PR Newswire | Oct 28, 2021 04:16PM EDT

10/28 15:15 CDT

SB Financial Group Announces Third Quarter 2021 Results DEFIANCE, Ohio, Oct. 28, 2021

DEFIANCE, Ohio, Oct. 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 third quarter and nine months ended September 30, 2021.

Third quarter 2021 highlights over prior-year third quarter include:

* Net income of $4.1 million; diluted earnings per share ("EPS") of $0.58 or a 15.9 percent decrease * Adjusted net income, excluding the impact of the Originated Mortgage Servicing Rights ("OMSR") impairment of $250,000 was $3.9 million, with EPS of $0.56 * Mortgage origination volume of $152.6 million, reflects a decrease of $47.5 million, or 23.8 percent

Third quarter 2021 highlights over the linked quarter include:

* Net income up $342,000 with EPS increasing $0.06 or 11.5 percent * Loan growth excluding the impact of Paycheck Protection Program ("PPP") was up $20.6 million or 10 percent annualized

Nine months ended September 30, 2021, highlights over prior-year nine months include:

* Net income of $14.9 million and diluted EPS of $2.08, compared to $9.6 million, or $1.25 per share or a 66.4 percent increase * Adjusted net income, excluding the impact of OMSR activity and merger costs, was $12.7 million, down $227,000 or 1.8 percent with EPS of $1.76, up $0.09 or 5.4 percent

Third quarter 2021 trailing twelve-month highlights include:

* Loans, excluding the impact of PPP loan balances from both years of $10.2 and $82.1 million, respectively, increased $32.6 million, or 4.1 percent from the prior year * Deposits grew by $97.7 million, or 9.6 percent to $1.11 billion at quarter end * Mortgage origination volume of $642.3 million; servicing portfolio of $1.34 billion, which is up $48.4 million, or 3.7 percent

Highlights Three Months Ended Nine Months Ended

($ in thousands, except per share & ratios) Sep. 2021 Sep. 2020 % Change Sep. 2021 Sep. 2020 % Change

Operating revenue $ 16,673 $ 19,677 -15.3% $ 52,914 $ 47,873 10.5%

Interest income 11,033 10,807 2.1% 31,901 32,046 -0.5%

Interest expense 1,009 1,548 -34.8% 3,095 5,367 -42.3%

Net interest income 10,024 9,259 8.3% 28,806 26,679 8.0%

Provision for loan losses 300 1,800 -83.3% 1,050 3,700 -71.6%

Noninterest income 6,649 10,418 -36.2% 24,108 21,194 13.7%

Noninterest expense 11,256 11,335 -0.7% 33,241 32,403 2.6%

Net income 4,103 5,250 -21.8% 14,945 9,586 55.9%

Earnings per diluted share 0.58 0.69 -15.9% 2.08 1.25 66.4%

Return on average assets 1.23% 1.73% -28.9% 1.51% 1.12% 34.8%

Return on average equity 11.35% 15.01% -24.4% 13.84% 9.74% 42.1%

Non-GAAP Measures

Adjusted net income $ 3,907 $ 4,992 -21.7% $ 12,690 $ 12,917 -1.8%

Adjusted diluted EPS 0.56 0.65 -13.8% 1.76 1.67 5.4%

Adjusted return on average assets 1.17% 1.64% -28.7% 1.34% 1.41% -5.0%

Adjusted pre-tax, pre-provision income 5,169 8,016 -35.5% 17,569 18,444 -4.7%

"The third quarter saw significant PPP forgiveness, which drove our EPS up nearly 12 percent from the linked quarter" said Mark A. Klein, Chairman, President, and CEO of SB Financial. "Loan growth net of PPP was up compared to the prior year quarter and we have now had positive loan growth, excluding PPP, in each of the last two quarters."

RESULTS OF OPERATIONS

Consolidated Revenue

Total operating revenue, consisting of net interest income and noninterest income, was down 15.3 percent from the third quarter of 2020, but up 6.2 percent from the linked quarter.

* Net interest income was up from the year-ago quarter by 8.3 percent, and up 9.5 percent from the linked quarter. * Net interest margin on a fully taxable equivalent basis (FTE) was down from the year-ago quarter by 20 basis points and flat to the linked quarter, as cash balances continued to be higher than normal, which was offset by higher PPP forgiveness. * Noninterest income was down 36 percent from the year ago quarter as mortgage volume and gain on sale yields trended lower. This compares to a two percent increase from the linked quarter.

