EX-99.1 2 f8k072319ex99-1_sbfin.htm NEWS RELEASE ISSUED BY SB FINANCIAL GROUP, INC. ON JULY 23, 2019, REPORTING FINANCIAL RESULTS FOR THE SECOND QUARTER 2019

Exhibit 99.1

SB Financial Group, Inc. Announces Second-Quarter and Six-Month 2019 Earnings

DEFIANCE, Ohio, July 23, 2019 -- SB Financial Group, Inc. (NASDAQ: SBFG) (“SB Financial” or the “Company”), a diversified financial services company providing full-service community banking, mortgage banking and wealth management, today reported earnings for the second-quarter and six months ended June 30, 2019.

Second-quarter 2019 highlights over prior-year second quarter include:

●

Total assets increased to $1.03 billion, up $84.3 million, or 8.9 percent

●

Net income of $2.6 million; adjusted net income due to servicing rights impairment of $3.2 million

●

Diluted earnings per share (EPS) of $0.33; adjusted EPS of $0.40

●

Tangible book value (TBV) per share increased 8.6 percent to $15.83 per share

Six months ended June 30, 2019, highlights over prior-year six months include:

●

Net income of $4.9 million; adjusted net income of $6.0 million, which is up $0.5 million or 8.0 percent

●

Diluted EPS of $0.61; adjusted EPS of $0.75

●

Return on Average Assets (ROA) of 0.96 percent; adjusted 1.07 percent

●

Net interest margin (NIM) of 3.84 percent down 5 basis points

Second-quarter 2019, trailing twelve-month highlights include:

	●	Loan growth of $61.2 million, or 8.1 percent

	●	Deposit growth of $86.5 million, or 11.5 percent

●

Mortgage origination volume of $324.0 million; servicing portfolio of $1.11 billion

Highlights	Three Months Ended									Six Months Ended
($ in thousands, except per share & ratios)	Jun. 2019			Jun. 2018			% Change			Jun. 2019			Jun. 2018			% Change
Operating revenue	$	12,523		$	12,673			-1.2	%	$	23,863		$	24,616			-3.1	%
Interest income		11,151			9,732			14.6	%		21,649			18,583			16.5	%
Interest expense		2,319			1,308			77.3	%		4,477			2,459			82.1	%
Net interest income		8,832			8,424			4.8	%		17,172			16,124			6.5	%
Provision for loan losses		200			300			-33.3	%		200			600			-66.7	%
Noninterest income		3,691			4,249			-13.1	%		6,691			8,492			-21.2	%
Noninterest expense		9,108			8,579			6.2	%		17,734			17,206			3.1	%
Net income		2,627			3,107			-15.4	%		4,853			5,560			-12.7	%
Earnings per diluted share		0.33			0.40			-17.5	%		0.61			0.75			-18.7	%
Return on average assets		1.03	%		1.35	%		-23.7	%		0.96	%		1.21	%		-20.7	%
Return on average equity		7.92	%		10.02	%		-21.0	%		7.36	%		9.64	%		-23.7	%

Non-GAAP Measures
Adjusted net income	$	3,172		$	3,122			1.6	%	$	5,957		$	5,514			8.0	%
Adjusted diluted EPS		0.40			0.40			0.0	%		0.75			0.74			1.4	%
Adjusted return on average assets		1.09	%		1.35	%		-19.3	%		1.07	%		1.20	%		-10.8	%
Net interest margin (FTE)		3.88	%		4.14	%		-6.3	%		3.84	%		3.89	%		-1.3	%

“We delivered increased second-quarter net income compared to the prior-year quarter, when we adjust for the impairment to our mortgage servicing rights,” said Mark A. Klein, Chairman, President and CEO of SB Financial. Our operating results included a very strong loan growth quarter, as we added over $32 million, and over the last 12 months, $61 million. Also, this quarter had a strong rebound in our mortgage origination volume of $98 million, increasing originations over the last 12 months to $324 million.”

RESULTS OF OPERATIONS

Consolidated Revenue

Total operating revenue, consisting of net interest income and noninterest income, was down 1.2 percent from the second quarter of 2018, but up 10.4 percent from the linked quarter.

	●	Net interest income was up 4.8 percent from the year-ago quarter, and up 5.9 percent from the linked quarter.

	●	Net interest margin (FTE) was down 26 basis points from the year-ago quarter, but up 7 basis points from the linked quarter.

	●	Noninterest income was down 13.1 percent from the year-ago quarter, but up 23.0 percent from the linked quarter.

