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SB Financial Group Announces First Quarter 2023 Results
Источник: Nasdaq GlobeNewswire / 20 апр 2023 15:15:01 America/Chicago
DEFIANCE, Ohio, April 20, 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 first quarter ended March 31, 2023.
First quarter 2023 highlights:
- Net income of $2.5 million decreased 12.9 percent compared to the prior year with diluted earnings per share (“EPS”) of $0.35
- Adjusted for Mortgage Servicing Rights recapture (“OMSR”), net income is higher by 14.0 percent compared to the prior year
- Noninterest expense of $10.8 million declined 0.8 percent from the prior year
- Loan growth of $14.2 million from the linked quarter, or 5.9 percent annualized
- Deposit growth of $23.5 million from the linked quarter, or 8.6 percent annualized
- Stable asset quality with nonperforming assets at 35 basis points
Earnings Highlights Three Months Ended ($ in thousands, except per share & ratios) Mar. 2023 Mar. 2022 % Change Operating revenue $ 13,990 $ 14,279 -2.0% Interest income 13,824 9,395 47.1% Interest expense 3,500 918 281.3% Net interest income 10,324 8,477 21.8% Provision for credit losses 250 - 0.0% Noninterest income 3,666 5,802 -36.8% Noninterest expense 10,773 10,859 -0.8% Net income 2,450 2,813 -12.9% Earnings per diluted share 0.35 0.40 -12.5% Return on average assets 0.73% 0.83% -12.0% Return on average equity 8.37% 8.08% 3.6% “Our Company experienced the volatility of the banking sector this quarter and it has impacted our earnings results,” said Mark A. Klein, Chairman, President, and CEO of SB Financial. “Liquidity concerns resulted in a much more competitive arena for deposits and funding in the quarter, which drove our deposit beta significantly higher and reduced margin income. We still were able to add loan balances in the quarter even as we have begun to examine all of our credit underwriting standards.”
RESULTS OF OPERATIONS
Consolidated Revenue
Total operating revenue, consisting of net interest income and noninterest income, was down from both the linked quarter and the prior year quarter by 4.3 and 2.0 percent, respectively. Operating revenue was negatively impacted by the decline in mortgage banking revenue and higher funding costs.
- Net interest income was down 5.3 percent from the linked quarter but up 21.8 percent from the year ago quarter.
- Net interest margin was up from the prior year by 68 basis points, primarily from the shift in mix of our balance sheet with cash and securities reallocated to the loan portfolio offset by the shift in our funding mix to higher cost term deposits.
- Noninterest income was down 36.8 percent from the year ago quarter, due to lower mortgage volume and OMSR recapture.
Mortgage Loan Business
Mortgage loan originations for the first quarter of 2023 were $49.3 million, down $48.0 million, or 49.3 percent, from the year-ago quarter; likewise, total sales of originated loans were $22.6 million, down $49.5 million, or 68.7 percent.
Net mortgage banking revenue, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $1.2 million for the first quarter of 2023, compared to $2.9 million for the year-ago quarter. The mortgage servicing valuation adjustment for the first quarter of 2023 was a positive $0.1 million, compared to a positive adjustment of $0.9 million for the first quarter of 2022. The servicing portfolio at March 31, 2023, was $1.34 billion, which was down 2.3 percent to the prior year.
Mr. Klein noted, “While we added producers in our high growth markets of Indianapolis and Columbus, mortgage origination volume was constrained by the rate environment. Our pipelines are improving and notably nearly 75 percent of the pipeline is saleable product, which is back to our more normal business model.”
