36.8 percent from the year ago quarter, due to lower mortgage volume and OMSR recapture.

Mortgage Loan Business

Mortgage loan originations for the first quarter of 2023 were $49.3 million, down $48.0 million, or 49.3 percent, from the year-ago quarter; likewise, total sales of originated loans were $22.6 million, down $49.5 million, or 68.7 percent.  

Net mortgage banking revenue, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $1.2 million for the first quarter of 2023, compared to $2.9 million for the year-ago quarter. The mortgage servicing valuation adjustment for the first quarter of 2023 was a positive $0.1 million, compared to a positive adjustment of $0.9 million for the first quarter of 2022. The servicing portfolio at March 31, 2023, was $1.34 billion, which was down 2.3 percent to the prior year.

Mr. Klein noted, “While we added producers in our high growth markets of Indianapolis and Columbus, mortgage origination volume was constrained by the rate environment. Our pipelines are improving and notably nearly 75 percent of the pipeline is saleable product, which is back to our more normal business model.”  

Mortgage Banking
($ in thousands)	Mar. 2023			Dec. 2022			Sep. 2022			Jun. 2022			Mar. 2022				Annual Growth
Mortgage originations	$	49,366		$	51,219		$	68,557		$	95,454		$	97,394			$	(48,028	)
Mortgage sales		25,803			23,590			39,176			49,915			72,154				(46,351	)
Mortgage servicing portfolio		1,344,158			1,352,016			1,362,666			1,369,732			1,375,554				(31,396	)
Mortgage servicing rights		13,548			13,503			13,473			13,408			13,135				413
Mortgage servicing revenue
Loan servicing fees		844			851			858			863			861				(17	)
OMSR amortization		(292	)		(310	)		(396	)		(496	)		(547	)			255
Net administrative fees		552			541			462			367			314				238
OMSR valuation adjustment		56			86			65			239			890				(834	)
Net loan servicing fees		608			627			527			606			1,204				(596	)
Gain on sale of mortgages		599			550			876			1,196			1,676				(1,077	)
Mortgage banking revenue, net	$	1,207		$	1,177		$	1,403		$	1,802		$	2,880			$	(1,673	)

Noninterest Income and Noninterest Expense

Noninterest income declined for the first quarter, from both the linked quarter and prior year. Gain-on-sale from mortgage loans were down significantly from the prior year and total sales were down over $46 million. The Title insurance business was off nearly 40 percent, reflecting the lower level of residential volume.

For the first quarter of 2023, noninterest expense of $10.8 million was down $0.1 million or 0.8 percent compared to the prior year quarter. Overall head count is down from the linked quarter by 4.9 percent as we continue to right size the mortgage business line. Commission expense for both mortgage and SBA is down compared to the prior year due to the lower total origination volume.

Mr. Klein stated, “We have undertaken a full scale review of our expense structure as we understand the headwinds that revenue growth will encounter in 2023. Our mortgage business line infrastructure has been reduced and we are looking at other areas to provide meaningful expense reductions.”

Noninterest Income / Noninterest Expense
($ in thousands, except ratios)	Mar. 2023			Dec. 2022			Sep. 2022			Jun. 2022			Mar. 2022				Annual Growth
Noninterest Income (NII)	$	3,666		$	3,713		$	4,043		$	4,673		$	5,802			$	(2,136	)
NII / Total Revenue		26.2%			25.4%			27.9%			32.8%			40.6%				-14.4%
NII / Average Assets		1.1%			1.1%			1.2%			1.4%			1.7%				-0.6%
Total Revenue Growth		-2.0%			-6.7%			-13.2%			-9.1%			-46.9%				44.9%
Noninterest Expense (NIE)	$	10,773		$	10,269		$	10,384		$	10,802		$	10,859			$	(86	)
Efficiency Ratio		76.9%			70.2%			71.6%			75.6%			75.9%				1.0%
NIE / Average Assets		3.2%			3.1%			3.2%			3.3%			3.2%				0.0%
Net Noninterest Expense/Avg. Assets		-2.1%			-2.0%			-2.0%			-1.9%			-1.5%				-0.6%
Total Expense Growth		-0.8%			-11.2%			-7.7%			-2.5%			-0.5%				-0.3%

