Core Viewpoint - SB Financial Group, Inc. is set to release its third quarter 2025 financial results on October 30, 2025, with a conference call scheduled for October 31, 2025 [1] Company Overview - SB Financial Group is a diversified financial services holding company based in Defiance, Ohio, operating through the State Bank & Trust Company and SBFG Title, LLC [3] - The State Bank offers a comprehensive range of financial services, including wealth management, mortgage banking, and commercial lending, with 26 offices across Ohio and Indiana [3] - SB Financial's common stock is traded on the NASDAQ Capital Market under the ticker symbol "SBFG" [3] Conference Call Details - Interested parties can join the conference call by dialing 888-338-9469 or accessing it via a live webcast [2] - An audio replay of the conference call will be available on the SB Financial Group website [2] Investor Contact Information - Key contacts for investors include Mark A. Klein, Chairman, President, and CEO, and Anthony V. Cosentino, Executive Vice President and CFO [4]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements and detailed notes for periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | **Assets** | | | | Cash and due from banks | $79,463 | $25,928 | | Total assets | $1,486,301 | $1,379,517 | | **Liabilities** | | | | Total deposits | $1,249,822 | $1,152,605 | | Total liabilities | $1,352,653 | $1,252,009 | | **Shareholders' Equity** | | | | Total shareholders' equity | $133,648 | $127,508 | - Total assets increased by **$106.8 million** (**7.7%**) from December 31, 2024, to June 30, 2025, reaching **$1.486 billion**[8](index=8&type=chunk)[173](index=173&type=chunk) - Total deposits increased by **$97.2 million** (**8.4%**) from December 31, 2024, to June 30, 2025, reaching **$1.250 billion**[8](index=8&type=chunk)[173](index=173&type=chunk) [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) | ($ in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $18,467 | $15,654 | $35,839 | $30,954 | | Total interest expense | $6,339 | $5,995 | $12,432 | $12,115 | | Net Interest Income | $12,128 | $9,659 | $23,407 | $18,839 | | Total provision for credit losses | $597 | $- | $984 | $- | | Total noninterest income | $5,048 | $4,386 | $9,155 | $8,337 | | Total noninterest expense | $11,852 | $10,671 | $24,262 | $20,953 | | Net Income | $3,852 | $3,113 | $6,010 | $5,481 | | Basic earnings per common share | $0.60 | $0.47 | $0.93 | $0.82 | | Diluted earnings per common share | $0.60 | $0.47 | $0.93 | $0.82 | - Net income for Q2 2025 increased by **23.7%** to **$3.9 million**, and diluted EPS rose to **$0.60**, driven by higher interest income on loans[157](index=157&type=chunk) - For the first six months of 2025, net income increased by **9.7%** to **$6.0 million**, with diluted EPS up **13.4%** to **$0.93**, also benefiting from higher loan interest income[165](index=165&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) | ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $3,852 | $3,113 | $6,010 | $5,481 | | Net effect on other comprehensive income (loss) | $1,380 | $(254) | $4,742 | $(1,970) | | Total comprehensive income | $5,232 | $2,859 | $10,752 | $3,511 | - Total comprehensive income significantly increased for both the three and six months ended June 30, 2025, primarily due to positive net effects on other comprehensive income from available-for-sale securities, contrasting with losses in the prior year[15](index=15&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) | ($ in thousands) | Balance, January 1, 2025 | Net income | Other comprehensive income | Cash dividends on common | Repurchased stock | Stock based compensation expense | Balance, June 30, 2025 | | :--------------- | :----------------------- | :--------- | :------------------------- | :----------------------- | :---------------- | :------------------------------- | :--------------------- | | Total | $127,508 | $6,010 | $4,742 | $(1,923) | $(3,030) | $341 | $133,648 | - Shareholders' equity increased from **$127.5 million** at January 1, 2025, to **$133.6 million** at June 30, 2025, driven by net income and other comprehensive income, partially offset by cash dividends and stock repurchases[17](index=17&type=chunk) - The Company repurchased **124,495** common shares for **$2.318 million** during Q2 2025 and **33,478** shares for **$0.712 million** during Q1 2025[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :----------------------------- | :----------------------------- | | Operating Activities | | | | Net cash provided by (used in) operating activities | $3,078 | $(126) | | Investing Activities | | | | Net cash provided by investing activities | $7,226 | $3,728 | | Financing Activities | | | | Net cash provided by (used in) financing activities | $43,231 | $(4,584) | | Increase (decrease) in cash and cash equivalents | $53,535 | $(982) | | Cash and cash equivalents, end of period | $79,463 | $21,983 | - Operating activities generated **$3.1 million** in cash for the first six months of 2025, a significant improvement from a net use of **$0.1 million** in the prior year, driven by higher proceeds from loan sales[19](index=19&type=chunk)[182](index=182&type=chunk) - Investing activities provided **$7.2 million** in cash for the first six months of 2025, up from **$3.7 million** in the prior year, despite a **$3.0 million** cash payment for the Marblehead acquisition[19](index=19&type=chunk)[183](index=183&type=chunk) - Financing activities provided **$43.2 million** in cash for the first six months of 2025, a reversal from a net use of **$4.6 million** in the prior year, primarily due to increases in demand and time deposits[19](index=19&type=chunk)[184](index=184&type=chunk) [NOTE 1—BASIS OF PRESENTATION](index=12&type=section&id=NOTE%201%E2%80%94BASIS%20OF%20PRESENTATION) - SB Financial Group, Inc. is a financial holding company operating through its wholly-owned subsidiaries: The State Bank and Trust Company, SBFG Title, LLC, and SB Captive, Inc. State Bank also owns State Bank Insurance, LLC[20](index=20&type=chunk)[21](index=21&type=chunk) - The Company adopted ASU No. 2023-07 (Segment Reporting) on January 1, 2024, and ASU No. 2020-04 (Reference Rate Reform) through December 31, 2024, neither of which had a material impact on financial statements[24](index=24&type=chunk)[25](index=25&type=chunk) - ASU No. 2023-09 (Income Tax Disclosures) and ASU No. 2024-03 (Expense Disaggregation) are not yet adopted, with the latter's impact currently being evaluated[26](index=26&type=chunk)[27](index=27&type=chunk) [NOTE 2 - EARNINGS PER SHARE](index=13&type=section&id=NOTE%202%20-%20EARNINGS%20PER%20SHARE) | ($ and outstanding shares in thousands - except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income allocated to common shares and participating securities | $3,852 | $3,113 | $6,010 | $5,481 | | Weighted average shares outstanding for basic earnings per share | 6,448 | 6,692 | 6,464 | 6,703 | | Basic earnings per common share | $0.60 | $0.47 | $0.93 | $0.82 | | Diluted earnings per common share | $0.60 | $0.47 | $0.93 | $0.82 | - Basic and diluted EPS for Q2 2025 were **$0.60**, up from **$0.47** in Q2 2024. For the six months ended June 30, 2025, basic and diluted EPS were **$0.93**, up from **$0.82** in the prior year[29](index=29&type=chunk) - Weighted average basic common shares outstanding decreased to **6,448 thousand** for Q2 2025 from **6,692 thousand** in Q2 2024, and to **6,464 thousand** for the six months ended June 30, 2025, from **6,703 thousand** in the prior year[29](index=29&type=chunk) [NOTE 3 – BUSINESS COMBINATION](index=15&type=section&id=NOTE%203%20%E2%80%93%20BUSINESS%20COMBINATION) - Effective January 17, 2025, the Company acquired Marblehead Bancorp and its subsidiary, The Marblehead Bank, for **$5.0 million** in cash, aiming to expand its presence in Northwest Ohio and increase profitability[31](index=31&type=chunk) - The acquisition resulted in **$3.9 million** of goodwill and **$1.7 million** of core deposit intangible assets, with approximately **$0.7 million** in direct acquisition costs expensed[33](index=33&type=chunk) | ($ in thousands) | January 17, 2025 | | :--------------- | :--------------- | | **Fair value of assets acquired** | | | Cash and cash equivalents | $1,995 | | Investment securities | $30,123 | | Loans held for investment | $18,661 | | Goodwill | $3,919 | | Core deposit intangible | $1,710 | | Total assets acquired | $59,161 | | **Fair value of liabilities assumed** | | | Deposits | $53,088 | | Total liabilities assumed | $54,152 | | Total purchase price (cash) | $5,009 | [NOTE 4 – AVAILABLE-FOR-SALE SECURITIES](index=17&type=section&id=NOTE%204%20%E2%80%93%20AVAILABLE-FOR-SALE%20SECURITIES) | ($ in thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :--------------- | :----------------------- | :--------------------------- | | U.S. Treasury and Government agencies | $5,832 | $7,389 | | Mortgage-backed securities | $165,314 | $169,620 | | State and political subdivisions | $9,430 | $9,407 | | Other corporate securities | $15,379 | $15,171 | | Totals | $195,955 | $201,587 | - Available-for-sale securities decreased in fair value from **$201.6 million** at December 31, 2024, to **$196.0 million** at June 30, 2025, with total unrealized losses of **$32.3 million** at June 30, 2025[38](index=38&type=chunk)[41](index=41&type=chunk) - Management believes the declines in fair value for these securities are temporary, and no allowance for credit losses on available-for-sale securities was recorded at June 30, 2025, or December 31, 2024[41](index=41&type=chunk)[43](index=43&type=chunk) [NOTE 5 – LOANS AND ALLOWANCE FOR CREDIT LOSSES](index=20&type=section&id=NOTE%205%20%E2%80%93%20LOANS%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) [Loan Portfolio Composition](index=20&type=section&id=Note%205.1%20-%20Loan%20Portfolio%20Composition) | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Commercial & industrial | $118,984 | $124,764 | | Commercial real estate - owner occupied | $137,924 | $134,431 | | Commercial real estate - nonowner occupied | $387,747 | $345,142 | | Agricultural | $60,924 | $64,680 | | Residential real estate | $310,126 | $308,378 | | HELOC | $59,683 | $53,811 | | Consumer | $19,331 | $15,529 | | Total loans | $1,094,719 | $1,046,735 | | Allowance for credit losses | $(15,645) | $(15,096) | | Loans, net | $1,079,074 | $1,031,639 | - Total loans, net of unearned income, increased by **$48.0 million** (**4.6%**) to **$1.09 billion** at June 30, 2025, from **$1.05 billion** at December 31, 2024[47](index=47&type=chunk)[173](index=173&type=chunk) - Commercial real estate (nonowner occupied) loans saw the largest increase, growing by **$42.6 million** to **$387.7 million**[47](index=47&type=chunk) [Loan Risk Characteristics](index=20&type=section&id=Note%205.2%20-%20Loan%20Risk%20Characteristics) - Commercial & Industrial and Agricultural loans are primarily underwritten based on borrower cash flows, with collateral as a secondary consideration, and are susceptible to fluctuations in cash flows and collateral values[48](index=48&type=chunk)[58](index=58&type=chunk) - Commercial Real Estate loans (owner and nonowner occupied) are primarily cash flow dependent and are sensitive to real estate market conditions and general economic factors, with construction loans carrying higher risks due to reliance on project success and long-term financing[49](index=49&type=chunk)[50](index=50&type=chunk)[54](index=54&type=chunk)[58](index=58&type=chunk) - Residential Real Estate, HELOC, and Consumer loans depend on borrowers' personal income and property values, with HELOCs secured by junior liens being particularly susceptible to declining collateral values[51](index=51&type=chunk)[58](index=58&type=chunk) [Allowance for Credit Losses (ACL) Methodology](index=21&type=section&id=Note%205.3%20-%20Allowance%20for%20Credit%20Losses%20(ACL)%20Methodology) - The ACL is estimated using relevant internal and external information, including historical credit loss experience, current conditions, and reasonable and supportable forecasts, with adjustments for loan-specific and environmental factors[53](index=53&type=chunk) - The Company primarily uses a Discounted Cash Flow (DCF) method for collective loan pools, with a one-year reasonable and supportable forecast period and a one-year straight-line reversion to the long-term historical average[55](index=55&type=chunk)[56](index=56&type=chunk) - Key inputs for the DCF model include loan-level detail, payment structure, loss history, forecasted loss drivers (from FRED), probability of default (PD), loss given default (LGD), and prepayment/curtailment rates[57](index=57&type=chunk)[59](index=59&type=chunk) [ACL Activity](index=24&type=section&id=Note%205.4%20-%20ACL%20Activity) | ($ in thousands) | Balance, beginning of period (June 30, 2025) | Initial allowance for credit losses on acquired PCD loans | Chargeoffs | Recoveries | Provision for Credit Losses | Balance, end of period (June 30, 2025) | | :--------------- | :------------------------------------------- | :---------------------------------------- | :--------- | :--------- | :-------------------------- | :------------------------------------- | | Total (3 months) | $15,391 | $- | $(49) | $3 | $300 | $15,645 | | ($ in thousands) | Balance, beginning of period (June 30, 2025) | Initial allowance for credit losses on acquired PCD loans | Chargeoffs | Recoveries | Provision for Credit Losses | Balance, end of period (June 30, 