SB Financial : Announces Fourth Quarter Results and Record Full Year 2021 earnings - Form 8-K

SB Financial Group Announces Fourth Quarter Results and Record Full Year 2021 earnings

DEFIANCE, OH, January 27, 2022 -- 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, 2021.

Fourth quarter 2021 highlights for the fourth quarter include:

●	Net income of $3.3 million; diluted earnings per share ("EPS") of $0.49 or a 31.0 percent decrease year over year

●	Adjusted net income, excluding the positive impact of the Originated Mortgage Servicing Rights ("OMSR") recovery of $581,000 was $2.9 million, with EPS of $0.42

●	Mortgage origination volume of $126.7 million, reflects a decrease of $42.3 million, or 25.0 percent

Full year 2021 highlights over the prior year include:

●	Net income of $18.3 million, which is the highest in history for the Company, with EPS of $2.56 or a 30.6 percent increase

●	Loans increased $18.5 million, or 2.3 percent year over year excluding the impact of Paycheck Protection Program ("PPP") loan balances in 2020 and 2021 of $2.0 and $70.6 million, respectively

●	Deposits increased by $64.0 million, or 6.1 percent to $1.11 billion

●	Mortgage origination volume of $600.0 million, was a decline of $94.2 million or 13.6 percent with the mortgage servicing portfolio increasing by $63.3 million to $1.36 billion, or 4.9 percent

●	Provision expense of $1.1 million declined 76.7 percent from the year ago period, with net recoveries of $181,000 in 2021, compared to net charge offs of $681,000 in 2020

Highlights		Three Months Ended			Twelve Months Ended
($ in thousands, except per share & ratios)		Dec. 2021			Dec. 2020			% Change			Dec. 2021			Dec. 2020			% Change
Operating revenue		$	15,667			$	18,153				-13.7	%		$	68,581			$	66,026				3.9	%
Interest income			10,003				10,589				-5.5	%			41,904				42,635				-1.7	%
Interest expense			925				1,338				-30.9	%			4,020				6,705				-40.0	%
Net interest income			9,078				9,251				-1.9	%			37,884				35,930				5.4	%
Provision for loan losses			-				800				-100.0	%			1,050				4,500				-76.7	%
Noninterest income			6,589				8,902				-26.0	%			30,697				30,096				2.0	%
Noninterest expense			11,567				10,684				8.3	%			44,808				43,087				4.0	%
Net income			3,332				5,358				-37.8	%			18,277				14,944				22.3	%
Earnings per diluted share			0.49				0.71				-31.0	%			2.56				1.96				30.6	%
Return on average assets			0.99	%			1.73	%			-42.8	%			1.38	%			1.29	%			7.0	%
Return on average equity			9.21	%			15.05	%			-38.8	%			12.67	%			10.74	%			18.0	%
Non-GAAP Measures
Adjusted net income		$	2,873			$	5,841				-50.8	%		$	15,563			$	18,757				-17.0	%
Adjusted diluted EPS			0.42				0.77				-45.5	%			2.18				2.44				-10.7	%
Adjusted return on average assets			0.86	%			1.89	%			-54.5	%			1.18	%			1.62	%			-27.2	%
Adjusted pre-tax, pre-provision income			3,518				8,080				-56.5	%			20,331				27,765				-26.8	%

"The fourth quarter completed the highest earnings performance for our Company in our history" said Mark A. Klein, Chairman, President, and CEO of SB Financial. "We have completed nearly all of the PPP forgiveness and we are looking forward to a return to a bit more normal operating environment with the onset of the new year. Our team made meaningful progress this year in the face of a fairly challenging environment."

RESULTS OF OPERATIONS

Consolidated Revenue

Total operating revenue, consisting of net interest income and noninterest income, was down 13.7 percent from the fourth quarter of 2020, and down 6.0 percent from the linked quarter.

●	Net interest income was down from the year-ago quarter by 1.9 percent, and down 9.4 percent from the linked quarter as the impact of PPP forgiveness declined.

●	Net interest margin on a fully taxable equivalent basis (FTE) was down from the year-ago and linked quarter by 32 basis points, as cash balances continued to be higher than normal, and PPP balances were down to $2.0 million.

●	Noninterest income was down 26 percent from the year ago quarter as mortgage volume and gain on sale yields trended lower.

Mortgage Loan Business

Mortgage loan originations for the fourth quarter of 2021 were $126.6 million, down $42.4 million, or 25.1 percent, from the year-ago quarter. Total sales of originated loans were $110.5 million, down $32.6 million, or 22.8 percent, from the year-ago quarter. For the twelve months of 2021, SB Financial had total volume of $600.0 million, of which $305.3 million (51 percent) was new purchase/construction lending, $152.2 million (25 percent) was external refinance, and the remaining $142.4 million (24 percent) was internal refinance.

