SB Financial Group Announces Second Quarter 2023 Results

DEFIANCE, Ohio, July 27, 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 second quarter ended June 30, 2023.

Second quarter 2023 highlights over prior-year, second quarter include:

  • Net income of $3.1 million increased 8.5 percent with diluted earnings per share (“EPS”) of $0.44
  • Adjusted for Mortgage Servicing Rights recapture (“OMSR”), net income is higher by 16.7 percent
  • Noninterest expense of $10.3 million declined 4.3 percent
  • Improved asset quality with nonperforming assets declining from 37 to 26 basis points

Six months ended June 30, 2023, highlights over prior-year six months include:

  • Net income of $5.5 million, down 2.2 percent
  • Adjusted for OMSR recapture, net income is higher by 15.5 percent
  • Noninterest expense of $21.1 million declined 2.5 percent

Second quarter 2023 trailing twelve-month highlights include:

  • Loan growth of $89.2 million, or 10.0 percent
  • Deposit decline of $0.6 million, or 0.1 percent
Earnings HighlightsThree Months Ended Six Months Ended
($ in thousands, except per share & ratios)Jun. 2023Jun. 2022% Change Jun. 2023Jun. 2022% Change
Operating revenue$14,190 $14,266 -0.5% $28,180 $28,545 -1.3%
Interest income 14,406  10,474 37.5%  28,230  19,869 42.1%
Interest expense 4,577  881 419.5%  8,077  1,799 349.0%
Net interest income 9,829  9,593 2.5%  20,153  18,070 11.5%
Provision for credit losses 145  - 0.0%  395  - 0.0%
Noninterest income 4,361  4,673 -6.7%  8,027  10,475 -23.4%
Noninterest expense 10,339  10,802 -4.3%  21,112  21,661 -2.5%
Net income 3,075  2,834 8.5%  5,525  5,647 -2.2%
Earnings per diluted share 0.44  0.40 10.0%  0.79  0.79 0.0%
Return on average assets 0.91% 0.87%4.6%  0.82% 0.85%-3.5%
Return on average equity 10.01% 8.89%12.6%  9.01% 8.46%6.5%
                  

“We were pleased with the positive momentum we experienced this quarter in what is a difficult and volatile operating environment for Community Banks,” said Mark A. Klein, Chairman, President, and CEO of SB Financial. “We had linked quarter growth in loans and mortgage originations and deposits were down just 3.5 percent. Liquidity concerns and deposit rate competition continued to be our most significant challenge as our funding beta’s exceeded our earning asset beta’s for the first time since the Fed rate increases began in March of 2022.  While margin compression consumed the narrative for the second quarter, on a positive note we did experience a further reduction in non-performing loans. Our nonperforming loan coverage ratio now stands in excess of 500 percent.”

RESULTS OF OPERATIONS

Consolidated Revenue

Total operating revenue, consisting of net interest income and noninterest income, was up from the linked quarter by 1.4 percent but less than the prior year quarter by 0.5 percent. Operating revenue continues to be impacted by much higher funding costs and the decline in mortgage banking revenue.

  • Net interest income was down 4.8 percent from the linked quarter but up 2.5 percent from the prior year quarter.
  • Net interest margin was flat compared to the prior year, as the increase in Earning Asset yields and balances has been offset by higher funding costs on deposits and wholesale borrowings.      
  • Noninterest income was down 6.7 percent from the year ago quarter, due to lower mortgage and Title insurance volume and a reduction in the recapture of temporary servicing rights.      

Mortgage Loan Business

Mortgage loan originations for the second quarter of 2023 were $65.4 million, down $30.1 million, or 31.5 percent, from the prior year quarter. Total sales of originated loans experienced a slight decline compared to the prior year, at $47.9 million, down $2.0 million, or 4.0 percent.  

Net mortgage banking revenue, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $1.6 million for the second quarter of 2023, down from $1.8 million for the prior year quarter. The mortgage servicing valuation adjustment for the second quarter of 2023 was a negative $0.02 million, compared to a positive adjustment of $0.2 million for the second quarter of 2022. The servicing portfolio at June 30, 2023, was $1.35 billion, which was down 1.2 percent compared to the prior year.

