SB Financial Group, Inc. Announces Improved Third Quarter 2013 Results

  • Consolidated earnings up 3.1 percent year over year, up 21.0 percent YTD
  • Nonperforming assets declined to 1.4 percent of total assets; down 6.7 percent from 2012
  • Revenue expanded despite slowing mortgage origination environment; up 4.5 percent YTD
  • Portfolio loans increased $20.2 million, or 4.4 percent, year over year
  • Tangible common equity of 6.2 percent, up 11.6 percent year over year
  • Operating expense down 2.4 percent year over year
  • YTD Return on Assets at 83 basis points, Return on Equity at 9.8 percent

DEFIANCE, Ohio, October 21, 2013 (GLOBE NEWSWIRE) -- SB Financial Group, Inc. (Nasdaq:SBFG) ("SB Financial" or the "Company"), a diversified financial services company providing full-service community banking, mortgage banking, wealth management and item processing services, today reported earnings for the third quarter ended September 30, 2013.

Consolidated earnings for SB Financial include the results of the Company's Banking Group, consisting primarily of State Bank ("State Bank" or the "Bank"), and the Company's data services subsidiary, Rurbanc Data Services, Inc. (dba "RDSI Banking Systems" or "RDSI"). For the quarter ended September 30, 2013, SB Financial reported net income of $1.3 million, or $0.28 per diluted share, compared to net income of $1.3 million, or $0.27 per diluted share for the quarter ended September 30, 2012, and net income of $1.3 million, or $0.27 per diluted share, for the quarter ended June 30, 2013.

For the nine months of 2013, net income was $4.0 million, or $0.82 per common share, compared to $3.3 million, or $0.68 per common share, for the prior-year nine month period.

Mark Klein, President and CEO of SB Financial Group, stated, "We are pleased with our third quarter results, which delivered earnings improvement compared to both the prior-year third quarter and the linked quarter. Additionally, over the past five quarters, SB Financial has demonstrated a consistent, positive earnings trend. Overall, despite a slowdown in mortgage origination volume, we continue to make progress in the execution of our key initiatives for the year by delivering steady revenue growth, improving asset quality and expanding our service offering utilization within our existing client base."

RESULTS OF OPERATIONS

Consolidated Revenue

Total revenue, consisting of net interest income fully tax equivalent (FTE) and noninterest income, was $9.0 million for the third quarter of 2013, up 0.1 percent, from the third quarter of 2012, and lower by $0.3 million, or 3.1 percent, from the linked quarter. Revenue was impacted in the quarter by the 32.6 percent decline in mortgage originations from the linked quarter.

Net interest income (FTE) for the 2013 third quarter was $5.3 million, down 4.5 percent year over year, reflecting the impact of declining yields on the loan portfolio, which was partially offset by lower funding costs. The net interest margin (FTE) was 3.7 percent for the third quarter of 2013, compared to 3.9 percent for the third quarter of 2012. Mr. Klein continued, "The current rising interest rate environment affects the banking industry as a whole, and is resulting in pressure on the yield of our loan portfolio and the volumes of our mortgage loan originations. Despite this headwind, we are confident in our ability to build on our existing mortgage business for the remainder of the year and into 2014."

Noninterest Income

Noninterest income was $3.7 million for the third quarter of 2013, up $0.3 million, or 8.9 percent, from the third quarter of 2012. Mortgage loan originations for the third quarter of 2013 were $55.2 million, a decrease of $35.5 million, or 39.1 percent, from the $90.6 million generated in the third quarter of 2012. For the nine months ended September 30, 2013, mortgage originations were $209.1 million, down $29.8 million, or 12.5 percent, from the nine months ended September 30, 2012.

Net mortgage banking income, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $1.8 million for the third quarter of 2013, compared to $1.9 million for the linked quarter and $1.4 million for the year-ago third quarter. The mortgage servicing valuation adjustment in the third quarter of 2013 was a favorable $0.2 million, compared to $0.3 million for the linked quarter. The mortgage servicing portfolio at the end of the third quarter 2013 was $597.0 million, up $108.1 million, or 22.1 percent, from the end of the third quarter 2012.