Net mortgage banking revenue, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $3.8 million for the fourth quarter of 2021, compared to $6.2 million for the year-ago quarter. The mortgage servicing valuation adjustment for the fourth quarter of 2021 was a positive $581,000, compared to a negative adjustment of $611,000 for the fourth quarter of 2020. For the twelve months of 2021, the recapture of servicing rights was $3.4 million compared to impairment of $3.6 million for the prior year twelve months. The aggregate servicing valuation impairment ended the quarter at $1.5 million. The servicing portfolio at December 31, 2021, was $1.36 billion, up $63.3 million, or 4.9 percent, from $1.30 billion at December 31, 2020.

Mr. Klein noted, "Mortgage originations of $127 million reflected the normal cyclical nature of the business line and also reflected the decline in refinance volume, which was down 20 percent from the linked quarter. We recaptured nearly $600,000 on our service rights impairment in the quarter, and as rates rise into 2022, potentially, the remaining $1.5 million would add to net income. We ended the year with strong origination teams in all of our markets, with the commitment to add originators across our footprint to achieve our volume targets."

Mortgage Banking
($ in thousands)		Dec. 2021			Sep. 2021			Jun. 2021			Mar. 2021			Dec. 2020
Mortgage originations		$	126,611			$	152,623			$	164,883			$	155,836			$	168,997
Mortgage sales			110,543				123,083				119,064				136,708				143,151
Mortgage servicing portfolio			1,362,962				1,341,439				1,323,804				1,304,097				1,299,698
Mortgage servicing rights			12,034				11,194				10,678				10,490				7,759
Mortgage servicing revenue
Loan servicing fees			850				850				830				859				857
OMSR amortization			(807	)			(943	)			(948	)			(1,187	)			(1,283	)
Net administrative fees			43				(93	)			(118	)			(328	)			(426	)
OMSR valuation adjustment			581				248				(99	)			2,706				(611	)
Net loan servicing fees			624				155				(217	)			2,378				(1,037	)
Gain on sale of mortgages			3,194				3,947				4,255				5,859				7,197
Mortgage banking revenue, net		$	3,818			$	4,102			$	4,038			$	8,237			$	6,160

2

Noninterest Income and Noninterest Expense

SB Financial's noninterest income for the quarter was down 26 percent from the prior year. The gain on sale mortgage loan yields were down 214 basis points from the prior year with the total dollars of sales down $32.7 million. Wealth management revenue was up over 14 percent from the prior year due to higher retention levels and growth in the equity sector. SB Financial's Title Agency provided revenue in the quarter of $528,000. For the twelve months, noninterest income of $30.7 million was up $600,000 or 2.0 percent year over year. Fee income as a percent of total revenue finished 2021 at 44.8 percent.

For the fourth quarter of 2021, noninterest expense of $11.6 million was up 8.3 percent from the prior year. For the twelve months of 2021, noninterest expense of $44.8 million was up $1.7 million or 4.0 percent compared to the prior year. This increase, in part, reflects our ongoing investment in technology and enhanced customer solutions.

Noninterest Income / Noninterest Expense
($ in thousands, except ratios)		Dec. 2021			Sep. 2021			Jun. 2021			Mar. 2021			Dec. 2020
Noninterest Income (NII)		$	6,589			$	6,649			$	6,537			$	10,922			$	8,902
NII / Total Revenue			42.1	%			39.9	%			41.7	%			53.2	%			49.0	%
NII / Average Assets			2.0	%			2.0	%			2.0	%			3.4	%			2.9	%
Total Revenue Growth			-13.7	%			-15.3	%			-10.3	%			91.9	%			24.7	%
Noninterest Expense (NIE)		$	11,567			$	11,256			$	11,076			$	10,909			$	10,684
Efficiency Ratio			73.7	%			67.4	%			70.5	%			53.0	%			58.8	%
NIE / Average Assets			3.5	%			3.4	%			3.3	%			3.4	%			3.5	%
Net Noninterest Expense/Avg. Assets			-1.5	%			-1.4	%			-1.4	%			0.0	%			-0.6	%
Total Expense Growth			8.3	%			-0.7	%			-5.0	%			16.0	%			5.0	%
Operating Leverage			-1.7				-21.5				-2.1				5.7				4.9

Balance Sheet

Total assets as of December 31, 2021, were $1.33 billion, up $73.0 million, or 5.8 percent, year over year due to higher liquidity levels. Total shareholders' equity as of December 31, 2021, was $144.9 million, up 1.4 percent year over year, and represented 10.9 percent of total assets.

Total loans held for investment were $822.7 million at December 31, 2021, down $50.0 million, or 5.7 percent, from December 31, 2020. Excluding PPP activity from both years, loan balances were up $18.5 million, or 2.3 percent.