Mortgage Loan Business

Mortgage loan originations for the third quarter of 2021 were $152.6 million, down $47.5 million, or 23.8 percent, from the year-ago quarter. Total sales of originated loans were $123.1 million, down $43.1 million, or 25.9 percent, from the year-ago quarter. For the first nine months of 2021, SB Financial had total volume of $473.8 million, of which $236.2 million (50 percent) was new purchase/construction lending, $118.5 million was external refinance (25 percent), and the remaining $119.1 million (25 percent) was internal refinance.

Net mortgage banking revenue, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $4.1 million for the third quarter of 2021, compared to $7.9 million for the year-ago quarter. The mortgage servicing valuation adjustment for the third quarter of 2021 was a positive $248,000, compared to a positive adjustment of $326,000 for the third quarter of 2020. For the first nine months of 2021, the recapture of servicing rights was $2.9 million compared to impairment of $3.0 million for the prior year nine months. The aggregate servicing valuation impairment ended the quarter at $2.0 million. The servicing portfolio at September 30, 2021, was $1.34 billion, up $48.4 million, or 3.7 percent, from $1.29 billion at September 30, 2020.

Mr. Klein noted, "This quarter had relatively strong mortgage origination of $153 million, which while down 24 percent from the prior year, was down just seven percent from the linked quarter. We continue to be positive about our mortgage pipeline as construction and private client activity remain strong. We now have a total of 24 Mortgage Originators that represents an increase of four from the prior year which includes the addition of two originators in our Ft. Wayne growth market."

Mortgage Banking

($ in thousands) Sep. 2021 Jun. 2021 Mar. 2021 Dec. 2020 Sep. 2020

Mortgage originations $ 152,623 $ 164,883 $ 155,836 $ 168,997 $ 200,158

Mortgage sales 123,083 119,064 136,708 143,151 166,201

Mortgage servicing portfolio 1,341,439 1,323,804 1,304,097 1,299,698 1,293,037

Mortgage servicing rights 11,194 10,678 10,490 7,759 8,535

Mortgage servicing revenue

Loan servicing fees 850 830 859 857 813

OMSR amortization (943) (948) (1,187) (1,283) (1,308)

Net administrative fees (93) (118) (328) (426) (495)

OMSR valuation adjustment 248 (99) 2,706 (611) 326

Net loan servicing fees 155 (217) 2,378 (1,037) (169)

Gain on sale of mortgages 3,947 4,255 5,859 7,197 8,085

Mortgage banking revenue, net $ 4,102 $ 4,038 $ 8,237 $ 6,160 $ 7,916

Noninterest Income and Noninterest Expense

SB Financial's noninterest income for the quarter was down 36 percent from the prior year but up compared to the linked quarter by approximately two percent. The gain on sale mortgage loan yields were down 165 basis points from the prior year with the total dollars of sales down $43.1 million. Wealth management revenue was up over 14 percent from the prior year due to higher retention levels and growth in the equity sector. SB Financial's Title Agency provided revenue in the quarter of $508,000.

For the third quarter of 2021, noninterest expense of $11.3 million was flat to the prior year and up slightly to the linked quarter. For the first nine months, noninterest expense of $33.2 million was up $838,000 or 2.6 percent compared to the prior year first nine months. Operating leverage for the nine months of 2021 compared to the prior year was positive with revenue growth of 10.5 percent exceeding expense growth of 2.6 percent by 4.1 times.

Noninterest Income / Noninterest Expense

($ in thousands, except ratios) Sep. 2021 Jun. 2021 Mar. 2021 Dec. 2020 Sep. 2020

Noninterest Income (NII) $ 6,649 $ 6,537 $ 10,922 $ 8,902 $ 10,418

NII / Total Revenue 39.9% 41.7% 53.2% 49.0% 52.9%

NII / Average Assets 2.0% 2.0% 3.4% 2.9% 3.4%

Total Revenue Growth -15.3% -10.3% 91.9% 24.7% 36.4%

Noninterest Expense (NIE) $ 11,256 $ 11,076 $ 10,909 $ 10,684 $ 11,335

Efficiency Ratio 67.4% 70.5% 53.0% 58.8% 57.5%

NIE / Average Assets 3.4% 3.3% 3.4% 3.5% 3.7%

Net Noninterest Expense/Avg. Assets -1.4% -1.4% 0.0% -0.6% -0.3%

Total Expense Growth -0.7% -5.0% 16.0% 5.0% 19.3%

Operating Leverage -21.5 -2.1 5.7 4.9 1.9

Balance Sheet

Total assets as of September 30, 2021, were $1.33 billion, up $111.5 million, or 9.2 percent, from the year ago quarter due to higher liquidity levels and PPP activity. Total shareholders' equity as of September 30, 2021, was $144.3 million, up 2.1 percent from a year ago, and comprised 10.9 percent of total assets.

