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 fourth quarter and twelve months ended December 31, 2022.

Fourth quarter 2022 highlights:

• Net income of $3.5 million increased six percent compared to the prior year with diluted earnings per share (“EPS”) of $0.50
• Noninterest expense of $10.3 million declined 11.2 percent from the prior year
• Loan growth of $36.8 million from the linked quarter, or 15.9 percent annualized
• Solid asset quality with nonperforming assets at 38 basis points

Twelve months ended December 31, 2022, highlights over the prior-year include:

• Net income of $12.5 million and diluted EPS of $1.77, compared to $18.3 million, or $2.56 per share or a 30.9 percent decrease
• Loans, increased $141.4 million, or 17.2 percent from the prior year, excluding Paycheck Protection Program (“PPP”) loans,
• Deposits decreased by $26.4 million, or 2.4 percent to $1.09 billion
• Mortgage origination volume of $312.6 million and a servicing portfolio of $1.35 billion
• Net recoveries on loans for the year of $13,000

Highlights	Three Months Ended									Twelve Months Ended
($ in thousands, except per share & ratios)	Dec. 2022			Dec. 2021			% Change			Dec. 2022			Dec. 2021			% Change
Operating revenue	$	14,613		$	15,667		-6.7	%		$	57,630		$	68,581		-16.0	%
Interest income		12,937			10,003		29.3	%			44,569			41,904		6.4	%
Interest expense		2,037			925		120.2	%			5,170			4,020		28.6	%
Net interest income		10,900			9,078		20.1	%			39,399			37,884		4.0	%
Provision for loan losses		-			-		0.0	%			-			1,050		-100.0	%
Noninterest income		3,713			6,589		-43.6	%			18,231			30,697		-40.6	%
Noninterest expense		10,269			11,567		-11.2	%			42,314			44,808		-5.6	%
Net income		3,533			3,332		6.0	%			12,521			18,277		-31.5	%
Earnings per diluted share		0.50			0.49		2.0	%			1.77			2.56		-30.9	%
Return on average assets		1.08	%		0.99	%	9.1	%			0.95	%		1.38	%	-31.2	%
Return on average equity		12.17	%		9.21	%	32.1	%			9.86	%		12.67	%	-22.2	%

“In the fourth quarter of 2022 loan growth was strong with balances growing $37 million, or 4.0 percent from the third quarter of 2022,” said Mark A. Klein, Chairman, President, and CEO of SB Financial. “And when we compare our growth to the prior year, organic loan growth was up $139.4 million or 16.9 percent. We continued to realize margin expansion as the pace of rate increases of our asset sensitive balance sheet provided greater expansion of interest income than the increased cost of funding, even as deposits repriced.”

RESULTS OF OPERATIONS

Consolidated Revenue

Total operating revenue, consisting of net interest income and noninterest income, was up 1.0% from the linked quarter but down 6.7 percent from the fourth quarter of 2021. Operating revenue was negatively impacted by the decline in mortgage banking revenue.

• Net interest income was up 4.5 percent from the linked quarter and up 20.1 percent from the year ago quarter.
• Net interest margin on a fully taxable equivalent basis (FTE) was up from both the linked and year-ago quarters by 15 and 72 basis points, respectively, primarily from the shift in mix of our balance sheet with cash and securities reallocated to the loan portfolio. Net of PPP, net interest margin was higher by 86 basis points compared to the prior year.
• Noninterest income was down 8 percent from the linked quarter and 44 percent from the year ago quarter, respectively, due to lower mortgage volume and OMSR recapture.

Mortgage Loan Business

Mortgage loan originations for the fourth quarter of 2022 were $51.2 million, down $75.4 million, or 59.6 percent, from the year-ago quarter; likewise, total sales of originated loans were $23.6 million, down $87.0 million, or 78.7 percent. For the full year of 2022, SB Financial had total volume of $312.6 million, of which $250.2 million (80 percent) was new purchase/construction lending, $41.0 million was external refinance (13 percent), and the remaining $21.4 million (7 percent) was internal refinance.

Net mortgage banking revenue, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $1.2 million for the fourth quarter of 2022, compared to $3.8 million for the year-ago quarter. The mortgage servicing valuation adjustment for the fourth quarter of 2022 was a positive $0.1 million, compared to a positive adjustment of $0.6 million for the fourth quarter of 2021. For all of 2022, the recapture of servicing rights was $1.3 million compared to a recapture of $3.4 million for the prior year. The aggregate servicing valuation impairment was $0.2 million at the end of the fourth quarter of 2022. The servicing portfolio at December 31, 2022, was $1.35 billion, which was flat to the prior year.