Balance Sheet

Total assets as of March 31, 2023, were $1.34 billion, or in line with the year ago quarter primarily due to the increase in the loan portfolio which was offset by declines in cash and investments. Total shareholders’ equity as of March 31, 2023, was $119.8 million, down from the prior year but compared to the linked quarter was higher due to the declining impairment of our bond portfolio. Excluding the impact of the valuation adjustment, equity increased $3.1 million or 2.1 percent. Our adoption of CECL on January 1st resulted in a reduction of equity that was transferred into our allowance for credit losses. SB Financial repurchased 56,000 shares of our stock during the quarter.  

The investment portfolio of $237.9 million, represented 17.7 percent of assets at March 31, 2023, and was down $27.4 million or 10.3 percent from the year-ago period. Total loans held for investment were $976.3 million at March 31, 2023, up $125.6 million, or 14.8 percent, from March 31, 2022.

Deposit balances of $1.11 billion at March 31, 2023, decreased by $27.9 million, or 2.5 percent, since March 31, 2022. However, deposits have increased from the linked quarter by $23.5 million and have increased for three consecutive quarters. The growth in deposits has come with a significant shift in the mix as time deposits now comprise 21.1 percent of the total compared to 13.1 percent at March 31, 2022.  

Mr. Klein continued, “Loan growth continued in the quarter and compared to the prior year we have increased our loan portfolio by over $125 million which has led to a positive mix shift on the asset side of the balance sheet. Like every community bank, the quest for deposits and low-cost funding was challenging. We are pleased that we have been able to grow deposits over the last three quarters, albeit at a higher cost.”

Loan Balances
($ in thousands, except ratios)	Mar. 2023			Dec. 2022			Sep. 2022			Jun. 2022			Mar. 2022			Annual Growth
Commercial	$	126,065		$	128,534		$	128,565		$	127,711		$	124,857		$	1,208
% of Total		12.9%			13.4%			13.9%			14.3%			14.7%			1.0%
Commercial RE		419,024			412,636			404,710			404,260			400,101			18,923
% of Total		42.9%			42.9%			43.7%			45.1%			47.0%			4.7%
Agriculture		57,761			64,388			60,522			60,586			55,741			2,020
% of Total		5.9%			6.7%			6.5%			6.8%			6.6%			3.6%
Residential RE		309,684			291,512			267,135			241,614			214,015			95,669
% of Total		31.7%			30.3%			28.9%			27.0%			25.2%			44.7%
Consumer & Other		63,778			65,005			64,317			61,440			55,957			7,821
% of Total		6.5%			6.8%			7.0%			6.9%			6.6%			14.0%
Total Loans	$	976,312		$	962,075		$	925,249		$	895,611		$	850,671		$	125,641
Total Growth Percentage																	14.8%
Deposit Balances
($ in thousands, except ratios)	Mar. 2023			Dec. 2022			Sep. 2022			Jun. 2022			Mar. 2022			Annual Growth
Non-Int DDA	$	237,175		$	256,799		$	250,791		$	239,676		$	252,273		$	(15,098	)
% of Total		21.4%			23.6%			23.1%			22.4%			22.2%			-6.0%
Interest DDA		188,497			191,719			199,523			198,286			211,152			(22,655	)
% of Total		17.0%			17.6%			18.4%			18.5%			18.6%			-10.7%
Savings		227,974			191,272			201,402			215,285			236,394			(8,420	)
% of Total		20.5%			17.6%			18.5%			20.1%			20.8%			-3.6%
Money Market		222,203			255,995			258,975			276,274			289,699			(67,496	)
% of Total		20.0%			23.6%			23.8%			25.8%			25.5%			-23.3%
Time Deposits		234,295			190,880			175,202			142,258			148,553			85,742
% of Total		21.1%			17.6%			16.1%			13.3%			13.1%			57.7%
Total Deposits	$	1,110,144		$	1,086,665		$	1,085,893		$	1,071,779		$	1,138,071		$	(27,927	)
Total Growth Percentage																	-2.5%

