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 second quarter ended June 30, 2023.

Second quarter 2023 highlights over prior-year, second quarter include:

• Net income of $3.1 million increased 8.5 percent with diluted earnings per share (“EPS”) of $0.44
• Adjusted for Mortgage Servicing Rights recapture (“OMSR”), net income is higher by 16.7 percent
• Noninterest expense of $10.3 million declined 4.3 percent
• Improved asset quality with nonperforming assets declining from 37 to 26 basis points

Six months ended June 30, 2023, highlights over prior-year six months include:

• Net income of $5.5 million, down 2.2 percent
• Adjusted for OMSR recapture, net income is higher by 15.5 percent
• Noninterest expense of $21.1 million declined 2.5 percent

Second quarter 2023 trailing twelve-month highlights include:

• Loan growth of $89.2 million, or 10.0 percent
• Deposit decline of $0.6 million, or 0.1 percent

Earnings Highlights	Three Months Ended									Six Months Ended
($ in thousands, except per share & ratios)	Jun. 2023			Jun. 2022			% Change			Jun. 2023			Jun. 2022			% Change
Operating revenue	$	14,190		$	14,266		-0.5	%		$	28,180		$	28,545		-1.3	%
Interest income		14,406			10,474		37.5	%			28,230			19,869		42.1	%
Interest expense		4,577			881		419.5	%			8,077			1,799		349.0	%
Net interest income		9,829			9,593		2.5	%			20,153			18,070		11.5	%
Provision for credit losses		145			-		0.0	%			395			-		0.0	%
Noninterest income		4,361			4,673		-6.7	%			8,027			10,475		-23.4	%
Noninterest expense		10,339			10,802		-4.3	%			21,112			21,661		-2.5	%
Net income		3,075			2,834		8.5	%			5,525			5,647		-2.2	%
Earnings per diluted share		0.44			0.40		10.0	%			0.79			0.79		0.0	%
Return on average assets		0.91	%		0.87	%	4.6	%			0.82	%		0.85	%	-3.5	%
Return on average equity		10.01	%		8.89	%	12.6	%			9.01	%		8.46	%	6.5	%

“We were pleased with the positive momentum we experienced this quarter in what is a difficult and volatile operating environment for Community Banks,” said Mark A. Klein, Chairman, President, and CEO of SB Financial. “We had linked quarter growth in loans and mortgage originations and deposits were down just 3.5 percent. Liquidity concerns and deposit rate competition continued to be our most significant challenge as our funding beta’s exceeded our earning asset beta’s for the first time since the Fed rate increases began in March of 2022.  While margin compression consumed the narrative for the second quarter, on a positive note we did experience a further reduction in non-performing loans. Our nonperforming loan coverage ratio now stands in excess of 500 percent.”

RESULTS OF OPERATIONS

Consolidated Revenue

Total operating revenue, consisting of net interest income and noninterest income, was up from the linked quarter by 1.4 percent but less than the prior year quarter by 0.5 percent. Operating revenue continues to be impacted by much higher funding costs and the decline in mortgage banking revenue.

• Net interest income was down 4.8 percent from the linked quarter but up 2.5 percent from the prior year quarter.
• Net interest margin was flat compared to the prior year, as the increase in Earning Asset yields and balances has been offset by higher funding costs on deposits and wholesale borrowings.      
• Noninterest income was down 6.7 percent from the year ago quarter, due to lower mortgage and Title insurance volume and a reduction in the recapture of temporary servicing rights.      

Mortgage Loan Business

Mortgage loan originations for the second quarter of 2023 were $65.4 million, down $30.1 million, or 31.5 percent, from the prior year quarter. Total sales of originated loans experienced a slight decline compared to the prior year, at $47.9 million, down $2.0 million, or 4.0 percent.  

Net mortgage banking revenue, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $1.6 million for the second quarter of 2023, down from $1.8 million for the prior year quarter. The mortgage servicing valuation adjustment for the second quarter of 2023 was a negative $0.02 million, compared to a positive adjustment of $0.2 million for the second quarter of 2022. The servicing portfolio at June 30, 2023, was $1.35 billion, which was down 1.2 percent compared to the prior year.

Mr. Klein noted, “Mortgage volume continued to be constrained by higher rates and reduced inventory in our markets. Compared to the linked quarter, we were pleased that originations were higher by $16.0 million, or 32.5 percent as we added new MLOs in several of our key markets.”  