Funding costs, primarily from retail deposits have increased from the prior year and from the linked quarter. Deposit cost of funds for the most recent quarter of 1.01 percent are up from the prior year quarter of 0.59 percent. From the linked quarter, deposit cost of funds are up only six basis points from 0.95 percent.

Mortgage Loan Business

Mortgage loan originations for the second quarter of 2019 were $98.4 million, down $11.0 million, or 10.1 percent, from the year-ago quarter. Total sales of originated loans were $71.0 million, down $8.2 million, or 10.3 percent from the year-ago quarter.

Net mortgage banking income, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $1.2 million for the second quarter of 2019, compared to $2.3 million for the year-ago quarter. The mortgage servicing valuation adjustment for the second quarter of 2019 was a negative $0.7 million, compared to a negative adjustment of $0.02 million for the second quarter of 2018. The aggregate servicing valuation impairment ended the quarter at $1.6 million. The mortgage-servicing portfolio at June 30, 2019, was $1.11 billion, up $0.08 billion, or 8.0 percent, from $1.03 billion at June 30, 2018.

Mr. Klein noted, “Although our earnings were impacted by the $0.7 million impairment in the quarter and $1.4 million for all of 2019, we are encouraged by the strong mortgage quarter that included purchase volume of $91 million or 93 percent and refinance volume of $7 million or 7 percent. Our current pipeline exceeds $50 million and we continue to attract targeted clients.”

Mortgage Banking
($ in thousands)	Jun. 2019		Mar. 2019		Dec. 2018		Sep. 2018		Jun. 2018
Mortgage originations	$	98,447	$	51,417	$	78,829	$	95,289	$	109,466
Mortgage sales		70,993		43,472		60,345		80,555		79,162
Mortgage servicing portfolio		1,112,857		1,094,060		1,084,678		1,066,402		1,030,780
Mortgage servicing rights		10,264		10,838		11,347		11,129		10,634

Mortgage servicing revenue:
Loan servicing fees		691			682			673			653			636
OMSR amortization		(460	)		(254	)		(300	)		(318	)		(367	)
Net administrative fees		231			428			373			335			269
OMSR valuation adjustment		(690	)		(708	)		(68	)		(62	)		(22	)
Net loan servicing fees		(459	)		(280	)		305			273			247
Gain on sale of mortgages		1,678			1,192			1,646			2,066			2,058
Mortgage banking revenue, net	$	1,219		$	912		$	1,951		$	2,339		$	2,305

Noninterest Income and Noninterest Expense

SB Financial’s noninterest income includes revenue from a diverse group of services, such as wealth management, deposit fees, residential loan sales, title agency revenue and the sale of Small Business Administration (SBA) loans. SBA activity for the quarter consisted of total loan volume of $4.1 million and gains of $0.1 million. Wealth management assets under the Company’s care stood at $479.4 million as of June 30, 2019. In the first full quarter of operation, the title agency business delivered revenue of $0.3 million. For the second quarter of 2019, noninterest income as a percentage of total revenue was 29.5 percent, with the YTD percentage at 33.9 percent when adjusted for the impairment.

For the second quarter of 2019, noninterest expense (NIE) of $9.1 million was up $0.5 million, or 6.2 percent, compared to the same quarter last year. Compared to the linked quarter, NIE was also up $0.5 million. Expense growth was the result of higher mortgage commissions, merit increases and the addition of a title agency. We continue to add resources of both technology and personnel in order to meet the expanded needs of our operations, information technology and risk management functions.

Noninterest Income / Noninterest Expense
($ in thousands, except ratios)		Jun. 2019			Mar. 2019			Dec. 2018			Sep. 2018			Jun. 2018
Noninterest Income (NII)	$	3,691		$	3,000		$	3,930		$	4,202		$	4,249
NII / Total Revenue		29.5	%		26.5	%		31.3	%		33.0	%		33.5	%
NII / Average Assets		1.5	%		1.2	%		1.6	%		1.8	%		1.8	%

Noninterest Expense (NIE)	$	9,108		$	8,626		$	8,852		$	8,789		$	8,579
Efficiency Ratio		72.7	%		76.1	%		70.6	%		69.0	%		67.7	%
NIE / Average Assets		3.6	%		3.5	%		3.6	%		3.7	%		3.7	%
Net Noninterest Expense/Avg. Assets		-2.1	%		-2.3	%		-2.0	%		-1.9	%		-1.9	%

Balance Sheet

Total assets as of June 30, 2019, were $1.03 billion, up $84.3 million, or 8.9 percent, from a year ago. Total equity as of June 30, 2019, was $133.9 million, up 7.1 percent from a year ago, and comprised 13.0 percent of total assets.