Mortgage Banking ($ in thousands) Mar. 2023 Dec. 2022 Sep. 2022 Jun. 2022 Mar. 2022 Annual Growth Mortgage originations $ 49,366 $ 51,219 $ 68,557 $ 95,454 $ 97,394 $ (48,028 ) Mortgage sales 25,803 23,590 39,176 49,915 72,154 (46,351 ) Mortgage servicing portfolio 1,344,158 1,352,016 1,362,666 1,369,732 1,375,554 (31,396 ) Mortgage servicing rights 13,548 13,503 13,473 13,408 13,135 413 Mortgage servicing revenue Loan servicing fees 844 851 858 863 861 (17 ) OMSR amortization (292 ) (310 ) (396 ) (496 ) (547 ) 255 Net administrative fees 552 541 462 367 314 238 OMSR valuation adjustment 56 86 65 239 890 (834 ) Net loan servicing fees 608 627 527 606 1,204 (596 ) Gain on sale of mortgages 599 550 876 1,196 1,676 (1,077 ) Mortgage banking revenue, net $ 1,207 $ 1,177 $ 1,403 $ 1,802 $ 2,880 $ (1,673 ) Noninterest Income and Noninterest Expense
Noninterest income declined for the first quarter, from both the linked quarter and prior year. Gain-on-sale from mortgage loans were down significantly from the prior year and total sales were down over $46 million. The Title insurance business was off nearly 40 percent, reflecting the lower level of residential volume.
For the first quarter of 2023, noninterest expense of $10.8 million was down $0.1 million or 0.8 percent compared to the prior year quarter. Overall head count is down from the linked quarter by 4.9 percent as we continue to right size the mortgage business line. Commission expense for both mortgage and SBA is down compared to the prior year due to the lower total origination volume.
Mr. Klein stated, “We have undertaken a full scale review of our expense structure as we understand the headwinds that revenue growth will encounter in 2023. Our mortgage business line infrastructure has been reduced and we are looking at other areas to provide meaningful expense reductions.”
Noninterest Income / Noninterest Expense ($ in thousands, except ratios) Mar. 2023 Dec. 2022 Sep. 2022 Jun. 2022 Mar. 2022 Annual Growth Noninterest Income (NII) $ 3,666 $ 3,713 $ 4,043 $ 4,673 $ 5,802 $ (2,136 ) NII / Total Revenue 26.2% 25.4% 27.9% 32.8% 40.6% -14.4% NII / Average Assets 1.1% 1.1% 1.2% 1.4% 1.7% -0.6% Total Revenue Growth -2.0% -6.7% -13.2% -9.1% -46.9% 44.9% Noninterest Expense (NIE) $ 10,773 $ 10,269 $ 10,384 $ 10,802 $ 10,859 $ (86 ) Efficiency Ratio 76.9% 70.2% 71.6% 75.6% 75.9% 1.0% NIE / Average Assets 3.2% 3.1% 3.2% 3.3% 3.2% 0.0% Net Noninterest Expense/Avg. Assets -2.1% -2.0% -2.0% -1.9% -1.5% -0.6% Total Expense Growth -0.8% -11.2% -7.7% -2.5% -0.5% -0.3% Balance Sheet
Total assets as of March 31, 2023, were $1.34 billion, or in line with the year ago quarter primarily due to the increase in the loan portfolio which was offset by declines in cash and investments. Total shareholders’ equity as of March 31, 2023, was $119.8 million, down from the prior year but compared to the linked quarter was higher due to the declining impairment of our bond portfolio. Excluding the impact of the valuation adjustment, equity increased $3.1 million or 2.1 percent. Our adoption of CECL on January 1st resulted in a reduction of equity that was transferred into our allowance for credit losses. SB Financial repurchased 56,000 shares of our stock during the quarter.
The investment portfolio of $237.9 million, represented 17.7 percent of assets at March 31, 2023, and was down $27.4 million or 10.3 percent from the year-ago period. Total loans held for investment were $976.3 million at March 31, 2023, up $125.6 million, or 14.8 percent, from March 31, 2022.
Deposit balances of $1.11 billion at March 31, 2023, decreased by $27.9 million, or 2.5 percent, since March 31, 2022. However, deposits have increased from the linked quarter by $23.5 million and have increased for three consecutive quarters. The growth in deposits has come with a significant shift in the mix as time deposits now comprise 21.1 percent of the total compared to 13.1 percent at March 31, 2022.
Mr. Klein continued, “Loan growth continued in the quarter and compared to the prior year we have increased our loan portfolio by over $125 million which has led to a positive mix shift on the asset side of the balance sheet. Like every community bank, the quest for deposits and low-cost funding was challenging. We are pleased that we have been able to grow deposits over the last three quarters, albeit at a higher cost.”