Mr. Klein noted, “Refinance activity for 2022 declined significantly to just 20 percent compared to 49 percent in the prior year. Our continued success in this key business line will hinge not only on the overall rate environment but our ability to attract high-producers in our expansion markets as well.”

Mortgage Banking
($ in thousands)	Dec. 2022			Sep. 2022			Jun. 2022			Mar. 2022			Dec. 2021				Annual Growth
Mortgage originations	$	51,219		$	68,557		$	95,454		$	97,394		$	126,611			$	(75,392	)
Mortgage sales		23,590			39,176			49,915			72,154			110,543				(86,953	)
Mortgage servicing portfolio		1,352,016			1,362,666			1,369,732			1,375,554			1,362,962				(10,946	)
Mortgage servicing rights		13,503			13,473			13,408			13,135			12,034				1,469
Mortgage servicing revenue
Loan servicing fees		851			858			863			861			850				1
OMSR amortization		(310	)		(396	)		(496	)		(547	)		(807	)			497
Net administrative fees		541			462			367			314			43				498
OMSR valuation adjustment		86			65			239			890			581				(495	)
Net loan servicing fees		627			527			606			1,204			624				3
Gain on sale of mortgages		550			876			1,196			1,676			3,194				(2,644	)
Mortgage banking revenue, net	$	1,177		$	1,403		$	1,802		$	2,880		$	3,818			$	(2,641	)

Noninterest Income and Noninterest Expense

Noninterest income declined for the fourth quarter, from the linked quarter and year over year. Gain-on-sale yields on mortgage loans were down significantly from the prior year and the total sales were down nearly $87 million. Wealth management revenue was down from both the prior year and linked quarter due to market declines. New sales in the wealth division were insufficient to overcome closed accounts and client distributions during 2022.

For the fourth quarter of 2022, noninterest expense of $10.3 million was down $1.3 million or 11.2 percent compared to the prior year quarter. We continue to have positive variance from our commission-based originators and medical costs eased a bit in the quarter. We continue to make headcount reductions and staffing realignment as retail transactions declined in several markets due to the continuing level of adoption of digital banking initiatives.

Mr. Klein stated, “We are committed to reducing our operating expenses to reflect not only the reduced revenue in residential mortgage lending but also, as economic expansion and contraction, dictates. Inflation concerns remain top of mind as we work to ensure our growth strategies deliver positive operating leverage.”

Noninterest Income / Noninterest Expense
($ in thousands, except ratios)	Dec. 2022			Sep. 2022			Jun. 2022			Mar. 2022			Dec. 2021				Annual Growth
Noninterest Income (NII)	$	3,713		$	4,043		$	4,673		$	5,802		$	6,589			$	(2,876	)
NII / Total Revenue		25.4	%		27.9	%		32.8	%		40.6	%		42.1	%			-16.7	%
NII / Average Assets		1.1	%		1.2	%		1.4	%		1.7	%		2.0	%			-0.9	%
Total Revenue Growth		-6.7	%		-13.2	%		-9.1	%		-46.9	%		-13.7	%			7.0	%
Noninterest Expense (NIE)	$	10,269		$	10,384		$	10,802		$	10,859		$	11,567			$	(1,298	)
Efficiency Ratio		70.2	%		71.6	%		75.6	%		75.9	%		73.7	%			-3.5	%
NIE / Average Assets		3.1	%		3.2	%		3.3	%		3.2	%		3.5	%			-0.4	%
Net Noninterest Expense/Avg. Assets		-2.0	%		-2.0	%		-1.9	%		-1.5	%		-1.5	%			-0.5	%
Total Expense Growth		-11.2	%		-7.7	%		-2.5	%		-0.5	%		8.3	%			-19.5	%

Balance Sheet

Total assets as of December 31, 2022, were $1.3 billion, or up 0.4 percent from the year ago quarter primarily due to the increase in the loan portfolio and partially offset by declines in cash and investments. Total shareholders’ equity as of December 31, 2022, was $118.4 million, down 18.3 percent from a year ago due to the valuation adjustment on the Company’s bond portfolio, which has regressed by $30.3 million. Excluding the impact of the valuation adjustment, equity increased $7.5 million or 5.2 percent. SB Financial bought back 317,000 shares of our stock during 2022 at an average price of $18.43 or 124.5 percent of tangible book value per share.  