Total loans held for investment were $814.5 million at June 30, 2019, up $61.2 million, or 8.1 percent, from June 30, 2018 and up $32.0 million or 16.4 percent annualized for the quarter. From the prior year, commercial loans were up $28.7 million, or 24.9 percent, with residential real estate rising $18.9 million, or 10.9 percent.

The investment portfolio of $89.9 million, including Federal Reserve Bank and Federal Home Loan Bank stock, represented 8.7 percent of assets at June 30, 2019. Deposit balances of $839.4 million at June 30, 2019, increased by $86.5 million, or 11.5 percent, since June 30, 2018. Growth from the prior year included $10.3 million in checking and $76.2 million in savings, money market and time deposit balances.

Mr. Klein stated, “Our balance sheet metrics improved this quarter with 16.4 percent annualized loan growth and $12 million in deposit growth. Compared to the prior year, deposit growth of 11.5 percent fully funded our 8.1 percent loan growth. Our asset quality metrics and coverage ratio remain in the top quartile of our peer group.”

Loan Balance
($ in thousands, except ratios)	Jun. 2019			Mar. 2019			Dec. 2018			Sep. 2018			Jun. 2018			Annual Growth
Commercial	$	143,798		$	136,201		$	127,640		$	119,810		$	115,140		$	28,658
% of Total		17.7	%		17.4	%		16.5	%		15.5	%		15.3	%		24.9	%
Commercial RE		360,491			343,900			340,791			356,563			350,266			10,225
% of Total		44.2	%		43.9	%		44.2	%		46.2	%		46.5	%		2.9	%
Agriculture		54,317			50,620			52,012			52,814			52,466			1,851
% of Total		6.7	%		6.5	%		6.7	%		6.8	%		7.0	%		3.5	%
Residential RE		191,642			187,548			187,104			178,033			172,773			18,869
% of Total		23.5	%		24.0	%		24.2	%		23.1	%		22.9	%		10.9	%
Consumer & Other		64,261			64,254			64,336			64,478			62,640			1,621
% of Total		7.9	%		8.2	%		8.3	%		8.4	%		8.3	%		2.6	%
Total Loans	$	814,509		$	782,523		$	771,883		$	771,698		$	753,285		$	61,224
Total Growth Percentage																	8.1	%

Deposit Balance
($ in thousands, except ratios)	Jun. 2019			Mar. 2019			Dec. 2018			Sep. 2018			Jun. 2018			Annual Growth
Non-Int DDA	$	141,216		$	146,327		$	144,592		$	134,747		$	131,125		$	10,091
% of Total		16.8	%		17.7	%		18.0	%		17.1	%		17.4	%		7.7	%
Interest DDA		129,710			132,101			130,628			130,897			129,486			224
% of Total		15.5	%		16.0	%		16.3	%		16.6	%		17.2	%		0.2	%
Savings		118,931			115,272			104,444			114,213			118,108			823
% of Total		14.1	%		13.8	%		12.9	%		14.4	%		15.7	%		0.7	%
Money Market		175,455			175,334			181,426			170,190			151,228			24,227
% of Total		20.9	%		21.2	%		22.6	%		21.6	%		20.1	%		16.0	%
Certificates		274,062			258,624			241,462			239,379			222,932			51,130
% of Total		32.7	%		31.2	%		30.1	%		30.3	%		29.6	%		22.9	%
Total Deposits	$	839,374		$	827,658		$	802,552		$	789,426		$	752,879		$	86,495
Total Growth Percentage																	11.5	%

Asset Quality

SB Financial’s nonperforming assets to total assets ratio of 0.43 percent continues to be in the top quartile of its 65-bank peer group. The coverage of problem loans by the loan loss allowance was at 212 percent at June 30, 2019, down from 264 percent at June 30, 2018.