Loan Balances ($ in thousands, except ratios) Mar. 2023 Dec. 2022 Sep. 2022 Jun. 2022 Mar. 2022 Annual Growth Commercial $ 126,065 $ 128,534 $ 128,565 $ 127,711 $ 124,857 $ 1,208 % of Total 12.9% 13.4% 13.9% 14.3% 14.7% 1.0% Commercial RE 419,024 412,636 404,710 404,260 400,101 18,923 % of Total 42.9% 42.9% 43.7% 45.1% 47.0% 4.7% Agriculture 57,761 64,388 60,522 60,586 55,741 2,020 % of Total 5.9% 6.7% 6.5% 6.8% 6.6% 3.6% Residential RE 309,684 291,512 267,135 241,614 214,015 95,669 % of Total 31.7% 30.3% 28.9% 27.0% 25.2% 44.7% Consumer & Other 63,778 65,005 64,317 61,440 55,957 7,821 % of Total 6.5% 6.8% 7.0% 6.9% 6.6% 14.0% Total Loans $ 976,312 $ 962,075 $ 925,249 $ 895,611 $ 850,671 $ 125,641 Total Growth Percentage 14.8% Deposit Balances ($ in thousands, except ratios) Mar. 2023 Dec. 2022 Sep. 2022 Jun. 2022 Mar. 2022 Annual Growth Non-Int DDA $ 237,175 $ 256,799 $ 250,791 $ 239,676 $ 252,273 $ (15,098 ) % of Total 21.4% 23.6% 23.1% 22.4% 22.2% -6.0% Interest DDA 188,497 191,719 199,523 198,286 211,152 (22,655 ) % of Total 17.0% 17.6% 18.4% 18.5% 18.6% -10.7% Savings 227,974 191,272 201,402 215,285 236,394 (8,420 ) % of Total 20.5% 17.6% 18.5% 20.1% 20.8% -3.6% Money Market 222,203 255,995 258,975 276,274 289,699 (67,496 ) % of Total 20.0% 23.6% 23.8% 25.8% 25.5% -23.3% Time Deposits 234,295 190,880 175,202 142,258 148,553 85,742 % of Total 21.1% 17.6% 16.1% 13.3% 13.1% 57.7% Total Deposits $ 1,110,144 $ 1,086,665 $ 1,085,893 $ 1,071,779 $ 1,138,071 $ (27,927 ) Total Growth Percentage -2.5% Asset Quality
SB Financial reported nonperforming assets of $4.7 million as of March 31, 2023, down $0.9 million or 16.0 percent from the year-ago quarter. The coverage ratio of problem loans to the allowance for credit losses was at 382.4 percent at March 31, 2023, which was up over 100 basis points from the prior year due in large part to the expansion of the allowance from the CECL adjustment of $1.4 million.
Nonperforming Assets Annual Change ($ in thousands, except ratios) Mar. 2023 Dec. 2022 Sep. 2022 Jun. 2022 Mar. 2022 Commercial & Agriculture $ 185 $ 114 $ 114 $ 140 $ 142 $ 43 % of Total Com./Ag. loans 0.10% 0.06% 0.06% 0.07% 0.08% 30.3% Commercial RE 199 210 223 359 544 (345 ) % of Total CRE loans 0.05% 0.05% 0.06% 0.09% 0.14% -63.4% Residential RE 2,742 2,967 3,129 3,176 3,198 (456 ) % of Total Res. RE loans 0.89% 1.02% 1.17% 1.31% 1.49% -14.3% Consumer & Other 270 391 280 323 409 (139 ) % of Total Con./Oth. loans 0.42% 0.60% 0.44% 0.53% 0.73% -34.0% Total Nonaccruing Loans 3,396 3,682 3,746 3,998 4,293 (897 ) % of Total loans 0.35% 0.38% 0.40% 0.45% 0.50% -20.9% Accruing Restructured Loans 642 654 668 683 762 (120 ) Total Change (%) -15.7% Total Nonaccruing & Restructured Loans 4,038 4,336 4,414 4,681 5,055 (1,017 ) % of Total loans 0.41% 0.45% 0.48% 0.52% 0.59% -20.1% Foreclosed Assets and Other Assets 650 777 756 730 527 123 Total Change (%) 23.3% Total Nonperforming Assets $ 4,688 $ 5,113 $ 5,170 $ 5,411 $ 5,582 $ (894 ) % of Total assets 0.35% 0.38% 0.40% 0.42% 0.42% -16.0% Webcast and Conference Call
The Company will hold the first quarter 2023 earnings conference call and webcast on April 21, 2023, at 11:00 a.m. EDT. Interested parties may access the conference call by dialing 1-888-338-9469. The webcast can be accessed at ir.yourstatebank.com. An audio replay of the call will be available on the Company’s website.
