EX-99.1 2 ea192225ex99-1_sbfinancial.htm NEWS RELEASE ISSUED BY SB FINANCIAL GROUP, INC. ON JANUARY 25, 2024, REPORTING FINANCIAL RESULTS FOR THE FOURTH QUARTER 2023

Exhibit 99.1

 

 

SB Financial Group Announces Fourth Quarter and  Full Year 2023 Results

 

DEFIANCE, OH, January 25, 2024 -- 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, 2023.

 

Fourth Quarter 2023 Highlights Over the Fourth Quarter Prior Year Include:

 

●Net income of $3.9 million increased by 9.9 percent compared to the prior year with diluted Earnings Per Share (“EPS”) of $0.57 and increased 44.5 percent compared to the linked quarter.

 

●Interest income of $15.1 million increased by 16.9 percent from the prior year.

 

●Loan growth of $38.1 million, or 4.0 percent from the prior year quarter, marks the eighth consecutive quarter of expanding loans.

 

●Strong asset quality with nonperforming assets decreasing to 25 basis points of total assets, a marked improvement from 33 basis points in the same quarter of the previous year. Delinquency levels for loans 30 days or more past due ended the year at 15 basis points of total loans.

 

Twelve Months Ended December 31, 2023 Highlights Over the Prior Year Include:

 

●Net income decreased slightly to $12.1 million, a 3.4 percent drop from the prior year’s $12.5 million, and diluted EPS was $1.75, down 1.13 percent from $1.77. Adjusted EPS were up by $0.12 per share or 7.4 percent.

 

●Deposits decreased by $16.5 million, or 1.5 percent to $1.07 billion.

 

●Mortgage origination volume was $215.5 million for the trailing twelve months, with a servicing portfolio of $1.37 billion.

 

Earnings Highlights  Three Months Ended   Twelve Months Ended 
($ in thousands, except per share & ratios)  Dec. 2023   Dec. 2022   % Change   Dec. 2023   Dec. 2022   % Change 
Operating revenue  $15,115   $14,613    3.4%  $56,994   $57,630    -1.1%
Interest income   15,126    12,937    16.9%   58,152    44,569    30.5%
Interest expense   5,542    2,037    172.1%   18,879    5,170    265.2%
Net interest income   9,584    10,900    -12.1%   39,273    39,399    -0.3%
Provision for credit losses   (74)   -    0.0%   315    -    0.0%
Noninterest income   5,531    3,713    49.0%   17,721    18,231    -2.8%
Noninterest expense   10,369    10,269    1.0%   41,962    42,314    -0.8%
Net income   3,883    3,533    9.9%   12,095    12,521    -3.4%
Earnings per diluted share   0.57    0.50    14.0%   1.75    1.77    -1.1%
Return on average assets   1.17%   1.08%   8.3%   0.91%   0.95%   -4.2%
Return on average equity   13.23%   12.17%   8.7%   10.22%   9.86%   3.7%

 

“We demonstrated our resilience and operational strength throughout the fourth quarter of 2023,” stated Mark A. Klein, Chairman, President, and CEO. “In doing so, we achieved a 9.9 percent increase in net income over the prior year, underpinned by robust growth in our loan portfolio, which eclipsed the $1 billion mark for the first time in our history. This marks our eighth successive quarter of loan expansion, underscoring our commitment to disciplined and consistent growth in our loan portfolio. While we navigate the economic headwinds, these milestones underscore our capability to adapt and broaden our revenue base. Looking to the future, we remain dedicated to reinforcing our solid financial foundation and delivering outstanding value to our clients and shareholders.”

 

 

 

RESULTS OF OPERATIONS

 

Consolidated Revenue

 

Total operating revenue, which includes both net interest income and noninterest income, showed a notable increase of 10.3 percent compared to the linked quarter and a 3.4 percent increase over the same quarter last year. Specifically, net interest income rose by 0.5 percent from the linked quarter, although it decreased by 12.1 percent from the year-ago quarter. The net interest margin saw a slight increase of 2 basis points from the linked quarter but experienced a decrease of 50 basis points when compared to the prior-year quarter. These changes in net interest income and margin primarily resulted from higher costs associated with deposits and funding.

 

In terms of noninterest income, we observed significant growth, increasing by 32.9 percent from the linked quarter and by 49.0 percent from the prior year quarter, largely due to our opportunistic decision to sell equity securities, resulting in a $1.5 million gain. Mortgage servicing revenue and gain on sale from residential loans were stable in the quarter compared to the prior year with SBA gains of $177 thousand. Conversely, income from wealth management and customer service fees, along with title insurance revenue, showed a decrease compared to the figures from the previous year’s corresponding quarter.