Mr. Klein noted, “Mortgage volume continued to be constrained by higher rates and reduced inventory in our markets. Compared to the linked quarter, we were pleased that originations were higher by $16.0 million, or 32.5 percent as we added new MLOs in several of our key markets.”  

Mortgage Banking       
($ in thousands)Jun. 2023Mar. 2023Dec. 2022Sep. 2022Jun. 2022 Annual Growth
Mortgage originations$65,387 $49,366 $51,219 $68,557 $95,454  $(30,067)
Mortgage sales 47,933  25,803  23,590  39,176  49,915   (1,982)
Mortgage servicing portfolio 1,353,904  1,344,158  1,352,016  1,362,666  1,369,732   (15,828)
Mortgage servicing rights 13,723  13,548  13,503  13,473  13,408   315 
        
        
Mortgage servicing revenue       
Loan servicing fees 844  844  851  858  863   (19)
OMSR amortization (334) (292) (310) (396) (496)  162 
Net administrative fees 510  552  541  462  367   143 
OMSR valuation adjustment (16) 56  86  65  239   (255)
Net loan servicing fees 494  608  627  527  606   (112)
Gain on sale of mortgages 1,056  599  550  876  1,196   (140)
Mortgage banking revenue, net$ 1,550  $ 1,207  $ 1,177  $ 1,403  $ 1,802   $ (252)
                    

Noninterest Income and Noninterest Expense

Noninterest income for the quarter declined, from the prior year quarter by 6.7 percent; however, when compared to the linked quarter, fee income was higher by 19.0 percent. Gain-on-sale from mortgage loans, was down just slightly from the prior year; however, the increase in sale volume above 73 percent in the quarter resulted in a nearly 80 percent increase in this metric over the linked quarter. Apart from Title Insurance, our remaining fee categories, are generally in line with revenue from both the linked and prior-year quarters.

For the second quarter of 2023, noninterest expense of $10.3 million was down from both the linked and prior year quarters by over 4 percent. Rightsizing of the mortgage business line has resulted in staffing levels lower by over 5 percent compared to the prior year.  

Mr. Klein stated, “Through the first half of the year, we have achieved positive operating leverage with expenses declining at nearly twice the rate of our revenue decline. When we exclude the non-core servicing rights recapture, revenue growth, year-to-date, is higher by 2.6 percent. We continue to examine all of our operations and resources as we look to manage expense levels into the second half of 2023.”

Noninterest Income/Noninterest Expense        
($ in thousands, except ratios)Jun. 2023Mar. 2023Dec. 2022Sep. 2022Jun. 2022 Annual Growth
Noninterest Income (NII)$4,361 $3,666 $3,713 $4,043 $4,673  $(312)
NII / Total Revenue 30.7% 26.2% 25.4% 27.9% 32.8%  -2.1%
NII / Average Assets 1.3% 1.1% 1.1% 1.2% 1.4%  -0.1%
Total Revenue Growth -0.5% -2.0% -6.7% -13.2% -9.1%  -6.7%
        
Noninterest Expense (NIE)$10,339 $10,773 $10,269 $10,384 $10,802  $(463)
Efficiency Ratio 72.7% 76.9% 70.2% 71.6% 75.6%  -2.9%
NIE / Average Assets 3.1% 3.2% 3.1% 3.2% 3.3%  -0.2%
Net Noninterest Expense/Avg. Assets -1.8% -2.1% -2.0% -2.0% -1.9%  0.1%
Total Expense Growth -4.3% -0.8% -11.2% -7.7% -2.5%  -4.3%
                    

Balance Sheet

As of June 30, 2023, total assets were $1.34 billion, in line with the linked quarter, and slightly higher compared to the prior year. This increase was driven by higher loan balances, partially offset by reductions in cash and investment securities.   Total shareholders’ equity at June 30, 2023, was $117.7 million. Excluding the impact of the investment portfolio impairment, equity rose to $150.6 million, reflecting a 2.6 percent increase. During the quarter, we repurchased 91,260 shares of our Company stock, further demonstrating our commitment to enhancing shareholder value.

With our adoption of CECL on January 1st, our Allowance for Credit Losses rose in the quarter to $15.8 million, up 14.4 percent compared to the prior year. In the quarter, we added $375 thousand to the reserve offset by just $22 thousand in net charge-offs.