About SB Financial Group
Headquartered in Defiance, Ohio, SB Financial is a diversified financial services holding company for the State Bank & Trust Company (State Bank) and SBFG Title, LLC dba Peak Title (Peak Title). State Bank provides a full range of financial services for consumers and small businesses, including wealth management, private client services, mortgage banking and commercial and agricultural lending, operating through a total of 23 offices: 22 in nine Ohio counties and one in Fort Wayne, Indiana, and 23 ATMs. State Bank has six loan production offices located throughout the Tri-State region of Ohio, Indiana and Michigan. Peak Title provides title insurance and title opinions throughout the Tri-State region. SB Financial’s common stock is listed on the NASDAQ Capital Market with the ticker symbol “SBFG”.
Forward-Looking Statements
Certain statements within this document, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, and actual results may differ materially from those predicted by the forward-looking statements. These risks and uncertainties include, but are not limited to, the duration and scope of the COVID-19 outbreak in the United States and the market areas in which SB Financial and its subsidiaries operate, including the impact to the state and local economies of prolonged shelter in place orders and the pandemic generally, risks and uncertainties inherent in the national and regional banking industry, changes in economic conditions in the market areas in which SB Financial and its subsidiaries operate, changes in policies by regulatory agencies, changes in accounting standards and policies, changes in tax laws, fluctuations in interest rates, demand for loans in the market areas in SB Financial and its subsidiaries operate, increases in FDIC insurance premiums, changes in the competitive environment, losses of significant customers, geopolitical events, the loss of key personnel and other risks identified in SB Financial’s Annual Report on Form 10-K and documents subsequently filed by SB Financial with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and SB Financial undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made, except as required by law. All subsequent written and oral forward-looking statements attributable to SB Financial or any person acting on its behalf are qualified by these cautionary statements.
Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures, specifically pre-tax, pre-provision income, tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common equity, total interest income – FTE, net interest income – FTE and net interest margin – FTE are used by the Company’s management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. In addition, the Company excludes the OMSR impairment from net income to report anon-GAAP adjusted net income level. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Investor Contact Information: Mark A. Klein
Chairman, President and
Chief Executive Officer
Mark.Klein@YourStateBank.com
Anthony V. Cosentino
Executive Vice President and
Chief Financial Officer