2025) | | :--------------- | :------------------------------------------- | :---------------------------------------- | :--------- | :--------- | :-------------------------- | :------------------------------------- | | Total (6 months) | $15,096 | $5 | $(135) | $5 | $674 | $15,645 | - The ACL increased by **$0.55 million** from December 31, 2024, to **$15.6 million** at June 30, 2025, due to **$0.23 million** from the Marblehead acquisition and **$0.30 million** of growth-related provision expense, partially offset by net charge-offs[65](index=65&type=chunk)[175](index=175&type=chunk) [Collateral-Dependent Loans](index=25&type=section&id=Note%205.5%20-%20Collateral-Dependent%20Loans) | ($ in thousands) | June 30, 2025 Total | June 30, 2025 Allocated Allowance | December 31, 2024 Total | December 31, 2024 Allocated Allowance | | :--------------- | :------------------ | :-------------------------------- | :---------------------- | :------------------------------------ | | Commercial & industrial | $3,534 | $65 | $2,877 | $380 | | Residential real estate | $1,073 | $23 | $801 | $26 | | Total | $5,183 | $101 | $4,477 | $419 | - Collateral-dependent loans increased to **$5.18 million** at June 30, 2025, from **$4.48 million** at December 31, 2024, with the allocated allowance for these loans decreasing from **$419 thousand** to **$101 thousand**[69](index=69&type=chunk) - For collateral-dependent loans, the ACL is measured based on the fair value of collateral, adjusted for liquidation costs/discounts, with no allowance required if collateral fair value exceeds amortized cost[70](index=70&type=chunk) [Credit Risk Profile and Loan Aging](index=27&type=section&id=Note%205.6%20-%20Credit%20Risk%20Profile%20and%20Loan%20Aging) - The Company categorizes loans into risk categories (Pass, Special Mention, Substandard, Doubtful, Loss) based on borrower ability to service debt, financial information, payment history, and economic trends[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) | ($ in thousands) | June 30, 2025 Total Loans | December 31, 2024 Total Loans | | :--------------- | :------------------------ | :---------------------------- | | Pass (1 - 4) | $1,087,881 | $1,040,392 | | Special Mention (5) | $1,246 | $911 | | Substandard (6) | $4,292 | $4,991 | | Doubtful (7) | $1,300 | $441 | | Total Loans | $1,094,719 | $1,046,735 | | ($ in thousands) | June 30, 2025 Total Past Due | December 31, 2024 Total Past Due | | :--------------- | :--------------------------- | :------------------------------- | | Commercial & industrial | $3,182 | $3,281 | | Residential real estate | $1,219 | $2,023 | | Total Loans | $5,600 | $6,599 | [Nonaccrual Loans](index=31&type=section&id=Note%205.7%20-%20Nonaccrual%20Loans) - All loans past due **90 days** are systematically placed on nonaccrual status, with interest reversed from income and subsequent payments applied to principal[84](index=84&type=chunk) | ($ in thousands) | June 30, 2025 Total nonaccrual loans | December 31, 2024 Total nonaccrual loans | | :--------------- | :----------------------------------- | :--------------------------------------- | | Commercial & industrial | $3,306 | $2,927 | | Residential real estate | $1,585 | $1,539 | | Total loans | $5,872 | $5,516 | - Total nonaccrual loans increased to **$5.87 million** at June 30, 2025, from **$5.52 million** at December 31, 2024[85](index=85&type=chunk) [Unfunded Loan Commitments](index=32&type=section&id=Note%205.8%20-%20Unfunded%20Loan%20Commitments) - The Company maintains an allowance for off-balance sheet credit exposures, such as unfunded lines of credit and commitments, which is classified within Other liabilities[88](index=88&type=chunk) - The allowance for unfunded loan commitments was **$1.65 million** at June 30, 2025, up from **$1.34 million** at the beginning of the six-month period, with a provision of **$307 thousand** for the six months ended June 30, 2025[90](index=90&type=chunk) [NOTE 6 – GOODWILL](index=33&type=section&id=NOTE%206%20%E2%80%93%20GOODWILL) - Goodwill increased to **$27.16 million** at June 30, 2025, from **$23.24 million** at December 31, 2024, primarily due to the **$3.92 million** acquired goodwill from the Marblehead acquisition[91](index=91&type=chunk) - Goodwill is not amortized but is evaluated for impairment annually or more frequently if circumstances change. A quantitative impairment test as of June 30, 2025, showed no impairment[91](index=91&type=chunk)[93](index=93&type=chunk) [NOTE 7 – MORTGAGE SERVICING RIGHTS](index=33&type=section&id=NOTE%207%20%E2%80%93%20MORTGAGE%20SERVICING%20RIGHTS) - The unpaid