Asset Quality

SB Financial reported nonperforming assets of $4.7 million as of March 31, 2023, down $0.9 million or 16.0 percent from the year-ago quarter. The coverage ratio of problem loans to the allowance for credit losses was at 382.4 percent at March 31, 2023, which was up over 100 basis points from the prior year due in large part to the expansion of the allowance from the CECL adjustment of $1.4 million.

Nonperforming Assets																Annual Change
($ in thousands, except ratios)	Mar. 2023			Dec. 2022			Sep. 2022			Jun. 2022			Mar. 2022
Commercial & Agriculture	$	185		$	114		$	114		$	140		$	142		$	43
% of Total Com./Ag. loans		0.10%			0.06%			0.06%			0.07%			0.08%			30.3%
Commercial RE		199			210			223			359			544			(345	)
% of Total CRE loans		0.05%			0.05%			0.06%			0.09%			0.14%			-63.4%
Residential RE		2,742			2,967			3,129			3,176			3,198			(456	)
% of Total Res. RE loans		0.89%			1.02%			1.17%			1.31%			1.49%			-14.3%
Consumer & Other		270			391			280			323			409			(139	)
% of Total Con./Oth. loans		0.42%			0.60%			0.44%			0.53%			0.73%			-34.0%
Total Nonaccruing Loans		3,396			3,682			3,746			3,998			4,293			(897	)
% of Total loans		0.35%			0.38%			0.40%			0.45%			0.50%			-20.9%
Accruing Restructured Loans		642			654			668			683			762			(120	)
Total Change (%)																	-15.7%
Total Nonaccruing & Restructured Loans		4,038			4,336			4,414			4,681			5,055			(1,017	)
% of Total loans		0.41%			0.45%			0.48%			0.52%			0.59%			-20.1%
Foreclosed Assets and Other Assets		650			777			756			730			527			123
Total Change (%)																	23.3%
Total Nonperforming Assets	$	4,688		$	5,113		$	5,170		$	5,411		$	5,582		$	(894	)
% of Total assets		0.35%			0.38%			0.40%			0.42%			0.42%			-16.0%

Webcast and Conference Call

The Company will hold the first quarter 2023 earnings conference call and webcast on April 21, 2023, at 11:00 a.m. EDT. Interested parties may access the conference call by dialing 1-888-338-9469. The webcast can be accessed at ir.yourstatebank.com. An audio replay of the call will be available on the Company’s website.

About SB Financial Group                 

Headquartered in Defiance, Ohio, SB Financial is a diversified financial services holding company for the State Bank & Trust Company (State Bank) and SBFG Title, LLC dba Peak Title (Peak Title). State Bank provides a full range of financial services for consumers and small businesses, including wealth management, private client services, mortgage banking and commercial and agricultural lending, operating through a total of 23 offices: 22 in nine Ohio counties and one in Fort Wayne, Indiana, and 23 ATMs. State Bank has six loan production offices located throughout the Tri-State region of Ohio, Indiana and Michigan. Peak Title provides title insurance and title opinions throughout the Tri-State region. SB Financial’s common stock is listed on the NASDAQ Capital Market with the ticker symbol “SBFG”.