Mortgage Banking ($000's) Three Months Ended
Sep. 2013 Jun. 2013 Mar. 2013 Dec. 2012 Sep. 2012
Mortgage originations $55,192 $81,945 $71,967 $93,619 $90,685
Mortgage sales 58,101 67,050 68,431 93,993 81,862
Mortgage servicing portfolio 597,030 575,091 548,493 528,086 488,930
Mortgage servicing rights 5,076 4,613 4,068 3,775 3,346
Mortgage servicing revenue:
Loan servicing fees 367 350 338 319 297
OMSR amortization (164) (205) (330) (362) (369)
Net administrative fees 203 145 8 (43) (72)
OMSR valuation adjustment 205 273 171 195 (120)
Net loan servicing fees 408 418 179 152 (192)
Gain on sale of mortgages 1,356 1,450 1,484 2,136 1,572
Mortgage banking revenue, net $1,764 $1,868 $1,663 $2,288 $1,380

SB Financial's fee income includes a diversity of services, such as wealth management, deposit fees and income from bank-owned life insurance. Wealth management increased revenue by 3.6 percent from the year-ago quarter as assets under management, which currently stand at $339.7 million, grew by $30.2 million, or 9.8 percent, from the third quarter of 2012. Noninterest income contributed 41.3 percent of third quarter 2013 revenue (FTE); this compares to a 38.2 percent contribution of revenue (FTE) for third quarter 2012.

Gross revenue generated by RDSI, including services provided to SB Financial/State Bank, was $0.5 million for the third quarter of 2013. Net data services fees, excluding SB Financial/State Bank intercompany transactions, were $0.3 million in the third quarter of 2013, down $0.2 million from the year-ago quarter. Mr. Klein added, "We made the decision this quarter to exit the network services business and concentrate our technology efforts in item and statement processing. We believe the reallocation of resources will better serve the Company in its long-term growth strategy."

Data Services ($000's) Sep. 2013 Jun. 2013 Mar. 2013 Dec. 2012 Sep. 2012
Data Processing & Network Services $104 $207 $270 $179 $229
Payment Solutions 403 493 484 549 488
Contract Buyout -- -- -- -- 53
Vendor Settlement -- -- -- 334 --
RDSI Gross Revenue 507 700 754 1,062 780
Less: Intercompany (174) (242) (340) (251) (285)
Net Data Services Fees $333 $458 $414 $811 $485
Core Data Service Fees $333 $458 $414 $477 $432

Loan Loss Provision

The loan loss provision was $0.4 million for the third quarter of 2013, which covers the net charge-offs for the quarter of $0.3 million. Asset quality metrics include a 21.9 percent decline in non-accruing and restructured loans, and a 24.6 percent reduction in year-to-date net charge-offs from the prior-year nine-month period. The loan loss reserve at third quarter-end 2013 was 1.5 percent of total loans, providing 97.1 percent coverage of nonperforming loans; this compares to reserve coverage of 95.9 percent at third quarter-end 2012.

Noninterest Expense

For the third quarter of 2013, noninterest expense was $6.6 million, down $0.2 million, or 2.4 percent, from the 2012 third quarter. Year-to-date noninterest expense was $20.3 million, up 0.2 percent, from the first nine months of 2012. Compensation expense was down from the linked quarter reflecting the lower level of mortgage originations. Year-to-date FDIC insurance is down 43.0 percent, from the prior year, which reflects State Bank's improved risk profile.

"Expense control continues to be a major focus for management and we continue to reduce our fixed costs each quarter. It is especially gratifying to have significantly lower FDIC premiums, reflecting the improvement in State Bank's asset quality and risk profile." said Mr. Klein.

Balance Sheet

Total assets as of September 30, 2013 were $633.4 million, an increase of $3.2 million, or 0.5 percent, from the third quarter-end 2012. Total deposits as of third quarter 2013 were $521.5 million, higher by $6.3 million than the third quarter-end 2012.

Total loans held for investment (HFI) were $475.2 million at September 30, 2013 compared to $455.0 million for the prior-year quarter-end, up $20.2 million, or 4.4 percent. Commercial real estate loans accounted for the majority of growth, up $11.1 million, or 5.6 percent, and residential real estate loans, up $10.8 million, or 12.5 percent. For the nine months ended September 30, 2013, loans have increased by $11.8 million, primarily from increases in commercial and residential real estate, offsetting declines in agricultural lending.