Mortgage Banking
($ in thousands)	Jun. 2023			Mar. 2023			Dec. 2022			Sep. 2022			Jun. 2022				Annual Growth
Mortgage originations	$	65,387		$	49,366		$	51,219		$	68,557		$	95,454			$	(30,067	)
Mortgage sales		47,933			25,803			23,590			39,176			49,915				(1,982	)
Mortgage servicing portfolio		1,353,904			1,344,158			1,352,016			1,362,666			1,369,732				(15,828	)
Mortgage servicing rights		13,723			13,548			13,503			13,473			13,408				315
Mortgage servicing revenue
Loan servicing fees		844			844			851			858			863				(19	)
OMSR amortization		(334	)		(292	)		(310	)		(396	)		(496	)			162
Net administrative fees		510			552			541			462			367				143
OMSR valuation adjustment		(16	)		56			86			65			239				(255	)
Net loan servicing fees		494			608			627			527			606				(112	)
Gain on sale of mortgages		1,056			599			550			876			1,196				(140	)
Mortgage banking revenue, net	$	1,550		$	1,207		$	1,177		$	1,403		$	1,802			$	(252	)

Noninterest Income and Noninterest Expense

Noninterest income for the quarter declined, from the prior year quarter by 6.7 percent; however, when compared to the linked quarter, fee income was higher by 19.0 percent. Gain-on-sale from mortgage loans, was down just slightly from the prior year; however, the increase in sale volume above 73 percent in the quarter resulted in a nearly 80 percent increase in this metric over the linked quarter. Apart from Title Insurance, our remaining fee categories, are generally in line with revenue from both the linked and prior-year quarters.

For the second quarter of 2023, noninterest expense of $10.3 million was down from both the linked and prior year quarters by over 4 percent. Rightsizing of the mortgage business line has resulted in staffing levels lower by over 5 percent compared to the prior year.  

Mr. Klein stated, “Through the first half of the year, we have achieved positive operating leverage with expenses declining at nearly twice the rate of our revenue decline. When we exclude the non-core servicing rights recapture, revenue growth, year-to-date, is higher by 2.6 percent. We continue to examine all of our operations and resources as we look to manage expense levels into the second half of 2023.”

Noninterest Income/Noninterest Expense
($ in thousands, except ratios)	Jun. 2023			Mar. 2023			Dec. 2022			Sep. 2022			Jun. 2022				Annual Growth
Noninterest Income (NII)	$	4,361		$	3,666		$	3,713		$	4,043		$	4,673			$	(312	)
NII / Total Revenue		30.7	%		26.2	%		25.4	%		27.9	%		32.8	%			-2.1	%
NII / Average Assets		1.3	%		1.1	%		1.1	%		1.2	%		1.4	%			-0.1	%
Total Revenue Growth		-0.5	%		-2.0	%		-6.7	%		-13.2	%		-9.1	%			-6.7	%
Noninterest Expense (NIE)	$	10,339		$	10,773		$	10,269		$	10,384		$	10,802			$	(463	)
Efficiency Ratio		72.7	%		76.9	%		70.2	%		71.6	%		75.6	%			-2.9	%
NIE / Average Assets		3.1	%		3.2	%		3.1	%		3.2	%		3.3	%			-0.2	%
Net Noninterest Expense/Avg. Assets		-1.8	%		-2.1	%		-2.0	%		-2.0	%		-1.9	%			0.1	%
Total Expense Growth		-4.3	%		-0.8	%		-11.2	%		-7.7	%		-2.5	%			-4.3	%

Balance Sheet

As of June 30, 2023, total assets were $1.34 billion, in line with the linked quarter, and slightly higher compared to the prior year. This increase was driven by higher loan balances, partially offset by reductions in cash and investment securities.   Total shareholders’ equity at June 30, 2023, was $117.7 million. Excluding the impact of the investment portfolio impairment, equity rose to $150.6 million, reflecting a 2.6 percent increase. During the quarter, we repurchased 91,260 shares of our Company stock, further demonstrating our commitment to enhancing shareholder value.

With our adoption of CECL on January 1st, our Allowance for Credit Losses rose in the quarter to $15.8 million, up 14.4 percent compared to the prior year. In the quarter, we added $375 thousand to the reserve offset by just $22 thousand in net charge-offs.