The investment portfolio of $228.0 million, represented 17.0 percent of assets at June 30, 2023, and was down $38.2 million or 14.2 percent from the year-ago period. Total loans held for investment were $984.8 million at June 30, 2023, up $89.2 million, or 10.0 percent, from June 30, 2022. Residential originations have offset the decline in Commercial loan originations we are seeing in the majority of our markets.

Deposit balances of $1.07 billion at June 30, 2023, were level to the prior year, but experienced a decline of 3.5 percent from the linked quarter. The shift in the mix of our deposit funding has driven the margin compression that we are experiencing. Currently, time deposits and demand deposits comprise 22.4 and 36.3 percent of total deposits, respectively, compared to 13.3 and 40.9 percent for the prior year.  

Mr. Klein continued, “Loan growth continued in the quarter, although we are focused on reducing the reliance on our residential mortgage portfolio products to drive growth as we have a fairly broad base of high-level commercial leaders in our markets working to grow our commercial book. The challenge of funding our Company and maintaining our margins continued in the quarter. We still have access to significant additional liquidity and our level of uninsured deposits ended the quarter at 14.8 percent.”

Loan Balances      
($ in thousands, except ratios)Jun. 2023Mar. 2023Dec. 2022Sep. 2022Jun. 2022Annual Growth
Commercial$123,226 $126,066 $128,393 $128,565 $127,711 $(4,485)
% of Total 12.5% 12.9% 13.3% 13.9% 14.3% -3.5%
Commercial RE 417,412  419,024  412,809  404,710  404,260  13,152 
% of Total 42.4% 42.9% 42.9% 43.7% 45.1% 3.3%
Agriculture 58,222  57,761  64,505  60,522  60,586  (2,364)
% of Total 5.9% 5.9% 6.7% 6.5% 6.8% -3.9%
Residential RE 321,365  309,684  291,368  267,135  241,614  79,751 
% of Total 32.6% 31.7% 30.3% 28.9% 27.0% 33.0%
Consumer & Other 64,599  63,777  65,000  64,317  61,440  3,159 
% of Total 6.6% 6.5% 6.8% 7.0% 6.9% 5.1%
Total Loans$ 984,824  $ 976,312  $ 962,075  $ 925,249  $ 895,611  $ 89,213  
Total Growth Percentage      10.0%
       
Deposit Balances      
($ in thousands, except ratios)Jun. 2023Mar. 2023Dec. 2022Sep. 2022Jun. 2022Annual Growth
Non-Int DDA$218,411 $237,175 $256,799 $250,791 $239,676 $(21,265)
% of Total 20.4% 21.4% 23.6% 23.1% 22.4% -8.9%
Interest DDA 170,282  188,497  191,719  199,523  198,286  (28,004)
% of Total 15.9% 17.0% 17.6% 18.4% 18.5% -14.1%
Savings 225,065  227,974  191,272  201,402  215,285  9,780 
% of Total 21.0% 20.5% 17.6% 18.5% 20.1% 4.5%
Money Market 217,681  222,203  255,995  258,975  276,274  (58,593)
% of Total 20.3% 20.0% 23.6% 23.8% 25.8% -21.2%
Time Deposits 239,717  234,295  190,880  175,202  142,258  97,459 
% of Total 22.4% 21.1% 17.6% 16.1% 13.3% 68.5%
Total Deposits$ 1,071,156  $ 1,110,144  $ 1,086,665  $ 1,085,893  $ 1,071,779  $ (623)
Total Growth Percentage      -0.1%
         

Asset Quality

SB Financial reported nonperforming assets of $3.5 million as of June 30, 2023, down $1.2 million or 25.2 percent from the year-ago quarter. The coverage ratio of problem loans to the allowance for credit losses was at 542.8 percent at June 30, 2023, which was up nearly 200 basis points from the prior year due to the expansion of the allowance from the CECL adjustment of $1.4 million and our reduction in problem loans.

