PR Newswire | Jan 28, 2021 04:16PM EST

01/28 15:15 CST

SB Financial Group Announces Fourth Quarter 2020 Results DEFIANCE, Ohio, Jan. 28, 2021

DEFIANCE, Ohio, Jan. 28, 2021 /PRNewswire/ -- 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 fourth quarter and twelve months ended December 31, 2020.

Fourth quarter 2020 highlights over prior-year fourth quarter include:

* Net income of $5.4 million up $2.0 million or 59.6 percent; diluted earnings per share ("EPS") of $0.71, up $0.29 per share or 69.0 percent * Adjusted net income, excluding the impact of the Originated Mortgage Servicing Rights ("OMSR") recapture, was $5.8 million, which yields an increase in adjusted EPS of $0.06 to $0.77 * Mortgage origination volume of $169.0 million, an increase of $31.5 million, or 22.9 percent * Pre-tax, pre-provision income of $7.5 million, up $3.1 million or 70.6 percent

The twelve months ended December 31, 2020, highlights over the prior-year twelve months include:

* Net income of $14.9 million; diluted EPS of $1.96 * Adjusted net income, excluding the impact of OMSR and Edon merger costs, rose to $18.8 million, up $5.9 million, or 46.1 percent, with adjusted EPS of $2.44 * Return on Average Assets ("ROAA") of 1.29 percent; adjusted ROAA of 1.61 percent * Loan growth of $47.2 million, or 5.7 percent, which includes Paycheck Protection Program ("PPP") loan balances and loans acquired in the Edon acquisition. * Deposit growth of $213.9 million, or 25.4 percent, driven by PPP balances and the Edon acquisition * Mortgage origination volume of $694.2 million; servicing portfolio of $1.3 billion, which is up $101 million, or 8.4 percent

Highlights Three Months Ended Twelve Months Ended

($ in thousands,except per share & Dec. 2020 Dec. 2019 % Change Dec. 2020 Dec. 2019 % Changeratios)

Operating revenue $ 18,153 $ 14,555 24.7% $ 66,026 $ 52,842 24.9%

Interest income 10,589 11,205 -5.5% 42,635 44,400 -4.0%

Interest expense 1,338 2,609 -48.7% 6,705 9,574 -30.0%

Net interest income 9,251 8,596 7.6% 35,930 34,826 3.2%

Provision for loan 800 300 166.7% 4,500 800 462.5%losses

Noninterest income 8,902 5,959 49.4% 30,096 18,016 67.1%

Noninterest expense 10,684 10,176 5.0% 43,087 37,410 15.2%

Net income 5,358 3,358 59.6% 14,944 11,973 24.8%

Earnings per diluted 0.71 0.42 69.0% 1.96 1.51 29.8%share

Return on average 1.73% 1.28% 35.2% 1.29% 1.16% 11.2%assets

Return on average 15.05% 9.93% 51.6% 10.74% 8.99% 19.5%equity

Non-GAAP Measures

Adjusted net income $ 5,841 $ 3,119 87.3% $ 18,757 $ 12,838 46.1%

Adjusted diluted EPS 0.77 0.39 97.4% 2.44 1.62 50.6%

Adjusted return on 1.89% 1.26% 50.0% 1.61% 1.24% 29.8%average assets

Adjusted pre-tax, 8,172 4,076 100.5% 19,685 16,526 19.1%pre-provision income

"The fourth quarter completed a record year of earnings for our Company. We earned $0.71 per share in the quarter up 69 percent from the prior year and for the full year $1.96, which was up 30 percent over the prior twelve months," said Mark A. Klein, Chairman, President, and CEO of SB Financial. "We had significant contributions from our lending teams in the PPP initiative and our Residential Mortgage group originated record volume during 2020. We were especially pleased to have returned over $10 million to our shareholders in the form of dividends and buybacks this past year and to have increased shareholder book value by nearly 11 percent."

RESULTS OF OPERATIONS

Consolidated Revenue

Total operating revenue, consisting of net interest income and noninterest income, was up 24.7 percent from the fourth quarter of 2019 and for the year was up 24.9 percent.

* Net interest income was up 7.6 percent from the year-ago quarter, and remained flat to the linked quarter. * Net interest margin on a fully taxable equivalent basis (FTE) was down from the year-ago quarter by 49 basis points and down 20 basis points from the linked quarter due to higher transactional cash balances, slower PPP forgiveness realization and lower mortgage volume. Loan yields are down 60 bps with the decline in the rate curve. * Noninterest income was up 49.4 percent year over year but down 14.5 percent from the linked quarter, due to servicing rights impairment and lower mortgage volume.