The investment portfolio of $228.0 million, represented 17.0 percent of assets at June 30, 2023, and was down $38.2 million or 14.2 percent from the year-ago period. Total loans held for investment were $984.8 million at June 30, 2023, up $89.2 million, or 10.0 percent, from June 30, 2022. Residential originations have offset the decline in Commercial loan originations we are seeing in the majority of our markets.

Deposit balances of $1.07 billion at June 30, 2023, were level to the prior year, but experienced a decline of 3.5 percent from the linked quarter. The shift in the mix of our deposit funding has driven the margin compression that we are experiencing. Currently, time deposits and demand deposits comprise 22.4 and 36.3 percent of total deposits, respectively, compared to 13.3 and 40.9 percent for the prior year.  

Mr. Klein continued, “Loan growth continued in the quarter, although we are focused on reducing the reliance on our residential mortgage portfolio products to drive growth as we have a fairly broad base of high-level commercial leaders in our markets working to grow our commercial book. The challenge of funding our Company and maintaining our margins continued in the quarter. We still have access to significant additional liquidity and our level of uninsured deposits ended the quarter at 14.8 percent.”

Loan Balances
($ in thousands, except ratios)	Jun. 2023			Mar. 2023			Dec. 2022			Sep. 2022			Jun. 2022			Annual Growth
Commercial	$	123,226		$	126,066		$	128,393		$	128,565		$	127,711		$	(4,485	)
% of Total		12.5	%		12.9	%		13.3	%		13.9	%		14.3	%		-3.5	%
Commercial RE		417,412			419,024			412,809			404,710			404,260			13,152
% of Total		42.4	%		42.9	%		42.9	%		43.7	%		45.1	%		3.3	%
Agriculture		58,222			57,761			64,505			60,522			60,586			(2,364	)
% of Total		5.9	%		5.9	%		6.7	%		6.5	%		6.8	%		-3.9	%
Residential RE		321,365			309,684			291,368			267,135			241,614			79,751
% of Total		32.6	%		31.7	%		30.3	%		28.9	%		27.0	%		33.0	%
Consumer & Other		64,599			63,777			65,000			64,317			61,440			3,159
% of Total		6.6	%		6.5	%		6.8	%		7.0	%		6.9	%		5.1	%
Total Loans	$	984,824		$	976,312		$	962,075		$	925,249		$	895,611		$	89,213
Total Growth Percentage																	10.0	%
Deposit Balances
($ in thousands, except ratios)	Jun. 2023			Mar. 2023			Dec. 2022			Sep. 2022			Jun. 2022			Annual Growth
Non-Int DDA	$	218,411		$	237,175		$	256,799		$	250,791		$	239,676		$	(21,265	)
% of Total		20.4	%		21.4	%		23.6	%		23.1	%		22.4	%		-8.9	%
Interest DDA		170,282			188,497			191,719			199,523			198,286			(28,004	)
% of Total		15.9	%		17.0	%		17.6	%		18.4	%		18.5	%		-14.1	%
Savings		225,065			227,974			191,272			201,402			215,285			9,780
% of Total		21.0	%		20.5	%		17.6	%		18.5	%		20.1	%		4.5	%
Money Market		217,681			222,203			255,995			258,975			276,274			(58,593	)
% of Total		20.3	%		20.0	%		23.6	%		23.8	%		25.8	%		-21.2	%
Time Deposits		239,717			234,295			190,880			175,202			142,258			97,459
% of Total		22.4	%		21.1	%		17.6	%		16.1	%		13.3	%		68.5	%
Total Deposits	$	1,071,156		$	1,110,144		$	1,086,665		$	1,085,893		$	1,071,779		$	(623	)
Total Growth Percentage																	-0.1	%

Asset Quality

SB Financial reported nonperforming assets of $3.5 million as of June 30, 2023, down $1.2 million or 25.2 percent from the year-ago quarter. The coverage ratio of problem loans to the allowance for credit losses was at 542.8 percent at June 30, 2023, which was up nearly 200 basis points from the prior year due to the expansion of the allowance from the CECL adjustment of $1.4 million and our reduction in problem loans.