Tony.Cosentino@YourStateBank.comSB FINANCIAL GROUP, INC. CONSOLIDATED BALANCE SHEETS - (Unaudited) March December September June March ($ in thousands) 2023 2022 2022 2022 2022 ASSETS Cash and due from banks $ 21,625 $ 27,817 $ 27,934 $ 29,567 $ 130,003 Interest bearing time deposits 1,380 2,131 2,134 1,691 1,894 Available-for-sale securities 237,917 238,780 243,233 266,162 265,311 Loans held for sale 5,592 2,073 2,979 4,242 4,737 Loans, net of unearned income 976,312 962,075 925,249 895,611 850,671 Allowance for credit losses (15,442 ) (13,818 ) (13,824 ) (13,801 ) (13,804 ) Premises and equipment, net 22,621 22,829 22,842 23,122 23,039 Federal Reserve and FHLB Stock, at cost 6,054 6,326 5,230 5,303 5,303 Foreclosed assets and other assets 650 777 756 730 527 Interest receivable 3,926 4,091 3,556 3,256 2,815 Goodwill 23,239 23,239 23,239 23,239 23,239 Cash value of life insurance 29,024 28,870 28,713 28,556 17,932 Mortgage servicing rights 13,548 13,503 13,473 13,408 13,135 Other assets 14,847 16,940 17,863 12,886 10,328 Total assets $ 1,341,293 $ 1,335,633 $ 1,303,377 $ 1,293,972 $ 1,335,130 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Non interest bearing demand $ 237,175 $ 256,799 $ 250,791 $ 239,676 $ 252,273 Interest bearing demand 188,497 191,719 199,523 198,286 211,152 Savings 227,974 191,272 201,402 215,285 236,394 Money market 222,203 255,995 258,975 276,274 289,699 Time deposits 234,295 190,880 175,202 142,258 148,553 Total deposits 1,110,144 1,086,665 1,085,893 1,071,779 1,138,071 Short-term borrowings 15,998 14,923 19,754 30,772 19,035 Federal Home Loan Bank advances 44,500 60,000 35,000 25,000 5,500 Trust preferred securities 10,310 10,310 10,310 10,310 10,310 Subordinated debt net of issuance costs 19,606 19,594 19,582 19,570 19,558 Interest payable 1,441 769 623 307 536 Other liabilities 19,535 24,944 17,587 11,678 9,483 Total liabilities 1,221,534 1,217,205 1,188,749 1,169,416 1,202,493 Shareholders' Equity Common stock 61,319 61,319 61,319 61,319 61,319 Additional paid-in capital 14,953 15,087 15,000 15,069 14,872 Retained earnings 101,548 101,966 99,309 96,809 94,833 Accumulated other comprehensive income (loss) (29,671 ) (32,120 ) (33,426 ) (22,210 ) (13,659 ) Treasury stock (28,390 ) (27,824 ) (27,574 ) (26,431 ) (24,728 ) Total shareholders' equity 119,759 118,428 114,628 124,556 132,637 Total liabilities and shareholders' equity $ 1,341,293 $ 1,335,633 $ 1,303,377 $ 1,293,972 $ 1,335,130 SB FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME - (Unaudited) ($ in thousands, except per share & ratios) At and for the Three Months Ended Six Months Ended March December September June March June June Interest income 2023 2022 2022 2022 2022 2023 2022 Loans Taxable $ 12,126 $ 11,222 $ 10,084 $ 8,880 $ 8,052 $ 12,126 $ 16,932 Tax exempt 116 109 92 73 61 116 134 Securities Taxable 1,535 1,559 1,536 1,469 1,235 1,535 2,704 Tax exempt 47 47 52 52 47 47 99 Total interest income 13,824 12,937 11,764 10,474 9,395 13,824 19,869 Interest expense Deposits 2,578 1,440 852 567 618 2,578 1,185 Repurchase agreements & other 10 7 8 11 13 10 24 Federal Home Loan Bank advances 553 258 180 38 39 553 77 Trust preferred securities 164 138 99 71 53 164 124 Subordinated debt 195 194 195 194 195 195 389 Total interest expense 3,500 2,037 1,334 881 918 3,500 1,799 Net interest income 10,324 10,900 10,430 9,593 8,477 10,324 18,070 Provision for credit losses 250 - - - - 250 - Net interest income after provision for loan losses 10,074 10,900 10,430 9,593 8,477 10,074 18,070 Noninterest income Wealth