principal balance of mortgage loans serviced for others increased to **$1.46 billion** at June 30, 2025, from **$1.43 billion** at December 31, 2024[94](index=94&type=chunk) | ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period | $14,868 | $13,906 | | Mortgage servicing rights capitalized during the period | $1,182 | $1,031 | | Mortgage servicing rights amortization during the period | $(762) | $(608) | | Net change in valuation allowance | $170 | $219 | | Balance at end of period | $15,458 | $14,548 | - Mortgage servicing rights (MSR) balance increased to **$15.46 million** at June 30, 2025, from **$14.87 million** at the beginning of the six-month period, with **$1.18 million** capitalized and **$0.76 million** amortized[95](index=95&type=chunk) [NOTE 8 – DERIVATIVE FINANCIAL INSTRUMENTS](index=34&type=section&id=NOTE%208%20%E2%80%93%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) - The Company uses derivative financial instruments, specifically interest rate swaps, forward contracts, and Interest Rate Lock Commitments (IRLCs), to manage economic risks and facilitate customer risk management, not for trading or speculative purposes[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) | ($ in thousands) | June 30, 2025 Notional Amount | June 30, 2025 Fair Value | December 31, 2024 Notional Amount | December 31, 2024 Fair Value | | :--------------- | :---------------------------- | :----------------------- | :-------------------------------- | :--------------------------- | | **Asset Derivatives** | | | | | | Interest rate swaps associated with loans | $96,374 | $1,852 | $79,235 | $4,029 | | Forward contracts | $16,077 | $96 | $11,000 | $69 | | **Liability Derivatives** | | | | | | Interest rate swaps associated with loans | $96,374 | $(1,852) | $79,235 | $(4,029) | | IRLCs | $25,000 | $(188) | $7,412 | $(21) | - The fair value of asset interest rate swaps decreased from **$4.03 million** at December 31, 2024, to **$1.85 million** at June 30, 2025, while IRLC liabilities increased from **$(21) thousand** to **$(188) thousand**[100](index=100&type=chunk) [NOTE 9 – DEPOSITS](index=36&type=section&id=NOTE%209%20%E2%80%93%20DEPOSITS) | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Non interest bearing demand | $241,245 | $232,155 | | Interest bearing demand | $205,581 | $201,085 | | Savings | $282,311 | $237,987 | | Money market | $249,536 | $222,161 | | Time deposits $250,000 or less | $217,293 | $208,273 | | Time deposits greater than $250,000 | $53,856 | $50,944 | | Total Deposits | $1,249,822 | $1,152,605 | - Total deposits increased by **$97.2 million** (**8.4%**) to **$1.25 billion** at June 30, 2025, from **$1.15 billion** at December 31, 2024, with significant growth in savings and money market accounts[106](index=106&type=chunk)[173](index=173&type=chunk) [NOTE 10 – SHORT-TERM BORROWINGS](index=36&type=section&id=NOTE%2010%20%E2%80%93%20SHORT-TERM%20BORROWINGS) | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Securities sold under repurchase agreements | $15,640 | $10,585 | - Securities sold under repurchase agreements increased to **$15.64 million** at June 30, 2025, from **$10.59 million** at December 31, 2024, secured by agency and mortgage-backed securities[107](index=107&type=chunk) - The Company had **$41.0 million** in federal funds lines and borrowing capabilities at the Federal Reserve Discount Window, with no amounts drawn or pledged at June 30, 2025[108](index=108&type=chunk)[109](index=109&type=chunk) [NOTE 11 – FEDERAL HOME LOAN BANK (FHLB) ADVANCES](index=37&type=section&id=NOTE%2011%20%E2%80%93%20FEDERAL%20HOME%20LOAN%20BANK%20(FHLB)%20ADVANCES) - FHLB advances totaled **$35.0 million** at June 30, 2025, secured by **$320.1 million** in mortgage loans, with fixed interest rates ranging from **3.75%** to **4.61%**[110](index=110&type=chunk) | ($ in thousands) | Debt | | :--------------- | :--- | | 2026 | $12,500 | | 2027 | $5,000 | | 2028 | $17,500 | | Total | $35,000 | [NOTE 12 – TRUST PREFERRED SECURITIES](index=37&type=section&id=NOTE%2012%20%E2%80%93%20TRUST%20PREFERRED%20SECURITIES) - The Company has **$10.31 million** in Trust Preferred Securities, with distributions payable quarterly at a variable rate based on **3-month CME Term SOFR plus 1.80%**, maturing on September 15, 2035[111](index=111&type=chunk) [NOTE 13 – SUBORDINATED DEBT](index=37&type=section&id=NOTE%2013%20%E2%80%93%20SUBORDINATED%20DEBT) - The Company has **$20.0 million** in **3.65%** Fixed to Floating Rate Subordinated Notes due 2031, bearing a fixed rate