 

Mortgage Loan Business

 

Mortgage loan originations for the fourth quarter of 2023 stood at $39.6 million, a decrease of $11.7 million, or 22.8 percent, from the year-ago quarter. This decline reflects the cooling housing market, which aligns with broader economic trends. However, it’s noteworthy that the total sales of originated loans reached $33.4 million, marking an increase of $9.8 million, or 41.4 percent from the prior year quarter. This increase underscores an effective sales strategy in the purchase market and indicates our commitment to emphasizing our traditional model of generation and sale.

 

For the full year of 2023, SB Financial reported mortgage originations totaling $215.5 million. Our originations reflected the changes in the market, with new purchase/construction lending constituting 92 percent of the business, up from 80 percent for all of 2022.

 

Net mortgage banking revenue for the quarter was $1.3 million, reflecting a steady performance with a marginal increase from the $1.2 million reported in the fourth quarter of 2022. Mortgage servicing operations demonstrated commendable stability, with a valuation adjustment resulting in a positive valuation adjustment of $12 thousand in the fourth quarter of 2023, a significant improvement from the $0.1 million decrease experienced in the same quarter of the prior year. The year 2023 concluded with a favorable adjustment, recapturing $0.1 million in servicing rights, in stark contrast to the previous year’s $1.3 million impairment of these rights. The mortgage servicing portfolio experienced growth, closing at $1.37 billion as of December 31, 2023, an increase of $14.7 million, or 1.1 percent from the prior year.

 

“In a year marked by fluctuating interest rates and heightened market sensitivity, our mortgage loan business has showcased remarkable resilience,” said Mr. Klein. “The increase in total sales of originated loans by over 40 percent compared to the same period last year, when originations faced significant headwinds, speaks to the agility, expertise and presence of our team. The steady net mortgage banking revenue and the growth of our servicing portfolio affirm our strategic focus and our dedication to delivering exceptional service and value to our clients.”

 

Mortgage Banking                      Prior Year 
($ in thousands)  Dec. 2023   Sep. 2023   Jun. 2023   Mar. 2023   Dec. 2022   Growth 
Mortgage originations  $39,566   $61,200   $65,387   $49,366   $51,219   $(11,653)
Mortgage sales   33,362    54,085    47,933    25,803    23,590    9,772 
Mortgage servicing portfolio   1,366,667    1,367,209    1,353,904    1,344,158    1,352,016    14,651 
Mortgage servicing rights   13,906    13,893    13,723    13,548    13,503    403 
                               
Revenue                              
Loan servicing fees   855    850    844    844    851    4 
OMSR amortization   (282)   (334)   (334)   (292)   (310)   28 
Net administrative fees   573    516    510    552    541    32 
OMSR valuation adjustment   (12)   (78)   (16)   56    86    (98)
Net loan servicing fees   561    438    494    608    627    (66)
Gain on sale of mortgages   747    1,207    1,056    599    550    197 
Mortgage banking revenue, net  $1,308   $1,645   $1,550   $1,207   $1,177   $131 

 

2

 

 

Noninterest Income and Noninterest Expense

 

Noninterest income for the quarter increased from the prior year quarter by 49.0 percent and increased by 32.9 percent from the linked quarter, reflective of the equity sale discussed earlier. Gain-on-sale yields on mortgage loans increased $0.2 million, or 35.8 percent from the prior year. Similarly, gain-on-sale yields of non-mortgage loans also saw a notable increase from both the prior year and the linked quarter, primarily driven by favorable market conditions and our focused efforts to capitalize on emerging lending opportunities.

 

For the fourth quarter of 2023, SB Financial reported a noninterest expense of $10.4 million, reflecting a slight increase from the prior year but a decrease from the linked quarter. The increase over the prior year was the direct result of a $0.2 million increase in professional fees and an increase of $0.1 million in data processing fees. These increases were partially offset by a $0.1 million decrease in marketing expenses and a marginal decrease of $25 thousand in salaries and employee benefits. As a result, total headcount for the Company is down over 6 percent compared to the prior year.

 

“Our noninterest income, always one of our strengths, was up over the same period last year and compared to the linked quarter,” Mr. Klein noted. “Significant contributions came from our gain-on-sale yields, which saw a substantial increase in both mortgage and non-mortgage loans compared to the same quarter of the previous year. On the expense side, we’ve maintained a disciplined approach, with noninterest expenses witnessing a modest year-over-year increase due to targeted investments in professional and data processing services. These investments are critical in supporting our growth and enhancing our operational efficiency. Even with these necessary expenditures, we’ve managed to realize savings in marketing and personnel costs, underscoring our commitment to control costs and improve our efficiency.”