Mortgage Loan Business

Mortgage loan originations for the fourth quarter of 2020 were $169.0 million, up $31.5 million, or 22.9 percent, from the year-ago quarter. Total sales of originated loans were $143.2 million, up $15.7 million, or 12.3 percent. For the full year, SB Financial had total volume of $694.2 million, of which $290.9 million (42 percent) was new purchase/construction lending, $217.0 million (31 percent) was internal refinance, and the remaining $186.3 million (27 percent) was new customer refinance volume.

Net mortgage banking revenue, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $6.2 million for the fourth quarter of 2020, compared to $3.4 million for the year-ago quarter. The mortgage servicing valuation adjustment for the fourth quarter of 2020 was a negative $0.6 million, compared to a positive adjustment of $0.3 million for the fourth quarter of 2019. For the year, the impairment on servicing rights was $3.6 million, compared to $1.1 million for the prior year. The aggregate servicing valuation impairment ended the quarter at $4.9 million. The servicing portfolio at December 31, 2020, was $1.3 billion up $100.6 million or 8.4 percent, from $1.2 billion at December 31, 2019. Normal amortization is up 124 percent from the prior year due to higher refinance activity.

Mr. Klein noted, "Our mortgage machine continued at a brisk pace in the quarter with nearly $170 million in volume and for the year we were just a few loans shy of $700 million. Our sales and processing teams set a new standard of excellence with over 3,100 units closed during the year, and the gain on sale yields continued at high levels in the quarter allowing us to overcome the effects of the servicing rights impairment. We can add to book value in the future with the potential realization of our $4.9 million in valuation impairment."

Mortgage Banking

($ in thousands) Dec. 2020 Sep. 2020 Jun. 2020 Mar. 2020 Dec. 2019

Mortgage originations $ 168,997 $ 200,158 $ 223,671 $ 101,365 $ 137,528

Mortgage sales 143,151 166,201 204,628 84,476 127,441

Mortgage servicing 1,299,698 1,293,037 1,261,746 1,216,292 1,199,107portfolio

Mortgage servicing rights 7,759 8,535 8,168 8,974 11,017

Mortgage servicingrevenue

Loan servicing fees 857 813 782 757 740

OMSR amortization (1,283) (1,308) (1,574) (597) (709)

Net administrative fees (426) (495) (792) 160 31

OMSR valuation adjustment (611) 326 (1,088) (2,212) 303

Net loan servicing fees (1,037) (169) (1,880) (2,052) 334

Gain on sale of mortgages 7,197 8,085 8,119 1,949 3,048

Mortgage banking revenue, $ $ $ $ $ net 6,160 7,916 6,239 (103) 3,382

Noninterest Income and Noninterest Expense

SB Financial's noninterest income includes revenue from a diverse group of services, such as wealth management, deposit fees, residential loan sales and the sale of Small Business Administration (SBA) and U.S. Department of Agriculture (USDA) loans. Wealth management assets under the Company's care were $558.4 million as of December 31, 2020, up $50.7 million, or 10.0 percent, compared to the prior year. For the fourth quarter of 2020, noninterest income as a percentage of total operating revenue was 49.0 percent. Reflective of the robust mortgage market, SB Financial's Title Agency provided revenue in the quarter of $0.5 million, up 32.8 percent from the prior year.

For the fourth quarter of 2020, noninterest expense of $10.7 million was up $0.5 million year over year or 5.0 percent reflecting a 4.9 times positive operating leverage. On a full year basis, noninterest expense of $43.1 million is up $5.7 million or 15.2 percent. Operating leverage for the year was a positive 1.6 times, however when adjusted for the Edon merger costs, operating leverage improves to 2.1 times.

Mr. Klein stated, "We continued to see the positive effects to net income this quarter from the resources we have allocated to our revenue lines. Our commitment to technology, hedging and geographic expansion continued to pay dividends as our revenue growth exceeded expense growth by over two times and we continue to realize significant benefits from our commitment to the mortgage business line for each of our stakeholders."

Noninterest Income / Noninterest Expense

($ in thousands, except ratios) Dec. Sep. Jun. Mar. Dec. 2020 2020 2020 2020 2019

Noninterest Income (NII) $ $ $ $ $ 8,902 10,418 8,615 2,161 5,959

NII / Total Revenue 49.0% 52.9% 49.3% 20.2% 40.9%

NII / Average Assets 2.9% 3.4% 3.0% 0.8% 2.3%

Total Revenue Growth 24.7% 36.4% 39.6% -5.6% 16.0%

Noninterest Expense (NIE) $ $ $ 11,662 $ $ 10,684 11,335 9,406 10,176

Efficiency Ratio 58.8% 57.5% 66.7% 87.8% 69.9%

NIE / Average Assets 3.5% 3.7% 4.0% 3.5% 3.9%

Net Noninterest Expense/Avg. -0.6 -0.3 -1.0% -2.7% -1.6%Assets

Total Expense Growth 5.0% 19.3% 28.0% 9.0% 15.0%

Operating Leverage 4.9 1.9 1.4 -0.6 1.1

Balance Sheet

Total assets as of December 31, 2020, were $1.26 billion, up $219.3 million, or 21.1 percent, from the year ago quarter due to the impact of the Edon acquisition and the PPP activity. Total equity as of December 31, 2020, was $142.9 million, up 5.0 percent from a year ago, and comprised 11.4 percent of total assets.