Nonperforming Assets     Annual Change
($ in thousands, except ratios)Jun. 2023Mar. 2023Dec. 2022Sep. 2022Jun. 2022
Commercial & Agriculture$170 $185 $114 $114 $140 $30 
% of Total Com./Ag. loans 0.09% 0.10% 0.06% 0.06% 0.07% 21.4%
Commercial RE 192  199  210  223  359  (167)
% of Total CRE loans 0.05% 0.05% 0.05% 0.06% 0.09% -46.5%
Residential RE 2,266  2,742  3,020  3,129  3,176  (910)
% of Total Res. RE loans 0.71% 0.89% 1.04% 1.17% 1.31% -28.7%
Consumer & Other 282  270  338  280  323  (41)
% of Total Con./Oth. loans 0.44% 0.42% 0.52% 0.44% 0.53% -12.7%
Total Nonaccruing Loans 2,910  3,396  3,682  3,746  3,998  (1,088)
% of Total loans 0.30% 0.35% 0.38% 0.40% 0.45% -27.2%
Foreclosed Assets and Other Assets 625  650  777  756  730  (105)
Total Change (%)      -14.4%
Total Nonperforming Assets$3,535 $4,046 $4,459 $4,502 $4,728 $(1,193)
% of Total assets 0.26% 0.30% 0.33% 0.35% 0.37% -25.23%
                   

Webcast and Conference Call

The Company will hold the second quarter 2023 earnings conference call and webcast on July 28, 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”.

In May 2023, SB Financial was valued #163 on the American Banker Magazine’s list of top 200 publicly traded Community Bank and Thrifts based on three-year average return on equity.

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.com
 


SB FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS - (Unaudited)
           
  June March December September June
($ in thousands)  2023   2023   2022   2022   2022 
           
ASSETS          
Cash and due from banks $20,993  $21,625  $27,817  $27,934  $29,567 
Interest bearing time deposits  1,180   1,380   2,131   2,134   1,691 
Available-for-sale securities  227,996   237,607   238,780   243,233   266,162 
Loans held for sale  5,684   5,592   2,073   2,979   4,242 
Loans, net of unearned income  984,824   976,312   962,075   925,249   895,611 
Allowance for credit losses  (15,795)  (15,442)  (13,818)  (13,824)  (13,801)
Premises and equipment, net  22,230   22,621   22,829   22,842   23,122 
Federal Reserve and FHLB Stock, at cost  7,634   6,054   6,326   5,230   5,303 
Foreclosed assets and other assets  625   650   777   756   730 
Interest receivable  4,079   3,926   4,091   3,556   3,256 
Goodwill  23,239   23,239   23,239   23,239   23,239 
Cash value of life insurance  29,183   29,024   28,870   28,713   28,556 
Mortgage servicing rights  13,723   13,548   13,503   13,473   13,408 
Other assets  15,840   15,157   16,940   17,863   12,886 
Total assets $1,341,435  $1,341,293  $1,335,633  $1,303,377  $1,293,972 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
Deposits          
Non interest bearing demand $218,411  $237,175  $256,799  $250,791  $239,676 
Interest bearing demand  170,282   188,497   191,719   199,523   198,286 
Savings  225,065   227,974   191,272   201,402   215,285 
Money market  217,681   222,203   255,995   258,975   276,274 
Time deposits  239,717   234,295   190,880   175,202   142,258 
Total deposits  1,071,156   1,110,144   1,086,665   1,085,893   1,071,779 
           
Short-term borrowings  21,118   15,998   14,923   19,754   30,772 
Federal Home Loan Bank advances  81,300   44,500   60,000   35,000   25,000 
Trust preferred securities  10,310   10,310   10,310   10,310   10,310 
Subordinated debt net of issuance costs  19,618   19,606   19,594   19,582   19,570 
Interest payable  1,866   1,441   769   623   307 
Other liabilities  18,401   19,535   24,944   17,587   11,678 
Total liabilities  1,223,769   1,221,534   1,217,205   1,188,749   1,169,416 
           
Shareholders' Equity          
Common stock  61,319   61,319   61,319   61,319   61,319 
Additional paid-in capital  15,154   14,953   15,087   15,000   15,069 
Retained earnings  103,725   101,548   101,966   99,309   96,809 
Accumulated other comprehensive loss  (32,894)  (29,671)  (32,120)  (33,426)  (22,210)
Treasury stock  (29,638)  (28,390)  (27,824)  (27,574)  (26,431)
Total shareholders' equity  117,666   119,759   118,428   114,628   124,556 
           