  

Noninterest Income/Noninterest Expense                      Prior Year 
($ in thousands, except ratios)  Dec. 2023   Sep. 2023   Jun. 2023   Mar. 2023   Dec. 2022   Growth 
Noninterest Income (NII)  $5,531   $4,163   $4,361   $3,666   $3,713   $1,818 
NII / Total Revenue   36.6%   30.4%   30.7%   26.2%   25.4%   11.2%
NII / Average Assets   1.7%   1.2%   1.3%   1.1%   1.1%   0.6%
Total Revenue Growth   3.4%   -5.3%   -0.5%   -2.0%   -6.7%   3.4%
                               
Noninterest Expense (NIE)  $10,369   $10,481   $10,339   $10,773   $10,269   $100 
Efficiency Ratio   68.4%   76.4%   72.7%   76.9%   70.2%   -1.8%
NIE / Average Assets   3.1%   3.1%   3.1%   3.2%   3.1%   0.0%
Net Noninterest Expense/Avg. Assets   -1.4%   -1.9%   -1.8%   -2.1%   -2.0%   0.6%
Total Expense Growth   1.0%   0.9%   -4.3%   -0.8%   -11.2%   1.0%

 

Balance Sheet

 

As of December 31, 2023, SB Financial reported total assets of $1.34 billion, reflecting a growth of 1.2 percent from the linked quarter and an increase of 0.5 percent from the previous year. The growth in assets is primarily attributed to the increase in the loan portfolio, which has reached $1 billion, marking a historic milestone, with a $38.1 million or 4.0 percent increase over the year. The strategic reallocation of liquidity, reflected in a decrease in cash and investments, has been instrumental in this growth, demonstrating the ability to prudently manage resources to maximize shareholder returns while maintaining a solid financial position.

 

Total shareholders’ equity increased to $124.3 million, up $5.9 million from the prior-year quarter. This increase is a direct reflection of our commitment to enhancing shareholder value and management’s confidence in the Company’s long-term strategy. The active capital management approach, including the repurchase of 53,000 shares in the fourth quarter, as part of the ongoing buyback program, reflects SB Financial’s dedication to delivering returns to its shareholders.

 

“As we cap off 2023, our commitment to disciplined growth and robust asset quality has once again proven effective,” said Mr. Klein. “The fourth quarter saw our loan balances grow by $38.1 million, securing a full year of continuous quarterly loan growth. Our dynamic approach to build strong lending relationships has borne fruit, despite commercial pipelines feeling the squeeze in a fairly competitive landscape. Our asset quality remains a cornerstone of our operations, with top decile coverage ratios, reinforcing the bank’s financial health. Over the year, we’ve generated an increase in our loan portfolio, demonstrating our capacity to drive organic growth amidst fluctuating interest rates and a challenging economic environment. This growth represents our deepening relationships with our customers and our ability to meet their evolving needs. Looking forward, we remain committed to leveraging our strong asset base while we maintain our focus on strategic initiatives that enhance shareholder value and position us for continued success in the coming years.”

 

3

 

 

Loan Balances                      Annual 
($ in thousands, except ratios)  Dec. 2023   Sep. 2023   Jun. 2023   Mar. 2023   Dec. 2022   Growth 
Commercial  $126,718   $120,325   $123,226   $126,066   $128,393   $(1,675)
% of Total   12.7%   12.2%   12.5%   12.9%   13.3%   -1.3%
Commercial RE   424,041    421,736    417,412    419,024    412,809    11,232 
% of Total   42.4%   42.6%   42.4%   42.9%   42.9%   2.7%
Agriculture   65,657    60,928    58,222    57,761    64,505    1,152 
% of Total   6.6%   6.2%   5.9%   5.9%   6.7%   1.8%
Residential RE   318,123    320,306    321,365    309,684    291,368    26,755 
% of Total   31.8%   32.4%   32.6%   31.7%   30.3%   9.2%
Consumer & Other   65,673    65,726    64,599    63,777    65,000    673 
% of Total   6.6%   6.6%   6.6%   6.5%   6.8%   1.0%
Total Loans  $1,000,212   $989,021   $984,824   $976,312   $962,075   $38,137 
Total Growth Percentage                            4.0%

  

Deposit Balances                      Annual 
($ in thousands, except ratios)  Dec. 2023   Sep. 2023   Jun. 2023   Mar. 2023   Dec. 2022   Growth 
Non-Int DDA  $228,713   $224,182   $218,411   $237,175   $256,799   $(28,086)
% of Total   21.4%   20.7%   20.4%   21.4%   23.6%   -10.9%
Interest DDA   166,413    174,729    170,282    188,497    191,719    (25,306)
% of Total   15.5%   16.1%   15.9%   17.0%   17.6%   -13.2%
Savings   216,965    226,077    225,065    227,974    191,272    25,693 
% of Total   20.3%   20.8%   21.0%   20.5%   17.6%   13.4%
Money Market   202,605    216,565    217,681    222,203    255,995    (53,390)
% of Total   18.9%   20.0%   20.3%   20.0%   23.6%   -20.9%
Time Deposits   255,509    243,766    239,717    234,295    190,880    64,629 
% of Total   23.9%   22.5%   22.4%   21.1%   17.6%   33.9%
Total Deposits  $1,070,205   $1,085,319   $1,071,156   $1,110,144   $1,086,665   $(16,460)
Total Growth Percentage                            -1.5%