The investment portfolio of $238.8 million, represented 17.9 percent of assets at December 31, 2022, and was down $24.5 million or 9.3 percent from the year-ago period.

Total loans held for investment were $962.1 million at December 31, 2022, up $139.4 million, or 16.9 percent, from December 31, 2021.

Deposit balances of $1.09 billion at December 31, 2022, decreased by $30 million, or 2.4 percent, since December 31, 2021. Deposits have stabilized since mid-year as we have been aggressively pursuing deposit clients throughout our footprint; albeit at a higher marginal cost.  

Mr. Klein continued, “Clearly, another quarter of strong loan growth was achieved even as rates continued to climb higher; loan yields are up by 78 basis points adjusted for PPP. Pressure to fund that growth increased with deposit balances rising at a slower pace; our average cost of deposits increased 30 basis points from the prior year quarter. Asset quality was stellar again this year, as we recorded net recoveries for all of 2022; our second consecutive year of this achievement.”

Loan Balances
($ in thousands, except ratios)	Dec. 2022			Sep. 2022			Jun. 2022			Mar. 2022			Dec. 2021			Annual Growth
Commercial	$	128,534		$	128,565		$	127,711		$	124,857		$	122,373		$	6,161
% of Total		13.4	%		13.9	%		14.3	%		14.7	%		14.9	%		5.0	%
Commercial RE		412,636			404,710			404,260			400,101			381,387			31,249
% of Total		42.9	%		43.7	%		45.1	%		47.0	%		46.4	%		8.2	%
Agriculture		64,388			60,522			60,586			55,741			57,473			6,915
% of Total		6.7	%		6.5	%		6.8	%		6.6	%		7.0	%		12.0	%
Residential RE		291,512			267,135			241,614			214,015			206,324			85,188
% of Total		30.3	%		28.9	%		27.0	%		25.2	%		25.1	%		41.3	%
Consumer & Other		65,005			64,317			61,440			55,957			55,157			9,848
% of Total		6.8	%		7.0	%		6.9	%		6.6	%		6.7	%		17.9	%
Total Loans	$	962,075		$	925,249		$	895,611		$	850,671		$	822,714		$	139,361
Total Growth Percentage																	16.9	%
Deposit Balances
($ in thousands, except ratios)	Dec. 2022			Sep. 2022			Jun. 2022			Mar. 2022			Dec. 2021			Annual Growth
Non-Int DDA	$	256,799		$	250,791		$	239,676		$	252,273		$	247,044		$	9,755
% of Total		23.6	%		23.1	%		22.4	%		22.2	%		22.2	%		3.9	%
Interest DDA		191,719			199,523			198,286			211,152			195,464			(3,745	)
% of Total		17.6	%		18.4	%		18.5	%		18.6	%		17.6	%		-1.9	%
Savings		191,272			201,402			215,285			236,394			237,571			(46,299	)
% of Total		17.6	%		18.5	%		20.1	%		20.8	%		21.3	%		-19.5	%
Money Market		255,995			258,975			276,274			289,699			276,462			(20,467	)
% of Total		23.6	%		23.8	%		25.8	%		25.5	%		24.8	%		-7.4	%
Time Deposits		190,880			175,202			142,258			148,553			156,504			34,376
% of Total		17.6	%		16.1	%		13.3	%		13.1	%		14.1	%		22.0	%
Total Deposits	$	1,086,665		$	1,085,893		$	1,071,779		$	1,138,071		$	1,113,045		$	(26,380	)
Total Growth Percentage																	-2.4	%

Asset Quality

SB Financial reported nonperforming assets of $5.1 million as of December 31, 2022, down $1.4 million or 21.1 percent from the year-ago quarter. The Company had small charge-offs in the quarter, but for the full year, the Company had $13,000 in net recoveries. The coverage ratio of problem loans to the loan loss allowance was at 318.6 percent at December 31, 2022.