The investment portfolio of $268.6 million, including shares in the Federal Reserve Bank and Federal Home Loan Bank, represented 20.2 percent of assets at December 31, 2021, and was up 87.4 percent year over year. Deposit balances of $1.11 billion at December 31, 2021, increased by $64.0 million, or 6.1 percent, since December 31, 2020. Growth from the prior year included $14.1 million in checking and $49.9 million in savings and time deposit balances.

Mr. Klein continued, "Our lenders are pleased to get the PPP process in the rear view mirror and get back out to connect with clients and drive organic growth. Pipelines are generally strong and we expect to add lenders in key urban markets to drive growth in 2022. Subsequent to year end, we have an agreement in principle to sell the largest OREO property in our portfolio, which will reduce NPA's to nearly 35 basis points when closed. Our coverage of non-performing loans ended the year at 315 percent, nearly double the coverage from the prior year."

Loan Balances
($ in thousands, except ratios)		Dec. 2021			Sep. 2021			Jun. 2021			Mar. 2021			Dec. 2020			Annual Growth
Commercial		$	122,373			$	138,085			$	149,998			$	179,157			$	203,256			$	(80,883	)
% of Total			14.9	%			16.3	%			17.6	%			21.1	%			23.3	%			-39.8	%
Commercial RE			381,387				387,858				389,287				385,403				370,984				10,403
% of Total			46.4	%			45.8	%			45.8	%			45.4	%			42.5	%			2.8	%
Agriculture			57,473				57,374				50,895				48,405				55,251				2,222
% of Total			7.0	%			6.8	%			6.0	%			5.7	%			6.3	%			4.0	%
Residential RE			206,324				207,571				203,294				176,998				182,076				24,248
% of Total			25.1	%			24.5	%			23.9	%			20.9	%			20.9	%			13.3	%
Consumer & Other			55,157				55,660				57,039				58,213				61,156				(5,999	)
% of Total			6.7	%			6.6	%			6.7	%			6.9	%			7.0	%			-9.8	%
Total Loans		$	822,714			$	846,548			$	850,513			$	848,176			$	872,723			$	(50,009	)
Total Growth Percentage																							-5.7	%

3

Deposit Balances
($ in thousands, except ratios)			Dec. 2021				Sep. 2021				Jun. 2021				Mar. 2021				Dec. 2020				Annual Growth
Non-Int DDA		$	247,044			$	258,857			$	240,572			$	273,026			$	251,649			$	(4,605	)
% of Total			22.2	%			23.3	%			22.0	%			24.4	%			24.0	%			-1.8	%
Interest DDA			195,464				189,130				187,023				191,593				176,785				18,679
% of Total			17.6	%			17.0	%			17.1	%			17.1	%			16.9	%			10.6	%
Savings			237,571				246,414				235,231				218,260				174,864				62,707
% of Total			21.3	%			22.2	%			21.6	%			19.5	%			16.7	%			35.9	%
Money Market			276,462				258,741				255,512				249,088				216,164				60,298
% of Total			24.8	%			23.3	%			23.4	%			22.2	%			20.6	%			27.9	%
Time Deposits			156,504				158,518				172,696				188,229				229,549				(73,045	)
% of Total			14.1	%			14.3	%			15.8	%			16.8	%			21.9	%			-31.8	%
Total Deposits		$	1,113,045			$	1,111,660			$	1,091,034			$	1,120,196			$	1,049,011			$	64,034
Total Growth Percentage																							6.1	%

Asset Quality

SB Financial reported nonperforming assets of $6.5 million as of December 31, 2021, which was down $778,000 or 10.7 percent year over year. The Company recorded $7,000 in net recoveries in the quarter, and total net recoveries of $181,000 for the year. Our loan loss reserve of $13.8 million is up $1.2 million or 9.8 percent year over year and represents 1.68 percent of total loans.

Nonperforming Assets																	Annual
($ in thousands, except ratios)		Dec. 2021			Sep. 2021			Jun. 2021			Mar. 2021			Dec. 2020			Change
Commercial & Agriculture		$	143			$	144			$	375			$	615			$	902			$	(759	)
% of Total Com./Ag. loans			0.08	%			0.07	%			0.19	%			0.27	%			0.35	%			-84.1	%
Commercial RE			554				566				1,026				2,402				2,412				(1,858	)
% of Total CRE loans			0.14	%			0.15	%			0.26	%			0.62	%			0.65	%			-77.0	%
Residential RE			2,433				2,056				1,751				2,138				2,704				(271	)
% of Total Res. RE loans			1.23	%			0.99	%			0.86	%			1.21	%			1.49	%			-10.0	%
Consumer & Other			522				422				463				480				408				114
% of Total Con./Oth. loans			0.95	%			0.76	%			0.81	%			0.82	%			0.67	%			27.9	%
Total Nonaccruing Loans			3,652				3,188				3,615				5,635				6,426				(2,774	)
% of Total loans			0.44	%			0.38	%			0.43	%			0.66	%			0.74	%			-43.2	%
Accruing Restructured Loans			725				805				758				794				810				(85	)
Total Change (%)																							-10.5	%
Total Nonaccruing & Restructured Loans			4,377				3,993				4,373				6,429				7,236				(2,859	)
% of Total loans			0.53	%			0.47	%			0.51	%			0.76	%			0.83	%			-39.5	%
Foreclosed Assets			2,104				1,601				1,603				43				23				2,081
Total Change (%)																							9047.8	%
Total Nonperforming Assets		$	6,481			$	5,594			$	5,976			$	6,472			$	7,259			$	(778	)
% of Total assets			0.49	%			0.42	%			0.46	%			0.49	%			0.58	%			-10.7	%