 

Asset Quality

 

SB Financial has demonstrated a strong commitment to maintaining high standards of asset quality. As of December 31, 2023, SB Financial reported nonperforming assets totaling $3.3 million, a significant decrease of $1.1 million or 25.3 percent from the same quarter last year, driven primarily by a decline in Residential Real Estate. This notable reduction in nonperforming assets is a clear indicator of the effectiveness of our risk management strategies and the overall health of the loan portfolio.

 

Furthermore, the coverage ratio for problem loans has seen a remarkable improvement, up by 185 basis points from the previous year to 560 percent. This improvement in the coverage ratio is a direct result of proactive measures in asset quality management. It includes the expansion of the allowance for credit losses, which followed a Current Expected Credit Loss (CECL) adjustment of $1.4 million. Additionally, this improvement coincides with a concurrent reduction in problem loans, underscoring our focused efforts on maintaining a robust and healthy loan portfolio.

 

Nonperforming Assets                      Annual 
($ in thousands, except ratios)  Dec. 2023   Sep. 2023   Jun. 2023   Mar. 2023   Dec. 2022   Change 
Commercial & Agriculture  $748   $717   $170   $185   $114   $634 
% of Total Com./Ag. loans   0.39%   0.40%   0.09%   0.10%   0.06%   556.1%
Commercial RE   168    222    192    199    210    (42)
% of Total CRE loans   0.04%   0.05%   0.05%   0.05%   0.05%   -20.0%
Residential RE   1,690    2,182    2,266    2,742    3,020    (1,330)
% of Total Res. RE loans   0.53%   0.68%   0.71%   0.89%   1.04%   -44.0%
Consumer & Other   212    208    282    270    338    (126)
% of Total Con./Oth. loans   0.32%   0.32%   0.44%   0.42%   0.52%   -37.3%
Total Nonaccruing Loans   2,818    3,329    2,910    3,396    3,682    (864)
% of Total loans   0.28%   0.34%   0.30%   0.35%   0.38%   -23.5%
Foreclosed Assets and Other Assets   511    629    625    650    777    (266)
Total Change (%)                            -34.2%
Total Nonperforming Assets  $3,329   $3,958   $3,535   $4,046   $4,459   $(1,130)
% of Total assets   0.25%   0.30%   0.26%   0.30%   0.33%   -25.34%

 

4

 

 

Webcast and Conference Call

 

The Company will hold the fourth quarter 2023 earnings conference call and webcast on January 26, 2024, at 11:00 a.m. EDT. Interested parties may access the conference call by dialing 1-888-338-9469. The webcast can be accessed at ir.yourstatebank.com. An audio replay of the call will be available on the Company’s website.

 

About SB Financial Group

 

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

 

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

 

Forward-Looking Statements

 

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

  

Non-GAAP Financial Measures

 

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

 

Investor Contact Information:

 

Mark A. Klein

Chairman, President and

Chief Executive Officer

Mark.Klein@YourStateBank.com

 

Anthony V. Cosentino

Executive Vice President and

Chief Financial Officer

Tony.Cosentino@YourStateBank.com

 

5

 

 

SB FINANCIAL GROUP, INC.

 CONSOLIDATED BALANCE SHEETS - (Unaudited)

 

   December   September   June   March   December 
($ in thousands)  2023   2023   2023   2023   2022 
ASSETS                    
Cash and due from banks  $22,965   $19,049   $20,993   $21,625   $27,817 
Interest bearing time deposits   1,535    1,180    1,180    1,380    2,131 
Available-for-sale securities   219,708    212,768    227,996    237,607    238,780 
Loans held for sale   2,525    3,206    5,684    5,592    2,073 
Loans, net of unearned income   1,000,212    989,021    984,824    976,312    962,075 
Allowance for credit losses   (15,786)   (15,790)   (15,795)   (15,442)   (13,818)
Premises and equipment, net   21,378    21,934    22,230    22,621    22,829 
Federal Reserve and FHLB Stock, at cost   7,279    6,261    7,634    6,054    6,326 
Foreclosed assets and other assets   511    629    625    650    777 
Interest receivable   4,657    4,457    4,079    3,926    4,091 
Goodwill   23,239    23,239    23,239    23,239    23,239 
Cash value of life insurance   29,121    29,291    29,183    29,024    28,870 
Mortgage servicing rights   13,906    13,893    13,723    13,548    13,503 
Other assets   11,137    17,336    15,840    15,157    16,940 
Total assets  $1,342,387   $1,326,474   $1,341,435   $1,341,293   $1,335,633 
                          