Forward-Looking Statements

Certain statements within this document, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, and actual results may differ materially from those predicted by the forward-looking statements. These risks and uncertainties include, but are not limited to, the duration and scope of the COVID-19 outbreak in the United States and the market areas in which SB Financial and its subsidiaries operate, including the impact to the state and local economies of prolonged shelter in place orders and the pandemic generally, risks and uncertainties inherent in the national and regional banking industry, changes in economic conditions in the market areas in which SB Financial and its subsidiaries operate, changes in policies by regulatory agencies, changes in accounting standards and policies, changes in tax laws, fluctuations in interest rates, demand for loans in the market areas in SB Financial and its subsidiaries operate, increases in FDIC insurance premiums, changes in the competitive environment, losses of significant customers, geopolitical events, the loss of key personnel and other risks identified in SB Financial’s Annual Report on Form 10-K and documents subsequently filed by SB Financial with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and SB Financial undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made, except as required by law. All subsequent written and oral forward-looking statements attributable to SB Financial or any person acting on its behalf are qualified by these cautionary statements.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures, specifically pre-tax, pre-provision income, tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common equity, total interest income – FTE, net interest income – FTE and net interest margin – FTE are used by the Company’s management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. In addition, the Company excludes the OMSR impairment from net income to report anon-GAAP adjusted net income level. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Investor Contact Information:

Mark A. KleinChairman, President and Chief Executive OfficerMark.Klein@YourStateBank.comAnthony V. CosentinoExecutive Vice President and Chief Financial OfficerTony.Cosentino@YourStateBank.com

SB FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS - (Unaudited)
	March				December				September				June				March
($ in thousands)		2023				2022				2022				2022				2022
ASSETS
Cash and due from banks	$	21,625			$	27,817			$	27,934			$	29,567			$	130,003
Interest bearing time deposits		1,380				2,131				2,134				1,691				1,894
Available-for-sale securities		237,917				238,780				243,233				266,162				265,311
Loans held for sale		5,592				2,073				2,979				4,242				4,737
Loans, net of unearned income		976,312				962,075				925,249				895,611				850,671
Allowance for credit losses		(15,442	)			(13,818	)			(13,824	)			(13,801	)			(13,804	)
Premises and equipment, net		22,621				22,829				22,842				23,122				23,039
Federal Reserve and FHLB Stock, at cost		6,054				6,326				5,230				5,303				5,303
Foreclosed assets and other assets		650				777				756				730				527
Interest receivable		3,926				4,091				3,556				3,256				2,815
Goodwill		23,239				23,239				23,239				23,239				23,239
Cash value of life insurance		29,024				28,870				28,713				28,556				17,932
Mortgage servicing rights		13,548				13,503				13,473				13,408				13,135
Other assets		14,847				16,940				17,863				12,886				10,328
Total assets	$	1,341,293			$	1,335,633			$	1,303,377			$	1,293,972			$	1,335,130
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non interest bearing demand	$	237,175			$	256,799			$	250,791			$	239,676			$	252,273
Interest bearing demand		188,497				191,719				199,523				198,286				211,152
Savings		227,974				191,272				201,402				215,285				236,394
Money market		222,203				255,995				258,975				276,274				289,699
Time deposits		234,295				190,880				175,202				142,258				148,553
Total deposits		1,110,144				1,086,665				1,085,893				1,071,779				1,138,071
Short-term borrowings		15,998				14,923				19,754				30,772				19,035
Federal Home Loan Bank advances		44,500				60,000				35,000				25,000				5,500
Trust preferred securities		10,310				10,310				10,310				10,310				10,310
Subordinated debt net of issuance costs		19,606				19,594				19,582				19,570				19,558
Interest payable		1,441				769				623				307				536
Other liabilities		19,535				24,944				17,587				11,678				9,483
Total liabilities		1,221,534				1,217,205				1,188,749				1,169,416				1,202,493
Shareholders' Equity
Common stock		61,319				61,319				61,319				61,319				61,319
Additional paid-in capital		14,953				15,087				15,000				15,069				14,872
Retained earnings		101,548				101,966				99,309				96,809				94,833
Accumulated other comprehensive income (loss)		(29,671	)			(32,120	)			(33,426	)			(22,210	)			(13,659	)
Treasury stock		(28,390	)			(27,824	)			(27,574	)			(26,431	)			(24,728	)
Total shareholders' equity		119,759				118,428				114,628				124,556				132,637
Total liabilities and shareholders' equity	$	1,341,293			$	1,335,633			$	1,303,377			$	1,293,972			$	1,335,130