Total loans held for investment were $872.7 million at December 31, 2020, up $47.2 million, or 5.7 percent, from December 31, 2019. Commercial loans were up $52.2 million, or 34.6 percent, commercial real estate up $1.0 million or 0.3 percent and agricultural loans increasing $4.3 million, or 8.3 percent. Absent the effects of the Edon acquisition and PPP loans, loan balances were down $44.7 million from the year ago quarter.

The investment portfolio of $154.7 million, including shares in the Federal Reserve Bank and Federal Home Loan Bank, represented 12.3 percent of assets at December 31, 2020, and was up 46.5 percent from the year-ago period. Deposit balances of $1.05 billion at December 31, 2020, increased by $213.9 million, or 25.5 percent, since December 31, 2019. Growth from the prior year included $144.1 million in checking and $69.8 million in savings and time deposit balances.

Mr. Klein continued, "We allocated more to our loan loss allowance in the quarter despite what we see as relatively stable asset quality. We continue to prepare for potential COVID impacts to our clients and other credit unknowns. For the year, we set aside $4.5 million in provision expense compared to credit losses of $0.7 million. We have been able to offset the provision expense with our PPP revenue and the pandemic related expense reductions we realized during the year. Adjusting for our PPP balances, our reserve level ended the year at $12.6 million, or 1.56 percent of loans, compared to the $8.8 million and 1.06 percent at the end of the prior year."

LoanBalances

($ inthousands, Dec. 2020 Sep. 2020 Jun. 2020 Mar. 2020 Dec. 2019 Annualexcept Growthratios)

Commercial $ 203,256 $ 216,667 $222,108 $151,538 $151,018 $ 52,238

% of Total 23.3% 24.5% 24.6% 18.2% 18.3% 34.6%

Commercial 370,984 371,947 375,450 378,212 369,962 1,022RE

% of Total 42.5% 42.0% 41.6% 45.5% 44.8% 0.3%

Agriculture 55,251 57,420 58,817 47,660 50,994 4,257

% of Total 6.3% 6.5% 6.5% 5.7% 6.2% 8.3%

Residential 182,076 178,393 184,684 189,738 189,290 (7,214)RE

% of Total 20.9% 20.1% 20.6% 22.9% 22.9% -3.8%

Consumer & 61,156 61,423 60,489 63,616 64,246 (3,090)Other

% of Total 7.0% 6.9% 6.7% 7.7% 7.8% -4.8%

Total Loans $ 872,723 $ 885,850 $901,548 $830,764 $825,510 $ 47,213

TotalGrowth 5.7%Percentage

DepositBalances

($ inthousands, Dec. 2020 Sep. 2020 Jun. 2020 Mar. 2020 Dec. 2019 Annual Growthexceptratios)

Non-Int DDA $ 251,649 $ 225,003 $229,042 $170,920 $158,357 $ 93,292

% of Total 24.0% 22.2% 23.1% 19.8% 18.8% 58.9%

Interest 176,785 164,248 154,143 133,722 131,084 45,701DDA

% of Total 16.9% 16.2% 15.6% 15.5% 15.6% 34.9%

Savings 174,864 169,474 161,182 138,863 119,359 55,505

% of Total 16.7% 16.7% 16.2% 16.0% 14.1% 46.5%

Money 216,164 204,862 189,380 169,209 173,666 42,498Market

% of Total 20.6% 20.2% 19.1% 19.6% 20.7% 24.5%

Time 229,549 250,428 256,840 251,177 257,753 (28,204)Deposits

% of Total 21.9% 24.7% 25.9% 29.2% 30.9% -10.9%

Total $1,049,011 $1,014,015 $990,587 $863,891 $840,219 $ 208,792Deposits

TotalGrowth 24.8%Percentage

Asset Quality

SB Financial reported nonperforming assets of $7.3 million as of December 31, 2020, up $0.6 million from the year-ago quarter. The coverage of nonperforming loans by the loan loss allowance was at 174 percent at December 31, 2020, up from 137 percent at December 31, 2019.