Nonperforming Assets
($ in thousands, except ratios)	Dec. 2022			Sep. 2022			Jun. 2022			Mar. 2022			Dec. 2021			Annual Change
Commercial & Agriculture	$	114		$	114		$	140		$	142		$	143		$	(29	)
% of Total Com./Ag. loans		0.06	%		0.06	%		0.07	%		0.08	%		0.08	%		-20.3	%
Commercial RE		210			223			359			544			554			(344	)
% of Total CRE loans		0.05	%		0.06	%		0.09	%		0.14	%		0.15	%		-62.1	%
Residential RE		2,967			3,129			3,176			3,198			2,484			483
% of Total Res. RE loans		1.02	%		1.17	%		1.31	%		1.49	%		1.20	%		19.4	%
Consumer & Other		391			280			323			409			471			(80	)
% of Total Con./Oth. loans		0.60	%		0.44	%		0.53	%		0.73	%		0.85	%		-17.0	%
Total Nonaccruing Loans		3,682			3,746			3,998			4,293			3,652			30
% of Total loans		0.38	%		0.40	%		0.45	%		0.50	%		0.44	%		0.8	%
Accruing Restructured Loans		654			668			683			762			725			(71	)
Total Change (%)																	-9.8	%
Total Nonaccruing & Restructured Loans		4,336			4,414			4,681			5,055			4,377			(41	)
% of Total loans		0.45	%		0.48	%		0.52	%		0.59	%		0.53	%		-0.9	%
Foreclosed Assets and Other Assets		777			756			730			527			2,104			(1,327	)
Total Change (%)																	-63.1	%
Total Nonperforming Assets	$	5,113		$	5,170		$	5,411		$	5,582		$	6,481		$	(1,368	)
% of Total assets		0.38	%		0.40	%		0.42	%		0.42	%		0.49	%		-21.1	%

Webcast and Conference Call

The Company will hold the fourth quarter 2022 earnings conference call and webcast on January 27, 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 24 full-service 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 April 2022, SB Financial was named to the Keefe, Bruyette & Woods, Inc. “Bank Honor Roll” of superior performers that consistently reported increases in earnings per share over the last decade. The honor roll review determined that just 17 banks in the U.S., including SB Financial, or five percent of all 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.comAnthony V. CosentinoExecutive Vice President and Chief Financial OfficerTony.Cosentino@YourStateBank.com

SB FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS - (Unaudited)
		December				September				June				March				December
($ in thousands)			2022				2022				2022				2022				2021
ASSETS
Cash and due from banks		$	27,817			$	27,934			$	29,567			$	130,003			$	149,511
Interest bearing time deposits			2,131				2,134				1,691				1,894				2,643
Available-for-sale securities			238,780				243,233				266,162				265,311				263,259
Loans held for sale			2,073				2,979				4,242				4,737				7,472
Loans, net of unearned income			962,075				925,249				895,611				850,671				822,714
Allowance for loan losses			(13,818	)			(13,824	)			(13,801	)			(13,804	)			(13,805	)
Premises and equipment, net			22,829				22,842				23,122				23,039				23,212
Federal Reserve and FHLB Stock, at cost			6,326				5,230				5,303				5,303				5,303
Foreclosed assets and other assets			777				756				730				527				2,104
Interest receivable			4,091				3,556				3,256				2,815				2,920
Goodwill			23,239				23,239				23,239				23,239				23,191
Cash value of life insurance			28,870				28,713				28,556				17,932				17,867
Mortgage servicing rights			13,503				13,473				13,408				13,135				12,034
Other assets			16,940				17,863				12,886				10,328				12,429
Total assets		$	1,335,633			$	1,303,377			$	1,293,972			$	1,335,130			$	1,330,854
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non interest bearing demand		$	256,799			$	250,791			$	239,676			$	252,273			$	247,044
Interest bearing demand			191,719				199,523				198,286				211,152				195,464
Savings			191,272				201,402				215,285				236,394				237,571
Money market			255,995				258,975				276,274				289,699				276,462
Time deposits			190,880				175,202				142,258				148,553				156,504
Total deposits			1,086,665				1,085,893				1,071,779				1,138,071				1,113,045
Short-term borrowings			14,923				19,754				30,772				19,035				15,320
Federal Home Loan Bank advances			60,000				35,000				25,000				5,500				5,500
Trust preferred securities			10,310				10,310				10,310				10,310				10,310
Subordinated debt net of issuance costs			19,594				19,582				19,570				19,558				19,546
Interest payable			769				623				307				536				299
Other liabilities			24,944				17,587				11,678				9,483				21,905
Total liabilities			1,217,205				1,188,749				1,169,416				1,202,493				1,185,925
Shareholders' Equity
Common stock			61,319				61,319				61,319				61,319				54,463
Additional paid-in capital			15,087				15,000				15,069				14,872				14,944
Retained earnings			101,966				99,309				96,809				94,833				99,716
Accumulated other comprehensive income (loss)			(32,120	)			(33,426	)			(22,210	)			(13,659	)			(1,845	)
Treasury stock			(27,824	)			(27,574	)			(26,431	)			(24,728	)			(22,349	)
Total shareholders' equity			118,428				114,628				124,556				132,637				144,929
Total liabilities and shareholders' equity		$	1,335,633			$	1,303,377			$	1,293,972			$	1,335,130			$	1,330,854