until May 31, 2026, then resetting quarterly to **3-month SOFR plus 296 basis points**[112](index=112&type=chunk)[113](index=113&type=chunk) - The Notes are redeemable after May 31, 2026, subject to regulatory approval, and incurred approximately **$0.5 million** in debt issuance costs[113](index=113&type=chunk) [NOTE 14 – DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES](index=38&type=section&id=NOTE%2014%20%E2%80%93%20DISCLOSURES%20ABOUT%20FAIR%20VALUE%20OF%20ASSETS%20AND%20LIABILITIES) [Fair Value Hierarchy and Methodologies](index=38&type=section&id=Note%2014.1%20-%20Fair%20Value%20Hierarchy%20and%20Methodologies) - Fair value measurements are categorized into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1 prices), and Level 3 (unobservable inputs)[119](index=119&type=chunk) - Available-for-sale securities and interest rate contracts are primarily valued using Level 2 inputs, while forward contracts use Level 1, and IRLCs use Level 3 inputs[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) [Recurring Fair Value Measurements](index=39&type=section&id=Note%2014.2%20-%20Recurring%20Fair%20Value%20Measurements) | ($ in thousands) | June 30, 2025 Fair Value | Level 1 | Level 2 | Level 3 | | :--------------- | :----------------------- | :------ | :------ | :------ | | U.S. Treasury and Government Agencies | $5,832 | $- | $5,832 | $- | | Mortgage-backed securities | $165,314 | $- | $165,314 | $- | | Interest rate contracts - assets | $1,852 | $- | $1,852 | $- | | Forward contracts | $96 | $96 | $- | $- | | IRLCs | $(188) | $- | $- | $(188) | - Most available-for-sale securities and interest rate contracts are classified as Level 2, while forward contracts are Level 1, and IRLCs are Level 3[121](index=121&type=chunk) [Nonrecurring Fair Value Measurements](index=40&type=section&id=Note%2014.3%20-%20Nonrecurring%20Fair%20Value%20Measurements) - Collateral-dependent individually evaluated loans and mortgage servicing rights are measured at fair value on a nonrecurring basis and are classified within Level 3 of the fair value hierarchy[123](index=123&type=chunk)[124](index=124&type=chunk) | ($ in thousands) | June 30, 2025 Fair Value | Level 3 | | :--------------- | :----------------------- | :------ | | Collateral-dependent Individually evaluated loans | $845 | $845 | | Mortgage servicing rights | $445 | $445 | [Unobservable (Level 3) Inputs](index=41&type=section&id=Note%2014.4%20-%20Unobservable%20(Level%203)%20Inputs) | ($ in thousands) | June 30, 2025 Fair value | Valuation technique | Unobservable inputs | Range (weighted-average) | | :--------------- | :----------------------- | :------------------ | :------------------ | :----------------------- | | Collateral-dependent individually evaluated loans | $845 | Market comparable properties | Comparability adjustments (%) | 1 - 28% (14%) | | Mortgage servicing rights | $445 | Discounted cash flow | Discount rate | 10.76% | | | | | Constant prepayment rate | 5.93% | | IRLCs | $(188) | Discounted cash flow | Loan closing rates | 55% - 96% | - Key unobservable inputs for Level 3 measurements include comparability adjustments for collateral-dependent loans, discount rates and prepayment rates for MSRs, and loan closing rates for IRLCs[127](index=127&type=chunk) [Fair Value of Other Financial Instruments](index=41&type=section&id=Note%2014.5%20-%20Fair%20Value%20of%20Other%20Financial%20Instruments) - The carrying amounts of cash, interest-bearing time deposits, FHLB stock, and accrued interest approximate their fair values[128](index=128&type=chunk) - Fair values for loans held for sale are based on quoted market prices or discounted estimated cash flows, while loans are valued using discounted estimated future cash flows incorporating credit, liquidity, and marketability factors[129](index=129&type=chunk)[130](index=130&type=chunk) | ($ in thousands) | June 30, 2025 Carrying amount | June 30, 2025 Fair value | Level 1 | Level 2 | Level 3 | | :--------------- | :---------------------------- | :----------------------- | :------ | :------ | :------ | | **Financial assets** | | | | | | | Cash and due from banks | $79,463 | $79,463 | $79,463 | $- | $- | | Loans, net of allowance for credit losses | $1,079,074 | $1,070,331 | $- | $- | $1,070,331 | | **Financial liabilities** | | | | | | | Deposits | $1,249,822 | $1,249,129 | $978,673 | $270,456 | $- | | Subordinated debt, net of issuance costs | $19,715 | $19,150 | $- | $19,150 | $- | [NOTE 15 – SHARE BASED COMPENSATION](index=43&type=section&id=NOTE%2015%20%E2%80%93%20SHARE%20BASED%20COMPENSATION) - The 