Total liabilities and shareholders' equity$1,341,435  $1,341,293  $1,335,633  $1,303,377  $1,293,972 
           


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
              
 June March December September June June June
Interest income 2023   2023   2022   2022   2022   2023   2022 
Loans             
Taxable$12,715  $12,126  $11,222  $10,084  $8,880  $24,841  $16,932 
Tax exempt 121   116   109   92   73   237   134 
Securities             
Taxable 1,524   1,535   1,559   1,536   1,469   3,059   2,704 
Tax exempt 46   47   47   52   52   93   99 
Total interest income 14,406   13,824   12,937   11,764   10,474   28,230   19,869 
              
Interest expense             
Deposits 3,538   2,578   1,440   852   567   6,116   1,185 
Repurchase agreements & other 9   10   7   8   11   19   24 
Federal Home Loan Bank advances 664   553   258   180   38   1,217   77 
Trust preferred securities 172   164   138   99   71   336   124 
Subordinated debt 194   195   194   195   194   389   389 
Total interest expense 4,577   3,500   2,037   1,334   881   8,077   1,799 
              
Net interest income 9,829   10,324   10,900   10,430   9,593   20,153   18,070 
              
Provision for credit losses 145   250   -   -   -   395   - 
              
Net interest income after provision for loan losses 9,684   10,074   10,900   10,430   9,593   19,758   18,070 
              
Noninterest income             
Wealth management fees 940   917   907   930   936   1,857   1,891 
Customer service fees 871   825   880   844   860   1,696   1,654 
Gain on sale of mtg. loans & OMSR 1,056   599   550   876   1,196   1,655   2,872 
Mortgage loan servicing fees, net 494   608   627   527   606   1,102   1,810 
Gain on sale of non-mortgage loans 218   24   105   125   167   242   336 
Title insurance revenue 455   373   454   476   697   828  ��1,299 
Gain (loss) on sale of assets 15   (11)  18   (12)  -   4   55 
Other 312   331   172   277   211   643   558 
Total noninterest income 4,361   3,666   3,713   4,043   4,673   8,027   10,475 
              
Noninterest expense             
Salaries and employee benefits 5,721   5,913   5,677   5,858   6,418   11,634   12,607 
Net occupancy expense 802   784   763   769   719   1,586   1,461 
Equipment expense 1,002   981   1,017   918   827   1,983   1,681 
Data processing fees 685   646   627   664   643   1,331   1,219 
Professional fees 612   863   738   766   760   1,475   1,710 
Marketing expense 213   198   258   200   222   411   453 
Telephone and communication expense 124   121   124   134   105   245   216 
Postage and delivery expense 78   87   121   75   110   165   226 
State, local and other taxes 218   228   277   250   277   446   555 
Employee expense 156   188   157   145   175   344   311 
Other expenses 728   764   510   605   546   1,492   1,222 
Total noninterest expense 10,339   10,773   10,269   10,384   10,802   21,112   21,661 
              
Income before income tax expense 3,706   2,967   4,344   4,088   3,464   6,673   6,884 
Income tax expense 631   517   811   746   630   1,148   1,237 
              
Net income $3,075  $2,450  $3,533  $3,342  $2,834  $5,525  $5,647 
              
Common share data:             
Basic earnings per common share$0.45  $0.35  $0.51  $0.48  $0.40  $0.80  $0.80 
Diluted earnings per common share$0.44  $0.35  $0.50  $0.47  $0.40  $0.79  $0.79 
              
Average shares outstanding (in thousands):             
Basic: 6,847   6,933   6,945   6,968   7,075   6,890   7,055 
Diluted: 6,910   7,008   7,021   7,033   7,149   6,976   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
               
  June March December September June June June
SUMMARY OF OPERATIONS  2023   2023   2022   2022   2022   2023   2022 
               