SB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
($ in thousands, except per share & ratios)	At and for the Three Months Ended																				Six Months Ended
	March				December				September				June				March				June				June
Interest income		2023				2022				2022				2022				2022				2023				2022
Loans
Taxable	$	12,126			$	11,222			$	10,084			$	8,880			$	8,052			$	12,126			$	16,932
Tax exempt		116				109				92				73				61				116				134
Securities
Taxable		1,535				1,559				1,536				1,469				1,235				1,535				2,704
Tax exempt		47				47				52				52				47				47				99
Total interest income		13,824				12,937				11,764				10,474				9,395				13,824				19,869
Interest expense
Deposits		2,578				1,440				852				567				618				2,578				1,185
Repurchase agreements & other		10				7				8				11				13				10				24
Federal Home Loan Bank advances		553				258				180				38				39				553				77
Trust preferred securities		164				138				99				71				53				164				124
Subordinated debt		195				194				195				194				195				195				389
Total interest expense		3,500				2,037				1,334				881				918				3,500				1,799
Net interest income		10,324				10,900				10,430				9,593				8,477				10,324				18,070
Provision for credit losses		250				-				-				-				-				250				-
Net interest income after provision for loan losses		10,074				10,900				10,430				9,593				8,477				10,074				18,070
Noninterest income
Wealth management fees		917				907				930				936				955				917				1,891
Customer service fees		825				880				844				860				794				825				1,654
Gain on sale of mtg. loans & OMSR		599				550				876				1,196				1,676				599				2,872
Mortgage loan servicing fees, net		608				627				527				606				1,204				608				1,810
Gain on sale of non-mortgage loans		24				105				125				167				169				24				336
Title insurance revenue		373				454				476				697				602				373				1,299
Gain (loss) on sale of assets		(11	)			18				(12	)			-				55				(11	)			55
Other		331				172				277				211				347				331				558
Total noninterest income		3,666				3,713				4,043				4,673				5,802				3,666				10,475
Noninterest expense
Salaries and employee benefits		5,913				5,677				5,858				6,418				6,189				5,913				12,607
Net occupancy expense		784				763				769				719				742				784				1,461
Equipment expense		981				1,017				918				827				854				981				1,681
Data processing fees		646				627				664				643				576				646				1,219
Professional fees		863				738				766				760				950				863				1,710
Marketing expense		198				258				200				222				231				198				453
Telephone and communication expense		121				124				134				105				111				121				216
Postage and delivery expense		87				121				75				110				116				87				226
State, local and other taxes		228				277				250				277				278				228				555
Employee expense		188				157				145				175				136				188				311
Other expenses		764				510				605				546				676				764				1,222
Total noninterest expense		10,773				10,269				10,384				10,802				10,859				10,773				21,661
Income before income tax expense		2,967				4,344				4,088				3,464				3,420				2,967				6,884
Income tax expense		517				811				746				630				607				517				1,237
Net income	$	2,450			$	3,533			$	3,342			$	2,834			$	2,813			$	2,450			$	5,647
Common share data:
Basic earnings per common share	$	0.35			$	0.51			$	0.48			$	0.40			$	0.40			$	0.35			$	0.80
Diluted earnings per common share	$	0.35			$	0.50			$	0.47			$	0.40			$	0.40			$	0.35			$	0.79
Average shares outstanding (in thousands):
Basic:		6,933				6,945				6,968				7,075				7,035				6,933				7,055
Diluted:		7,008				7,021				7,033				7,149				7,100				7,008				7,116