Summary of Nonperforming Assets																Annual
($ in thousands, except ratios)	Jun. 2019			Mar. 2019			Dec. 2018			Sep. 2018			Jun. 2018			Growth
Commercial & Agriculture	$	674		$	998		$	731		$	360		$	33		$	641
% of Total Com./Ag. loans		0.34	%		0.53	%		0.41	%		0.21	%		0.02	%		1942.4	%
Commercial RE		208			212			218			228			234			(26	)
% of Total CRE loans		0.06	%		0.06	%		0.06	%		0.06	%		0.07	%		-11.1	%
Residential RE		1,768			1,612			1,738			1,541			1,634			134
% of Total Res. RE loans		0.92	%		0.86	%		0.93	%		0.87	%		0.95	%		8.2	%
Consumer & Other		456			325			219			252			221			235
% of Total Con./Oth. loans		0.71	%		0.51	%		0.34	%		0.39	%		0.35	%		106.3	%
Total Nonaccruing Loans		3,106			3,147			2,906			2,381			2,122			984
% of Total loans		0.38	%		0.40	%		0.38	%		0.31	%		0.28	%		46.4	%
Accruing Restructured Loans		814			827			928			940			1,101			(287	)
Total Growth (%)																	-26.1	%
Total Nonaccruing & Restructured Loans		3,920			3,974			3,834			3,321			3,223			697
% of Total loans		0.48	%		0.51	%		0.50	%		0.43	%		0.43	%		21.6	%
Foreclosed Assets		530			313			131			105			16			514
Total Growth (%)																	3212.5	%
Total Nonperforming Assets	$	4,450		$	4,287		$	3,965		$	3,426		$	3,239		$	1,211
% of Total assets		0.43	%		0.42	%		0.40	%		0.35	%		0.34	%		37.4	%

Webcast and Conference Call

The Company will hold a related conference call and webcast on July 24, 2019, 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 http://www.yoursbfinancial.com/investorrelations.html. An audio replay of the call will be available on the SB Financial 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 20 offices; 19 in nine Ohio counties and one in Fort Wayne, Indiana, and 25 full-service ATMs. State Bank has seven 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”. SB Financial’s preferred stock is listed on the NASDAQ Capital Market under the symbol “SBFGP”.

In May 2019, SB Financial was ranked #94 on the American Banker Magazine’s list of Top 200 Publicly Traded Community Banks and Thrifts based on three-year average return on equity (“ROE”).

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, 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

In addition to results presented in accordance with GAAP, this release contains certain non-GAAP financial measures. Management believes that including certain non-GAAP financial measures will provide investors with information useful in understanding the Company’s financial performance, its performance trends and financial position. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results.

Investor Contact Information:

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)	2019			2019			2018			2018			2018

ASSETS
Cash and due from banks	$	42,786		$	62,962		$	48,363		$	45,515		$	24,413
Available-for-sale securities		85,261			95,802			90,969			84,114			89,911
Loans held for sale		9,579			4,346			4,445			6,888			7,551
Loans, net of unearned income		814,509			782,523			771,883			771,698			753,285
Allowance for loan losses		(8,306	)		(8,121	)		(8,167	)		(8,489	)		(8,494	)
Premises and equipment, net		23,150			23,270			22,084			21,900			21,683
Federal Reserve and FHLB Stock, at cost		4,648			4,123			4,123			4,123			3,748
Foreclosed assets held for sale, net		530			313			131			105			16
Interest receivable		3,209			3,123			2,822			2,433			2,000
Goodwill and other intangibles		17,836			17,838			16,401			16,404			16,406
Cash value of life insurance		17,051			16,966			16,834			16,745			16,656
Mortgage servicing rights		10,264			10,838			11,365			11,129			10,633
Other assets		8,606			7,288			5,575			6,615			6,977
Total assets	$	1,029,123		$	1,021,271		$	986,828		$	979,180		$	944,785

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non interest bearing demand	$	141,216		$	146,327		$	144,592		$	134,747		$	131,125
Interest bearing demand		129,710			132,101			130,628			130,897			129,486
Savings		118,931			115,272			104,444			114,213			118,108
Money market		175,455			175,334			181,426			170,190			151,228
Time deposits		274,062			258,624			241,462			239,379			222,932
Total deposits		839,374			827,658			802,552			789,426			752,879

Repurchase agreements		13,968			12,255			15,184			15,539			18,191
Federal Home Loan Bank advances		16,000			24,000			16,000			24,500			26,500
Trust preferred securities		10,310			10,310			10,310			10,310			10,310
Interest payable		1,188			1,123			909			891			685
Other liabilities		14,346			14,419			11,438			11,405			11,116
Total liabilities		895,186			889,765			856,393			852,071			819,681

Shareholders’ Equity
Preferred stock		13,978			13,978			13,979			13,979			13,983
Common stock		40,486			40,486			40,485			40,485			40,481
Additional paid-in capital		15,259			15,143			15,226			15,160			15,098
Retained earnings		67,236			65,438			64,012			61,854			59,503
Accumulated other comprehensive income/(loss)		801			124			(552	)		(1,654	)		(1,240	)
Treasury stock		(3,823	)		(3,663	)		(2,715	)		(2,715	)		(2,721	)
Total equity		133,937			131,506			130,435			127,109			125,104
Total liabilities and shareholders’ equity	$	1,029,123		$	1,021,271		$	986,828		$	979,180		$	944,785