Webcast and Conference Call

The Company will hold a related conference call and webcast on January 28, 2022, 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.

4

About SB Financial Group

Headquartered in Defiance, Ohio, SB Financial is a diversified financial services holding company for the State Bank & Trust Company (State Bank) and SBFG Title, LLC dba Peak Title (Peak Title). State Bank provides a full range of financial services for consumers and small businesses, including wealth management, private client services, mortgage banking and commercial and agricultural lending, operating through a total of 23 offices; 22 in nine Ohio counties and one in Fort Wayne, Indiana, and 24 full-service ATMs. State Bank has five loan production offices located throughout the Tri-State region of Ohio, Indiana and Michigan. Peak Title provides title insurance and opinions throughout the Tri-State region. SB Financial's common stock is listed on the NASDAQ Capital Market under the symbol "SBFG".

In May 2021, SB Financial was named to the Keefe, Bruyette & Woods, Inc. "Bank Honor Roll" of superior performers as revealed in EPS increases for 10 consecutive years. The honor roll review determined that just 16 banks in the U.S., including SB Financial, or 4 percent of the nearly 400 banks screened, qualified for inclusion.

Forward-Looking Statements

Certain statements within this document, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties and actual results may differ materially from those predicted by the forward-looking statements. These risks and uncertainties include, but are not limited to, the duration and scope of the COVID-19 outbreak in the United States and the market areas in which SB Financial and its subsidiaries operate, including the impact to the state and local economies of prolonged shelter in place orders and the pandemic generally, risks and uncertainties inherent in the national and regional banking industry, changes in economic conditions in the market areas in which SB Financial and its subsidiaries operate, changes in policies by regulatory agencies, changes in accounting standards and policies, changes in tax laws, fluctuations in interest rates, demand for loans in the market areas in SB Financial and its subsidiaries operate, increases in FDIC insurance premiums, changes in the competitive environment, losses of significant customers, geopolitical events, the loss of key personnel and other risks identified in SB Financial's Annual Report on Form 10-K and documents subsequently filed by SB Financial with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and SB Financial undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made, except as required by law. All subsequent written and oral forward-looking statements attributable to SB Financial or any person acting on its behalf are qualified by these cautionary statements.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles ("GAAP"). Non-GAAP financial measures, specifically pre-tax, pre-provision income, tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common equity, total interest income - FTE, net interest income - FTE and net interest margin - FTE are used by the Company's management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. In addition, the Company excludes the non-GAAP items of OMSR impairment and merger related costs from net income to report an adjusted net income level. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Investor Contact Information:

Mark A. Klein

Chairman, President and

Chief Executive Officer

[e-mail]

Anthony V. Cosentino

Executive Vice President and

Chief Financial Officer

[e-mail]

###

5

SB FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS - (Unaudited)