management fees 917 907 930 936 955 917 1,891 Customer service fees 825 880 844 860 794 825 1,654 Gain on sale of mtg. loans & OMSR 599 550 876 1,196 1,676 599 2,872 Mortgage loan servicing fees, net 608 627 527 606 1,204 608 1,810 Gain on sale of non-mortgage loans 24 105 125 167 169 24 336 Title insurance revenue 373 454 476 697 602 373 1,299 Gain (loss) on sale of assets (11 ) 18 (12 ) - 55 (11 ) 55 Other 331 172 277 211 347 331 558 Total noninterest income 3,666 3,713 4,043 4,673 5,802 3,666 10,475 Noninterest expense Salaries and employee benefits 5,913 5,677 5,858 6,418 6,189 5,913 12,607 Net occupancy expense 784 763 769 719 742 784 1,461 Equipment expense 981 1,017 918 827 854 981 1,681 Data processing fees 646 627 664 643 576 646 1,219 Professional fees 863 738 766 760 950 863 1,710 Marketing expense 198 258 200 222 231 198 453 Telephone and communication expense 121 124 134 105 111 121 216 Postage and delivery expense 87 121 75 110 116 87 226 State, local and other taxes 228 277 250 277 278 228 555 Employee expense 188 157 145 175 136 188 311 Other expenses 764 510 605 546 676 764 1,222 Total noninterest expense 10,773 10,269 10,384 10,802 10,859 10,773 21,661 Income before income tax expense 2,967 4,344 4,088 3,464 3,420 2,967 6,884 Income tax expense 517 811 746 630 607 517 1,237 Net income $ 2,450 $ 3,533 $ 3,342 $ 2,834 $ 2,813 $ 2,450 $ 5,647 Common share data: Basic earnings per common share $ 0.35 $ 0.51 $ 0.48 $ 0.40 $ 0.40 $ 0.35 $ 0.80 Diluted earnings per common share $ 0.35 $ 0.50 $ 0.47 $ 0.40 $ 0.40 $ 0.35 $ 0.79 Average shares outstanding (in thousands): Basic: 6,933 6,945 6,968 7,075 7,035 6,933 7,055 Diluted: 7,008 7,021 7,033 7,149 7,100 7,008 7,116 SB FINANCIAL GROUP, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited) ($ in thousands, except per share & ratios) At and for the Three Months Ended Six Months Ended March December September June March June June SUMMARY OF OPERATIONS 2023 2022 2022 2022 2022 2023 2022 Net interest income $ 10,324 $ 10,900 $ 10,430 $ 9,593 $ 8,477 $ 10,324 $ 18,070 Tax-equivalent adjustment 43 41 38 33 29 43 62 Tax-equivalent net interest income 10,367 10,941 10,468 9,626 8,506 10,367 18,132 Provision for credit loss 250 - - - - - - Noninterest income 3,666 3,713 4,043 4,673 5,802 3,666 10,475 Total operating revenue 13,990 14,613 14,473 14,266 14,279 13,990 28,545 Noninterest expense 10,773 10,269 10,384 10,802 10,859 10,773 21,661 Pre-tax pre-provision income 3,217 4,344 4,088 3,464 3,420 3,217 6,884 Pretax income 2,967 4,344 4,088 3,464 3,420 3,217 6,884 Net income 2,450 3,533 3,342 2,834 2,813 2,450 5,647 PER SHARE INFORMATION: Basic earnings per share (EPS) 0.35 0.51 0.48 0.40 0.40 0.35 0.80 Diluted earnings per share 0.35 0.50 0.47 0.40 0.40 0.35 0.79 Common dividends 0.125 0.125 0.120 0.120 0.115 0.125 0.235 Book value per common share 17.37 17.08 16.49 17.75 18.65 17.37 17.75 Tangible book value per common share (TBV) 13.93 13.65 13.07 14.36 15.31 13.93 14.36 Market price per common share 14.16 16.95 16.85 17.26 19.91 14.16 17.26 Market price to TBV 101.7 % 124.2 % 128.9 % 120.2 % 130.1 % 101.7 % 120.2 % Market price to trailing 12 month EPS 8.2 9.6 9.6 9.3 10.0 8.2 9.3 PERFORMANCE RATIOS: Return on average assets (ROAA) 0.73 % 1.08 % 1.03 % 0.87 % 0.83 % 0.73 % 0.85 % Pre-tax pre-provision ROAA 0.96 % 1.32 % 