Net interest income $9,829  $10,324  $10,900  $10,430  $9,593  $20,153  $18,070 
Tax-equivalent adjustment  44   43   41   38   33   88   62 
Tax-equivalent net interest income  9,873   10,367   10,941   10,468   9,626   20,241   18,132 
Provision for credit loss  145   250   -   -   -   395   - 
Noninterest income  4,361   3,666   3,713   4,043   4,673   8,027   10,475 
Total operating revenue  14,190   13,990   14,613   14,473   14,266   28,180   28,545 
Noninterest expense  10,339   10,773   10,269   10,384   10,802   21,112   21,661 
Pre-tax pre-provision income  3,851   3,217   4,344   4,088   3,464   7,068   6,884 
Pretax income  3,706   2,967   4,344   4,088   3,464   6,673   6,884 
Net income  3,075   2,450   3,533   3,342   2,834   5,525   5,647 
               
PER SHARE INFORMATION:              
Basic earnings per share (EPS)  0.45   0.35   0.51   0.48   0.40   0.80   0.80 
Diluted earnings per share  0.44   0.35   0.50   0.47   0.40   0.79   0.79 
Common dividends  0.130   0.125   0.125   0.120   0.120   0.255   0.235 
Book value per common share  17.30   17.37   17.08   16.49   17.75   17.30   17.75 
Tangible book value per common share (TBV)  13.81   13.93   13.65   13.07   14.36   13.81   14.36 
Market price per common share  12.62   14.13   16.95   16.85   17.26   12.62   17.26 
Market price to TBV  91.4%  101.4%  124.2%  128.9%  120.2%  91.4%  120.2%
Market price to trailing 12 month EPS  7.1   8.2   9.6   9.6   9.3   7.1   9.3 
               
PERFORMANCE RATIOS:              
Return on average assets (ROAA)  0.91%  0.73%  1.08%  1.03%  0.87%  0.82%  0.85%
Pre-tax pre-provision ROAA  1.14%  0.96%  1.32%  1.26%  1.06%  1.14%  1.11%
Return on average equity  10.01%  8.37%  12.17%  10.89%  8.89%  9.01%  8.46%
Return on average tangible equity  12.40%  10.50%  15.30%  13.51%  10.93%  11.18%  10.30%
Efficiency ratio  72.71%  76.85%  70.16%  71.63%  75.60%  74.77%  75.76%
Earning asset yield  4.61%  4.49%  4.27%  3.89%  3.45%  4.54%  3.20%
Cost of interest bearing liabilities  1.90%  1.46%  0.90%  0.58%  0.39%  1.69%  0.38%
Net interest margin  3.15%  3.35%  3.60%  3.45%  3.16%  3.24%  2.91%
Tax equivalent effect  0.01%  0.02%  0.01%  0.01%  0.00%  0.02%  0.01%
Net interest margin, tax equivalent  3.16%  3.37%  3.61%  3.46%  3.16%  3.26%  2.92%
Non interest income/Average assets  1.30%  1.10%  1.13%  1.24%  1.43%  1.20%  1.58%
Non interest expense/Average assets  3.07%  3.23%  3.13%  3.19%  3.31%  3.15%  3.26%
Net noninterest expense/Average assets  -1.78%  -2.13%  -2.00%  -1.95%  -1.88%  -1.95%  -1.68%
               
ASSET QUALITY RATIOS:              
Gross charge-offs  32   69   7   9   9   101   18 
Recoveries  10   8   1   32   6   18   14 
Net charge-offs  22   61   6   (23)  3   83   4 
Nonaccruing loans/Total loans  0.30%  0.35%  0.38%  0.40%  0.45%  0.30%  0.45%
Nonperforming loans/Total loans  0.30%  0.35%  0.38%  0.40%  0.45%  0.30%  0.45%
Nonperforming assets/Loans & OREO  0.36%  0.41%  0.46%  0.49%  0.53%  0.36%  0.53%
Nonperforming assets/Total assets  0.26%  0.30%  0.33%  0.35%  0.37%  0.26%  0.37%
Allowance for credit loss/Nonperforming loans  542.78%  454.71%  375.29%  369.03%  345.20%  542.78%  345.20%
Allowance for credit loss/Total loans  1.60%  1.58%  1.44%  1.49%  1.54%  1.60%  1.54%
Net loan charge-offs/Average loans (ann.)  0.01%  0.03%  0.00%  (0.01%)  0.00%  0.02%  0.00%
               