Total loans held for investment were $846.5 million at September 30, 2021, down $39.3 million, or 4.4 percent, from September 30, 2020. Excluding PPP activity from both years, loan balances were up $32.6 million, or 4.1 percent.

The investment portfolio of $254.1 million, including shares in the Federal Reserve Bank and Federal Home Loan Bank, represented 19.1 percent of assets at September 30, 2021, and was up 87.4 percent from the year-ago period. Deposit balances of $1.11 billion at September 30, 2021, increased by $97.6 million, or 9.6 percent, since September 30, 2020. Growth from the prior year included $58.7 million in checking and $38.9 million in savings and time deposit balances.

Mr. Klein continued, "Our lending teams were very busy in the quarter as we had solid loan growth for the second consecutive quarter and we assisted a number of clients in submitting PPP forgiveness applications. We also had two non-performing credits that paid off in the quarter, resulting in lower NPA balances and recapture of prior non-accrual interest. Our coverage of non-performing loans is now above 350 percent and we continue to have no loans on COVID deferral."

Loan Balances

($ in thousands, except ratios) Sep. 2021 Jun. 2021 Mar. 2021 Dec. 2020 Sep. 2020 Annual Growth

Commercial $ 138,085 $ 149,998 $ 179,157 $ 203,256 $ 216,667 $ (78,582)

% of Total 16.3% 17.6% 21.1% 23.3% 24.5% -36.3%

Commercial RE 387,858 389,287 385,403 370,984 371,947 15,911

% of Total 45.8% 45.8% 45.4% 42.5% 42.0% 4.3%

Agriculture 57,374 50,895 48,405 55,251 57,420 (46)

% of Total 6.8% 6.0% 5.7% 6.3% 6.5% -0.1%

Residential RE 207,571 203,294 176,998 182,076 178,393 29,178

% of Total 24.5% 23.9% 20.9% 20.9% 20.1% 16.4%

Consumer & Other 55,660 57,039 58,213 61,156 61,423 (5,763)

% of Total 6.6% 6.7% 6.9% 7.0% 6.9% -9.4%

Total Loans $ 846,548 $ 850,513 $ 848,176 $ 872,723 $ 885,850 $ (39,302)

Total Growth Percentage -4.4%

Deposit Balances

($ in thousands, except ratios) Sep. 2021 Jun. 2021 Mar. 2021 Dec. 2020 Sep. 2020 Annual Growth

Non-Int DDA $ 258,857 $ 240,572 $ 273,026 $ 251,649 $ 225,003 $ 33,854

% of Total 23.3% 22.0% 24.4% 24.0% 22.2% 15.0%

Interest DDA 189,130 187,023 191,593 176,785 164,248 24,882

% of Total 17.0% 17.1% 17.1% 16.9% 16.2% 15.1%

Savings 246,414 235,231 218,260 174,864 169,474 76,940

% of Total 22.2% 21.6% 19.5% 16.7% 16.7% 45.4%

Money Market 258,741 255,512 249,088 216,164 204,862 53,879

% of Total 23.3% 23.4% 22.2% 20.6% 20.2% 26.3%

Time Deposits 158,518 172,696 188,229 229,549 250,428 (91,910)

% of Total 14.3% 15.8% 16.8% 21.9% 24.7% -36.7%

Total Deposits $ 1,111,660 $ 1,091,034 $ 1,120,196 $ 1,049,011 $ 1,014,015 $ 97,645

Total Growth Percentage 9.6%

Asset Quality

SB Financial reported nonperforming assets of $5.6 million as of September 30, 2021, down $1.7 million or 23.1 percent from the year-ago quarter. The Company took $206,000 in net recoveries in the quarter. The coverage of problem loans by the loan loss allowance was at 351 percent at September 30, 2021, up from 164 percent at September 30, 2020.