NonperformingAssets Annual($ in Changethousands, Dec. 2020 Sep. 2020 Jun. 2020 Mar. 2020 Dec. 2019exceptratios)

Commercial & $ 902 $ 1,140 $ 1,204 $ 1,309 $ 1,772 $ (870)Agriculture

% of TotalCom./Ag. 0.35% 0.42% 0.43% 0.66% 0.88% -49.1%loans

Commercial 2,412 2,475 2,484 1,816 1,826 586RE

% of Total 0.65% 0.67% 0.66% 0.48% 0.49% 32.1%CRE loans

Residential 2,704 2,481 2,538 2,330 1,635 1,069RE

% of Total 1.49% 1.39% 1.37% 1.23% 0.86% 65.4%Res. RE loans

Consumer & 408 313 308 327 267 141Other

% of TotalCon./Oth. 0.67% 0.51% 0.51% 0.51% 0.42% 52.8%loans

TotalNonaccruing 6,426 6,409 6,534 5,782 5,500 926Loans

% of Total 0.74% 0.72% 0.72% 0.70% 0.67% 16.8%loans

AccruingRestructured 810 789 804 816 874 (64)Loans

Total Change -7.3%(%)

TotalNonaccruing & 7,236 7,198 7,338 6,598 6,374 862RestructuredLoans

% of Total 0.83% 0.81% 0.81% 0.79% 0.77% 13.5%loans

Foreclosed 23 76 382 85 305 (282)Assets

Total Change -92.5%(%)

TotalNonperforming $ 7,259 $ 7,274 $ 7,720 $ 6,683 $ 6,679 $ 580Assets

% of Total 0.58% 0.60% 0.64% 0.61% 0.64% 8.7%assets

The Company continued to provide payment relief to clients as needed, with total forbearance as of December 31, 2020 of 83 loans at $39.7 million. The detail on these deferrals; 9 commercial at $28.0 million down $8.3 million from the linked quarter, zero portfolio residential and consumer loans, down $2.0 million from the linked quarter and 74 sold residential real estate loans at $11.7 million, down $30.6 million from the linked quarter.

Loans in Deferral Status Linked Qtr.($ in thousands, except Dec. Sep. Jun. Changeratios) 2020 2020 2020

Total Commercial $ $ $142,682 $ 28,032 36,366 (8,334)

Total Consumer - 28 350 (28)

Total Portfolio Mortgage - 1,959 10,274 (1,959)

Total Balance Sheet $ $ $153,306 $ Deferrals 28,032 38,353 (10,321)

% of Total loans 3.21% 4.33% 17.00% -1.12%

Total Sold Mortgage $ $ $ $ 11,685 42,317 41,751 (30,632)

Webcast and Conference Call

The Company will hold a related conference call and webcast on January 29, 2021, at 11:00 a.m. EST. 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 22 offices; 21 in nine Ohio counties and one in Fort Wayne, Indiana, and 23 full-service ATMs. State Bank has five loan production offices located throughout the Tri-State region of Ohio, Indiana and Michigan. Peak Title provides title insurance and opinions throughout the Tri-State region. SB Financial's common stock is listed on the NASDAQ Capital Market under the symbol "SBFG".

In May 2020, SB Financial was ranked #125 on the American Banker Magazine's list of Top 200 Publicly Traded Community Banks and Thrifts based on three-year average return on equity ("ROE").

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 non-GAAP items of OMSR impairment and merger related costs from net income to report an 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.

SB FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS - (Unaudited)