SB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
($ in thousands, except per share & ratios)		At and for the Three Months Ended																				Twelve Months Ended
		December				September				June				March				December				December				December
Interest income			2022				2022				2022				2022				2021				2022				2021
Loans
Taxable		$	11,222			$	10,084			$	8,880			$	8,052			$	8,889			$	38,238			$	37,959
Tax exempt			109				92				73				61				59				335				206
Securities
Taxable			1,559				1,536				1,469				1,235				969				5,798				3,386
Tax exempt			47				52				52				47				86				198				353
Total interest income			12,937				11,764				10,474				9,395				10,003				44,569				41,904
Interest expense
Deposits			1,440				852				567				618				640				3,477				3,129
Repurchase agreements & other			7				8				11				13				7				39				42
Federal Home Loan Bank advances			258				180				38				39				41				515				188
Trust preferred securities			138				99				71				53				49				361				199
Subordinated debt			194				195				194				195				188				778				462
Total interest expense			2,037				1,334				881				918				925				5,170				4,020
Net interest income			10,900				10,430				9,593				8,477				9,078				39,399				37,884
Provision for loan losses			-				-				-				-				-				-				1,050
Net interest income after provision for loan losses			10,900				10,430				9,593				8,477				9,078				39,399				36,834
Noninterest income
Wealth management fees			907				930				936				955				988				3,728				3,814
Customer service fees			880				844				860				794				827				3,378				3,217
Gain on sale of mtg. loans & OMSR			550				876				1,196				1,676				3,194				4,298				17,255
Mortgage loan servicing fees, net			627				527				606				1,204				624				2,964				2,940
Gain on sale of non-mortgage loans			105				125				167				169				44				566				158
Title insurance revenue			454				476				697				602				528				2,229				2,089
Gain (loss) on sale of assets			18				(12	)			-				55				1				61				2
Other			172				277				211				347				383				1,007				1,222
Total noninterest income			3,713				4,043				4,673				5,802				6,589				18,231				30,697
Noninterest expense
Salaries and employee benefits			5,677				5,858				6,418				6,189				6,648				24,142				26,838
Net occupancy expense			763				769				719				742				846				2,993				3,048
Equipment expense			1,017				918				827				854				899				3,616				3,281
Data processing fees			627				664				643				576				721				2,510				2,579
Professional fees			738				766				760				950				872				3,214				3,027
Marketing expense			258				200				222				231				228				911				784
Telephone and communication expense			124				134				105				111				148				474				581
Postage and delivery expense			121				75				110				116				106				422				414
State, local and other taxes			277				250				277				278				288				1,082				1,175
Employee expense			157				145				175				136				163				613				663
Other expenses			510				605				546				676				648				2,337				2,418
Total noninterest expense			10,269				10,384				10,802				10,859				11,567				42,314				44,808
Income before income tax expense			4,344				4,088				3,464				3,420				4,100				15,315				22,723
Income tax expense			811				746				630				607				768				2,794				4,446
Net income		$	3,533			$	3,342			$	2,834			$	2,813			$	3,332			$	12,521			$	18,277
Common share data:
Basic earnings per common share		$	0.51			$	0.48			$	0.40			$	0.40			$	0.49			$	1.79			$	2.58
Diluted earnings per common share		$	0.50			$	0.47			$	0.40			$	0.40			$	0.49			$	1.77			$	2.56
Average shares outstanding (in thousands):
Basic:			6,945				6,968				7,075				7,035				6,906				7,005				7,083
Diluted:			7,021				7,033				7,149				7,100				6,970				7,078				7,130