Nonperforming Assets Annual Change($ in thousands, except ratios) Sep. 2021 Jun. 2021 Mar. 2021 Dec. 2020 Sep. 2020

Commercial & Agriculture $ 144 $ 375 $ 615 $ 902 $ 1,140 $ (996)

% of Total Com./Ag. loans 0.07% 0.19% 0.27% 0.35% 0.42% -87.4%

Commercial RE 566 1,026 2,402 2,412 2,475 (1,909)

% of Total CRE loans 0.15% 0.26% 0.62% 0.65% 0.67% -77.1%

Residential RE 2,056 1,751 2,138 2,704 2,481 (425)

% of Total Res. RE loans 0.99% 0.86% 1.21% 1.49% 1.39% -17.1%

Consumer & Other 422 463 480 408 313 109

% of Total Con./Oth. loans 0.76% 0.81% 0.82% 0.67% 0.51% 34.8%

Total Nonaccruing Loans 3,188 3,615 5,635 6,426 6,409 (3,221)

% of Total loans 0.38% 0.43% 0.66% 0.74% 0.72% -50.3%

Accruing Restructured Loans 805 758 794 810 789 16

Total Change (%) 2.0%

Total Nonaccruing & Restructured Loans 3,993 4,373 6,429 7,236 7,198 (3,205)

% of Total loans 0.47% 0.51% 0.76% 0.83% 0.81% -44.5%

Foreclosed Assets 1,601 1,603 43 23 76 1,525

Total Change (%) 2006.6%

Total Nonperforming Assets $ 5,594 $ 5,976 $ 6,472 $ 7,259 $ 7,274 $ (1,680)

% of Total assets 0.42% 0.46% 0.49% 0.58% 0.60% -23.1%

Webcast and Conference Call

The Company will hold a related conference call and webcast on October 29, 2021, 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 24 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 2021, SB Financial was named to the Keefe, Bruyette & Woods, Inc. "Bank Honor Roll" of superior performers as revealed in EPS increases for 10 consecutive years. The honor roll review determined that just 16 banks, including SB Financial, or 4% of the nearly 400 banks screened, qualified for inclusion.

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.

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

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

SB FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS - (Unaudited)

September June March December September

($ in thousands) 2021 2021 2021 2020 2020

ASSETS

Cash and due from banks $ 138,015 $ 154,993 $ 206,036 $ 140,690 $ 94,641

Interest bearing time deposits 2,651 2,906 3,562 5,823 8,956

Available-for-sale securities 248,815 211,756 177,918 149,406 130,315

Loans held for sale 10,335 8,731 8,689 7,234 13,943

Loans, net of unearned income 846,548 850,513 848,176 872,723 885,850

Allowance for loan losses (13,812) (13,306) (13,326) (12,574) (11,793)

Premises and equipment, net 23,874 24,343 23,233 23,557 23,785

Federal Reserve and FHLB Stock, at cost 5,303 5,303 5,303 5,303 5,303

Foreclosed assets held for sale, net 1,601 1,603 43 23 76

Interest receivable 2,954 3,000 3,371 3,799 4,159

Goodwill 22,091 22,091 22,091 22,091 22,091

Cash value of life insurance 17,795 17,721 17,651 17,530 17,453

Mortgage servicing rights 11,194 10,678 10,490 7,759 8,535

Other assets 12,361 12,175 12,630 14,475 14,927

Total assets $ 1,329,725 $ 1,312,507 $ 1,325,867 $ 1,257,839 $ 1,218,241

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits

Non interest bearing demand $ 258,857 $ 240,572 $ 273,026 $ 251,649 $ 225,003

Interest bearing demand 189,130 187,023 191,593 176,785 164,248

Savings 246,414 235,231 218,260 174,864 169,474

Money market 258,741 255,512 249,088 216,164 204,862

Time deposits 158,518 172,696 188,229 229,549 250,428

Total deposits 1,111,660 1,091,034 1,120,196 1,049,011 1,014,015

Short-term borrowings 20,771 25,096 24,321 20,189 20,710

Federal Home Loan Bank advances 5,500 5,500 8,000 8,000 8,000

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

Subordinated debt net of issuance costs 19,534 19,522 - - -

Interest payable 576 417 489 616 946

Other liabilities 17,082 16,611 18,585 26,790 22,913

Total liabilities 1,185,433 1,168,490 1,181,901 1,114,916 1,076,894

Shareholders' Equity

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

Additional paid-in capital 14,875 14,906 14,755 14,845 14,782

Retained earnings 97,183 93,851 90,883 84,578 80,012

Accumulated other comprehensive income (loss) (699) 499 (457) 2,210 2,221

Treasury stock (21,530) (19,702) (15,678) (13,173) (10,131)

