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SB Financial Group Announces Fourth Quarter 2022 Results

DEFIANCE, Ohio, Jan. 26, 2023 (GLOBE NEWSWIRE) -- 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 $13,000
HighlightsThree Months Ended Twelve Months Ended
($ in thousands, except per share & ratios)Dec. 2022Dec. 2021% Change Dec. 2022Dec. 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. 2022Sep. 2022Jun. 2022Mar. 2022Dec. 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. 2022Sep. 2022Jun. 2022Mar. 2022Dec. 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. 2022Sep. 2022Jun. 2022Mar. 2022Dec. 2021Annual 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. 2022Sep. 2022Jun. 2022Mar. 2022Dec. 2021Annual 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. 2022Sep. 2022Jun. 2022Mar. 2022Dec. 2021Annual 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. Klein
Chairman, President and
Chief Executive Officer
Mark.Klein@YourStateBank.com

Anthony V. Cosentino
Executive Vice President and
Chief Financial Officer
Tony.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 BalanceInterestRate BalanceInterestRate
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 measure3.60%   2.87%
         
Net interest income as a percent of average interest-earning assets - non GAAP3.61%   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 BalanceInterestRate BalanceInterestRate
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 measure3.21%   3.05%
         
Net interest income as a percent of average interest-earning assets - non GAAP3.22%   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      
       

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