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
	2019			2019			2018		2018		2018		2019			2018
Interest income
Loans
Taxable	$	10,182		$	9,427		$	9,661	$	9,499	$	8,968	$	19,609		$	17,108
Tax exempt		73			62			55		42		36		135			57
Securities
Taxable		802			911			822		610		613		1,713			1,186
Tax exempt		94			98			100		107		115		192			232
Total interest income		11,151			10,498			10,638		10,258		9,732		21,649			18,583

Interest expense
Deposits		2,092			1,918			1,776		1,472		1,091		4,010			2,066
Repurchase agreements & other		17			26			10		11		6		43			16
Federal Home Loan Bank advances		100			100			131		140		110		200			189
Trust preferred securities		110			114			107		106		101		224			188
Total interest expense		2,319			2,158			2,024		1,729		1,308		4,477			2,459

Net interest income		8,832			8,340			8,614		8,529		8,424		17,172			16,124

Provision for loan losses		200			-			-		-		300		200			600

Net interest income after provision for loan losses		8,632			8,340			8,614		8,529		8,124		16,972			15,524

Noninterest income
Wealth Management Fees		783			734			717		705		710		1,517			1,449
Customer service fees		689			631			679		672		675		1,320			1,319
Gain on sale of mtg. loans & OMSR		1,678			1,192			1,646		2,066		2,058		2,870			3,158
Mortgage loan servicing fees, net		(459	)		(280	)		305		273		247		(739	)		718
Gain on sale of non-mortgage loans		216			327			295		125		150		543			810
Title insurance income		308			19			-		-		-		327			-
Net gain on sales of securities		206			-			-		70		-		206			-
Gain/(loss) on sale of assets		(5	)		(2	)		14		-		60		(7	)		21
Other		275			379			274		291		349		654			1,017
Total noninterest income		3,691			3,000			3,930		4,202		4,249		6,691			8,492

Noninterest expense
Salaries and employee benefits		5,305			4,902			5,108		5,372		5,201		10,207			10,140
Net occupancy expense		627			645			600		588		560		1,272			1,209
Equipment expense		665			711			756		667		637		1,376			1,466
Data processing fees		488			443			466		489		418		931			856
Professional fees		649			617			532		393		504		1,266			923
Marketing expense		246			239			262		197		204		485			425
Telephone and communication		112			115			121		124		128		227			250
Postage and delivery expense		81			84			66		83		63		165			137
State, local and other taxes		247			255			180		177		176		502			362
Employee expense		236			153			283		243		220		389			386
Other expenses		452			462			478		456		468		914			1,052
Total noninterest expense		9,108			8,626			8,852		8,789		8,579		17,734			17,206

Income before income tax expense		3,215			2,714			3,692		3,942		3,794		5,929			6,810
Income tax expense		588			488			732		824		687		1,076			1,250

Net income	$	2,627		$	2,226		$	2,960	$	3,118	$	3,107	$	4,853		$	5,560

Preferred Share Dividends		243			244			243		244		244		487			488

Net income available to common shareholders		2,384			1,982			2,717		2,874		2,863		4,366			5,072

Common share data:
Basic earnings per common share	$	0.37		$	0.31		$	0.42	$	0.45	$	0.45	$	0.68		$	0.85
Diluted earnings per common share	$	0.33		$	0.28		$	0.37	$	0.39	$	0.40	$	0.61		$	0.75

Average shares outstanding (in thousands):
Basic:		6,454			6,482			6,503		6,503		6,489		6,469			5,935
Diluted:		7,967			7,994			8,030		8,022		8,003		7,982			7,454

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	2019			2019			2018			2018			2018			2019			2018
Net interest income	$	8,832		$	8,340		$	8,614		$	8,529		$	8,424		$	17,172		$	16,124
Tax-equivalent adjustment		44			43			41			40			40			87			77
Tax-equivalent net interest income		8,876			8,383			8,655			8,569			8,464			17,259			16,201
Provision for loan loss		200			-			-			-			300			200			600
Noninterest income		3,691			3,000			3,930			4,202			4,249			6,691			8,492
Total operating revenue		12,523			11,340			12,544			12,731			12,673			23,863			24,616
Noninterest expense		9,108			8,626			8,852			8,789			8,579			17,734			17,206
Pre-tax pre-provision income		3,415			2,714			3,692			3,942			4,094			6,129			7,410
Pretax income		3,215			2,714			3,692			3,942			3,794			5,929			6,810
Net income		2,627			2,226			2,960			3,118			3,107			4,853			5,560
Income available to common shareholders		2,384			1,982			2,717			2,874			2,863			4,366			5,072