Mr. Klein stated, "We have been pleased with our consistent loan growth over the past year, and we find the additional loan growth opportunities we are seeing across our markets encouraging. We believe that as a regionally-focused bank that we are well positioned to capture successfully these new business opportunities."

Loan Portfolio ($000's) Sep. 2013 Jun. 2013 Mar. 2013 Dec. 2012 Sep. 2012 Variance YOY
Commercial $81,571 $84,766 $80,431 $81,491 $76,043 $5,528
% of Total 17.2% 18.3% 17.7% 17.6% 16.7% 7.3%
Commercial RE 209,739 199,795 199,615 201,392 198,682 11,057
% of Total 44.1% 43.1% 43.8% 43.5% 43.6% 5.6%
Agriculture 39,636 38,552 37,950 42,276 42,988 (3,352)
% of Total 8.3% 8.3% 8.3% 9.1% 9.4% (7.8%)
Residential RE 96,477 93,292 89,669 87,859 85,727 10,750
% of Total 20.3% 20.1% 19.7% 19.0% 18.8% 12.5%
Consumer & Other 47,810 47,630 47,778 50,371 51,581 (3,771)
% of Total 10.1% 10.3% 10.5% 10.9% 11.3% (7.3%)
Total Loans $475,233 $464,035 $455,443 $463,389 $455,021 $20,212
4.4%

Asset Quality

SB Financial continues to improve its asset quality, reporting nonperforming assets of $8.8 million for the current quarter, lower by $0.6 million, or 6.7 percent, than the prior-year third quarter. From the linked quarter, nonperforming assets increased due to an agricultural equipment dealer bankruptcy. Net charge-offs of $0.3 million were just 25 basis points for the quarter and up slightly from the prior-year third quarter. Delinquency levels have declined, with the 30-89 day category totaling $0.4 million at the end of the 2013 third quarter, compared to $0.7 million for the prior-year third quarter. Mr. Klein continued, "All of our asset quality measures, especially delinquency, have shown improvement. We have continued to add to our loan loss reserve, resisting thus far in 2013 to release loan loss reserves to impact our earnings."

Summary of Nonperforming Assets ($000's)
Nonperforming Loan Category Sep. 2013 Jun. 2013 Mar. 2013 Dec. 2012 Sep. 2012
Commercial $2,738 $982 $1,135 $1,246 $1,362
% of Total Commercial loans 3.4% 1.2% 1.4% 1.5% 1.8%
Commercial RE loans 642 519 457 782 448
% of Total CRE loans 0.3% 0.3% 0.2% 0.4% 0.2%
Agriculture -- -- -- -- 3
% of Total Ag loans -- -- -- -- 0.01%
Residential RE 1,837 2,285 2,614 2,631 2,607
% of Total Res. RE loans 1.9% 2.5% 2.9% 3.0% 3.0%
Consumer & Other 363 600 605 646 829
% of Consumer & Other loans 0.8% 1.3% 1.3% 1.3% 1.6%
Total Nonaccruing Loans 5,580 4,386 4,811 5,305 5,249
% of Total Loans 1.2% 1.0% 1.0% 1.1% 1.2%
Accruing Restructured Loans 1,756 1,262 1,273 1,258 1,735
Total Nonaccruing & Restructured $7,336 $5,648 $6,084 $6,563 $6,984
% of Total Loans 1.5% 1.2% 1.3% 1.4% 1.5%
OREO & Repossessed Vehicles 1,430 1,955 2,270 2,367 2,415
Total Nonperforming Assets $8,766 $7,603 $8,354 $8,930 $9,399
% of Total Assets 1.4% 1.2% 1.3% 1.4% 1.5%

Capitalization

Improving capital ratios remains an important focus of management. The Tangible equity ratio improved by 65 basis points over the past twelve months, and now stands at 6.2 percent. All bank regulatory ratios remain in excess of "well-capitalized" levels. At September 30, 2013, State Bank's Total Risk-based Capital was estimated to be $60.0 million, $21.6 million above the well-capitalized level. The Total Risk-based Capital Ratio is estimated at 12.6 percent.