Nonperforming Assets																Annual Change
($ in thousands, except ratios)	Jun. 2023			Mar. 2023			Dec. 2022			Sep. 2022			Jun. 2022
Commercial & Agriculture	$	170		$	185		$	114		$	114		$	140		$	30
% of Total Com./Ag. loans		0.09	%		0.10	%		0.06	%		0.06	%		0.07	%		21.4	%
Commercial RE		192			199			210			223			359			(167	)
% of Total CRE loans		0.05	%		0.05	%		0.05	%		0.06	%		0.09	%		-46.5	%
Residential RE		2,266			2,742			3,020			3,129			3,176			(910	)
% of Total Res. RE loans		0.71	%		0.89	%		1.04	%		1.17	%		1.31	%		-28.7	%
Consumer & Other		282			270			338			280			323			(41	)
% of Total Con./Oth. loans		0.44	%		0.42	%		0.52	%		0.44	%		0.53	%		-12.7	%
Total Nonaccruing Loans		2,910			3,396			3,682			3,746			3,998			(1,088	)
% of Total loans		0.30	%		0.35	%		0.38	%		0.40	%		0.45	%		-27.2	%
Foreclosed Assets and Other Assets		625			650			777			756			730			(105	)
Total Change (%)																	-14.4	%
Total Nonperforming Assets	$	3,535		$	4,046		$	4,459		$	4,502		$	4,728		$	(1,193	)
% of Total assets		0.26	%		0.30	%		0.33	%		0.35	%		0.37	%		-25.23	%

Webcast and Conference Call

The Company will hold the second quarter 2023 earnings conference call and webcast on July 28, 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”.

In May 2023, SB Financial was valued #163 on the American Banker Magazine’s list of top 200 publicly traded Community Bank and Thrifts based on three-year average return on equity.

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)
		June				March				December				September				June
($ in thousands)			2023				2023				2022				2022				2022
ASSETS
Cash and due from banks		$	20,993			$	21,625			$	27,817			$	27,934			$	29,567
Interest bearing time deposits			1,180				1,380				2,131				2,134				1,691
Available-for-sale securities			227,996				237,607				238,780				243,233				266,162
Loans held for sale			5,684				5,592				2,073				2,979				4,242
Loans, net of unearned income			984,824				976,312				962,075				925,249				895,611
Allowance for credit losses			(15,795	)			(15,442	)			(13,818	)			(13,824	)			(13,801	)
Premises and equipment, net			22,230				22,621				22,829				22,842				23,122
Federal Reserve and FHLB Stock, at cost			7,634				6,054				6,326				5,230				5,303
Foreclosed assets and other assets			625				650				777				756				730
Interest receivable			4,079				3,926				4,091				3,556				3,256
Goodwill			23,239				23,239				23,239				23,239				23,239
Cash value of life insurance			29,183				29,024				28,870				28,713				28,556
Mortgage servicing rights			13,723				13,548				13,503				13,473				13,408
Other assets			15,840				15,157				16,940				17,863				12,886
Total assets		$	1,341,435			$	1,341,293			$	1,335,633			$	1,303,377			$	1,293,972
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non interest bearing demand		$	218,411			$	237,175			$	256,799			$	250,791			$	239,676
Interest bearing demand			170,282				188,497				191,719				199,523				198,286
Savings			225,065				227,974				191,272				201,402				215,285
Money market			217,681				222,203				255,995				258,975				276,274
Time deposits			239,717				234,295				190,880				175,202				142,258
Total deposits			1,071,156				1,110,144				1,086,665				1,085,893				1,071,779
Short-term borrowings			21,118				15,998				14,923				19,754				30,772
Federal Home Loan Bank advances			81,300				44,500				60,000				35,000				25,000
Trust preferred securities			10,310				10,310				10,310				10,310				10,310
Subordinated debt net of issuance costs			19,618				19,606				19,594				19,582				19,570
Interest payable			1,866				1,441				769				623				307
Other liabilities			18,401				19,535				24,944				17,587				11,678
Total liabilities			1,223,769				1,221,534				1,217,205				1,188,749				1,169,416
Shareholders' Equity
Common stock			61,319				61,319				61,319				61,319				61,319
Additional paid-in capital			15,154				14,953				15,087				15,000				15,069
Retained earnings			103,725				101,548				101,966				99,309				96,809
Accumulated other comprehensive loss			(32,894	)			(29,671	)			(32,120	)			(33,426	)			(22,210	)
Treasury stock			(29,638	)			(28,390	)			(27,824	)			(27,574	)			(26,431	)
Total shareholders' equity			117,666				119,759				118,428				114,628				124,556
Total liabilities and shareholders' equity		$	1,341,435			$	1,341,293			$	1,335,633			$	1,303,377			$	1,293,972