1.26 % 1.06 % 1.01 % 1.04 % 1.11 % Return on average equity 8.37 % 12.17 % 10.89 % 8.89 % 8.08 % 8.37 % 8.46 % Return on average tangible equity 10.50 % 15.30 % 13.51 % 10.93 % 9.75 % 10.51 % 10.30 % Efficiency ratio 76.85 % 70.16 % 71.63 % 75.60 % 75.93 % 76.85 % 75.76 % Earning asset yield 4.49 % 4.27 % 3.89 % 3.45 % 2.96 % 4.49 % 3.20 % Cost of interest bearing liabilities 1.46 % 0.90 % 0.58 % 0.39 % 0.39 % 1.46 % 0.38 % Net interest margin 3.35 % 3.60 % 3.45 % 3.15 % 2.67 % 3.36 % 2.91 % Tax equivalent effect 0.02 % 0.01 % 0.01 % 0.01 % 0.01 % 0.01 % 0.01 % Net interest margin, tax equivalent 3.37 % 3.61 % 3.46 % 3.16 % 2.68 % 3.37 % 2.92 % Non interest income/Average assets 1.10 % 1.13 % 1.24 % 1.43 % 1.72 % 1.10 % 1.58 % Non interest expense/Average assets 3.23 % 3.13 % 3.19 % 3.31 % 3.22 % 3.23 % 3.26 % Net noninterest expense/Average assets -2.13 % -2.00 % -1.95 % -1.88 % -1.50 % -2.13 % -1.68 % ASSET QUALITY RATIOS: Gross charge-offs 69 7 9 9 9 69 18 Recoveries 8 1 32 6 8 8 14 Net charge-offs 61 6 (23 ) 3 1 61 4 Nonaccruing loans/Total loans 0.35 % 0.38 % 0.40 % 0.45 % 0.50 % 0.35 % 0.45 % Nonperforming loans/Total loans 0.41 % 0.45 % 0.48 % 0.52 % 0.59 % 0.41 % 0.52 % Nonperforming assets/Loans & OREO 0.48 % 0.53 % 0.56 % 0.60 % 0.66 % 0.48 % 0.60 % Nonperforming assets/Total assets 0.35 % 0.38 % 0.40 % 0.42 % 0.42 % 0.35 % 0.42 % Allowance for credit loss/Nonperforming loans 382.42 % 318.68 % 313.26 % 294.83 % 273.08 % 382.42 % 294.83 % Allowance for credit loss/Total loans 1.58 % 1.44 % 1.49 % 1.54 % 1.62 % 1.58 % 1.54 % Net loan charge-offs/Average loans (ann.) 0.03 % 0.00 % (0.01 %) 0.00 % 0.00 % 0.03 % 0.00 % CAPITAL & LIQUIDITY RATIOS: Loans/ Deposits 87.94 % 88.53 % 85.21 % 83.56 % 74.75 % 87.94 % 83.56 % Equity/ Assets 8.93 % 8.87 % 8.79 % 9.63 % 9.93 % 8.93 % 9.63 % Tangible equity/Tangible assets 7.29 % 7.22 % 7.10 % 7.93 % 8.30 % 7.29 % 7.93 % Common equity tier 1 ratio (Bank) 13.47 % 13.42 % 13.23 % 13.21 % 13.71 % 13.47 % 13.21 % END OF PERIOD BALANCES Total assets 1,341,293 1,335,633 1,303,377 1,293,972 1,335,130 1,341,293 1,293,972 Total loans 976,312 962,075 925,249 895,611 850,671 976,312 895,611 Deposits 1,110,144 1,086,665 1,085,893 1,071,779 1,138,071 1,110,144 1,071,779 Stockholders equity 119,759 118,428 114,628 124,556 132,637 119,759 124,556 Goodwill and intangibles 23,732 23,753 23,770 23,787 23,804 23,732 23,787 Tangible equity 96,027 94,675 90,858 100,769 108,833 96,027 100,769 Mortgage servicing portfolio 1,344,158 1,352,016 1,362,666 1,369,732 1,375,554 1,344,158 1,369,732 Wealth/Brokerage assets under care 518,009 507,093 480,947 500,487 560,698 518,009 500,487 Total assets under care 3,203,460 3,194,742 3,146,990 3,164,191 3,271,382 3,203,460 3,164,191 Full-time equivalent employees 255 268 271 267 256 255 267 Period end common shares outstanding 6,894 6,935 6,950 7,017 7,111 6,894 7,017 Market capitalization (all) 97,626 117,556 117,113 121,105 141,575 97,626 121,105 AVERAGE BALANCES Total assets 1,335,056 1,314,419 1,302,297 1,305,815 1,350,982 1,335,056 1,328,216 Total earning assets 1,232,018 1,211,674 1,209,958 1,216,124 1,270,218 1,232,018 1,243,017 Total loans 970,813 937,898 909,909 870,439 832,825 970,813 851,736 Deposits 1,098,935 1,094,491 1,085,821 1,108,890 1,134,234 1,098,935 1,121,373 Stockholders equity 117,071 116,114 122,738 