LIABILITIES AND SHAREHOLDERS’ EQUITY                         
Deposits                         
Non interest bearing demand  $228,713   $224,182   $218,411   $237,175   $256,799 
Interest bearing demand   166,413    174,729    170,282    188,497    191,719 
Savings   216,965    226,077    225,065    227,974    191,272 
Money market   202,605    216,565    217,681    222,203    255,995 
Time deposits   255,509    243,766    239,717    234,295    190,880 
Total deposits   1,070,205    1,085,319    1,071,156    1,110,144    1,086,665 
                          
Short-term borrowings   13,387    16,519    21,118    15,998    14,923 
Federal Home Loan Bank advances   83,600    59,500    81,300    44,500    60,000 
Trust preferred securities   10,310    10,310    10,310    10,310    10,310 
Subordinated debt net of issuance costs   19,642    19,630    19,618    19,606    19,594 
Interest payable   2,443    2,216    1,866    1,441    769 
Other liabilities   18,458    20,632    18,401    19,535    24,944 
Total liabilities   1,218,045    1,214,126    1,223,769    1,221,534    1,217,205 
                          
Shareholders’ Equity                         
Common stock   61,319    61,319    61,319    61,319    61,319 
Additional paid-in capital   15,124    15,037    15,154    14,953    15,087 
Retained earnings   108,486    105,521    103,725    101,548    101,966 
Accumulated other comprehensive loss   (29,831)   (39,517)   (32,894)   (29,671)   (32,120)
Treasury stock   (30,756)   (30,012)   (29,638)   (28,390)   (27,824)
Total shareholders’ equity   124,342    112,348    117,666    119,759    118,428 
                          
Total liabilities and shareholders’ equity  $1,342,387   $1,326,474   $1,341,435   $1,341,293   $1,335,633 

 

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

 
   

2023

    2023    2023    2023    2022    2023    2022 
Interest income                                   
Loans                                   
Taxable  $13,438   $13,128   $12,715   $12,126   $11,222   $51,407   $38,238 
Tax exempt   124    122    121    116    109    483    335 
Securities                                   
Taxable   1,526    1,507    1,524    1,535    1,559    6,092    5,798 
Tax exempt   38    39    46    47    47    170    198 
Total interest income   15,126    14,796    14,406    13,824    12,937    58,152    44,569 
                                    
Interest expense                                   
Deposits   4,398    4,194    3,538    2,578    1,440    14,708    3,477 
Repurchase agreements & other   39    16    9    10    7    74    39 
Federal Home Loan Bank advances   720    666    664    553    258    2,603    515 
Trust preferred securities   191    189    172    164    138    716    361 
Subordinated debt   194    195    194    195    194    778    778 
Total interest expense   5,542    5,260    4,577    3,500    2,037    18,879    5,170 
                                    
Net interest income   9,584    9,536    9,829    10,324    10,900    39,273    39,399 
                                    
Provision for credit losses   (74)   (6)   145    250    -    315    - 
                                    
Net interest income after provision for loan losses   9,658    9,542    9,684    10,074    10,900    38,958    39,399 
                                    
Noninterest income                                   
Wealth management fees   838    837    940    917    907    3,532    3,728 
Customer service fees   844    863    871    825    880    3,403    3,378 
Gain on sale of mtg. loans & OMSR   747    1,207    1,056    599    550    3,609    4,298 
Mortgage loan servicing fees, net   561    438    494    608    627    2,101    2,964 
Gain on sale of non-mortgage loans   177    10    218    24    105    429    566 
Title insurance revenue   378    429    455    373    454    1,635    2,229 
Net gain on sales of securities   1,453    -    -    -    -    1,453    - 
Gain (loss) on sale of assets   16    -    15    (11)   18    20    61 
Other   517    379    312    331    172    1,539    1,007 
Total noninterest income   5,531    4,163    4,361    3,666    3,713    17,721    18,231 
                                    
Noninterest expense                                   
Salaries and employee benefits   5,652    5,491    5,721    5,913    5,677    22,777    24,142 
Net occupancy expense   746    764    802    784    763    3,096    2,993 
Equipment expense   1,027    1,068    1,002    981    1,017    4,078    3,616 
Data processing fees   680    648    685    646    627    2,659    2,510 
Professional fees   926    623    612    863    738    3,024    3,214 
Marketing expense   182    189    213    198    258    782    911 
Telephone and communication expense   132    124    124    121    124    501    474 
Postage and delivery expense   167    100    78    87    121    432    422 
State, local and other taxes   285    218    218    228    277    949    1,082 
Employee expense   146    141    156    188    157    631    613 
Other expenses   426    1,115    728    764    510    3,033    2,337 
Total noninterest expense   10,369    10,481    10,339    10,773    10,269    41,962    42,314 
                                    