SB FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)
($ in thousands, except per share & ratios)		At and for the Three Months Ended																				Twelve Months Ended
		December				September				June				March				December				December				December
SUMMARY OF OPERATIONS			2022				2022				2022				2022				2021				2022				2021
Net interest income		$	10,900			$	10,430			$	9,593			$	8,477			$	9,078			$	39,399			$	37,884
Tax-equivalent adjustment			41				38				33				29				39				142				149
Tax-equivalent net interest income			10,941				10,468				9,626				8,506				9,117				39,541				38,033
Provision for loan loss			-				-				-				-				-				-				1,050
Noninterest income			3,713				4,043				4,673				5,802				6,589				18,231				30,697
Total operating revenue			14,613				14,473				14,266				14,279				15,667				57,630				68,581
Noninterest expense			10,269				10,384				10,802				10,859				11,567				42,314				44,808
Pre-tax pre-provision income			4,344				4,088				3,464				3,420				4,100				15,315				23,773
Pretax income			4,344				4,088				3,464				3,420				4,100				15,315				22,723
Net income			3,533				3,342				2,834				2,813				3,332				12,521				18,277
PER SHARE INFORMATION:
Basic earnings per share (EPS)			0.51				0.48				0.40				0.40				0.49				1.79				2.58
Diluted earnings per share			0.50				0.47				0.40				0.40				0.49				1.77				2.56
Common dividends			0.125				0.120				0.120				0.115				0.115				0.480				0.440
Book value per common share			17.08				16.49				17.75				18.65				21.05				17.08				21.05
Tangible book value per common share (TBV)			13.65				13.07				14.36				15.31				17.60				13.65				17.60
Market price per common share			16.95				16.85				17.26				19.91				18.69				16.95				18.69
Market price to TBV			124.2	%			128.9	%			120.2	%			130.1	%			106.2	%			124.2	%			106.2	%
Market price to trailing 12 month EPS			9.6				9.6				9.3				10.0				7.7				9.6				7.7
PERFORMANCE RATIOS:
Return on average assets (ROAA)			1.08	%			1.03	%			0.87	%			0.83	%			0.99	%			0.95	%			1.38	%
Pre-tax pre-provision ROAA			1.32	%			1.26	%			1.06	%			1.01	%			1.22	%			1.25	%			1.91	%
Return on average equity			12.17	%			10.89	%			8.89	%			8.08	%			9.21	%			9.86	%			12.67	%
Return on average tangible equity			15.30	%			13.51	%			10.93	%			9.75	%			10.92	%			12.14	%			15.04	%
Efficiency ratio			70.16	%			71.63	%			75.60	%			75.93	%			73.72	%			73.31	%			65.23	%
Earning asset yield			4.27	%			3.89	%			3.45	%			2.96	%			3.17	%			3.63	%			3.37	%
Cost of interest bearing liabilities			0.90	%			0.58	%			0.39	%			0.39	%			0.40	%			0.56	%			0.45	%
Net interest margin			3.60	%			3.45	%			3.15	%			2.67	%			2.87	%			3.21	%			3.05	%
Tax equivalent effect			0.01	%			0.01	%			0.01	%			0.01	%			0.02	%			0.01	%			0.01	%
Net interest margin, tax equivalent			3.61	%			3.46	%			3.16	%			2.68	%			2.89	%			3.22	%			3.06	%
Non interest income/Average assets			1.13	%			1.24	%			1.43	%			1.72	%			1.96	%			1.38	%			2.32	%
Non interest expense/Average assets			3.13	%			3.19	%			3.31	%			3.22	%			3.45	%			3.21	%			3.39	%
Net noninterest expense/Average assets			-2.00	%			-1.95	%			-1.88	%			-1.50	%			-1.48	%			-1.83	%			-1.07	%
ASSET QUALITY RATIOS:
Gross charge-offs			7				9				9				9				34				34				136
Recoveries			1				32				6				8				27				47				317
Net charge-offs			6				(23	)			3				1				7				(13	)			(181	)
Nonaccruing loans/Total loans			0.38	%			0.40	%			0.45	%			0.50	%			0.44	%			0.38	%			0.44	%
Nonperforming loans/Total loans			0.45	%			0.48	%			0.52	%			0.59	%			0.53	%			0.45	%			0.53	%
Nonperforming assets/Loans & OREO			0.53	%			0.56	%			0.60	%			0.66	%			0.79	%			0.53	%			0.79	%
Nonperforming assets/Total assets			0.38	%			0.40	%			0.42	%			0.42	%			0.49	%			0.38	%			0.49	%
Allowance for loan loss/Nonperforming loans			318.68	%			313.26	%			294.83	%			273.08	%			315.40	%			318.68	%			315.40	%
Allowance for loan loss/Total loans			1.44	%			1.49	%			1.54	%			1.62	%			1.68	%			1.44	%			1.68	%
Net loan charge-offs/Average loans (ann.)			0.00	%			(0.01	%)			0.00	%			0.00	%			0.00	%			(0.00	%)			(0.02	%)
CAPITAL & LIQUIDITY RATIOS:
Loans/ Deposits			88.53	%			85.21	%			83.56	%			74.75	%			73.92	%			88.53	%			73.92	%
Equity/ Assets			8.87	%			8.79	%			9.63	%			9.93	%			10.89	%			8.87	%			10.89	%
Tangible equity/Tangible assets			7.22	%			7.10	%			7.93	%			8.30	%			9.27	%			7.22	%			9.27	%
Common equity tier 1 ratio (Bank)			13.42	%			13.23	%			13.21	%			13.71	%			13.94	%			13.63	%			13.94	%
END OF PERIOD BALANCES
Total assets			1,335,633				1,303,377				1,293,972				1,335,130				1,330,854				1,335,633				1,330,854
Total loans			962,075				925,249				895,611				850,671				822,714				962,075				822,714
Deposits			1,086,665				1,085,893				1,071,779				1,138,071				1,113,045				1,086,665				1,113,045
Stockholders equity			118,428				114,628				124,556				132,637				144,929				118,428				144,929
Goodwill and intangibles			23,753				23,770				23,787				23,804				23,774				23,753				23,774
Tangible equity			94,675				90,858				100,769				108,833				121,155				94,675				121,155
Mortgage servicing portfolio			1,352,016				1,362,666				1,369,732				1,375,554				1,362,962				1,352,016				1,362,962
Wealth/Brokerage assets under care			507,093				480,947				500,487				560,698				618,279				507,093				618,279
Total assets under care			3,194,742				3,146,990				3,164,191				3,271,382				3,312,095				3,194,742				3,312,095
Full-time equivalent employees			268				271				267				256				269				268				269
Period end common shares outstanding			6,935				6,950				7,017				7,111				6,884				6,935				6,884
Market capitalization (all)			117,556				117,113				121,105				141,575				128,668				117,556				128,668
AVERAGE BALANCES
Total assets			1,314,419				1,302,297				1,305,815				1,350,982				1,342,202				1,318,781				1,322,253
Total earning assets			1,211,674				1,209,958				1,216,124				1,270,218				1,263,431				1,226,771				1,243,093
Total loans			937,898				909,909				870,439				832,825				845,078				888,116				854,521
Deposits			1,094,491				1,085,821				1,108,890				1,134,234				1,123,843				1,105,571				1,106,122
Stockholders equity			116,114				122,738				127,519				139,214				144,749				126,963				144,223
Goodwill and intangibles			23,761				23,778				23,796				23,801				22,701				23,783				22,718
Tangible equity			92,353				98,960				103,723				115,413				122,048				103,180				121,505
Average basic shares outstanding			6,945				6,968				7,075				7,035				6,906				7,005				7,083
Average diluted shares outstanding			7,021				7,033				7,149				7,100				6,970				7,078				7,130