December September June March December

($ in thousands) 2020 2020 2020 2020 2019

ASSETS

Cash and due from $ 142,225 $ 94,641 $ 85,661 $ 56,393 $ 27,064 banks

Interest bearing 4,288 8,956 10,542 - - time deposits

Available-for-sale 149,406 130,315 104,289 107,727 100,948 securities

Loans held for 7,234 13,943 13,742 11,328 7,258 sale

Loans, net of 872,723 885,850 901,548 830,764 825,510 unearned income

Allowance for loan (12,574) (11,793) (10,013) (8,958) (8,755) losses

Premises and 23,557 23,785 23,662 23,599 23,385 equipment, net

Federal Reserve and FHLB Stock, at 5,303 5,303 4,837 4,648 4,648 cost

Foreclosed assets 23 76 382 85 305 held for sale, net

Interest 3,799 4,159 4,272 2,940 3,106 receivable

Goodwill 22,745 22,091 22,117 17,792 17,792

Cash value of life 17,530 17,453 17,375 17,299 17,221 insurance

Mortgage servicing 7,759 8,535 8,168 8,974 11,017 rights

Other assets 13,821 14,927 16,354 15,722 9,078

Total assets $ 1,257,839 $ 1,218,241 $ 1,202,936 $ 1,088,313 $ 1,038,577

LIABILITIES ANDSHAREHOLDERS'EQUITY

Deposits

Non interest $ 251,649 $ 225,003 $ 229,042 $ 170,920 $ 158,357 bearing demand

Interest bearing 176,785 164,248 154,143 133,722 131,084 demand

Savings 174,864 169,474 161,182 138,863 119,359

Money market 216,164 204,862 189,380 169,209 173,666

Time deposits 229,549 250,428 256,840 251,177 257,753

Total deposits 1,049,011 1,014,015 990,587 863,891 840,219

Short-term 20,189 20,710 23,826 36,881 12,945 borrowings

Federal Home Loan 8,000 8,000 13,000 16,000 16,000 Bank advances

Trust preferred 10,310 10,310 10,310 10,310 10,310 securities

Interest payable 616 946 929 1,131 1,191

Other liabilities 26,790 22,913 26,403 24,195 21,818

Total 1,114,916 1,076,894 1,065,055 952,408 902,483 liabilities

Shareholders' Equity

Preferred stock - - - - -

Common stock 54,463 54,463 54,463 54,463 54,463

Additional 14,845 14,782 14,780 14,655 15,023 paid-in capital

Retained earnings 84,578 80,012 75,526 72,641 72,704

Accumulated other comprehensive 2,210 2,221 2,320 2,049 659 income (loss)

Treasury stock (13,173) (10,131) (9,208) (7,903) (6,755)

Total shareholders' 142,923 141,347 137,881 135,905 136,094 equity

Total liabilities and $ 1,257,839 $ 1,218,241 $ 1,202,936 $ 1,088,313 $ 1,038,577 shareholders' equity

SB FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)

($ in thousands, except At and for the Three Months Ended Twelve Months Endedper share & ratios)

December September June March December December December

Interest 2020 2020 2020 2020 2019 2020 2019income

Loans

Taxable $ 9,816 $ 10,179 $ 9,945 $ 9,795 $ 10,313 $ 39,735 $ 40,529

Tax exempt 54 47 59 79 83 239 300

Securities

Taxable 632 494 510 692 737 2,328 3,226

Tax exempt 87 87 81 78 72 333 345

Total interest 10,589 10,807 10,595 10,644 11,205 42,635 44,400 income

Interestexpense

Deposits 1,218 1,423 1,549 1,880 2,392 6,070 8,660

Repurchase agreements & 10 12 20 28 17 70 82 other

Federal Home Loan Bank 58 59 92 100 101 309 402 advances

Trust preferred 52 54 62 88 99 256 430 securities

Total interest 1,338 1,548 1,723 2,096 2,609 6,705 9,574 expense

Net interest income 9,251 9,259 8,872 8,548 8,596 35,930 34,826

Provision for 800 1,800 1,300 600 300 4,500 800 loan losses

Net interest incomeafter provision

for loan 8,451 7,459 7,572 7,948 8,296 31,430 34,026losses

Noninterestincome

Wealth 863 839 775 768 801 3,245 3,093 management fees

Customer 728 730 667 682 712 2,807 2,761 service fees

Gain on sale of mtg. loans & 7,197 8,085 8,119 1,949 3,048 25,350 8,413 OMSR

Mortgage loan servicing fees, (1,037) (169) (1,880) (2,052) 334 (5,138) (397) net

Gain on sale of non-mortgage 123 119 107 104 250 453 1,255 loans

Title insurance 522 517 609 265 393 1,913 1,120 revenue

Net gain on sales of - - - - - - 206 securities

Gain (loss) on 181 (52) (80) (46) 1 3 (5) sale of assets

Other 325 349 298 491 420 1,463 1,570

Total noninterest 8,902 10,418 8,615 2,161 5,959 30,096 18,016 income

Noninterest expense

Salaries and employee 6,556 6,995 6,419 5,427 6,142 25,397 22,064 benefits

Net occupancy 782 736 675 698 675 2,891 2,603 expense

Equipment 818 888 780 700 764 3,186 2,828 expense

Data processing 633 586 1,288 548 543 3,055 1,973 fees

Professional 631 695 1,224 757 639 3,307 2,476 fees

Marketing 172 137 141 208 171 658 895 expense

Telephone and communication 156 142 122 115 121 535 466 expense

Postage and delivery 108 96 96 115 86 415 340 expense

State, local 299 331 262 254 347 1,146 1,092 and other taxes

Employee 103 155 93 184 207 535 795 expense

Other expenses 426 574 562 400 481 1,962 1,878

Total noninterest 10,684 11,335 11,662 9,406 10,176 43,087 37,410 expense

Income before income 6,669 6,542 4,525 703 4,079 18,439 14,632tax expense

Income tax 1,311 1,292 870 22 721 3,495 2,659 expense

Net $ 5,358 $ 5,250 $ 3,655 $ 681 $ 3,358 $ 14,944 $ 11,973income

Preferred share - - - - 230 - 950dividends

Net income available to 5,358 5,250 3,655 681 3,128 14,944 11,023common shareholders

Common share data:

Basic earnings per common $ 0.71 $ 0.69 $ 0.47 $ 0.09 $ 0.48 $ 1.96 $ 1.71 share

Diluted earnings per $ 0.71 $ 0.69 $ 0.47 $ 0.09 $ 0.42 $ 1.96 $ 1.51 common share