Total shareholders' equity 144,292 144,017 143,966 142,923 141,347

Total liabilities and shareholders' equity $ 1,329,725 $ 1,312,507 $ 1,325,867 $ 1,257,839 $ 1,218,241

SB FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)

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

September June March December September September September

Interest income 2021 2021 2021 2020 2020 2021 2020

Loans

Taxable $ 9,948 $ 9,196 $ 9,926 $ 9,816 $ 10,179 $ 29,070 $ 29,919

Tax exempt 52 47 48 54 47 147 185

Securities

Taxable 939 835 643 632 494 2,417 1,696

Tax exempt 94 85 88 87 87 267 246

Total interest income 11,033 10,163 10,705 10,589 10,807 31,901 32,046

Interest expense

Deposits 709 818 962 1,218 1,423 2,489 4,852

Repurchase agreements & other 12 12 11 10 12 35 60

Federal Home Loan Bank advances 40 51 56 58 59 147 251

Trust preferred securities 49 50 51 52 54 150 204

Subordinated debt 199 75 - - - 274 -

Total interest expense 1,009 1,006 1,080 1,338 1,548 3,095 5,367

Net interest income 10,024 9,157 9,625 9,251 9,259 28,806 26,679

Provision for loan losses 300 - 750 800 1,800 1,050 3,700

Net interest income after provision

for loan losses 9,724 9,157 8,875 8,451 7,459 27,756 22,979

Noninterest income

Wealth management fees 959 955 912 863 839 2,826 2,382

Customer service fees 812 820 758 728 730 2,390 2,079

Gain on sale of mtg. loans & OMSR 3,947 4,255 5,859 7,197 8,085 14,061 18,153

Mortgage loan servicing fees, net 155 (217) 2,378 (1,037) (169) 2,316 (4,101)

Gain on sale of non-mortgage loans 52 45 17 123 119 114 330

Title insurance revenue 508 532 521 522 517 1,561 1,391

Gain (loss) on sale of assets 1 2 (2) 181 (52) 1 (178)

Other 215 145 479 325 349 839 1,138

Total noninterest income 6,649 6,537 10,922 8,902 10,418 24,108 21,194

Noninterest expense

Salaries and employee benefits 6,689 6,881 6,620 6,556 6,995 20,190 18,841

Net occupancy expense 714 748 740 782 736 2,202 2,109

Equipment expense 872 778 732 818 888 2,382 2,368

Data processing fees 671 653 534 633 586 1,858 2,422

Professional fees 817 574 764 631 695 2,155 2,676

Marketing expense 201 220 135 172 137 556 486

Telephone and communication expense 140 139 154 156 142 433 379

Postage and delivery expense 100 97 111 108 96 308 307

State, local and other taxes 286 278 323 299 331 887 847

Employee expense 186 161 153 103 155 500 432

Other expenses 580 547 643 426 574 1,770 1,536

Total noninterest expense 11,256 11,076 10,909 10,684 11,335 33,241 32,403

Income before income tax expense 5,117 4,618 8,888 6,669 6,542 18,623 11,770

Income tax expense 1,014 857 1,807 1,311 1,292 3,678 2,184

Net income $ 4,103 $ 3,761 $ 7,081 $ 5,358 $ 5,250 $ 14,945 $ 9,586

Common share data:

Basic earnings per common share $ 0.59 $ 0.53 $ 0.97 $ 0.71 $ 0.69 $ 2.09 $ 1.25

Diluted earnings per common share $ 0.58 $ 0.52 $ 0.97 $ 0.71 $ 0.69 $ 2.08 $ 1.25

Average shares outstanding (in thousands):

Basic: 6,966 7,148 7,317 7,487 7,607 7,142 7,700

Diluted: 7,017 7,200 7,335 7,487 7,607 7,167 7,700

SB FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)