		December			September			June			March			December
($ in thousands)		2021			2021			2021			2021			2020
ASSETS
Cash and due from banks		$	149,511			$	138,015			$	154,993			$	206,036			$	140,690
Interest bearing time deposits			2,643				2,651				2,906				3,562				5,823
Available-for-sale securities			263,259				248,815				211,756				177,918				149,406
Loans held for sale			7,472				10,335				8,731				8,689				7,234
Loans, net of unearned income			822,714				846,548				850,513				848,176				872,723
Allowance for loan losses			(13,805	)			(13,812	)			(13,306	)			(13,326	)			(12,574	)
Premises and equipment, net			23,212				23,874				24,343				23,233				23,557
Federal Reserve and FHLB Stock, at cost			5,303				5,303				5,303				5,303				5,303
Foreclosed assets held for sale, net			2,104				1,601				1,603				43				23
Interest receivable			2,920				2,954				3,000				3,371				3,799
Goodwill			23,191				22,091				22,091				22,091				22,091
Cash value of life insurance			17,867				17,795				17,721				17,651				17,530
Mortgage servicing rights			12,034				11,194				10,678				10,490				7,759
Other assets			12,430				12,361				12,175				12,630				14,475
Total assets		$	1,330,855			$	1,329,725			$	1,312,507			$	1,325,867			$	1,257,839
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non interest bearing demand		$	247,044			$	258,857			$	240,572			$	273,026			$	251,649
Interest bearing demand			195,464				189,130				187,023				191,593				176,785
Savings			237,571				246,414				235,231				218,260				174,864
Money market			276,462				258,741				255,512				249,088				216,164
Time deposits			156,504				158,518				172,696				188,229				229,549
Total deposits			1,113,045				1,111,660				1,091,034				1,120,196				1,049,011
Short-term borrowings			15,320				20,771				25,096				24,321				20,189
Federal Home Loan Bank advances			5,500				5,500				5,500				8,000				8,000
Trust preferred securities			10,310				10,310				10,310				10,310				10,310
Subordinated debt net of issuance costs			19,546				19,534				19,522				-				-
Interest payable			299				576				417				489				616
Other liabilities			21,906				17,082				16,611				18,585				26,790
Total liabilities			1,185,926				1,185,433				1,168,490				1,181,901				1,114,916
Shareholders' Equity
Common stock			54,463				54,463				54,463				54,463				54,463
Additional paid-in capital			14,944				14,875				14,906				14,755				14,845
Retained earnings			99,716				97,183				93,851				90,883				84,578
Accumulated other comprehensive income (loss)			(1,845	)			(699	)			499				(457	)			2,210
Treasury stock			(22,349	)			(21,530	)			(19,702	)			(15,678	)			(13,173	)
Total shareholders' equity			144,929				144,292				144,017				143,966				142,923
Total liabilities and shareholders' equity		$	1,330,855			$	1,329,725			$	1,312,507			$	1,325,867			$	1,257,839

6

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
		2021				2021				2021				2021				2020				2021				2020
Interest income
Loans
Taxable		$	8,889			$	9,948			$	9,196			$	9,926			$	9,816			$	37,959			$	39,735
Tax exempt			59				52				47				48				54				206				239
Securities
Taxable			969				939				835				643				632				3,386				2,328
Tax exempt			86				94				85				88				87				353				333
Total interest income			10,003				11,033				10,163				10,705				10,589				41,904				42,635
Interest expense
Deposits			640				709				818				962				1,218				3,129				6,070
Repurchase agreements & other			7				12				12				11				10				42				70
Federal Home Loan Bank advances			41				40				51				56				58				188				309
Trust preferred securities			49				49				50				51				52				199				256
Subordinated debt			188				199				75				-				-				462				-
Total interest expense			925				1,009				1,006				1,080				1,338				4,020				6,705
Net interest income			9,078				10,024				9,157				9,625				9,251				37,884				35,930
Provision for loan losses			-				300				-				750				800				1,050				4,500
Net interest income after provisionfor loan losses			9,078				9,724				9,157				8,875				8,451				36,834				31,430
Noninterest income
Wealth management fees			988				959				955				912				863				3,814				3,245
Customer service fees			827				812				820				758				728				3,217				2,807
Gain on sale of mtg. loans & OMSR			3,194				3,947				4,255				5,859				7,197				17,255				25,350
Mortgage loan servicing fees, net			624				155				(217	)			2,378				(1,037	)			2,940				(5,138	)
Gain on sale of non-mortgage loans			44				52				45				17				123				158				453
Title insurance revenue			528				508				532				521				522				2,089				1,913
Gain (loss) on sale of assets			1				1				2				(2	)			181				2				3
Other			383				215				145				479				325				1,222				1,463
Total noninterest income			6,589				6,649				6,537				10,922				8,902				30,697				30,096
Noninterest expense
Salaries and employee benefits			6,648				6,689				6,881				6,620				6,556				26,838				25,397
Net occupancy expense			846				714				748				740				782				3,048				2,891
Equipment expense			899				872				778				732				818				3,281				3,186
Data processing fees			721				671				653				534				633				2,579				3,055
Professional fees			872				817				574				764				631				3,027				3,307
Marketing expense			228				201				220				135				172				784				658
Telephone and communication expense			148				140				139				154				156				581				535
Postage and delivery expense			106				100				97				111				108				414				415
State, local and other taxes			288				286				278				323				299				1,175				1,146
Employee expense			163				186				161				153				103				663				535
Other expenses			648				580				547				643				426				2,418				1,962
Total noninterest expense			11,567				11,256				11,076				10,909				10,684				44,808				43,087
Income before income tax expense			4,100				5,117				4,618				8,888				6,669				22,723				18,439
Income tax expense			768				1,014				857				1,807				1,311				4,446				3,495
Net income		$	3,332			$	4,103			$	3,761			$	7,081			$	5,358			$	18,277			$	14,944
Common share data:
Basic earnings per common share		$	0.49			$	0.59			$	0.53			$	0.97			$	0.71			$	2.58			$	1.96
Diluted earnings per common share		$	0.49			$	0.58			$	0.52			$	0.97			$	0.71			$	2.56			$	1.96
Average shares outstanding (in thousands):
Basic:			6,906				6,966				7,148				7,317				7,470				7,083				7,614
Diluted:			6,970				7,017				7,200				7,335				7,487				7,130				7,635