2017 Stock Incentive Plan allows for grants of various equity-based awards, with **202,093** shares granted out of **500,000** authorized as of June 30, 2025[137](index=137&type=chunk) - Restricted stock awards under the LTI Plan vest over four years, with compensation cost of **$0.2 million** for Q2 2025 and **$0.3 million** for the six months ended June 30, 2025[140](index=140&type=chunk) | | Shares | Weighted Average Value per Share | | :----------------------- | :----- | :------------------------------- | | Nonvested, January 1, 2025 | 54,311 | $17.15 | | Granted | 21,003 | $23.43 | | Vested | (23,234) | $17.67 | | Forfeited | (8,366) | $18.11 | | Nonvested, June 30, 2025 | 43,714 | $19.71 | [NOTE 16 – OPERATING SEGMENTS](index=44&type=section&id=NOTE%2016%20%E2%80%93%20OPERATING%20SEGMENTS) - The Company operates as a single reportable segment, 'Banking,' providing community banking services including lending, banking, wealth management, and other financial services[144](index=144&type=chunk)[145](index=145&type=chunk) - The Chief Executive Officer, as the chief operating decision maker (CODM), evaluates performance and allocates resources based on consolidated financial statements, with no single customer accounting for more than **10%** of revenue[145](index=145&type=chunk) [NOTE 17 – GENERAL LITIGATION](index=44&type=section&id=NOTE%2017%20%E2%80%93%20GENERAL%20LITIGATION) - The Company is subject to ordinary course legal claims and lawsuits, but management believes their resolution will not have a material adverse effect on its financial position, results of operations, or cash flow[146](index=146&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis of financial condition, results of operations, critical policies, and performance [Cautionary Statement Regarding Forward-Looking Information](index=45&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Information) - The report contains forward-looking statements regarding future financial performance, plans, and economic conditions, which are subject to risks and uncertainties[147](index=147&type=chunk) - Key risks include economic and financial market conditions (inflation, interest rates, recession), bank failures, geopolitical instability, volatility of mortgage banking income, loan portfolio performance, operational and cybersecurity risks, competition, regulatory changes, and the ability to adapt to technological changes[147](index=147&type=chunk)[149](index=149&type=chunk) [Overview of SB Financial](index=48&type=section&id=Overview%20of%20SB%20Financial) - SB Financial Group, Inc. is an Ohio financial holding company, with its primary subsidiary being The State Bank and Trust Company, an Ohio-chartered commercial bank[150](index=150&type=chunk) - Other subsidiaries include Rurban Statutory Trust II (for Trust Preferred Securities), State Bank Insurance, LLC, SBFG Title, LLC, and SB Captive, Inc., which collectively form the Company[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) [Critical Accounting Policies](index=48&type=section&id=Critical%20Accounting%20Policies) - The determination of the Allowance for Credit Losses (ACL) is a critical accounting policy, involving significant judgment and estimates of expected credit losses based on historical experience, current conditions, and forecasts[155](index=155&type=chunk) - Goodwill and Other Intangibles are recorded at fair value upon acquisition and are subject to annual impairment tests, requiring subjective judgments about future performance and potential impacts on earnings[156](index=156&type=chunk) [Three Months Ended June 30, 2025, compared to Three Months Ended June 30, 2024](index=49&type=section&id=Three%20Months%20Ended%20June%2030,%202025,%20compared%20to%20Three%20Months%20Ended%20June%2030,%202024) | Financial Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change ($ in thousands) | Change (%) | | :--------------- | :----------------------- | :----------------------- | :---------------------- | :--------- | | Net Income | $3,852 | $3,113 | $739 | 23.7% | | Diluted EPS | $0.60 | $0.47 | $0.13 | 27.7% | | Total Interest Income | $18,467 | $15,654 | $2,813 | 18.0% | | Net Interest Income | $12,128 | $9,659 | $2,469 | 25.6% | | Total Noninterest Income | $5,048 | $4,386 | $662 | 15.1% | | Total Noninterest Expense | $11,852 | $10,671 | $1,181 | 11.1% | | Income Taxes | $875 | $261 | $614 | 235.2% | - Net interest income increased by **$2.5 million**, or **25.6%**, driven by an **18.0%** increase in total