Income before income tax expense   4,820    3,224    3,706    2,967    4,345    14,717    15,315 
Income tax expense   937    537    631    517    812    2,622    2,794 
Net income  $3,883   $2,687   $3,075   $2,450   $3,533   $12,095   $12,521 
                                    
Common share data:                                   
Basic earnings per common share  $0.58   $0.40   $0.45   $0.35   $0.51   $1.77   $1.79 
Diluted earnings per common share  $0.57   $0.39   $0.44   $0.35   $0.50   $1.75   $1.77 
                                    
Average shares outstanding (in thousands):                                   
Basic:   6,748    6,791    6,847    6,933    6,945    6,829    7,005 
Diluted:   6,851    6,878    6,910    7,008    7,021    6,917    7,078 

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 
    

December

    

September

    

June

    

March

    

December

    

December

    

December

 
SUMMARY OF OPERATIONS   

2023

    

2023

    

2023

    

2023

    

2022

    

2023

    

2022

 
Net interest income  $9,584   $9,536   $9,829   $10,324   $10,900   $39,273   $39,399 
Tax-equivalent adjustment   43    43    44    43    41    174    142 
Tax-equivalent net interest income   9,627    9,579    9,873    10,367    10,941    39,447    39,541 
Provision for credit loss   (74)   (6)   145    250    -    315    - 
Noninterest income   5,531    4,163    4,361    3,666    3,713    17,721    18,231 
Total operating revenue   15,115    13,699    14,190    13,990    14,613    56,994    57,630 
Noninterest expense   10,369    10,481    10,339    10,773    10,269    41,962    42,314 
Pre-tax pre-provision income   4,746    3,218    3,851    3,217    4,344    15,032    15,316 
Pretax income   4,820    3,224    3,706    2,967    4,344    14,717    15,316 
Net income   3,883    2,687    3,075    2,450    3,533    12,095    12,521 
                                    
PER SHARE INFORMATION:                                   
Basic earnings per share (EPS)   0.58    0.40    0.45    0.35    0.51    1.77    1.79 
Diluted earnings per share   0.57    0.39    0.44    0.35    0.50    1.75    1.77 
Common dividends   0.135    0.130    0.130    0.125    0.125    0.520    0.480 
Book value per common share   18.50    16.59    17.30    17.37    17.08    18.50    17.08 
Tangible book value per common share (TBV)   14.98    13.09    13.81    13.93    13.65    14.98    13.65 
Market price per common share   15.35    13.50    12.62    14.13    16.95    15.35    16.95 
Market price to TBV   102.5%   103.1%   91.4%   101.4%   124.2%   102.5%   124.2%
Market price to trailing 12 month EPS   8.8    8.0    7.1    8.2    9.6    8.8    9.6 
                                    
PERFORMANCE RATIOS:                                   
Return on average assets (ROAA)   1.17%   0.80%   0.91%   0.73%   1.07%   0.91%   0.95%
Pre-tax pre-provision ROAA   1.43%   0.96%   1.14%   0.96%   1.32%   1.21%   1.25%
Return on average equity   13.23%   9.25%   10.32%   8.22%   12.17%   10.22%   9.86%
Return on average tangible equity   16.57%   11.62%   12.89%   10.26%   15.30%   12.78%   12.14%
Efficiency ratio   68.44%   76.34%   72.71%   76.85%   70.16%   73.47%   73.31%
Earning asset yield   4.89%   4.78%   4.61%   4.49%   4.27%   4.67%   3.63%
Cost of interest bearing liabilities   2.33%   2.18%   1.90%   1.46%   0.90%   1.97%   0.56%
Net interest margin   3.10%   3.08%   3.15%   3.35%   3.60%   3.15%   3.21%
Tax equivalent effect   0.01%   0.01%   0.01%   0.02%   0.01%   0.01%   0.01%
Net interest margin, tax equivalent   3.11%   3.09%   3.16%   3.37%   3.61%   3.16%   3.22%
Non interest income/Average assets   1.67%   1.24%   1.30%   1.10%   1.13%   1.33%   1.38%
Non interest expense/Average assets   3.12%   3.13%   3.07%   3.23%   3.13%   3.14%   3.21%
Net noninterest expense/Average assets   -1.46%   -1.89%   -1.78%   -2.13%   -2.00%   -1.82%   -1.83%
                                    