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

September June March December September September September

SUMMARY OF OPERATIONS 2021 2021 2021 2020 2020 2021 2020

Net interest income $ 10,024 $ 9,157 $ 9,625 $ 9,251 $ 9,259 $ 28,806 $ 26,679

Tax-equivalent adjustment 39 35 36 37 36 110 115

Tax-equivalent net interest income 10,063 9,192 9,661 9,288 9,295 28,916 26,794

Provision for loan loss 300 - 750 800 1,800 1,050 3,700

Noninterest income 6,649 6,537 10,922 8,902 10,418 24,108 21,194

Total operating revenue 16,673 15,694 20,547 18,153 19,677 52,914 47,873

Noninterest expense 11,256 11,076 10,909 10,684 11,335 33,241 32,403

Pre-tax pre-provision income 5,417 4,618 9,638 7,469 8,342 19,673 15,470

Pretax income 5,117 4,618 8,888 6,669 6,542 18,623 11,770

Net income 4,103 3,761 7,081 5,358 5,250 14,945 9,586

PER SHARE INFORMATION:

Basic earnings per share (EPS) 0.59 0.53 0.97 0.71 0.69 2.09 1.25

Diluted earnings per share 0.58 0.52 0.97 0.71 0.69 2.08 1.25

Common dividends 0.110 0.110 0.105 0.105 0.100 0.325 0.295

Book value per common share 20.83 20.50 19.88 19.39 18.73 20.83 18.73

Tangible book value per common share (TBV) 17.55 17.27 16.74 16.30 15.72 17.55 15.72

Market price per common share 18.18 18.50 18.26 18.28 13.49 18.18 13.49

Market price to TBV 103.6% 107.2% 109.1% 112.1% 85.8% 103.6% 85.8%

Market price to trailing 12 month EPS 6.5 6.4 6.4 9.3 8.0 6.5 8.0

PERFORMANCE RATIOS:

Return on average assets (ROAA) 1.23% 1.13% 2.21% 1.73% 1.73% 1.51% 1.12%

Pre-tax pre-provision ROAA 1.63% 1.39% 3.01% 2.41% 2.74% 2.12% 1.81%

Return on average equity 11.35% 10.42% 19.78% 15.05% 15.01% 13.84% 9.74%

Return on average tangible equity 13.47% 12.37% 23.52% 17.91% 17.93% 16.43% 11.48%

Efficiency ratio 67.40% 70.46% 53.01% 58.76% 57.48% 62.72% 67.63%

Earning asset yield 3.52% 3.25% 3.56% 3.66% 3.96% 3.44% 4.08%

Cost of interest bearing liabilities 0.44% 0.44% 0.50% 0.64% 0.75% 0.46% 0.91%

Net interest margin 3.20% 2.93% 3.20% 3.20% 3.39% 3.11% 3.39%

Tax equivalent effect 0.01% 0.01% 0.01% 0.01% 0.02% 0.01% 0.02%

Net interest margin, tax equivalent 3.21% 2.94% 3.21% 3.21% 3.41% 3.12% 3.41%

Non interest income/Average assets 1.99% 1.97% 3.41% 2.87% 3.42% 2.44% 2.48%

Non interest expense/Average assets 3.38% 3.33% 3.40% 3.45% 3.73% 3.37% 3.79%

Net noninterest expense/Average assets -1.38% -1.37% 0.00% -0.58% -0.31% -0.93% -1.31%

ASSET QUALITY RATIOS:

Gross charge-offs 24 26 52 57 32 102 686

Recoveries 230 6 54 39 11 290 24

Net charge-offs (206) 20 (2) 18 21 (188) 662

Nonaccruing loans/Total loans 0.38% 0.43% 0.66% 0.74% 0.72% 0.38% 0.72%

Nonperforming loans/Total loans 0.47% 0.51% 0.76% 0.83% 0.81% 0.47% 0.81%

Nonperforming assets/Loans & OREO 0.66% 0.70% 0.76% 0.83% 0.82% 0.66% 0.82%

Nonperforming assets/Total assets 0.42% 0.46% 0.49% 0.58% 0.60% 0.42% 0.60%

Allowance for loan loss/Nonperforming loans 345.91% 304.28% 207.28% 173.77% 163.84% 345.91% 163.84%

Allowance for loan loss/Total loans 1.63% 1.56% 1.57% 1.44% 1.33% 1.63% 1.33%

Net loan charge-offs/Average loans (ann.) (0.10%) 0.01% (0.00%) 0.01% 0.01% (0.03%) 0.10%

Loan loss provision/Net charge-offs (145.63%) 0.00% (37500.00%) 4444.44% 8571.43% (558.51%) 558.91%

CAPITAL & LIQUIDITY RATIOS:

Loans/ Deposits 76.15% 77.95% 75.72% 83.19% 87.36% 76.15% 87.36%

Equity/ Assets 10.85% 10.97% 10.86% 11.36% 11.60% 10.85% 11.60%

Tangible equity/Tangible assets 9.30% 9.41% 9.30% 9.73% 9.92% 9.30% 9.92%

Common equity tier 1 ratio (Bank) 13.23% 13.11% 13.08% 12.91% 12.71% 13.51% 12.71%

END OF PERIOD BALANCES

Total assets 1,329,725 1,312,507 1,325,867 1,257,839 1,218,241 1,329,725 1,218,241

Total loans 846,548 850,513 848,176 872,723 885,850 846,548 885,850

Deposits 1,111,660 1,091,034 1,120,196 1,049,011 1,014,015 1,111,660 1,014,015

Stockholders equity 144,292 144,017 143,966 142,923 141,347 144,292 141,347

Goodwill and intangibles 22,692 22,710 22,728 22,745 22,813 22,692 22,813

Tangible equity 121,600 121,307 121,238 120,178 118,534 121,600 118,534

Mortgage servicing portfolio 1,341,439 1,323,804 1,304,097 1,299,698 1,293,037 1,341,439 1,293,037

Wealth/Brokerage assets under care 588,319 600,904 576,503 558,409 522,360 588,319 522,360

Total assets under care 3,259,483 3,237,215 3,206,467 3,115,946 3,033,638 3,259,483 3,033,638

Full-time equivalent employees 264 256 246 244 251 264 251

Period end common shares outstanding 6,927 7,026 7,242 7,372 7,545 6,927 7,545

Market capitalization (all) 125,935 129,984 132,239 134,760 101,782 125,935 101,782

AVERAGE BALANCES

Total assets 1,333,369 1,329,348 1,281,635 1,238,790 1,216,843 1,315,521 1,141,008

Total earning assets 1,253,722 1,251,213 1,203,284 1,156,718 1,090,386 1,236,227 1,047,846

Total loans 856,486 853,794 862,898 893,244 907,483 857,703 879,536

Deposits 1,109,491 1,115,186 1,073,641 1,031,649 1,007,679 1,099,892 936,805

Stockholders equity 144,565 144,315 143,167 142,418 139,908 144,020 131,156

Goodwill and intangibles 22,701 22,718 22,736 22,754 22,787 22,718 19,813

Tangible equity 121,864 121,597 120,431 119,664 117,121 121,302 111,343

Average basic shares outstanding 6,966 7,148 7,317 7,487 7,607 7,142 7,700

Average diluted shares outstanding 7,017 7,200 7,335 7,487 7,607 7,167 7,700

SB FINANCIAL GROUP, INC.

Rate Volume Analysis - (Unaudited)

At and for the Three and Nine Months Ended September 30, 2021 and 2020

($ in thousands) Three Months Ended Sep. 30, 2021 Three Months Ended Sep. 30, 2020

Average Average Average Average

Assets Balance Interest Rate Balance Interest Rate

Taxable securities/cash $ 388,800 $ 939 0.97% $ 176,821 $ 494 1.12%

Nontaxable securities 8,436 94 4.46% 6,082 87 5.72%

Loans, net 856,486 10,000 4.67% 907,483 10,226 4.51%

Total earning assets 1,253,722 11,033 3.52% 1,090,386 10,807 3.96%

Cash and due from banks 6,975 53,532

Allowance for loan losses (13,475) (10,448)

Premises and equipment 25,820 23,968

Other assets 60,327 59,405

Total assets $ 1,333,369 $ 1,216,843

Liabilities

Savings, MMDA and interest bearing demand $ 695,801 $ 441 0.25% $ 531,913 $ 690 0.52%

Time deposits 164,432 268 0.65% 254,381 733 1.15%

Repurchase agreements & other 24,672 12 0.19% 23,811 12 0.20%

Advances from Federal Home Loan Bank 5,500 40 2.91% 8,272 59 2.85%

Trust preferred securities 10,310 49 1.90% 10,310 54 2.10%

Subordinated debt 19,528 199 4.08% - - 0.00%

Total interest bearing liabilities 920,243 1,009 0.44% 828,687 1,548 0.75%

Non interest bearing demand 249,258 - 221,385 -

Total funding 1,169,501 0.35% 1,050,072 0.59%

Other liabilities 19,303 26,863

Total liabilities 1,188,804 1,076,935

Equity 144,565 139,908

Total liabilities and equity $ 1,333,369 $ 1,216,843

Net interest income $ 10,024 $ 9,259

Net interest income as a percent of average interest-earning assets - GAAP 3.20% 3.40% measure