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
	June				March				December				September				June				June				June
Interest income		2023				2023				2022				2022				2022				2023				2022
Loans
Taxable	$	12,715			$	12,126			$	11,222			$	10,084			$	8,880			$	24,841			$	16,932
Tax exempt		121				116				109				92				73				237				134
Securities
Taxable		1,524				1,535				1,559				1,536				1,469				3,059				2,704
Tax exempt		46				47				47				52				52				93				99
Total interest income		14,406				13,824				12,937				11,764				10,474				28,230				19,869
Interest expense
Deposits		3,538				2,578				1,440				852				567				6,116				1,185
Repurchase agreements & other		9				10				7				8				11				19				24
Federal Home Loan Bank advances		664				553				258				180				38				1,217				77
Trust preferred securities		172				164				138				99				71				336				124
Subordinated debt		194				195				194				195				194				389				389
Total interest expense		4,577				3,500				2,037				1,334				881				8,077				1,799
Net interest income		9,829				10,324				10,900				10,430				9,593				20,153				18,070
Provision for credit losses		145				250				-				-				-				395				-
Net interest income after provision for loan losses		9,684				10,074				10,900				10,430				9,593				19,758				18,070
Noninterest income
Wealth management fees		940				917				907				930				936				1,857				1,891
Customer service fees		871				825				880				844				860				1,696				1,654
Gain on sale of mtg. loans & OMSR		1,056				599				550				876				1,196				1,655				2,872
Mortgage loan servicing fees, net		494				608				627				527				606				1,102				1,810
Gain on sale of non-mortgage loans		218				24				105				125				167				242				336
Title insurance revenue		455				373				454				476				697				828				1,299
Gain (loss) on sale of assets		15				(11	)			18				(12	)			-				4				55
Other		312				331				172				277				211				643				558
Total noninterest income		4,361				3,666				3,713				4,043				4,673				8,027				10,475
Noninterest expense
Salaries and employee benefits		5,721				5,913				5,677				5,858				6,418				11,634				12,607
Net occupancy expense		802				784				763				769				719				1,586				1,461
Equipment expense		1,002				981				1,017				918				827				1,983				1,681
Data processing fees		685				646				627				664				643				1,331				1,219
Professional fees		612				863				738				766				760				1,475				1,710
Marketing expense		213				198				258				200				222				411				453
Telephone and communication expense		124				121				124				134				105				245				216
Postage and delivery expense		78				87				121				75				110				165				226
State, local and other taxes		218				228				277				250				277				446				555
Employee expense		156				188				157				145				175				344				311
Other expenses		728				764				510				605				546				1,492				1,222
Total noninterest expense		10,339				10,773				10,269				10,384				10,802				21,112				21,661
Income before income tax expense		3,706				2,967				4,344				4,088				3,464				6,673				6,884
Income tax expense		631				517				811				746				630				1,148				1,237
Net income	$	3,075			$	2,450			$	3,533			$	3,342			$	2,834			$	5,525			$	5,647
Common share data:
Basic earnings per common share	$	0.45			$	0.35			$	0.51			$	0.48			$	0.40			$	0.80			$	0.80
Diluted earnings per common share	$	0.44			$	0.35			$	0.50			$	0.47			$	0.40			$	0.79			$	0.79
Average shares outstanding (in thousands):
Basic:		6,847				6,933				6,945				6,968				7,075				6,890				7,055
Diluted:		6,910				7,008				7,021				7,033				7,149				6,976				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
		June				March				December				September				June				June				June
SUMMARY OF OPERATIONS			2023				2023				2022				2022				2022				2023				2022
Net interest income		$	9,829			$	10,324			$	10,900			$	10,430			$	9,593			$	20,153			$	18,070
Tax-equivalent adjustment			44				43				41				38				33				88				62
Tax-equivalent net interest income			9,873				10,367				10,941				10,468				9,626				20,241				18,132
Provision for credit loss			145				250				-				-				-				395				-
Noninterest income			4,361				3,666				3,713				4,043				4,673				8,027				10,475
Total operating revenue			14,190				13,990				14,613				14,473				14,266				28,180				28,545
Noninterest expense			10,339				10,773				10,269				10,384				10,802				21,112				21,661
Pre-tax pre-provision income			3,851				3,217				4,344				4,088				3,464				7,068				6,884
Pretax income			3,706				2,967				4,344				4,088				3,464				6,673				6,884
Net income			3,075				2,450				3,533				3,342				2,834				5,525				5,647
PER SHARE INFORMATION:
Basic earnings per share (EPS)			0.45				0.35				0.51				0.48				0.40				0.80				0.80
Diluted earnings per share			0.44				0.35				0.50				0.47				0.40				0.79				0.79
Common dividends			0.130				0.125				0.125				0.120				0.120				0.255				0.235
Book value per common share			17.30				17.37				17.08				16.49				17.75				17.30				17.75