7

SB FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)

($ in thousands, except per share & ratios)		At and for the Three Months Ended			Twelve Months Ended
SUMMARY OF		December			September			June			March			December			December			December
OPERATIONS		2021			2021			2021			2021			2020			2021			2020
Net interest income		$	9,078			$	10,024			$	9,157			$	9,625			$	9,251			$	37,884			$	35,930
Tax-equivalent adjustment			39				39				35				36				37				149				152
Tax-equivalent net interest income			9,117				10,063				9,192				9,661				9,288				38,033				36,082
Provision for loan loss			-				300				-				750				800				1,050				4,500
Noninterest income			6,589				6,649				6,537				10,922				8,902				30,697				30,096
Total operating revenue			15,667				16,673				15,694				20,547				18,153				68,581				66,026
Noninterest expense			11,567				11,256				11,076				10,909				10,684				44,808				43,087
Pre-tax pre-provision income			4,100				5,417				4,618				9,638				7,469				23,773				22,939
Pretax income			4,100				5,117				4,618				8,888				6,669				22,723				18,439
Net income			3,332				4,103				3,761				7,081				5,358				18,277				14,944
PER SHARE INFORMATION:
Basic earnings per share (EPS)			0.49				0.59				0.53				0.97				0.71				2.58				1.96
Diluted earnings per share			0.49				0.58				0.52				0.97				0.71				2.56				1.96
Common dividends			0.115				0.110				0.110				0.105				0.105				0.440				0.400
Book value per common share			21.05				20.83				20.50				19.88				19.39				21.05				19.39
Tangible book value per common share (TBV)			17.60				17.55				17.27				16.74				16.30				17.60				16.30
Market price per common share			19.67				18.18				18.50				18.26				18.28				19.67				18.28
Market price to TBV			111.8	%			103.6	%			107.2	%			109.1	%			112.1	%			111.8	%			112.1	%
Market price to trailing 12 month EPS			7.7				6.7				6.5				6.4				9.3				7.7				9.3
PERFORMANCE RATIOS:
Return on average assets (ROAA)			0.99	%			1.23	%			1.13	%			2.21	%			1.73	%			1.38	%			1.29	%
Pre-tax pre-provision ROAA			1.22	%			1.63	%			1.39	%			3.01	%			2.41	%			1.91	%			2.14	%
Return on average equity			9.21	%			11.35	%			10.42	%			19.78	%			15.05	%			12.67	%			10.74	%
Return on average tangible equity			10.92	%			13.47	%			12.37	%			23.52	%			17.91	%			15.04	%			12.59	%
Efficiency ratio			73.72	%			67.40	%			70.46	%			53.01	%			58.76	%			65.23	%			65.25	%
Earning asset yield			3.17	%			3.25	%			3.56	%			3.66	%			3.66	%			3.37	%			3.98	%
Cost of interest bearing liabilities			0.40	%			0.44	%			0.44	%			0.50	%			0.64	%			0.45	%			0.85	%
Net interest margin			2.87	%			3.20	%			2.93	%			3.20	%			3.20	%			3.05	%			3.35	%
Tax equivalent effect			0.02	%			0.01	%			0.01	%			0.01	%			0.01	%			0.01	%			0.01	%
Net interest margin, tax equivalent			2.89	%			3.21	%			2.94	%			3.21	%			3.21	%			3.06	%			3.36	%
Non interest income/Average assets			1.96	%			1.99	%			1.97	%			3.41	%			2.87	%			2.32	%			2.59	%
Non interest expense/Average assets			3.45	%			3.38	%			3.33	%			3.40	%			3.45	%			3.39	%			3.71	%
Net noninterest expense/Average assets			-1.48	%			-1.38	%			-1.37	%			0.00	%			-0.58	%			-1.07	%			-1.12	%
ASSET QUALITY RATIOS:
Gross charge-offs			34				24				26				52				57				136				743
Recoveries			27				230				6				54				39				317				62
Net charge-offs			7				(206	)			20				(2	)			18				(181	)			681
Nonaccruing loans/Total loans			0.44	%			0.38	%			0.43	%			0.66	%			0.74	%			0.44	%			0.74	%
Nonperforming loans/Total loans			0.53	%			0.47	%			0.51	%			0.76	%			0.83	%			0.53	%			0.83	%
Nonperforming assets/Loans & OREO			0.79	%			0.66	%			0.70	%			0.76	%			0.83	%			0.79	%			0.83	%
Nonperforming assets/Total assets			0.49	%			0.42	%			0.46	%			0.49	%			0.58	%			0.49	%			0.58	%
Allowance for loan loss/Nonperforming loans			315.40	%			345.91	%			304.28	%			207.28	%			173.77	%			315.40	%			173.77	%
Allowance for loan loss/Total loans			1.68	%			1.63	%			1.56	%			1.57	%			1.44	%			1.68	%			1.44	%
Net loan charge-offs/Average loans (ann.)			0.00	%			(0.10)	%			0.01	%			(0.00)	%			0.01	%			(0.02)	%			0.08	%
Loan loss provision/Net charge-offs			0.00	%			(145.63)	%			0.00	%			(37500.00)	%			4444.44	%			(580.11)	%			660.79	%
CAPITAL & LIQUIDITY RATIOS:
Loans/Deposits			73.92	%			76.15	%			77.95	%			75.72	%			83.19	%			73.92	%			83.19	%
Equity/Assets			10.89	%			10.85	%			10.97	%			10.86	%			11.36	%			10.89	%			11.36	%
Tangible equity/Tangible assets			9.27	%			9.30	%			9.41	%			9.30	%			9.73	%			9.27	%			9.73	%
Common equity tier 1 ratio (Bank)			13.94	%			13.23	%			13.11	%			13.08	%			12.91	%			13.94	%			12.91	%
END OF PERIOD BALANCES
Total assets			1,330,855				1,329,725				1,312,507				1,325,867				1,257,839				1,330,855				1,257,839
Total loans			822,714				846,548				850,513				848,176				872,723				822,714				872,723
Deposits			1,113,045				1,111,660				1,091,034				1,120,196				1,049,011				1,113,045				1,049,011
Stockholders equity			144,929				144,292				144,017				143,966				142,923				144,929				142,923
Goodwill and intangibles			23,774				22,692				22,710				22,728				22,745				23,774				22,745
Tangible equity			121,155				121,600				121,307				121,238				120,178				121,155				120,178
Mortgage servicing portfolio			1,362,962				1,341,439				1,323,804				1,304,097				1,299,698				1,362,962				1,299,698
Wealth/Brokerage assets under care			618,279				588,319				600,904				576,503				558,409				618,279				558,409
Total assets under care			3,312,096				3,259,483				3,237,215				3,206,467				3,115,946				3,312,096				3,115,946
Full-time equivalent employees			269				264				256				246				244				269				244
Period end common shares outstanding			6,884				6,927				7,026				7,242				7,372				6,884				7,372
Market capitalization (all)			135,415				125,935				129,984				132,239				134,760				135,415				134,760
AVERAGE BALANCES
Total assets			1,342,202				1,333,369				1,329,348				1,281,635				1,238,790				1,322,253				1,161,396
Total earning assets			1,263,431				1,253,722				1,251,213				1,203,284				1,156,718				1,243,093				1,072,443
Total loans			845,078				856,486				853,794				862,898				893,244				854,521				880,338
Deposits			1,123,843				1,109,491				1,115,186				1,073,641				1,031,649				1,106,122				951,226
Stockholders equity			144,749				144,565				144,315				143,167				142,418				144,223				139,197
Goodwill and intangibles			22,701				22,701				22,718				22,736				22,754				22,718				20,491
Tangible equity			122,048				121,864				121,597				120,431				119,664				121,505				118,706
Average basic shares outstanding			6,906				6,966				7,148				7,317				7,470				7,083				7,614
Average diluted shares outstanding			6,970				7,017				7,200				7,335				7,487				7,130				7,635

