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

Published: 2022-01-27 16:16:12 ET SBFG

DEFIANCE, Ohio, Jan. 27, 2022 /PRNewswire/ -- 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:

Full year 2021 highlights over the prior year include:

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%

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.

Mortgage Loan Business

Mortgage loan originations for the fourthquarter 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

830

859

857

OMSR amortization

(807)

(943)

(948)

(1,187)

(1,283)

Net administrative fees

(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

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 fourthquarter 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%

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%

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%

45.4%

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%

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%

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%

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 Change

($ in thousands, except ratios)

Dec. 2021

Sep. 2021

Jun. 2021

Mar. 2021

Dec. 2020

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

0.15%

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

1.18%

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

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.

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. KleinChairman, President and Chief Executive [email protected] V. CosentinoExecutive Vice President and Chief Financial [email protected]

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

SB FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS - (Unaudited)

December

September

June

March

December

($ in thousands)

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

Foreclosed assets held for sale, net

2,104

1,601

1,603

Interest receivable

2,920

2,954

3,000

3,371

3,799

Goodwill

23,191

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

8,000

Trust preferred securities

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

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

SB FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME - (Unaudited) ($ in thousands, except per share & ratios) At and for the Three Months Ended Twelve Months Ended December September June March December December December Interest income 2021 2021 2021 2021 2020 2021 2020 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 provision for 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

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

Interest income

2021

2020

2021

2020

Loans

Taxable

$ 8,889

$ 9,948

$ 9,196

$ 9,926

$ 9,816

$ 37,959

$ 39,735

Tax exempt

206

239

Securities

Taxable

969

939

835

643

632

3,386

2,328

Tax exempt

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

Federal Home Loan Bank advances

188

309

Trust preferred securities

199

256

Subordinated debt

188

199

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 provision

for 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

123

158

453

Title insurance revenue

528

508

532

521

522

2,089

1,913

Gain (loss) on sale of assets

(2)

181

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

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

SB FINANCIAL GROUP, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited) ($ in thousands, except per share & ratios) At and for the Three Months Ended Twelve Months Ended December September June March December December December SUMMARY OF OPERATIONS 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

SB FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)

($ in thousands, except per share & ratios)

At and for the Three Months Ended

Twelve Months Ended

December

September

June

March

December

SUMMARY OF OPERATIONS

2021

2020

2021

2020

Net interest income

$ 9,078

$ 10,024

$ 9,157

$ 9,625

$ 9,251

$ 37,884

$ 35,930

Tax-equivalent adjustment

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

0.105

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%

3.37%

3.98%

Cost of interest bearing liabilities

0.40%

0.44%

0.50%

0.64%

0.45%

0.85%

Net interest margin

2.87%

3.20%

2.93%

3.20%

3.05%

3.35%

Tax equivalent effect

0.02%

0.01%

Net interest margin, tax equivalent

2.89%

3.21%

2.94%

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

136

743

Recoveries

230

317

Net charge-offs

(206)

(2)

(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

22,718

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

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 Assets Balance Interest Rate Balance Interest Rate 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 Twelve Months Ended Dec. 31, 2021 Twelve Months Ended Dec. 31, 2020 Average Average Average Average Assets Balance Interest Rate Balance Interest Rate 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

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

Assets

Balance

Interest

Rate

Balance

Interest

Rate

Taxable securities/cash

$ 410,489

$ 969

0.94%

$ 256,068

$ 632

0.99%

Nontaxable securities

7,864

4.37%

7,406

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

0.15%

21,610

0.19%

Advances from Federal Home Loan Bank

5,500

2.98%

8,000

2.90%

Trust preferred securities

10,310

1.90%

10,310

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

Twelve Months Ended Dec. 31, 2021

Twelve Months Ended Dec. 31, 2020

Average

Assets

Balance

Interest

Rate

Balance

Interest

Rate

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

0.18%

22,832

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

Non-GAAP reconciliation Three Months Ended Twelve Months Ended ($ 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

Non-GAAP reconciliation

Three Months Ended

Twelve Months Ended

($ 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

SOURCE SB Financial Group, Inc.