Average sharesoutstanding (inthousands):

Basic: 7,487 7,607 7,708 7,749 6,445 7,635 6,456

Diluted: 7,487 7,607 7,708 7,756 7,799 7,635 7,935

SB FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)

($ inthousands,except per At and for the Three Months Ended Twelve Months Endedshare &ratios)

December September June March December December December

SUMMARY OF 2020 2020 2020 2020 2019 2020 2019OPERATIONS

Netinterest $ 9,251 $ 9,259 $ 8,872 $ 8,548 $ 8,596 $ 35,930 $ 34,826income

Tax-equivalent 37 36 37 42 41 152 171adjustment

Tax-equivalent 9,288 9,295 8,909 8,590 8,637 36,082 34,997net interestincome

Provision 800 1,800 1,300 600 300 4,500 800for loan loss

Noninterest 8,902 10,418 8,615 2,161 5,959 30,096 18,016income

Totaloperating 18,153 19,677 17,487 10,709 14,555 66,026 52,842revenue

Noninterest 10,684 11,335 11,662 9,406 10,176 43,087 37,410expense

Pre-taxpre-provision 7,469 8,342 5,825 1,303 4,379 22,939 15,432income

Pretax 6,669 6,542 4,525 703 4,079 18,439 14,632income

Net income 5,358 5,250 3,655 681 3,358 14,944 11,973

Net incomeavailable to 5,358 5,250 3,655 681 3,128 14,944 11,023commonshareholders

PER SHAREINFORMATION:

Basicearnings per 0.71 0.69 0.47 0.09 0.48 1.96 1.71share (EPS)

Dilutedearnings per 0.71 0.69 0.47 0.09 0.42 1.96 1.51share

Common 0.105 0.100 0.100 0.095 0.095 0.400 0.360dividends

Book valueper common 19.39 18.73 17.97 17.64 17.53 19.39 17.53share

Tangiblebook value per 16.30 15.72 15.09 15.33 15.24 16.30 15.24common share(TBV)

Marketprice per 18.28 13.49 16.62 11.12 19.69 18.28 19.69common share

Market 112.1% 85.8% 110.1% 72.5% 129.2% 112.1% 129.2%price to TBV

Marketprice to 9.3 8.0 11.4 8.4 13.0 9.3 13.0trailing 12month EPS

PERFORMANCERATIOS:

Return onaverage assets 1.73% 1.73% 1.25% 0.26% 1.28% 1.29% 1.16%(ROAA)

Pre-taxpre-provision 2.41% 2.74% 1.99% 0.49% 1.67% 2.14% 1.50%ROAA

Return on 15.05% 15.01% 10.31% 1.99% 9.93% 10.74% 8.99%average equity

Return onaverage 17.91% 17.93% 11.91% 2.29% 12.83% 12.59% 11.73%tangibleequity

Efficiency 58.76% 57.48% 66.68% 87.81% 69.90% 65.25% 70.79%ratio

Earning 3.66% 3.96% 3.95% 4.32% 4.80% 3.98% 4.85%asset yield

Cost ofinterest 0.64% 0.75% 0.89% 1.12% 1.42% 0.85% 1.31%bearingliabilities

Netinterest 3.20% 3.39% 3.30% 3.47% 3.68% 3.35% 3.81%margin

Taxequivalent 0.01% 0.02% 0.02% 0.01% 0.02% 0.01% 0.01%effect

Netinterest 3.21% 3.41% 3.32% 3.48% 3.70% 3.36% 3.82%margin, taxequivalent

Noninterest 2.87% 3.42% 2.95% 0.81% 2.27% 2.59% 1.75%income/Averageassets

Noninterest 3.45% 3.73% 3.99% 3.54% 3.87% 3.71% 3.64%expense/Average assets

Netnoninterest -0.58% -0.30% -1.04% -2.73% -1.60% -1.12% -1.89%expense/Average assets

ASSET QUALITYRATIOS:

Gross 57 32 254 400 51 743 259charge-offs

Recoveries 39 11 10 3 14 63 47

Net 18 21 244 397 37 680 212charge-offs

Nonaccruingloans/Total 0.74% 0.72% 0.72% 0.70% 0.67% 0.74% 0.67%loans

Nonperforming 0.83% 0.81% 0.81% 0.79% 0.77% 0.83% 0.77%loans/Totalloans

Nonperforming 0.83% 0.82% 0.86% 0.80% 0.81% 0.83% 0.81%assets/Loans &OREO

Nonperforming 0.58% 0.60% 0.64% 0.61% 0.64% 0.58% 0.64%assets/Totalassets

Allowancefor loan loss/ 173.77% 163.84% 136.45% 135.77% 137.35% 173.77% 137.35%Nonperformingloans

Allowancefor loan loss/ 1.44% 1.33% 1.11% 1.08% 1.06% 1.44% 1.06%Total loans

Net loancharge-offs/ 0.01% 0.01% 0.11% 0.19% 0.02% 0.08% 0.03%Average loans(ann.)