SB FINANCIAL GROUP, INC.
Rate Volume Analysis - (Unaudited)
For the Three and Twelve Months Ended Dec. 31, 2022 and 2021
($ in thousands)		Three Months Ended Dec. 31, 2022									Three Months Ended Dec. 31, 2021
		Average						Average			Average						Average
Assets		Balance			Interest			Rate			Balance			Interest			Rate
Taxable securities/cash		$	265,711		$	1,559		2.35	%		$	410,489		$	969		0.94	%
Nontaxable securities			8,065			47		2.33	%			7,864			86		4.37	%
Loans, net			937,898			11,331		4.83	%			845,078			8,948		4.24	%
Total earning assets			1,211,674			12,937		4.27	%			1,263,431			10,003		3.17	%
Cash and due from banks			7,052									6,489
Allowance for loan losses			(13,820	)								(13,795	)
Premises and equipment			23,757									25,505
Other assets			85,756									60,572
Total assets		$	1,314,419								$	1,342,202
Liabilities
Savings, MMDA and interest bearing demand		$	646,498		$	965		0.60	%		$	704,534		$	400		0.23	%
Time deposits			180,678			475		1.05	%			157,888			240		0.61	%
Repurchase agreements & other			18,058			7		0.16	%			18,910			7		0.15	%
Advances from Federal Home Loan Bank			29,078			258		3.55	%			5,500			41		2.98	%
Trust preferred securities			10,310			138		5.35	%			10,310			49		1.90	%
Subordinated debt			19,588			194		3.96	%			19,539			188		3.85	%
Total interest bearing liabilities			904,210			2,037		0.90	%			916,681			925		0.40	%
Non interest bearing demand			267,315			-						261,421			-
Total funding			1,171,525					0.70	%			1,178,102					0.31	%
Other liabilities			26,780									19,351
Total liabilities			1,198,305									1,197,453
Equity			116,114									144,749
Total liabilities and equity		$	1,314,419								$	1,342,202
Net interest income					$	10,900								$	9,078
Net interest income as a percent of average interest-earning assets - GAAP measure								3.60	%								2.87	%
Net interest income as a percent of average interest-earning assets - non GAAP								3.61	%								2.89	%
- Computed on a fully tax equivalent (FTE) basis
		Twelve Months Ended Dec. 31, 2022									Twelve Months Ended Dec. 31, 2021
		Average						Average			Average						Average
Assets		Balance			Interest			Rate			Balance			Interest			Rate
Taxable securities/cash		$	330,549		$	5,798		1.75	%		$	380,770		$	3,386		0.89	%
Nontaxable securities			8,106			198		2.44	%			7,802			353		4.52	%
Loans, net			888,116			38,573		4.34	%			854,521			38,165		4.47	%
Total earning assets			1,226,771			44,569		3.63	%			1,243,093			41,904		3.37	%
Cash and due from banks			7,296									7,290
Allowance for loan losses			(13,808	)								(13,422	)
Premises and equipment			24,137									24,710
Other assets			74,385									60,582
Total assets		$	1,318,781								$	1,322,253
Liabilities
Savings, MMDA and interest bearing demand		$	693,271		$	2,258		0.33	%		$	672,296		$	1,813		0.27	%
Time deposits			159,401			1,219		0.76	%			177,918			1,316		0.74	%
Repurchase agreements & Other			20,481			39		0.19	%			22,821			42		0.18	%
Advances from Federal Home Loan Bank			16,420			515		3.14	%			6,507			188		2.89	%
Trust preferred securities			10,310			361		3.50	%			10,310			199		1.93	%
Subordinated debt			19,570			778		3.98	%			12,057			462		3.83	%
Total interest bearing liabilities			919,453			5,170		0.56	%			901,909			4,020		0.45	%
Non interest bearing demand			252,899					0.44	%			255,908					0.35	%
Total funding			1,172,352									1,157,817
Other liabilities			19,466									20,213
Total liabilities			1,191,818									1,178,030
Equity			126,963									144,223
Total liabilities and equity		$	1,318,781								$	1,322,253
Net interest income					$	39,399								$	37,884
Net interest income as a percent of average interest-earning assets - GAAP measure								3.21	%								3.05	%
Net interest income as a percent of average interest-earning assets - non GAAP								3.22	%								3.06	%
- Computed on a fully tax equivalent (FTE) basis