8

SB FINANCIAL GROUP, INC.

Rate Volume Analysis - (Unaudited)

At and for the Three and Twelve Months Ended December 31, 2021 and 2020

($ in thousands)		Three Months Ended Dec. 31, 2021			Three Months Ended Dec. 31, 2020
		Average						Average			Average						Average
	Balance			Interest			Rate			Balance			Interest			Rate
Assets
Taxable securities/cash		$	410,489			$	969				0.94	%		$	256,068			$	632				0.99	%
Nontaxable securities			7,864				86				4.37	%			7,406				87				4.70	%
Loans, net			845,078				8,948				4.24	%			893,244				9,870				4.42	%
Total earning assets			1,263,431				10,003				3.17	%			1,156,718				10,589				3.66	%
Cash and due from banks			6,489												7,463
Allowance for loan losses			(13,795	)											(12,045	)
Premises and equipment			25,505												23,841
Other assets			60,572												62,813
Total assets		$	1,342,202											$	1,238,790
Liabilities
Savings, MMDA and interest bearing demand		$	704,534			$	400				0.23	%		$	552,018			$	841				0.61	%
Time deposits			157,888				240				0.61	%			238,284				377				0.63	%
Repurchase agreements & other			18,910				7				0.15	%			21,610				10				0.19	%
Advances from Federal Home Loan Bank			5,500				41				2.98	%			8,000				58				2.90	%
Trust preferred securities			10,310				49				1.90	%			10,310				52				2.02	%
Subordinated debt			19,539				188				3.85	%			-				-				0.00	%
Total interest bearing liabilities			916,681				925				0.40	%			830,222				1,338				0.64	%
Non interest bearing demand			261,421				-								241,347				-
Total funding			1,178,102								0.31	%			1,071,569								0.50	%
Other liabilities			19,351												24,803
Total liabilities			1,197,453												1,096,372
Equity			144,749												142,418
Total liabilities and equity		$	1,342,202											$	1,238,790
Net interest income						$	9,078											$	9,251
Net interest income as a percent of average interest-earning assets - GAAP measure											2.87	%											3.20	%
Net interest income as a percent of average interest-earning assets - non GAAP											2.89	%											3.21	%
- Computed on a fully tax equivalent (FTE) basis