Loan lossprovision/Net 4444.44% 8571.43% 532.79% 151.13% 810.81% 661.76% 377.36%charge-offs

CAPITAL &LIQUIDITYRATIOS:

Loans/ 83.19% 87.36% 91.01% 96.17% 98.25% 83.19% 98.25%Deposits

Equity/ 11.36% 11.60% 11.46% 12.49% 13.10% 11.36% 13.10%Assets

Tangibleequity/ 9.73% 9.97% 9.80% 11.03% 11.59% 9.73% 11.59%Tangibleassets

Commonequity tier 1 12.91% 12.71% 11.97% 12.17% 12.46% 12.91% 12.46%ratio (Bank)

END OF PERIODBALANCES

Total 1,257,839 1,218,241 1,202,936 1,088,313 1,038,577 1,257,839 1,038,577assets

Total 872,723 885,850 901,548 830,764 825,510 872,723 825,510loans

Deposits 1,049,011 1,014,015 990,587 863,891 840,219 1,049,011 840,219

Stockholders 142,923 141,347 137,881 135,905 136,094 142,923 136,094equity

Goodwilland 22,745 22,091 22,117 17,792 17,792 22,745 17,792intangibles

Tangible 120,178 119,256 115,764 118,113 118,302 120,178 118,302equity

Mortgageservicing 1,299,698 1,293,037 1,261,746 1,216,292 1,199,107 1,299,698 1,199,107portfolio

Wealth/Brokerage 558,409 522,360 495,025 427,129 507,670 558,409 507,670assets undercare

Totalassets under 3,115,946 3,033,638 2,959,707 2,731,734 2,745,354 3,115,946 2,745,354care

Full-timeequivalent 244 251 254 253 252 244 252employees

Period endcommon shares 7,372 7,545 7,672 7,705 7,763 7,372 7,763outstanding

Marketcapitalization 134,760 101,782 127,509 85,680 152,853 134,760 152,853(all)

AVERAGEBALANCES

Total 1,238,790 1,216,843 1,169,030 1,061,365 1,051,071 1,161,396 1,027,932assets

Totalearning 1,156,718 1,090,386 1,073,490 986,216 934,540 1,072,443 914,975assets

Total 893,244 907,483 898,216 832,975 828,108 880,338 809,651loans

Deposits 1,031,649 1,007,679 946,053 855,272 856,961 951,226 836,299

Stockholders 142,418 139,908 141,821 136,930 135,267 139,197 133,190equity

Goodwilland 22,754 22,787 19,066 17,831 17,833 20,491 17,597intangibles

Preferred - - - - 12,707 - 13,484equity

Tangible 119,664 117,121 122,755 119,099 104,727 118,706 102,109equity

Averagebasic shares 7,487 7,607 7,708 7,749 6,445 7,635 6,456outstanding

Averagediluted shares 7,487 7,607 7,708 7,756 7,799 7,635 7,935outstanding

SB FINANCIAL GROUP, INC.

Rate Volume Analysis - (Unaudited)

At and for the Three Months Ended December 31, 2020 and 2019

($ in Three Months Ended Dec. 31, 2020 Three Months Ended Dec. 31, 2019 thousands)

Average Average Average Average

Assets Balance Interest Rate Balance Interest Rate

Taxable securities/ $ 256,068 $ 632 0.99% $ 99,149 $ 737 2.97% Cash

Nontaxable 7,406 87 4.70% 7,283 72 3.95% securities

Loans, net 893,244 9,870 4.42% 828,108 10,396 5.02%

Total 1,156,718 10,589 3.66% 934,540 11,205 4.80% earning assets

Cash and due from 7,463 48,289 banks

Allowance for loan (12,045) (8,566) losses

Premises and 23,841 24,183 equipment

Other 62,813 52,625 assets

Total $ 1,238,790 $ 1,051,071 assets

Liabilities

Savings, MMDA and interest $ 552,018 $ 841 0.61% $ 432,077 $ 614 0.57% bearing demand

Time 238,284 377 0.63% 264,054 1,778 2.69% deposits

Repurchase agreements 21,610 10 0.19% 13,891 17 0.49% & other

Advances from Federal 8,000 58 2.90% 16,000 101 2.53% Home Loan Bank

Trust preferred 10,310 52 2.02% 10,310 99 3.84% securities

Total interest 830,222 1,338 0.64% 736,332 2,609 1.42% bearing liabilities

Non interest 241,347 - 160,830 - bearing demand

Total 1,071,569 0.50% 897,162 1.16% funding

Other 24,803 18,642 liabilities

Total 1,096,372 915,804 liabilities

Equity 142,418 135,267

Total liabilities $ 1,238,790 $ 1,051,071 and equity

Net interest $ 9,251 $ 8,596 income

Net interest income as a percent of average 3.20% 3.68% interest-earning assets - GAAP measure