CAPITAL & LIQUIDITY RATIOS:              
Loans/ Deposits  91.94%  87.94%  88.53%  85.21%  83.56%  91.94%  83.56%
Equity/ Assets  8.77%  8.93%  8.87%  8.79%  9.63%  8.77%  9.63%
Tangible equity/Tangible assets  7.13%  7.29%  7.22%  7.10%  7.93%  7.13%  7.93%
Common equity tier 1 ratio (Bank)  13.18%  13.44%  13.42%  13.23%  13.21%  13.18%  13.21%
               
END OF PERIOD BALANCES              
Total assets  1,341,435   1,341,293   1,335,633   1,303,377   1,293,972   1,341,435   1,293,972 
Total loans  984,824   976,312   962,075   925,249   895,611   984,824   895,611 
Deposits  1,071,156   1,110,144   1,086,665   1,085,893   1,071,779   1,071,156   1,071,779 
Stockholders equity  117,666   119,759   118,428   114,628   124,556   117,666   124,556 
Goodwill and intangibles  23,710   23,732   23,753   23,770   23,787   23,710   23,787 
Tangible equity  93,956   96,027   94,675   90,858   100,769   93,956   100,769 
Mortgage servicing portfolio  1,353,904   1,344,158   1,352,016   1,362,666   1,369,732   1,353,904   1,369,732 
Wealth/Brokerage assets under care  499,255   518,009   507,093   480,947   500,487   499,255   500,487 
Total assets under care  3,194,594   3,203,460   3,194,742   3,146,990   3,164,191   3,194,594   3,164,191 
Full-time equivalent employees  253   255   268   271   267   253   267 
Period end common shares outstanding  6,803   6,894   6,935   6,950   7,017   6,803   7,017 
Market capitalization (all)  85,857   97,419   117,556   117,113   121,105   85,857   121,105 
               
AVERAGE BALANCES              
Total assets  1,346,010   1,335,056   1,314,419   1,302,297   1,305,815   1,341,918   1,328,216 
Total earning assets  1,248,813   1,232,018   1,211,674   1,209,958   1,216,124   1,243,540   1,243,017 
Total loans  988,348   970,813   937,898   909,909   870,439   979,629   851,736 
Deposits  1,100,344   1,098,935   1,094,491   1,085,821   1,108,890   1,098,647   1,121,373 
Stockholders equity  122,886   117,071   116,114   122,738   127,519   122,601   133,471 
Goodwill and intangibles  23,721   23,743   23,761   23,778   23,796   23,732   23,798 
Tangible equity  99,165   93,328   92,353   98,960   103,723   98,869   109,673 
Average basic shares outstanding  6,847   6,933   6,945   6,968   7,075   6,890   7,055 
Average diluted shares outstanding  6,910   7,008   7,021   7,033   7,149   6,976   7,116 
                             


SB FINANCIAL GROUP, INC.
Rate Volume Analysis - (Unaudited)
For the Three Months Ended Jun. 30, 2023 and 2022
     
($ in thousands) Three Months Ended Jun. 30, 2023 Three Months Ended Jun. 30, 2022
  Average Average Average Average
Assets BalanceInterestRate BalanceInterestRate
         
Taxable securities/cash $252,899 $1,524 2.41% $337,226 $1,469 1.74%
Nontaxable securities  7,566  46 2.43%  8,459  52 2.46%
Loans, net  988,348  12,836 5.19%  870,439  8,953 4.11%
Total earning assets  1,248,813  14,406 4.61%  1,216,124  10,474 3.45%
Cash and due from banks  3,952     7,177   
Allowance for loan losses  (15,556)    (13,803)  
Premises and equipment  22,529     23,741   
Other assets  86,272     72,576   
Total assets $1,346,010    $1,305,815   
         
Liabilities        
Savings, MMDA and interest bearing demand$621,999 $1,850 1.19% $713,367 $353 0.20%
Time deposits  239,532  1,688 2.82%  145,694  214 0.59%
Repurchase agreements & other  15,064  9 0.24%  18,671  11 0.24%
Advances from Federal Home Loan Bank  57,495  664 4.62%  3,989  38 3.81%
Trust preferred securities  10,310  172 6.67%  10,310  71 2.75%
Subordinated debt  19,610  194 3.96%  19,564  194 3.97%
Total interest bearing liabilities  964,010  4,577 1.90%  911,595  881 0.39%
Non interest bearing demand  238,813  -    249,829  -  
Total funding  1,202,823  1.52%  1,161,424  0.30%
Other liabilities  20,301     16,872   
Total liabilities  1,223,124     1,178,296   
Equity  122,886     127,519   
         