About SB Financial Group

Based in Defiance, Ohio, SB Financial Group, Inc. is a financial services holding company with two wholly-owned operating subsidiaries: State Bank and RDSI Banking Systems (RDSI). State Bank operates through 17 banking centers in seven Northwestern Ohio counties, one center in Fort Wayne, Indiana; and three loan production offices: two in Columbus, Ohio and one in Angola, Indiana. State Bank offers a full range of financial services for consumers and small businesses, including wealth management, mortgage banking, commercial and agricultural lending. RDSI provides item processing services to community banks located in the Midwest. The Company's common stock is listed on the NASDAQ Global Market under the symbol SBFG.

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, insurance and mortgage industries, competitive factors specific to markets in which SB Financial Group and its subsidiaries operate, future interest rate levels, legislative and regulatory actions, capital market conditions, general economic conditions, geopolitical events, the loss of key personnel and other factors. Additional factors that could cause results to differ from those described above can be found in the Company's Annual Report on Form 10-K and documents subsequently filed by SB Financial Group with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and SB Financial Group 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 Group 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 providing certain non-GAAP financial measures provides investors with information useful in understanding the Company's financial performance, its performance trends and financial position. Specifically, SB Financial Group provides measures based on "core operating earnings," which excludes merger, integration and restructuring expenses that are not reflective of on-going operations or not expected to recur. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results.