PER SHARE INFORMATION:
Basic earnings per share (EPS)	$	0.37		$	0.31		$	0.42		$	0.45		$	0.45		$	0.68		$	0.85
Diluted earnings per share		0.33			0.28			0.37			0.39			0.40			0.61			0.75
Common dividends		0.090			0.085			0.085			0.080			0.080			0.175			0.155
Book value per common share		16.89			16.57			16.36			15.94			15.73			16.89			15.73
Tangible book value per common share (TBV)		15.83			15.43			15.39			14.87			14.57			15.83			14.57
Fully converted TBV per common share		14.64			14.32			14.30			13.88			13.66			14.64			13.66
Market price per common share		16.46			18.02			16.45			20.35			20.32			16.46			20.32
Market price per preferred share		16.10			19.00			17.90			20.25			19.82			16.10			19.82
Market price to TBV		104.0	%		116.8	%		106.9	%		136.8	%		139.5	%		104.0	%		139.5	%
Market price to fully converted TBV		112.4	%		125.8	%		115.0	%		146.6	%		148.7	%		112.4	%		148.7	%
Market price to trailing 12 month EPS		12.1			12.6			11.0			11.5			11.2			12.1			11.2

PERFORMANCE RATIOS:
Return on average assets (ROAA)		1.03	%		0.89	%		1.19	%		1.30	%		1.35	%		0.96	%		1.21	%
Pre-tax pre-provision ROAA		1.34	%		1.08	%		1.48	%		1.64	%		1.78	%		1.22	%		1.61	%
Return on average equity		7.92	%		6.76	%		9.21	%		9.89	%		10.02	%		7.36	%		9.64	%
Return on average tangible equity		10.41	%		8.83	%		12.06	%		13.02	%		13.28	%		9.65	%		13.08	%
Efficiency ratio		72.71	%		76.05	%		70.55	%		69.01	%		67.67	%		74.30	%		69.88	%
Earning asset yield		4.88	%		4.78	%		4.86	%		4.75	%		4.76	%		4.82	%		4.46	%
Cost of interest bearing liabilities		1.28	%		1.20	%		1.15	%		1.00	%		0.80	%		1.24	%		0.75	%
Net interest margin		3.86	%		3.79	%		3.93	%		3.95	%		4.12	%		3.83	%		3.87	%
Tax equivalent effect		0.02	%		0.02	%		0.02	%		0.01	%		0.02	%		0.01	%		0.02	%
Net interest margin, tax equivalent		3.88	%		3.81	%		3.95	%		3.96	%		4.14	%		3.84	%		3.89	%
Non interest income/Average assets		1.45	%		1.20	%		1.58	%		1.75	%		1.84	%		1.33	%		1.85	%
Non interest expense/Average assets		3.58	%		3.45	%		3.56	%		3.65	%		3.72	%		3.52	%		3.74	%
Net noninterest/Average assets		2.13	%		2.25	%		1.98	%		1.91	%		1.88	%		2.19	%		1.89	%

ASSET QUALITY RATIOS:
Gross charge-offs	$	20		$	60		$	322		$	12		$	54		$	80		$	73
Recoveries		5			13			1			6			29			18			38
Net charge-offs		15			47			321			6			25			62			35
Nonaccruing loans/ Total loans		0.38	%		0.40	%		0.38	%		0.31	%		0.28	%		0.38	%		0.28	%
Nonperforming loans/ Total loans		0.48	%		0.51	%		0.50	%		0.43	%		0.43	%		0.48	%		0.43	%
Nonperforming assets/ Loans & OREO		0.55	%		0.55	%		0.51	%		0.44	%		0.43	%		0.55	%		0.43	%
Nonperforming assets/ Total assets		0.43	%		0.42	%		0.40	%		0.35	%		0.34	%		0.43	%		0.34	%
Allowance for loan loss/ Nonperforming loans		211.89	%		204.35	%		213.02	%		255.62	%		263.54	%		211.89	%		263.54	%
Allowance for loan loss/ Total loans		1.02	%		1.04	%		1.06	%		1.10	%		1.13	%		1.02	%		1.13	%
Net loan charge-offs/ Average loans (ann.)		0.01	%		0.02	%		0.17	%		0.00	%		0.01	%		0.02	%		0.01	%
Loan loss provision/ Net charge-offs		1333.33	%		0.00	%		0.00	%		0.00	%		1200.00	%		322.58	%		1714.29	%