9

		Twelve Months Ended Dec. 31, 2021				Twelve Months Ended Dec. 31, 2020
			Average								Average				Average								Average
		Balance				Interest				Rate				Balance				Interest				Rate
Assets
Taxable securities/cash		$	380,770			$	3,386				0.89	%		$	185,480			$	2,328				1.26	%
Nontaxable securities			7,802				353				4.52	%			6,625				333				5.03	%
Loans, net			854,521				38,165				4.47	%			880,338				39,974				4.54	%
Total earning assets			1,243,093				41,904				3.37	%			1,072,443				42,635				3.98	%
Cash and due from banks			7,290												14,553
Allowance for loan losses			(13,422	)											(10,165	)
Premises and equipment			24,710												23,776
Other assets			60,582												60,789
Total assets		$	1,322,253											$	1,161,396
Liabilities
Savings, MMDA and interest bearing demand		$	672,296			$	1,813				0.27	%		$	492,267			$	3,152				0.64	%
Time deposits			177,918				1,316				0.74	%			247,955				2,918				1.18	%
Repurchase agreements & Other			22,821				42				0.18	%			22,832				70				0.31	%
Advances from Federal Home Loan Bank			6,507				188				2.89	%			14,186				309				2.18	%
Trust preferred securities			10,310				199				1.93	%			10,310				256				2.48	%
Subordinated debt			12,057				462				3.83	%			-				-				0.00	%
Total interest bearing liabilities			901,909				4,020				0.45	%			787,550				6,705				0.85	%
Non interest bearing demand			255,908								0.35	%			211,004								0.67	%
Total funding			1,157,817												998,554
Other liabilities			20,213												23,645
Total liabilities			1,178,030												1,022,199
Equity			144,223												139,197
Total liabilities and equity		$	1,322,253											$	1,161,396
Net interest income						$	37,884											$	35,930
Net interest income as a percent of average interest-earning assets - GAAP measure											3.05	%											3.35	%
Net interest income as a percent of average interest-earning assets - non GAAP											3.06	%											3.36	%
- Computed on a fully tax equivalent (FTE) basis

10

	Three Months Ended			Twelve Months Ended
Non-GAAP reconciliation ($ in thousands, except per share & ratios)		Dec. 31, 2021			Dec. 31, 2020			Dec. 31, 2021			Dec. 31, 2020
Total Operating Revenue		$	15,667			$	18,153			$	68,581			$	66,026
Adjustment to (deduct)/add OMSR recapture/impairment*			(581	)			611				(3,436	)			3,585
Adjusted Total Operating Revenue			15,086				18,764				65,145				69,611
Total Operating Expense		$	11,567			$	10,684			$	44,808			$	43,087
Adjustment for merger expenses**			-				-				-				(1,241	)
Adjusted Total Operating Expense			11,567				10,684				44,808				41,846
Income before Income Taxes			4,100				6,669				22,723				18,439
Adjustment for OMSR & merger expenses			(581	)			611				(3,436	)			4,826
Adjusted Income before Income Taxes			3,519				7,280				19,287				23,265
Provision for Income Taxes			768				1,311				4,446				3,495
Adjustment for OMSR & merger expenses***			(122	)			128				(722	)			1,013
Adjusted Provision for Income Taxes			646				1,439				3,724				4,509
Net Income			3,332				5,358				18,277				14,944
Adjustment for OMSR & merger expenses			(459	)			483				(2,714	)			3,813
Adjusted Net Income			2,873				5,841				15,563				18,757
Diluted Earnings per Share			0.49				0.71				2.56				1.96
Adjustment for OMSR & merger expenses			(0.07	)			0.06				(0.38	)			0.48
Adjusted Diluted Earnings per Share		$	0.42			$	0.77			$	2.18			$	2.44
Return on Average Assets			0.99	%			1.73	%			1.38	%			1.29	%
Adjustment for OMSR & merger expenses			-0.14	%			0.16	%			-0.21	%			0.33	%
Adjusted Return on Average Assets			0.86	%			1.89	%			1.18	%			1.62	%

*	valuation adjustment to the Company's mortgage servicing rights

**	transaction costs related to the Edon acquisition

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

11