ASSET QUALITY RATIOS:                                   
Gross charge-offs   5    12    32    69    7    118    34 
Recoveries   1    7    10    8    1    26    47 
Net charge-offs   4    5    22    61    6    92    (13)
Nonperforming loans/Total loans   0.28%   0.34%   0.30%   0.35%   0.38%   0.28%   0.38%
Nonperforming assets/Loans & OREO   0.33%   0.40%   0.36%   0.41%   0.46%   0.33%   0.46%
Nonperforming assets/Total assets   0.25%   0.30%   0.26%   0.30%   0.33%   0.25%   0.33%
Allowance for credit loss/Nonperforming loans   560.18%   474.32%   542.78%   454.71%   375.29%   560.18%   375.29%
Allowance for credit loss/Total loans   1.58%   1.60%   1.60%   1.58%   1.44%   1.58%   1.44%
Net loan charge-offs/Average loans (ann.)   0.00%   0.00%   0.01%   0.03%   0.00%   0.01%   (0.00)%
                                    
CAPITAL & LIQUIDITY RATIOS:                                   
Loans/ Deposits   93.46%   91.13%   91.94%   87.94%   88.53%   93.46%   88.53%
Equity/ Assets   9.26%   8.47%   8.77%   8.93%   8.87%   9.26%   8.87%
Tangible equity/Tangible assets   7.63%   6.81%   7.13%   7.29%   7.22%   7.63%   7.22%
Common equity tier 1 ratio (Bank)   13.42%   13.56%   13.18%   13.44%   13.42%   13.42%   13.42%
                                    
END OF PERIOD BALANCES                                   
Total assets   1,342,387    1,326,474    1,341,435    1,341,293    1,335,633    1,342,387    1,335,633 
Total loans   1,000,212    989,021    984,824    976,312    962,075    1,000,212    962,075 
Deposits   1,070,205    1,085,319    1,071,156    1,110,144    1,086,665    1,070,205    1,086,665 
Shareholders equity   124,342    112,348    117,666    119,759    118,428    124,342    118,428 
Goodwill and intangibles   23,662    23,687    23,710    23,732    23,753    23,662    23,753 
Tangible equity   100,680    88,661    93,956    96,027    94,675    100,680    94,675 
Mortgage servicing portfolio   1,366,667    1,367,209    1,353,904    1,344,158    1,352,016    1,366,667    1,352,016 
Wealth/Brokerage assets under care   501,829    478,236    499,255    518,009    507,093    501,829    507,093 
Total assets under care   3,210,883    3,171,919    3,194,594    3,203,460    3,194,742    3,210,883    3,194,742 
Full-time equivalent employees   251    252    253    255    268    251    268 
Period end common shares outstanding   6,720    6,773    6,803    6,894    6,935    6,720    6,935 
Market capitalization (all)   103,147    91,437    85,857    97,419    117,556    103,147    117,556 
                                    
AVERAGE BALANCES                                   
Total assets   1,327,415    1,339,870    1,346,010    1,335,056    1,314,419    1,334,644    1,318,781 
Total earning assets   1,236,165    1,239,145    1,248,813    1,232,018    1,211,674    1,246,531    1,226,771 
Total loans   992,337    989,089    988,348    970,813    937,898    985,217    888,116 
Deposits   1,084,939    1,095,414    1,100,344    1,098,935    1,094,491    1,094,547    1,105,571 
Shareholders equity   117,397    116,165    119,177    119,237    116,114    118,315    126,963 
Goodwill and intangibles   23,675    23,698    23,721    23,743    23,761    23,709    23,783 
Tangible equity   93,722    92,467    95,456    95,494    92,353    94,606    103,180 
Average basic shares outstanding   6,748    6,791    6,847    6,933    6,945    6,829    7,005 
Average diluted shares outstanding   6,851    6,878    6,910    7,008    7,021    6,917    7,078 

8

 

 

SB FINANCIAL GROUP, INC.

Rate Volume Analysis - (Unaudited)

For the Three & Twelve Months Ended Dec. 31, 2023 and 2022

 

($ in thousands)  Three Months Ended Dec. 31, 2023   Three Months Ended Dec. 31, 2022 
   Average       Average   Average       Average 
  Balance   Interest   Rate   Balance   Interest   Rate 
Assets                        
Taxable securities/cash  $237,203   $1,526    2.57%  $265,711   $1,559    2.35%
Nontaxable securities   6,625    38    2.29%   8,065    47    2.33%
Loans, net   992,337    13,562    5.47%   937,898    11,331    4.83%
Total earning assets   1,236,165    15,126    4.89%   1,211,674    12,937    4.27%
Cash and due from banks   4,077              7,052           
Allowance for loan losses   (15,787)             (13,820)          
Premises and equipment   22,205              23,757           
Other assets   80,755              85,756           
Total assets  $1,327,415             $1,314,419           
                               