CAPITAL & LIQUIDITY RATIOS:
Loans/ Deposits		97.04	%		94.55	%		96.18	%		97.75	%		100.05	%		97.04	%		100.05	%
Equity/ Assets		13.01	%		12.88	%		13.22	%		12.98	%		13.24	%		13.01	%		13.24	%
Tangible equity/ Tangible assets		10.10	%		9.93	%		10.31	%		10.05	%		10.20	%		10.10	%		10.20	%
Tangible equity adjusted for conversion		11.48	%		11.33	%		11.75	%		11.50	%		11.71	%		11.48	%		11.71	%
Common equity tier 1 ratio (Bank) - 6/19 est.		13.03	%		12.71	%		12.57	%		12.16	%		11.91	%		13.03	%		11.91	%

END OF PERIOD BALANCES
Total assets	$	1,029,123		$	1,021,271		$	986,828		$	979,180		$	944,785		$	1,029,123		$	944,785
Total loans		814,509			782,523			771,883			771,698			753,285			814,509			753,285
Deposits		839,374			827,658			802,552			789,426			752,879			839,374			752,879
Stockholders equity		133,937			131,506			130,435			127,109			125,104			133,937			125,104
Goodwill & intangibles		17,836			17,838			16,401			16,404			16,406			17,836			16,406
Preferred equity		13,978			13,978			13,979			13,979			13,983			13,978			13,983
Tangible equity		102,123			99,690			100,055			96,726			94,715			102,123			94,715
Mortgage servicing portfolio		1,112,857			1,094,060			1,084,678			1,066,402			1,030,780			1,112,857			1,030,780
Wealth/Brokerage assets under care		479,442			462,580			423,289			412,218			407,592			479,442			407,592
Total assets under care		2,621,422			2,577,911			2,494,795			2,457,800			2,383,157			2,621,422			2,383,157
Full-time equivalent employees (actual)		250			256			250			250			241			250			241
Period end basic shares outstanding		6,451			6,460			6,503			6,503			6,502			6,451			6,502
Period end outstanding (Series A Converted)		1,478			1,475			1,472			1,470			1,453			1,478			1,453
Market capitalization (all)		130,324			144,898			133,824			162,711			161,851			130,324			161,851

AVERAGE BALANCES
Total assets	$	1,016,493		$	1,001,282		$	994,977		$	962,369		$	922,355		$	1,008,559		$	920,024
Total earning assets		914,652			879,394			875,747			864,490			817,270			897,611			832,849
Total loans		804,716			775,280			775,060			770,948			724,710			790,080			737,544
Deposits		827,615			812,190			803,928			769,266			739,877			819,252			745,231
Stockholders equity		132,734			131,691			128,539			126,144			123,990			131,861			115,387
Intangibles		17,837			16,880			16,403			16,405			16,407			17,359			16,409
Preferred equity		13,978			13,979			13,979			13,983			13,983			13,978			13,983
Tangible equity		100,919			100,832			98,157			95,756			93,600			100,524			84,995
Average basic shares outstanding		6,454			6,482			6,503			6,503			6,489			6,469			5,935
Average diluted shares outstanding		7,967			7,994			8,030			8,022			8,003			7,982			7,454

SB FINANCIAL GROUP, INC.

Rate Volume Analysis - (Unaudited)

At and for the Three Months Ended June 30, 2019 and 2018

($ in thousands)	Three Months Ended Jun. 30, 2019								Three Months Ended Jun. 30, 2018
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
Assets
Taxable securities	$	100,768		$	802		3.18	%	$	80,610		$	612		3.04	%
Nontaxable securities		9,168			94		4.10	%		11,950			115		3.85	%
Loans, net		804,716			10,255		5.10	%		724,710			9,004		4.97	%
Total earning assets		914,652			11,151		4.88	%		817,270			9,731		4.76	%
Cash and due from banks		36,908								32,930
Allowance for loan losses		(8,232	)							(8,178	)
Premises and equipment		23,555								21,476
Other assets		49,610								58,857
Total assets	$	1,016,493							$	922,355