Non-GAAP reconciliation		Three Months Ended								Twelve Months Ended
($ in thousands, except per share & ratios)		Dec. 31, 2022				Dec. 31, 2021				Dec. 31, 2022				Dec. 31, 2021
Total Operating Revenue		$	14,613			$	15,667			$	57,630			$	68,581
Adjustment to (deduct)/add OMSR recapture/impairment *			(86	)			(581	)			(1,279	)			(3,436	)
Adjusted Total Operating Revenue			14,527				15,086				56,351				65,145
Income before Income Taxes			4,344				4,100				15,315				22,723
Adjustment for OMSR *			(86	)			(581	)			(1,279	)			(3,436	)
Adjusted Income before Income Taxes			4,258				3,519				14,036				19,287
Provision for Income Taxes			811				768				2,794				4,446
Adjustment for OMSR **			(18	)			(122	)			(269	)			(722	)
Adjusted Provision for Income Taxes			793				646				2,525				3,725
Net Income			3,533				3,332				12,521				18,277
Adjustment for OMSR *			(68	)			(459	)			(1,010	)			(2,714	)
Adjusted Net Income			3,465				2,873				11,511				15,563
Diluted Earnings per Share			0.50				0.49				1.77				2.56
Adjustment for OMSR *			(0.01	)			(0.07	)			(0.14	)			(0.38	)
Adjusted Diluted Earnings per Share		$	0.49			$	0.42			$	1.63			$	2.18
Return on Average Assets			1.08	%			0.99	%			0.95	%			1.38	%
Adjustment for OMSR *			-0.02	%			-0.14	%			-0.08	%			-0.21	%
Adjusted Return on Average Assets			1.05	%			0.86	%			0.87	%			1.18	%
*valuation adjustment to the Company's mortgage servicing rights
**tax effect is calculated using a 21% statutory federal corporate income tax rate