Liabilities                              
Savings, MMDA and interest bearing demand  $601,034   $2,232    1.49%  $646,498   $965    0.60%
Time deposits   247,382    2,166    3.50%   180,678    475    1.05%
Repurchase agreements & other   13,359    39    1.17%   18,058    7    0.16%
Advances from Federal Home Loan Bank   58,330    720    4.94%   29,078    258    3.55%
Trust preferred securities   10,310    191    7.41%   10,310    138    5.35%
Subordinated debt   19,634    194    3.95%   19,588    194    3.96%
Total interest bearing liabilities   950,049    5,542    2.33%   904,210    2,037    0.90%
Non interest bearing demand   236,523    -         267,315    -      
Total funding   1,186,572         1.87%   1,171,525         0.70%
Other liabilities   23,446              26,780           
Total liabilities   1,210,018              1,198,305           
Equity   117,397              116,114           
Total liabilities and equity  $1,327,415             $1,314,419           
                               
Net interest income       $9,584             $10,900      
                               
Net interest income as a percent of average interest-earning assets - GAAP measure  3.10%             3.60%
                    
Net interest income as a percent of average interest-earning assets - non GAAP - Computed on a fully tax equivalent (FTE) basis  3.11%             3.61%

 

9

 

 

   Twelve Months Ended Dec. 31, 2023   Twelve Months Ended Dec. 31, 2022 
   Average       Average   Average       Average 
  Balance   Interest   Rate   Balance   Interest   Rate 
Assets                        
Taxable securities/cash  $254,133   $6,092    2.40%  $330,549   $5,798    1.75%
Nontaxable securities   7,181    170    2.37%   8,106    198    2.44%
Loans, net   985,217    51,890    5.27%   888,116    38,573    4.34%
Total earning assets   1,246,531    58,152    4.67%   1,226,771    44,569    3.63%
Cash and due from banks   4,035              7,296           
Allowance for loan losses   (15,478)             (13,808)          
Premises and equipment   22,990              24,137           
Other assets   76,566              74,385           
Total assets  $1,334,644             $1,318,781           
                               
Liabilities                              
Savings, MMDA and interest bearing demand  $619,906   $7,599    1.23%  $693,271   $2,258    0.33%
Time deposits   236,665    7,109    3.00%   159,401    1,219    0.76%
Repurchase agreements & Other   15,765    74    0.47%   20,481    39    0.19%
Advances from Federal Home Loan Bank   55,044    2,603    4.73%   16,420    515    3.14%
Trust preferred securities   10,310    716    6.94%   10,310    361    3.50%
Subordinated debt   19,616    778    3.97%   19,570    778    3.98%
Total interest bearing liabilities   957,306    18,879    1.97%   919,453    5,169    0.56%
Non interest bearing demand   237,976         1.58%   252,899         0.44%
Total funding   1,195,282              1,172,352           
Other liabilities   21,047              19,466           
Total liabilities   1,216,329              1,191,818           
Equity   118,315              126,963           
Total liabilities and equity  $1,334,644             $1,318,781           
                               
Net interest income       $39,273             $39,400      
                               
Net interest income as a percent of average interest-earning assets - GAAP measure  3.15%             3.21%
                    
Net interest income as a percent of average interest-earning assets - non GAAP - Computed on a fully tax equivalent (FTE) basis  3.16%             3.22%

 

10

 

 

Non-GAAP reconciliation  Three Months Ended   Twelve Months Ended 
($ in thousands, except per share & ratios)  Dec. 31, 2023   Dec. 31, 2022   Dec. 31, 2023   Dec. 31, 2022 
                 
Total Operating Revenue  $15,115   $14,613   $56,994   $57,630 
Adjustment to (deduct)/add OMSR recapture/impairment *   12    (86)   51    (1,279)
Adjusted Total Operating Revenue   15,127    14,527    57,045    56,351 
                     
Income before Income Taxes   4,820    4,345    14,717    15,316 
Adjustment for OMSR *   12    (86)   51    (1,279)
Adjusted Income before Income Taxes   4,832    4,259    14,768    14,037 
                     
Provision for Income Taxes   937    812    2,622    2,795 
Adjustment for OMSR **   3    (18)   11    (269)
Adjusted Provision for Income Taxes   940    794    2,633    2,527 
                     
Net Income   3,883    3,533    12,095    12,521 
Adjustment for OMSR *   9    (68)   40    (1,010)
Adjusted Net Income   3,892    3,465    12,135    11,511 
                     
Diluted Earnings per Share   0.57    0.50    1.75    1.77 
Adjustment for OMSR *   0.00    (0.01)   0.01    (0.14)
Adjusted Diluted Earnings per Share  $0.57   $0.49   $1.75   $1.63 
                     
Return on Average Assets   1.17%   1.08%   0.91%   0.95%
Adjustment for OMSR *   0.00%   -0.02%   0.00%   -0.08%
Adjusted Return on Average Assets   1.17%   1.05%   0.91%   0.87%

 

*valuation adjustment to the Company’s mortgage servicing rights

 

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

 

11