Liabilities
Savings, MMDA and interest bearing demand	$	422,327		$	740		0.70	%	$	393,507		$	303		0.31	%
Time deposits		261,746			1,352		2.07	%		214,928			788		1.47	%
Repurchase agreements & other		13,645			17		0.50	%		15,646			6		0.15	%
Advances from Federal Home Loan Bank		16,000			100		2.50	%		20,655			110		2.13	%
Trust preferred securities		10,310			110		4.27	%		10,310			100		3.88	%
Total interest bearing liabilities		724,028			2,319		1.28	%		655,046			1,307		0.80	%
Non interest bearing demand		143,542			-					131,442			-
Total funding		867,570					1.07	%		786,488					0.66	%
Other liabilities		16,189								11,877
Total liabilities		883,759								798,365
Equity		132,734								123,990
Total liabilities and equity	$	1,016,493							$	922,355
Net interest income				$	8,832							$	8,424

Net interest income as a percent of average interest-earning assets - GAAP measure							3.86	%							4.12	%

Net interest income as a percent of average interest-earning assets - non GAAP - Computed on a fully tax equivalent (FTE) basis							3.88	%							4.14	%

SB FINANCIAL GROUP, INC.

Rate Volume Analysis - (Unaudited)

At and for the Three Months Ended June 30, 2019 and 2018

($ in thousands)	Six Months Ended Jun. 30, 2019								Six Months Ended Jun. 30, 2018
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
Assets
Taxable securities	$	98,203			1,713		3.49	%	$	83,225			1,186		2.85	%
Nontaxable securities		9,328			192		4.12	%		12,080			232		3.84	%
Loans, net		790,080			19,744		5.00	%		737,544			17,165		4.65	%
Total earning assets		897,611			21,649		4.82	%		832,849			18,583		4.46	%
Cash and due from banks		41,724								27,773
Allowance for loan losses		(8,258	)							(8,311	)
Premises and equipment		23,536								21,855
Other assets		53,946								45,858
Total assets	$	1,008,559							$	920,024

Liabilities
Savings, MMDA and interest bearing demand	$	422,494		$	1,462		0.69	%	$	393,384			559		0.28	%
Time deposits		255,734			2,548		1.99	%		215,208			1,507		1.40	%
Repurchase agreements & other		15,663			43		0.55	%		13,196			16		0.24	%
Advances from Federal Home Loan Bank		16,133			200		2.48	%		22,786			189		1.66	%
Trust preferred securities		10,310			224		4.35	%		10,310			188		3.65	%
Total interest bearing liabilities		720,334			4,477		1.24	%		654,884			2,459		0.75	%
Non interest bearing demand		141,024					1.04	%		136,639					0.62	%
Total funding		861,358								791,523
Other liabilities		15,340								13,114
Total liabilities		876,698								804,637
Equity		131,861								115,387
Total liabilities and equity	$	1,008,559							$	920,024
Net interest income				$	17,172							$	16,124

Net interest income as a percent of average interest-earning assets - GAAP measure							3.83	%							3.87	%

Net interest income as a percent of average interest-earning assets - non GAAP - Computed on a fully tax equivalent (FTE) basis							3.84	%							3.89	%

Non-GAAP reconciliation	2nd Quarter						Year to Date

	3 Months ended			3 Months ended			6 Months ended			6 Months ended
($ in thousands, except per share & ratios)	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018

Total Revenues	$	12,523		$	12,673		$	23,863		$	24,616
Adjustment to remove temporary impairment*		690			22			1,398			(70	)
Adjusted Total Revenues	$	13,213		$	12,695		$	25,261		$	24,546

Income before Income Taxes	$	3,215		$	3,794		$	5,929		$	6,810
Adjustment to remove temporary impairment		690			22			1,398			(70	)
Adjusted Income before Income Taxes	$	3,905		$	3,816		$	7,327		$	6,740

Provision for Income Taxes	$	588		$	687		$	1,076		$	1,250
Adjustment to remove temporary impairment		145			7			294			(24	)
Adjusted Provision for Income Taxes	$	733		$	694		$	1,370		$	1,226

Net Income	$	2,627		$	3,107		$	4,853		$	5,560
Adjustment to remove temporary impairment		545			15			1,104			(46	)
Adjusted Net Income	$	3,172		$	3,122		$	5,957		$	5,514

Diluted Earnings per Share	$	0.33		$	0.40		$	0.61		$	0.75
Adjustment to remove temporary impairment		0.07			0.00			0.14			(0.01	)
Adjusted Diluted Earnings per Share	$	0.40		$	0.40		$	0.75		$	0.74

Return on Average Assets		1.03	%		1.35	%		0.96	%		1.21	%
Adjustment to remove temporary impairment		0.05	%		0.00	%		0.11	%		-0.01	%
Adjusted Return on Average Assets		1.09	%		1.35	%		1.07	%		1.20	%

temporary valuation adjustment to the Company’s mortgage servicing rights