Tangible book value per common share (TBV)			13.81				13.93				13.65				13.07				14.36				13.81				14.36
Market price per common share			12.62				14.13				16.95				16.85				17.26				12.62				17.26
Market price to TBV			91.4	%			101.4	%			124.2	%			128.9	%			120.2	%			91.4	%			120.2	%
Market price to trailing 12 month EPS			7.1				8.2				9.6				9.6				9.3				7.1				9.3
PERFORMANCE RATIOS:
Return on average assets (ROAA)			0.91	%			0.73	%			1.08	%			1.03	%			0.87	%			0.82	%			0.85	%
Pre-tax pre-provision ROAA			1.14	%			0.96	%			1.32	%			1.26	%			1.06	%			1.14	%			1.11	%
Return on average equity			10.01	%			8.37	%			12.17	%			10.89	%			8.89	%			9.01	%			8.46	%
Return on average tangible equity			12.40	%			10.50	%			15.30	%			13.51	%			10.93	%			11.18	%			10.30	%
Efficiency ratio			72.71	%			76.85	%			70.16	%			71.63	%			75.60	%			74.77	%			75.76	%
Earning asset yield			4.61	%			4.49	%			4.27	%			3.89	%			3.45	%			4.54	%			3.20	%
Cost of interest bearing liabilities			1.90	%			1.46	%			0.90	%			0.58	%			0.39	%			1.69	%			0.38	%
Net interest margin			3.15	%			3.35	%			3.60	%			3.45	%			3.16	%			3.24	%			2.91	%
Tax equivalent effect			0.01	%			0.02	%			0.01	%			0.01	%			0.00	%			0.02	%			0.01	%
Net interest margin, tax equivalent			3.16	%			3.37	%			3.61	%			3.46	%			3.16	%			3.26	%			2.92	%
Non interest income/Average assets			1.30	%			1.10	%			1.13	%			1.24	%			1.43	%			1.20	%			1.58	%
Non interest expense/Average assets			3.07	%			3.23	%			3.13	%			3.19	%			3.31	%			3.15	%			3.26	%
Net noninterest expense/Average assets			-1.78	%			-2.13	%			-2.00	%			-1.95	%			-1.88	%			-1.95	%			-1.68	%
ASSET QUALITY RATIOS:
Gross charge-offs			32				69				7				9				9				101				18
Recoveries			10				8				1				32				6				18				14
Net charge-offs			22				61				6				(23	)			3				83				4
Nonaccruing loans/Total loans			0.30	%			0.35	%			0.38	%			0.40	%			0.45	%			0.30	%			0.45	%
Nonperforming loans/Total loans			0.30	%			0.35	%			0.38	%			0.40	%			0.45	%			0.30	%			0.45	%
Nonperforming assets/Loans & OREO			0.36	%			0.41	%			0.46	%			0.49	%			0.53	%			0.36	%			0.53	%
Nonperforming assets/Total assets			0.26	%			0.30	%			0.33	%			0.35	%			0.37	%			0.26	%			0.37	%
Allowance for credit loss/Nonperforming loans			542.78	%			454.71	%			375.29	%			369.03	%			345.20	%			542.78	%			345.20	%
Allowance for credit loss/Total loans			1.60	%			1.58	%			1.44	%			1.49	%			1.54	%			1.60	%			1.54	%
Net loan charge-offs/Average loans (ann.)			0.01	%			0.03	%			0.00	%			(0.01	%)			0.00	%			0.02	%			0.00	%
CAPITAL & LIQUIDITY RATIOS:
Loans/ Deposits			91.94	%			87.94	%			88.53	%			85.21	%			83.56	%			91.94	%			83.56	%
Equity/ Assets			8.77	%			8.93	%			8.87	%			8.79	%			9.63	%			8.77	%			9.63	%
Tangible equity/Tangible assets			7.13	%			7.29	%			7.22	%			7.10	%			7.93	%			7.13	%			7.93	%
Common equity tier 1 ratio (Bank)			13.18	%			13.44	%			13.42	%			13.23	%			13.21	%			13.18	%			13.21	%
END OF PERIOD BALANCES
Total assets			1,341,435				1,341,293				1,335,633				1,303,377				1,293,972				1,341,435				1,293,972
Total loans			984,824				976,312				962,075				925,249				895,611				984,824				895,611
Deposits			1,071,156				1,110,144				1,086,665				1,085,893				1,071,779				1,071,156				1,071,779
Stockholders equity			117,666				119,759				118,428				114,628				124,556				117,666				124,556
Goodwill and intangibles			23,710				23,732				23,753				23,770				23,787				23,710				23,787
Tangible equity			93,956				96,027				94,675				90,858				100,769				93,956				100,769
Mortgage servicing portfolio			1,353,904				1,344,158				1,352,016				1,362,666				1,369,732				1,353,904				1,369,732
Wealth/Brokerage assets under care			499,255				518,009				507,093				480,947				500,487				499,255				500,487
Total assets under care			3,194,594				3,203,460				3,194,742				3,146,990				3,164,191				3,194,594				3,164,191
Full-time equivalent employees			253				255				268				271				267				253				267
Period end common shares outstanding			6,803				6,894				6,935				6,950				7,017				6,803				7,017
Market capitalization (all)			85,857				97,419				117,556				117,113				121,105				85,857				121,105
AVERAGE BALANCES
Total assets			1,346,010				1,335,056				1,314,419				1,302,297				1,305,815				1,341,918				1,328,216
Total earning assets			1,248,813				1,232,018				1,211,674				1,209,958				1,216,124				1,243,540				1,243,017
Total loans			988,348				970,813				937,898				909,909				870,439				979,629				851,736
Deposits			1,100,344				1,098,935				1,094,491				1,085,821				1,108,890				1,098,647				1,121,373
Stockholders equity			122,886				117,071				116,114				122,738				127,519				122,601				133,471
Goodwill and intangibles			23,721				23,743				23,761				23,778				23,796				23,732				23,798
Tangible equity			99,165				93,328				92,353				98,960				103,723				98,869				109,673
Average basic shares outstanding			6,847				6,933				6,945				6,968				7,075				6,890				7,055
Average diluted shares outstanding			6,910				7,008				7,021				7,033				7,149				6,976				7,116