Net interest income as a percent of average 3.21% 3.70% interest-earning assets - non GAAP

- Computed on a fully tax equivalent (FTE) basis

Twelve Months Ended Dec. 31, 2020 Twelve Months Ended Dec. 31, 2019

Average Average Average Average

Assets Balance Interest Rate Balance Interest Rate

Taxable securities/ $ 185,480 $ 2,328 1.26% $ 95,216 $ 3,226 3.39% Cash

Nontaxable 6,625 333 5.03% 10,108 345 3.41% securities

Loans, net 880,338 39,974 4.54% 809,651 40,829 5.04%

Total 1,072,443 42,635 3.98% 914,975 44,400 4.85% earning assets

Cash and due from 14,553 47,135 banks

Allowance for loan (10,165) (8,370) losses

Premises and 23,776 23,779 equipment

Other 60,789 50,413 assets

Total $ 1,161,396 $ 1,027,932 assets

Liabilities

Savings, MMDA and interest $ 492,267 $ 3,152 0.64% $ 427,858 $ 2,846 0.67% bearing demand

Time 247,955 2,918 1.18% 262,040 5,814 2.22% deposits

Repurchase agreements 22,832 70 0.31% 15,288 82 0.54% & Other

Advances from Federal 14,186 309 2.18% 16,066 402 2.50% Home Loan Bank

Trust preferred 10,310 256 2.48% 10,310 430 4.17% securities

Total interest 787,550 6,705 0.85% 731,562 9,574 1.31% bearing liabilities

Non interest 211,004 0.67% 146,401 1.09% bearing demand

Total 998,554 877,963 funding

Other 23,645 16,779 liabilities

Total 1,022,199 894,742 liabilities

Equity 139,197 133,190

Total liabilities $ 1,161,396 $ 1,027,932 and equity

Net interest $ 35,930 $ 34,826 income

Net interest income as a percent of average 3.35% 3.81% interest-earning assets - GAAP measure

Net interest income as a percent of average 3.36% 3.82% interest-earning assets - non GAAP

- Computed on a fully tax equivalent (FTE) basis

Non-GAAP Three Months Ended Twelve Months Ended reconciliation

($ inthousands,except per Dec. 31, 2020 Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2019 share &ratios)

TotalOperating $ 18,153 $ 14,555 $ 66,026 $ 52,842Revenue

Adjustment to(deduct)/add 611 (303) 3,585 1,094OMSRimpairment*

Adjusted TotalOperating 18,764 14,252 69,611 53,936Revenue

TotalOperating $ 10,684 $ 9,500 $ 43,087 $ 37,410Expense

Adjustmentfor merger - - (1,241) -expenses**

Adjusted TotalOperating 10,684 9,500 41,846 37,410Expense

Income before 6,669 4,079 18,439 14,632Income Taxes

Adjustmentfor OMSR & 611 (303) 4,826 1,094merger expense

AdjustedIncome before 7,280 3,776 23,265 15,726Income Taxes

Provision for 1,311 721 3,495 2,659Income Taxes

Adjustmentfor OMSR & 128 (64) 1,013 230mergerexpense***

AdjustedProvision for 1,439 657 4,508 2,890Income Taxes

Net Income 5,358 3,358 14,944 11,973

Adjustmentfor OMSR & 483 (239) 3,813 864merger expense

Adjusted Net 5,841 3,119 18,757 12,838Income

DilutedEarnings per 0.71 0.42 1.96 1.51Share

Adjustmentfor OMSR & 0.06 (0.03) 0.48 0.11merger expense

AdjustedDiluted $ 0.77 $ 0.39 $ 2.44 $ 1.62Earnings perShare

Return on 1.73% 1.28% 1.29% 1.16%Average Assets

Adjustmentfor OMSR & 0.16% -0.02% 0.33% 0.08%merger expense

AdjustedReturn on 1.89% 1.26% 1.61% 1.24%Average Assets

*valuation adjustment to the Company's mortgage servicing rights

**transactions costs related to the Edon acquisition

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

Investor Contact Information:Mark A. Klein Chairman, President and Chief Executive OfficerMark.Klein@YourStateBank.com

Anthony V. Cosentino Executive Vice President and Chief Financial OfficerTony.Cosentino@YourStateBank.com

View original content: http://www.prnewswire.com/news-releases/sb-financial-group-announces-fourth-quarter-2020-results-301217593.html

SOURCE SB Financial Group, Inc.