Total liabilities and equity $1,346,010    $1,305,815   
         
Net interest income  $9,829    $9,593  
         
Net interest income as a percent of average interest-earning assets - GAAP measure   3.15%   3.16%
         
Net interest income as a percent of average interest-earning assets - non GAAP3.16%   3.16%
- Computed on a fully tax equivalent (FTE) basis      
         
  Six Months Ended Jun. 30, 2023 Six Months Ended Jun. 30, 2022
  Average Average Average Average
Assets BalanceInterestRate BalanceInterestRate
         
Taxable securities/cash $256,250 $3,059 2.39% $383,272 $2,704 1.41%
Nontaxable securities  7,661  93 2.43%  8,009  99 2.47%
Loans, net  979,629  25,078 5.12%  851,736  17,066 4.01%
Total earning assets  1,243,540  28,230 4.54%  1,243,017  19,869 3.20%
Cash and due from banks  4,019     7,593   
Allowance for loan losses  (15,162)    (13,805)  
Premises and equipment  22,692     24,522   
Other assets  86,829     66,889   
Total assets $1,341,918    $1,328,216   
         
Liabilities        
Savings, MMDA and interest bearing demand$629,061 $3,135 1.00% $723,176 $751 0.21%
Time deposits  227,343  2,981 2.62%  156,268  435 0.56%
Repurchase agreements & Other  16,832  19 0.23%  21,876  24 0.22%
Advances from Federal Home Loan Bank  53,359  1,217 4.56%  4,740  77 3.25%
Trust preferred securities  10,310  336 6.52%  10,310  124 2.41%
Subordinated debt  19,604  389 3.97%  19,558  389 3.98%
Total interest bearing liabilities  956,509  8,077 1.69%  935,928  1,799 0.38%
Non interest bearing demand  242,243  1.35%  241,929  0.31%
Total funding  1,198,752     1,177,857   
Other liabilities  20,565     16,888   
Total liabilities  1,219,317     1,194,745   
Equity  122,601     133,471   
         
Total liabilities and equity $1,341,918    $1,328,216   
         
Net interest income  $20,153    $18,070  
         
Net interest income as a percent of average interest-earning assets - GAAP measure   3.24%   2.91%
         
Net interest income as a percent of average interest-earning assets - non GAAP3.26%   2.92%
- Computed on a fully tax equivalent (FTE) basis      
         


Non-GAAP reconciliation Three Months Ended Six Months Ended
         
($ in thousands, except per share & ratios) Jun. 30, 2023 Jun. 30, 2022 Jun. 30, 2023 Jun. 30, 2022
         
Total Operating Revenue $14,190  $14,266  $28,180  $28,545 
Adjustment to (deduct)/add OMSR recapture/impairment * 16   (239)  (39)  (1,128)
         
Adjusted Total Operating Revenue  14,206   14,027   28,141   27,417 
         
Income before Income Taxes  3,706   3,464   6,673   6,884 
Adjustment for OMSR *  16   (239)  (39)  (1,128)
         
Adjusted Income before Income Taxes  3,722   3,225   6,634   5,756 
         
Provision for Income Taxes  631   630   1,148   1,237 
Adjustment for OMSR **  3   (50)  (8)  (237)
         
Adjusted Provision for Income Taxes  634   580   1,140   1,001 
         
Net Income  3,075   2,834   5,525   5,647 
Adjustment for OMSR *  13   (189)  (31)  (891)
         
Adjusted Net Income  3,088   2,645   5,494   4,756 
         
Diluted Earnings per Share  0.44   0.40   0.79   0.79 
Adjustment for OMSR *  0.00   (0.03)  (0.00)  (0.13)
         
Adjusted Diluted Earnings per Share $0.45  $0.37  $0.79  $0.67 
         
Return on Average Assets  0.91%  0.87%  0.82%  0.85%
Adjustment for OMSR *  0.00%  -0.06%  -0.00%  -0.07%
         
Adjusted Return on Average Assets  0.92%  0.81%  0.82%  0.78%
         

*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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