SB FINANCIAL GROUP, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Unaudited)
September June March December September
($ in Thousands) 2013 2013 2013 2012 2012
ASSETS
Cash and due from banks $19,016 $10,750 $28,031 $19,144 $10,289
Securities available for sale, at fair value 86,620 95,379 98,390 98,702 101,247
Other securities - FRB and FHLB Stock 3,748 3,748 3,748 3,748 3,748
Total investment securities 90,368 99,127 102,138 102,450 104,995
Loans held for sale 2,407 10,715 8,560 6,147 11,584
Loans, net of unearned income 475,233 464,035 455,443 463,389 455,021
Allowance for loan losses (7,120) (7,013) (6,992) (6,811) (6,696)
Net loans 468,113 457,022 448,451 456,578 448,325
Premises and equipment, net 12,399 12,483 12,738 12,633 12,898
Purchased software 320 289 300 330 334
Cash surrender value of life insurance 12,826 12,742 12,659 12,577 12,491
Goodwill 16,353 16,353 16,353 16,353 16,353
Core deposits and other intangibles 784 913 1,066 1,219 1,376
Foreclosed assets held for sale, net 1,430 1,955 2,270 2,367 2,415
Mortgage servicing rights 5,076 4,613 4,068 3,775 3,346
Accrued interest receivable 1,694 1,575 1,618 1,235 1,832
Other assets 2,626 2,955 3,048 3,426 3,967
Total assets $633,412 $631,492 $641,300 $638,234 $630,205
LIABILITIES AND EQUITY
Deposits
Non interest bearing demand $78,217 $76,355 $79,579 $77,799 $69,250
Interest bearing demand 124,860 118,957 123,748 117,289 112,230
Savings 61,899 61,513 62,404 57,461 53,505
Money market 78,406 78,487 81,130 80,381 78,006
Time deposits 178,161 176,066 185,398 194,071 202,259
Total deposits 521,543 511,378 532,259 527,001 515,250
Notes payable 680 1,148 1,424 1,702 1,975
Advances from Federal Home Loan Bank 16,000 30,000 17,500 21,000 18,500
Repurchase agreements 14,836 9,314 10,983 10,333 13,735
Trust preferred securities 20,620 20,620 20,620 20,620 20,620
Accrued interest payable 448 715 515 138 4,223
Other liabilities 3,748 3,930 3,704 4,156 3,972
Total liabilities 577,875 577,105 587,005 584,950 578,275
Equity
Preferred stock -- -- -- -- --
Common stock 12,569 12,569 12,569 12,569 12,569
Additional paid-in capital 15,399 15,392 15,381 15,374 15,363
Retained earnings 28,846 27,648 26,476 25,280 23,755
Accumulated other comprehensive income 415 496 1,623 1,830 2,012
Treasury stock (1,692) (1,718) (1,754) (1,769) (1,769)
Total equity 55,537 54,387 54,295 53,284 51,930
Total liabilities and equity $633,412 $631,492 $641,300 $638,234 $630,205
SB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
($ in thousands, except share data) Three Months Ended Nine Months Ended
September June March December September September September
Interest income 2013 2013 2013 2012 2012 2013 2012
Loans
Taxable $ 5,649 $ 5,874 $ 5,883 $ 5,840 $ 6,106 $ 17,406 $ 18,071
Nontaxable 14 16 24 22 21 54 68
Securities
Taxable 305 296 330 330 383 931 1,185
Nontaxable 178 174 170 157 156 522 449
Total interest income 6,146 6,360 6,407 6,349 6,666 18,913 19,773
Interest expense
Deposits 539 573 606 653 694 1,718 2,316
Other borrowings 11 12 14 15 17 37 49
Repurchase Agreements 2 3 2 3 11 7 139
Federal Home Loan Bank advances 83 84 90 92 92 257 241
Trust preferred securities 336 338 403 431 418 1,077 1,451
Total interest expense 971 1,010 1,115 1,194 1,232 3,096 4,196
Net interest income 5,175 5,350 5,292 5,155 5,434 15,817 15,577
Provision for loan losses 401 200 299 400 300 900 950
Net interest income after provision for loan losses 4,774 5,150 4,993 4,755 5,134 14,917 14,627
Noninterest income
Trust fees 669 652 643 606 646 1,964 1,895
Customer service fees 659 639 616 648 677 1,914 1,976
Gain on sale of mtg. loans & OMSR's 1,356 1,450 1,484 2,136 1,572 4,290 4,148
Mortgage loan servicing fees, net 408 418 179 152 (192) 1,005 (28)
Gain on sale of non-mortgage loans 44 82 156 94 170 282 170
Data service fees 333 458 414 811 485 1,205 1,704
Net gain on sales of securities 28 -- 20 -- -- 48 --
Gain/(loss) on sale/disposal of assets 15 (129) (105) (54) (151) (219) (257)
Other income 198 250 160 255 201 608 589
Total non-interest income 3,710 3,820 3,567 4,648 3,408 11,097 10,197
Noninterest expense