SB FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)
($ in thousands, except per share & ratios)		At and for the Three Months Ended																				Six Months Ended
		March				December				September				June				March				June				June
SUMMARY OF OPERATIONS			2023				2022				2022				2022				2022				2023				2022
Net interest income		$	10,324			$	10,900			$	10,430			$	9,593			$	8,477			$	10,324			$	18,070
Tax-equivalent adjustment			43				41				38				33				29				43				62
Tax-equivalent net interest income			10,367				10,941				10,468				9,626				8,506				10,367				18,132
Provision for credit loss			250				-				-				-				-				-				-
Noninterest income			3,666				3,713				4,043				4,673				5,802				3,666				10,475
Total operating revenue			13,990				14,613				14,473				14,266				14,279				13,990				28,545
Noninterest expense			10,773				10,269				10,384				10,802				10,859				10,773				21,661
Pre-tax pre-provision income			3,217				4,344				4,088				3,464				3,420				3,217				6,884
Pretax income			2,967				4,344				4,088				3,464				3,420				3,217				6,884
Net income			2,450				3,533				3,342				2,834				2,813				2,450				5,647
PER SHARE INFORMATION:
Basic earnings per share (EPS)			0.35				0.51				0.48				0.40				0.40				0.35				0.80
Diluted earnings per share			0.35				0.50				0.47				0.40				0.40				0.35				0.79
Common dividends			0.125				0.125				0.120				0.120				0.115				0.125				0.235
Book value per common share			17.37				17.08				16.49				17.75				18.65				17.37				17.75
Tangible book value per common share (TBV)			13.93				13.65				13.07				14.36				15.31				13.93				14.36
Market price per common share			14.16				16.95				16.85				17.26				19.91				14.16				17.26
Market price to TBV			101.7	%			124.2	%			128.9	%			120.2	%			130.1	%			101.7	%			120.2	%
Market price to trailing 12 month EPS			8.2				9.6				9.6				9.3				10.0				8.2				9.3
PERFORMANCE RATIOS:
Return on average assets (ROAA)			0.73	%			1.08	%			1.03	%			0.87	%			0.83	%			0.73	%			0.85	%
Pre-tax pre-provision ROAA			0.96	%			1.32	%			1.26	%			1.06	%			1.01	%			1.04	%			1.11	%
Return on average equity			8.37	%			12.17	%			10.89	%			8.89	%			8.08	%			8.37	%			8.46	%
Return on average tangible equity			10.50	%			15.30	%			13.51	%			10.93	%			9.75	%			10.51	%			10.30	%
Efficiency ratio			76.85	%			70.16	%			71.63	%			75.60	%			75.93	%			76.85	%			75.76	%
Earning asset yield			4.49	%			4.27	%			3.89	%			3.45	%			2.96	%			4.49	%			3.20	%
Cost of interest bearing liabilities			1.46	%			0.90	%			0.58	%			0.39	%			0.39	%			1.46	%			0.38	%
Net interest margin			3.35	%			3.60	%			3.45	%			3.15	%			2.67	%			3.36	%			2.91	%
Tax equivalent effect			0.02	%			0.01	%			0.01	%			0.01	%			0.01	%			0.01	%			0.01	%
Net interest margin, tax equivalent			3.37	%			3.61	%			3.46	%			3.16	%			2.68	%			3.37	%			2.92	%
Non interest income/Average assets			1.10	%			1.13	%			1.24	%			1.43	%			1.72	%			1.10	%			1.58	%
Non interest expense/Average assets			3.23	%			3.13	%			3.19	%			3.31	%			3.22	%			3.23	%			3.26	%
Net noninterest expense/Average assets			-2.13	%			-2.00	%			-1.95	%			-1.88	%			-1.50	%			-2.13	%			-1.68	%
ASSET QUALITY RATIOS:
Gross charge-offs			69				7				9				9				9				69				18
Recoveries			8				1				32				6				8				8				14
Net charge-offs			61				6				(23	)			3				1				61				4
Nonaccruing loans/Total loans			0.35	%			0.38	%			0.40	%			0.45	%			0.50	%			0.35	%			0.45	%
Nonperforming loans/Total loans			0.41	%			0.45	%			0.48	%			0.52	%			0.59	%			0.41	%			0.52	%
Nonperforming assets/Loans & OREO			0.48	%			0.53	%			0.56	%			0.60	%			0.66	%			0.48	%			0.60	%
Nonperforming assets/Total assets			0.35	%			0.38	%			0.40	%			0.42	%			0.42	%			0.35	%			0.42	%
Allowance for credit loss/Nonperforming loans			382.42	%			318.68	%			313.26	%			294.83	%			273.08	%			382.42	%			294.83	%
Allowance for credit loss/Total loans			1.58	%			1.44	%			1.49	%			1.54	%			1.62	%			1.58	%			1.54	%
Net loan charge-offs/Average loans (ann.)			0.03	%			0.00	%			(0.01	%)			0.00	%			0.00	%			0.03	%			0.00	%
CAPITAL & LIQUIDITY RATIOS:
Loans/ Deposits			87.94	%			88.53	%			85.21	%			83.56	%			74.75	%			87.94	%			83.56	%
Equity/ Assets			8.93	%			8.87	%			8.79	%			9.63	%			9.93	%			8.93	%			9.63	%
Tangible equity/Tangible assets			7.29	%			7.22	%			7.10	%			7.93	%			8.30	%			7.29	%			7.93	%
Common equity tier 1 ratio (Bank)			13.47	%			13.42	%			13.23	%			13.21	%			13.71	%			13.47	%			13.21	%
END OF PERIOD BALANCES
Total assets			1,341,293				1,335,633				1,303,377				1,293,972				1,335,130				1,341,293				1,293,972
Total loans			976,312				962,075				925,249				895,611				850,671				976,312				895,611
Deposits			1,110,144				1,086,665				1,085,893				1,071,779				1,138,071				1,110,144				1,071,779
Stockholders equity			119,759				118,428				114,628				124,556				132,637				119,759				124,556
Goodwill and intangibles			23,732				23,753				23,770				23,787				23,804				23,732				23,787
Tangible equity			96,027				94,675				90,858				100,769				108,833				96,027				100,769
Mortgage servicing portfolio			1,344,158				1,352,016				1,362,666				1,369,732				1,375,554				1,344,158				1,369,732
Wealth/Brokerage assets under care			518,009				507,093				480,947				500,487				560,698				518,009				500,487
Total assets under care			3,203,460				3,194,742				3,146,990				3,164,191				3,271,382				3,203,460				3,164,191
Full-time equivalent employees			255				268				271				267				256				255				267
Period end common shares outstanding			6,894				6,935				6,950				7,017				7,111				6,894				7,017
Market capitalization (all)			97,626				117,556				117,113				121,105				141,575				97,626				121,105
AVERAGE BALANCES
Total assets			1,335,056				1,314,419				1,302,297				1,305,815				1,350,982				1,335,056				1,328,216
Total earning assets			1,232,018				1,211,674				1,209,958				1,216,124				1,270,218				1,232,018				1,243,017
Total loans			970,813				937,898				909,909				870,439				832,825				970,813				851,736
Deposits			1,098,935				1,094,491				1,085,821				1,108,890				1,134,234				1,098,935				1,121,373
Stockholders equity			117,071				116,114				122,738				127,519				139,214				117,071				133,471
Goodwill and intangibles			23,743				23,761				23,778				23,796				23,801				23,783				23,798
Tangible equity			93,328				92,353				98,960				103,723				115,413				93,288				109,673
Average basic shares outstanding			6,933				6,945				6,968				7,075				7,035				6,933				7,055
Average diluted shares outstanding			7,008				7,021				7,033				7,149				7,100				7,008				7,116