SB FINANCIAL GROUP, INC.
Rate Volume Analysis - (Unaudited)
For the Three Months Ended Jun. 30, 2023 and 2022
($ in thousands)		Three Months Ended Jun. 30, 2023									Three Months Ended Jun. 30, 2022
		Average						Average			Average						Average
Assets		Balance			Interest			Rate			Balance			Interest			Rate
Taxable securities/cash		$	252,899		$	1,524		2.41	%		$	337,226		$	1,469		1.74	%
Nontaxable securities			7,566			46		2.43	%			8,459			52		2.46	%
Loans, net			988,348			12,836		5.19	%			870,439			8,953		4.11	%
Total earning assets			1,248,813			14,406		4.61	%			1,216,124			10,474		3.45	%
Cash and due from banks			3,952									7,177
Allowance for loan losses			(15,556	)								(13,803	)
Premises and equipment			22,529									23,741
Other assets			86,272									72,576
Total assets		$	1,346,010								$	1,305,815
Liabilities
Savings, MMDA and interest bearing demand		$	621,999		$	1,850		1.19	%		$	713,367		$	353		0.20	%
Time deposits			239,532			1,688		2.82	%			145,694			214		0.59	%
Repurchase agreements & other			15,064			9		0.24	%			18,671			11		0.24	%
Advances from Federal Home Loan Bank			57,495			664		4.62	%			3,989			38		3.81	%
Trust preferred securities			10,310			172		6.67	%			10,310			71		2.75	%
Subordinated debt			19,610			194		3.96	%			19,564			194		3.97	%
Total interest bearing liabilities			964,010			4,577		1.90	%			911,595			881		0.39	%
Non interest bearing demand			238,813			-						249,829			-
Total funding			1,202,823					1.52	%			1,161,424					0.30	%
Other liabilities			20,301									16,872
Total liabilities			1,223,124									1,178,296
Equity			122,886									127,519
Total liabilities and equity		$	1,346,010								$	1,305,815
Net interest income					$	9,829								$	9,593
Net interest income as a percent of average interest-earning assets - GAAP measure								3.15	%								3.16	%
Net interest income as a percent of average interest-earning assets - non GAAP								3.16	%								3.16	%
- Computed on a fully tax equivalent (FTE) basis
		Six Months Ended Jun. 30, 2023									Six Months Ended Jun. 30, 2022
		Average						Average			Average						Average
Assets		Balance			Interest			Rate			Balance			Interest			Rate
Taxable securities/cash		$	256,250		$	3,059		2.39	%		$	383,272		$	2,704		1.41	%
Nontaxable securities			7,661			93		2.43	%			8,009			99		2.47	%
Loans, net			979,629			25,078		5.12	%			851,736			17,066		4.01	%
Total earning assets			1,243,540			28,230		4.54	%			1,243,017			19,869		3.20	%
Cash and due from banks			4,019									7,593
Allowance for loan losses			(15,162	)								(13,805	)
Premises and equipment			22,692									24,522
Other assets			86,829									66,889
Total assets		$	1,341,918								$	1,328,216
Liabilities
Savings, MMDA and interest bearing demand		$	629,061		$	3,135		1.00	%		$	723,176		$	751		0.21	%
Time deposits			227,343			2,981		2.62	%			156,268			435		0.56	%
Repurchase agreements & Other			16,832			19		0.23	%			21,876			24		0.22	%
Advances from Federal Home Loan Bank			53,359			1,217		4.56	%			4,740			77		3.25	%
Trust preferred securities			10,310			336		6.52	%			10,310			124		2.41	%
Subordinated debt			19,604			389		3.97	%			19,558			389		3.98	%
Total interest bearing liabilities			956,509			8,077		1.69	%			935,928			1,799		0.38	%
Non interest bearing demand			242,243					1.35	%			241,929					0.31	%
Total funding			1,198,752									1,177,857
Other liabilities			20,565									16,888
Total liabilities			1,219,317									1,194,745
Equity			122,601									133,471
Total liabilities and equity		$	1,341,918								$	1,328,216
Net interest income					$	20,153								$	18,070
Net interest income as a percent of average interest-earning assets - GAAP measure								3.24	%								2.91	%
Net interest income as a percent of average interest-earning assets - non GAAP								3.26	%								2.92	%
- Computed on a fully tax equivalent (FTE) basis