Salaries and employee benefits 3,343 3,688 3,439 3,825 3,597 10,470 10,693
Net occupancy expense 507 513 541 494 515 1,561 1,591
Equipment expense 701 703 755 692 722 2,159 2,145
FDIC insurance expense 98 94 109 100 91 301 528
Fixed asset and software impairment -- -- -- 65 -- -- --
Data processing fees 189 194 77 132 103 460 337
Professional fees 456 499 429 686 451 1,384 1,226
Marketing expense 135 92 108 115 85 335 278
Printing and office supplies 49 151 46 46 39 246 184
Telephone and communication 156 158 158 146 151 472 434
Postage and delivery expense 199 209 215 204 223 623 652
State, local and other taxes 140 138 134 136 128 412 366
Employee expense 125 126 152 113 118 403 343
Other intangible amortization expense 129 153 153 158 157 435 472
OREO Impairment -- -- 33 -- -- 33 58
Other expenses 335 362 321 300 345 1,018 965
Total non-interest expense 6,562 7,080 6,670 7,212 6,725 20,312 20,272
Income before income tax expense 1,922 1,890 1,890 2,191 1,817 5,702 4,552
Income tax expense 578 571 572 667 513 1,721 1,262
Net income $1,344 $1,319 $1,318 $1,524 $1,304 $3,981 $3,290
Common share data:
Basic earnings per common share $0.28 $0.27 $0.27 $0.31 $0.27 $0.82 $0.68
Diluted earnings per common share $0.28 $0.27 $0.27 $0.31 $0.27 $0.82 $0.68
Average shares outstanding ($ in thousands):
Basic: 4,867 4,866 4,863 4,862 4,862 4,865 4,862
Diluted: 4,881 4,870 4,870 4,862 4,862 4,877 4,862
SB FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)
($ in thousands, except per share data) Three Months Ended Nine Months Ended
September June March December September September September
SUMMARY OF OPERATIONS 2013 2013 2013 2012 2012 2013 2012
Net interest income $5,175 5,350 5,292 5,155 5,434 15,817 15,577
Tax-equivalent adjustment $ 99 98 100 92 91 297 266
Tax-equivalent net interest income $5,274 5,448 5,392 5,247 5,525 16,114 15,843
Provision for loan loss $401 200 299 400 300 900 950
Noninterest income $3,710 3,820 3,567 4,648 3,408 11,097 10,197
Total revenue, tax-equivalent $8,984 9,268 8,959 9,895 8,933 27,211 26,040
Noninterest expense $6,562 7,080 6,670 7,212 6,725 20,312 20,272
Pre provision pretax income $2,323 2,090 2,189 2,591 2,117 6,602 5,502
Pretax income $1,922 1,890 1,890 2,191 1,817 5,702 4,552
Net income $1,344 1,319 1,318 1,524 1,304 3,981 3,290
PER SHARE INFORMATION:
Basic & diluted earnings per share $0.28 0.27 0.27 0.31 0.27 0.82 0.68
Common dividends $0.03 0.055 -- -- -- 0.085 --
Book value per common share $11.41 11.18 11.16 10.96 10.68 11.41 10.68
Tangible book value per common share $7.89 7.63 7.58 7.35 7.03 7.89 7.03
PERFORMANCE RATIOS:
Return on average assets 0.84% 0.82% 0.83% 0.95% 0.82% 0.83% 0.69%
Return on average common equity 9.82% 9.70% 9.82% 11.64% 10.25% 9.78% 8.84%
Return on avg. tangible common equity 14.31% 14.25% 14.56% 17.57% 15.91% 14.36% 13.96%
Efficiency ratio 72.40% 75.54% 73.56% 71.96% 74.28% 73.85% 76.82%
Earning asset yield 4.40% 4.58% 4.65% 4.50% 4.78% 4.54% 4.77%
Cost of interest bearing liabilities 0.79% 0.81% 0.90% 0.96% 0.98% 0.83% 1.10%
Net interest margin 3.65% 3.79% 3.78% 3.65% 3.85% 3.74% 3.71%
Tax equivalent effect 0.07% 0.07% 0.08% 0.07% 0.06% 0.07% 0.06%
Net interest margin - fully tax equivalent basis 3.72% 3.86% 3.86% 3.72% 3.91% 3.81% 3.77%
ASSET QUALITY RATIOS:
Gross charge-offs $307 213 136 300 302 656 1,028
Recoveries $13 34 18 15 78 65 244
Net charge-offs $294 179 118 285 223 591 784
Nonaccruing loans/ Total loans 1.17% 0.95% 1.06% 1.14% 1.15% 1.17% 1.15%
Nonperforming loans/ Total loans 1.54% 1.22% 1.34% 1.42% 1.53% 1.54% 1.53%
Nonperforming assets/ Loans & OREO 1.84% 1.63% 1.83% 1.92% 2.05% 1.84% 2.05%
Nonperforming assets/ Total assets 1.38% 1.20% 1.30% 1.40% 1.49% 1.38% 1.49%
Allowance for loan loss/ Nonperforming loans 97.1% 124.2% 114.9% 103.8% 95.9% 97.06% 95.88%
Allowance for loan loss/ Total loans 1.50% 1.51% 1.54% 1.47% 1.47% 1.50% 1.47%
Net loan charge-offs/ Average loans (ann.) 0.25% 0.15% 0.10% 0.25% 0.20% 0.17% 0.23%
Loan loss provision/ Net charge-offs 136.39% 111.73% 253.39% 140.56% 134.46% 152.28% 121.25%
CAPITAL & LIQUIDITY RATIOS:
Loans/ Deposits 91.12% 90.74% 85.57% 87.93% 88.31% 91.12% 88.31%