SB FINANCIAL GROUP, INC.
Rate Volume Analysis - (Unaudited)
For the Three Months Ended Mar. 31, 2023 and 2022
($ in thousands)	Three Months Ended Mar. 31, 2023									Three Months Ended Mar. 31, 2022
	Average						Average			Average						Average
Assets	Balance			Interest			Rate			Balance			Interest			Rate
Taxable securities/cash	$	253,449		$	1,535		2.42	%		$	429,839		$	1,235		1.15	%
Nontaxable securities		7,756			47		2.42	%			7,554			47		2.49	%
Loans, net		970,813			12,242		5.04	%			832,825			8,113		3.90	%
Total earning assets		1,232,018			13,824		4.49	%			1,270,218			9,395		2.96	%
Cash and due from banks		11,067									8,156
Allowance for loan losses		(14,763	)								(13,807	)
Premises and equipment		22,858									25,317
Other assets		83,876									61,098
Total assets	$	1,335,056								$	1,350,982
Liabilities
Savings, MMDA and interest bearing demand	$	643,081		$	1,285		0.80	%		$	733,095		$	398		0.22	%
Time deposits		214,978			1,293		2.41	%			155,006			220		0.57	%
Repurchase agreements & other		18,618			10		0.21	%			25,115			13		0.21	%
Advances from Federal Home Loan Bank		49,177			553		4.50	%			5,500			39		2.84	%
Trust preferred securities		10,310			164		6.36	%			10,310			53		2.06	%
Subordinated debt		19,598			195		3.98	%			19,552			195		3.99	%
Total interest bearing liabilities		955,762			3,500		1.46	%			948,578			918		0.39	%
Non interest bearing demand		240,876			-						246,133			-
Total funding		1,196,638					1.17	%			1,194,711					0.31	%
Other liabilities		21,347									17,057
Total liabilities		1,217,985									1,211,768
Equity		117,071									139,214
Total liabilities and equity	$	1,335,056								$	1,350,982
Net interest income				$	10,324								$	8,477
Net interest income as a percent of average interest-earning assets - GAAP measure							3.35	%								2.67	%
Net interest income as a percent of average interest-earning assets - non GAAP							3.37	%								2.68	%
- Computed on a fully tax equivalent (FTE) basis