Non-GAAP reconciliation		Three Months Ended								Six Months Ended
($ in thousands, except per share & ratios)		Jun. 30, 2023				Jun. 30, 2022				Jun. 30, 2023				Jun. 30, 2022
Total Operating Revenue		$	14,190			$	14,266			$	28,180			$	28,545
Adjustment to (deduct)/add OMSR recapture/impairment *			16				(239	)			(39	)			(1,128	)
Adjusted Total Operating Revenue			14,206				14,027				28,141				27,417
Income before Income Taxes			3,706				3,464				6,673				6,884
Adjustment for OMSR *			16				(239	)			(39	)			(1,128	)
Adjusted Income before Income Taxes			3,722				3,225				6,634				5,756
Provision for Income Taxes			631				630				1,148				1,237
Adjustment for OMSR **			3				(50	)			(8	)			(237	)
Adjusted Provision for Income Taxes			634				580				1,140				1,001
Net Income			3,075				2,834				5,525				5,647
Adjustment for OMSR *			13				(189	)			(31	)			(891	)
Adjusted Net Income			3,088				2,645				5,494				4,756
Diluted Earnings per Share			0.44				0.40				0.79				0.79
Adjustment for OMSR *			0.00				(0.03	)			(0.00	)			(0.13	)
Adjusted Diluted Earnings per Share		$	0.45			$	0.37			$	0.79			$	0.67
Return on Average Assets			0.91	%			0.87	%			0.82	%			0.85	%
Adjustment for OMSR *			0.00	%			-0.06	%			-0.00	%			-0.07	%
Adjusted Return on Average Assets			0.92	%			0.81	%			0.82	%			0.78	%

*valuation adjustment to the Company's mortgage servicing rights

**tax effect is calculated using a 21% statutory federal corporate income tax rate