Equity/ Assets 8.77% 8.61% 8.47% 8.35% 8.24% 8.77% 8.24%
Tangible equity/ Tangible assets 6.23% 6.04% 5.91% 5.75% 5.58% 6.23% 5.58%
END OF PERIOD BALANCES
Total loans $475,233 464,035 455,443 463,389 455,021 475,233 455,021
Total assets $633,412 631,492 641,300 638,234 630,205 633,412 630,205
Deposits $521,543 511,378 532,259 527,001 515,250 521,543 515,250
Stockholders equity $55,537 54,387 54,295 53,284 51,930 55,537 51,930
Tangible equity $38,400 37,121 36,876 35,712 34,201 38,400 34,201
Full-time equivalent employees 196 198 204 204 199 196 199
Period-end basic shares outstanding 4,869 4,867 4,863 4,862 4,862 4,869 4,862
AVERAGE BALANCES
Total loans $474,349 464,105 459,988 455,705 454,634 466,200 452,967
Total earning assets $567,787 564,050 559,383 564,564 565,144 563,730 559,795
Total assets $636,437 640,382 638,801 639,048 635,012 638,667 638,276
Deposits $516,669 520,259 524,901 522,970 515,795 520,359 522,150
Stockholders equity $54,758 54,398 53,711 52,351 50,905 54,287 49,622
Tangible equity $37,556 37,037 36,199 34,686 32,779 36,964 31,405
SB FINANCIAL GROUP, INC.
Rate Volume Analysis - (Unaudited)
For the Three Months Ended September 30, 2013 and 2012
($ in Thousands) Three Months Ended September 30, 2013 Three Months Ended September 30, 2012
Average Average Average Average
Assets Balance Interest Rate Balance Interest Rate
Taxable securities $74,918 305 1.63% $87,528 383 1.76%
Non-taxable securities 18,520 270 5.82% 15,566 236 6.06%
Federal funds sold -- -- N/A -- -- N/A
Loans, net 474,349 5,670 4.78% 462,050 6,138 5.31%
Total earning assets 567,787 6,245 4.40% 565,144 6,757 4.78%
Cash and due from banks 15,270 13,407
Allowance for loan losses (6,947) (6,707)
Premises and equipment 14,461 15,390
Other assets 45,866 47,778
Total assets $636,437 $635,012
Liabilities
Savings and interest-bearing demand $262,166 19 0.03% $243,004 47 0.08%
Time deposits 177,802 520 1.17% 203,104 647 1.26%
Repurchase agreements 12,347 2 0.06% 13,972 11 0.31%
Advances from FHLB 19,038 83 1.74% 18,082 92 2.04%
Junior subordinated debentures 20,620 336 6.52% 20,620 403 7.82%
Notes payable & other borrowed funds 914 11 4.81% 2,076 31 6.00%
Total interest-bearing liabilities 492,887 971 0.79% 500,858 1,232 0.98%
Non interest-bearing demand 76,701 69,687
Other liabilities 12,091 13,562
Total liabilities 581,679 584,107
Equity 54,758 50,905
Total liabilities and equity $636,437 $635,012
Net interest income (tax equivalent basis) $ 5,274 $ 5,525
Net interest income as a percent of average interest-earning assets 3.72% 3.91%
Nine Months Ended September 30, 2013 Nine Months Ended September 30, 2012
Average Average Average Average
Assets Balance Interest Rate Balance Interest Rate
Taxable securities $80,553 931 1.54% $91,917 1,185 1.72%
Non-taxable securities 16,977 791 6.21% 14,911 680 6.08%
Federal funds sold -- -- N/A -- -- N/A
Loans, net 466,200 17,488 5.00% 452,967 18,174 5.35%
Total earning assets 563,730 19,210 4.54% 559,795 20,039 4.77%
Cash and due from banks 20,307 21,740
Allowance for loan losses (6,924) (6,506)
Premises and equipment 14,913 14,962
Other assets 46,641 48,285
Total assets $638,667 $638,276
Liabilities
Savings and interest-bearing demand $262,177 58 0.03% $244,744 167 0.09%
Time deposits 181,348 1,660 1.22% 208,645 2,149 1.37%
Repurchase agreements 10,959 7 0.09% 16,344 139 1.14%
Advances from FHLB 19,410 257 1.76% 14,641 241 2.19%
Junior subordinated debentures 20,620 1,077 6.96% 20,620 1,396 9.03%
Notes payable & other borrowed funds 1,211 37 4.07% 2,315 103 5.94%
Total interest-bearing liabilities 495,725 3,096 0.83% 507,308 4,196 1.10%
Non interest-bearing demand 76,834 68,761
Other liabilities 11,821 12,584
Total liabilities 584,380 588,653
Equity 54,287 49,622
Total liabilities and equity $638,667 $638,275
Net interest income (tax equivalent basis) $ 16,114 $ 15,843
Net interest income as a percent of average interest-earning assets 3.81% 3.77%

CONTACT: Investor Contact Information: Anthony V. Cosentino Executive Vice President and Chief Financial Officer 419.785.3663 Tony.Cosentino@YourStateBank.comSource:SB Financial Group