Non-GAAP reconciliation	Three Months Ended								Twelve Months Ended
($ in thousands, except per share & ratios)	Mar. 31, 2023				Mar. 31, 2022				Mar. 31, 2023				Mar. 31, 2022
Total Operating Revenue	$	13,990			$	14,279			$	13,990			$	68,581
Adjustment to (deduct)/add OMSR recapture/impairment *		(56	)			(889	)			(1,279	)			(3,436	)
Adjusted Total Operating Revenue		13,934				13,390				12,711				65,145
Income before Income Taxes		2,967				3,420				2,967				22,723
Adjustment for OMSR *		(56	)			(889	)			(1,279	)			(3,436	)
Adjusted Income before Income Taxes		2,911				2,531				1,688				19,287
Provision for Income Taxes		517				607				517				4,446
Adjustment for OMSR **		(12	)			(187	)			(269	)			(722	)
Adjusted Provision for Income Taxes		505				420				248				3,725
Net Income		2,450				2,813				2,450				18,277
Adjustment for OMSR *		(44	)			(703	)			(1,010	)			(2,714	)
Adjusted Net Income		2,406				2,110				1,440				15,563
Diluted Earnings per Share		0.35				0.40				0.35				2.56
Adjustment for OMSR *		(0.01	)			(0.10	)			(0.14	)			(0.38	)
Adjusted Diluted Earnings per Share	$	0.34			$	0.30			$	0.21			$	2.18
Return on Average Assets		0.73	%			0.83	%			0.73	%			1.38	%
Adjustment for OMSR *		-0.01	%			-0.21	%			-0.08	%			-0.21	%
Adjusted Return on Average Assets		0.72	%			0.62	%			0.66	%			1.18	%
*valuation adjustment to the Company's mortgage servicing rights
**tax effect is calculated using a 21% statutory federal corporate income tax rate