Net interest income as a percent of average interest-earning assets - non GAAP 3.21% 3.41%

- Computed on a fully tax equivalent (FTE) basis

Nine Months Ended Sep. 30, 2021 Nine Months Ended Sep. 30, 2020

Average Average Average Average

Assets Balance Interest Rate Balance Interest Rate

Taxable securities/cash $ 370,743 $ 2,417 0.87% $ 161,947 $ 1,696 1.40%

Nontaxable securities 7,781 267 4.58% 6,363 246 5.15%

Loans, net 857,703 29,217 4.54% 879,536 30,104 4.56%

Total earning assets 1,236,227 31,901 3.44% 1,047,846 32,046 4.08%

Cash and due from banks 7,554 28,040

Allowance for loan losses (13,297) (9,560)

Premises and equipment 24,442 23,855

Other assets 60,595 50,827

Total assets $ 1,315,521 $ 1,141,008

Liabilities

Savings, MMDA and interest bearing demand $ 661,433 $ 1,413 0.28% $ 483,156 $ 2,550 0.70%

Time deposits 184,668 1,076 0.78% 253,398 2,302 1.21%

Repurchase agreements & Other 24,139 35 0.19% 21,856 60 0.37%

Advances from Federal Home Loan Bank 6,846 147 2.86% 16,263 251 2.06%

Trust preferred securities 10,310 150 1.94% 10,310 204 2.64%

Subordinated debt 9,811 274 3.72% - - 0.00%

Total interest bearing liabilities 897,207 3,095 0.46% 784,983 5,367 0.91%

Non interest bearing demand 253,791 0.36% 200,251 0.73%

Total funding 1,150,998 985,234

Other liabilities 20,503 24,618

Total liabilities 1,171,501 1,009,852

Equity 144,020 131,156

Total liabilities and equity $ 1,315,521 $ 1,141,008

Net interest income $ 28,806 $ 26,679

Net interest income as a percent of average interest-earning assets - GAAP 3.11% 3.39% measure

Net interest income as a percent of average interest-earning assets - non GAAP 3.12% 3.41%

- Computed on a fully tax equivalent (FTE) basis

Non-GAAP reconciliation Three Months Ended Nine Months Ended

($ in thousands, except per share & ratios) Sep. 30, 2021 Sep. 30, 2020 Sep. 30, 2021 Sep. 30, 2020

Total Operating Revenue $ 16,673 $ 19,677 $ 52,914 $ 47,873

Adjustment to (deduct)/add OMSR recapture/impairment* (248) (326) (2,854) 2,974

Adjusted Total Operating Revenue 16,425 19,351 50,060 50,847

Total Operating Expense $ 11,256 $ 11,335 $ 33,241 $ 32,403

Adjustment for merger expenses** - - - (1,241)

Adjusted Total Operating Expense 11,256 11,335 33,241 31,162

Income before Income Taxes 5,117 6,542 18,623 11,770

Adjustment for OMSR & merger expenses (248) (326) (2,854) 4,215

Adjusted Income before Income Taxes 4,869 6,216 15,769 15,985

Provision for Income Taxes 1,014 1,292 3,678 2,184

Adjustment for OMSR & merger expenses*** (52) (68) (599) 885

Adjusted Provision for Income Taxes 962 1,224 3,079 3,070

Net Income 4,103 5,250 14,945 9,586

Adjustment for OMSR & merger expenses (196) (258) (2,255) 3,330

Adjusted Net Income 3,907 4,992 12,690 12,917

Diluted Earnings per Share 0.58 0.69 2.08 1.25

Adjustment for OMSR & merger expenses (0.03) (0.04) (0.31) 0.42

Adjusted Diluted Earnings per Share $ 0.56 $ 0.65 $ 1.77 $ 1.67

Return on Average Assets 1.23% 1.73% 1.51% 1.12%

Adjustment for OMSR & merger expenses -0.06% -0.08% -0.17% 0.29%

Adjusted Return on Average Assets 1.17% 1.64% 1.34% 1.41%

*valuation adjustment to the Company's mortgage servicing rights

**transaction costs related to the Edon acquisition

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

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SOURCE SB Financial Group, Inc.