127,519 139,214 117,071 133,471 Goodwill and intangibles 23,743 23,761 23,778 23,796 23,801 23,783 23,798 Tangible equity 93,328 92,353 98,960 103,723 115,413 93,288 109,673 Average basic shares outstanding 6,933 6,945 6,968 7,075 7,035 6,933 7,055 Average diluted shares outstanding 7,008 7,021 7,033 7,149 7,100 7,008 7,116 SB FINANCIAL GROUP, INC. Rate Volume Analysis - (Unaudited) For the Three Months Ended Mar. 31, 2023 and 2022 ($ in thousands) Three Months Ended Mar. 31, 2023 Three Months Ended Mar. 31, 2022 Average Average Average Average Assets Balance Interest Rate Balance Interest Rate Taxable securities/cash $ 253,449 $ 1,535 2.42 % $ 429,839 $ 1,235 1.15 % Nontaxable securities 7,756 47 2.42 % 7,554 47 2.49 % Loans, net 970,813 12,242 5.04 % 832,825 8,113 3.90 % Total earning assets 1,232,018 13,824 4.49 % 1,270,218 9,395 2.96 % Cash and due from banks 11,067 8,156 Allowance for loan losses (14,763 ) (13,807 ) Premises and equipment 22,858 25,317 Other assets 83,876 61,098 Total assets $ 1,335,056 $ 1,350,982 Liabilities Savings, MMDA and interest bearing demand $ 643,081 $ 1,285 0.80 % $ 733,095 $ 398 0.22 % Time deposits 214,978 1,293 2.41 % 155,006 220 0.57 % Repurchase agreements & other 18,618 10 0.21 % 25,115 13 0.21 % Advances from Federal Home Loan Bank 49,177 553 4.50 % 5,500 39 2.84 % Trust preferred securities 10,310 164 6.36 % 10,310 53 2.06 % Subordinated debt 19,598 195 3.98 % 19,552 195 3.99 % Total interest bearing liabilities 955,762 3,500 1.46 % 948,578 918 0.39 % Non interest bearing demand 240,876 - 246,133 - Total funding 1,196,638 1.17 % 1,194,711 0.31 % Other liabilities 21,347 17,057 Total liabilities 1,217,985 1,211,768 Equity 117,071 139,214 Total liabilities and equity $ 1,335,056 $ 1,350,982 Net interest income $ 10,324 $ 8,477 Net interest income as a percent of average interest-earning assets - GAAP measure 3.35 % 2.67 % Net interest income as a percent of average interest-earning assets - non GAAP 3.37 % 2.68 % - Computed on a fully tax equivalent (FTE) basis Non-GAAP reconciliation Three Months Ended Twelve Months Ended ($ in thousands, except per share & ratios) Mar. 31, 2023 Mar. 31, 2022 Mar. 31, 2023 Mar. 31, 2022 Total Operating Revenue $ 13,990 $ 14,279 $ 13,990 $ 68,581 Adjustment to (deduct)/add OMSR recapture/impairment * (56 ) (889 ) (1,279 ) (3,436 ) Adjusted Total Operating Revenue 13,934 13,390 12,711 65,145 Income before Income Taxes 2,967 3,420 2,967 22,723 Adjustment for OMSR * (56 ) (889 ) (1,279 ) (3,436 ) Adjusted Income before Income Taxes 2,911 2,531 1,688 19,287 Provision for Income Taxes 517 607 517 4,446 Adjustment for OMSR ** (12 ) (187 ) (269 ) (722 ) Adjusted Provision for Income Taxes 505 420 248 3,725 Net Income 2,450 2,813 2,450 18,277 Adjustment for OMSR * (44 ) (703 ) (1,010 ) (2,714 ) Adjusted Net Income 2,406 2,110 1,440 15,563 Diluted Earnings per Share 0.35 0.40 0.35 2.56 Adjustment for OMSR * (0.01 ) (0.10 ) (0.14 ) (0.38 ) Adjusted Diluted Earnings per Share $ 0.34 $ 0.30 $ 0.21 $ 2.18 Return on Average Assets 0.73 % 0.83 % 0.73 % 1.38 % Adjustment for OMSR * -0.01 % -0.21 % -0.08 % -0.21 % Adjusted Return on Average Assets 0.72 % 0.62 % 0.66 % 1.18 % *valuation adjustment to the Company's mortgage servicing rights **tax effect is calculated using a 21% statutory federal corporate income tax rate 