interest income, while the net interest margin improved to **3.48%** from **3.12%**[160](index=160&type=chunk) - Total noninterest income grew by **15.1%**, primarily due to increased mortgage revenue (up **$0.3 million**) and SBFG Title income (up **$0.18 million**), with recapture of mortgage servicing rights also contributing positively[161](index=161&type=chunk)[162](index=162&type=chunk) - Provision for credit losses was **$597 thousand** in Q2 2025, compared to zero in Q2 2024, including **$297 thousand** for unfunded commitments and **$300 thousand** for growth-related provision[158](index=158&type=chunk) [Six Months Ended June 30, 2025, compared to Six Months Ended June 30, 2024](index=50&type=section&id=Six%20Months%20Ended%20June%2030,%202025,%20compared%20to%20Six%20Months%20Ended%20June%2030,%202024) | Financial Metric | YTD 2025 ($ in thousands) | YTD 2024 ($ in thousands) | Change ($ in thousands) | Change (%) | | :--------------- | :------------------------ | :------------------------ | :---------------------- | :--------- | | Net Income | $6,010 | $5,481 | $529 | 9.7% | | Diluted EPS | $0.93 | $0.82 | $0.11 | 13.4% | | Total Interest Income | $35,839 | $30,954 | $4,885 | 15.8% | | Net Interest Income | $23,407 | $18,839 | $4,568 | 24.2% | | Total Noninterest Income | $9,155 | $8,337 | $818 | 9.8% | | Total Noninterest Expense | $24,262 | $20,953 | $3,309 | 15.8% | | Income Taxes | $1,306 | $742 | $564 | 76.0% | - Net interest income increased by **$4.6 million**, or **24.2%**, with the net interest margin improving to **3.43%** from **3.05%**[168](index=168&type=chunk) - Total noninterest income increased by **9.8%**, driven by higher mortgage revenue (up **$0.36 million**) and SBFG Title income (up **$0.31 million**)[169](index=169&type=chunk)[170](index=170&type=chunk) - Total noninterest expense increased by **$3.3 million**, including over **$0.7 million** in one-time merger-related expenses and approximately five and a half months of Marblehead's operating expenses[171](index=171&type=chunk) [Changes in Financial Condition](index=51&type=section&id=Changes%20in%20Financial%20Condition) | Financial Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :--------------- | :---------------------------- | :-------------------------------- | :--------------------- | :--------- | | Total assets | $1,486.3 | $1,379.5 | $106.8 | 7.7% | | Total loans, net | $1,094.7 | $1,046.7 | $48.0 | 4.6% | | Total deposits | $1,249.8 | $1,152.6 | $97.2 | 8.4% | | Borrowed funds | $80.7 | $75.6 | $5.1 | 6.7% | | Total shareholders' equity | $133.6 | $127.5 | $6.1 | 4.8% | - The allowance for credit losses increased by **$0.55 million** to **$15.6 million**, driven by the Marblehead acquisition and growth-related provision, with a non-performing asset ratio of **41 basis points** and coverage on non-performing loans at **266%**[175](index=175&type=chunk) [Capital Resources](index=51&type=section&id=Capital%20Resources) - State Bank was classified as 'well capitalized' under regulatory frameworks as of June 30, 2025, maintaining capital ratios above required minimums[176](index=176&type=chunk) | Capital Ratio | June 30, 2025 Actual Ratio | December 31, 2024 Actual Ratio | To Be Well Capitalized Ratio | | :------------ | :------------------------- | :----------------------------- | :--------------------------- | | Tier I Capital to average assets | 10.15% | 11.09% | 5.0% | | Tier I Common equity capital to risk-weighted assets | 12.53% | 13.43% | 6.5% | | Total Risk-based capital to risk-weighted assets | 13.78% | 14.69% | 10.0% | - Management opted out of the accumulated other comprehensive income treatment under Basel III, excluding unrealized gains and losses from available-for-sale securities from regulatory capital[177](index=177&type=chunk) [Liquidity](index=52&type=section&id=Liquidity) - Liquid assets increased to **$289.8 million** at June 30, 2025, from **$235.9 million** at December 31, 2024, ensuring the Company's ability to fund loan demand and meet withdrawal requirements[178](index=178&type=chunk) - The Company's Liquidity Policy, overseen by the Asset/Liability Committee (ALCO), identifies primary liquidity sources, monitors liquidity, and quantifies minimum requirements[179](index=179&type=chunk) - The Company had approximately **$157.0 million** of additional FHLB borrowing capacity and **$57.8 million** in unpledged securities available for additional borrowings at June 30, 2025[186](index=186&type=chunk) [Asset Liability Management](index=53&type=section&id=Asset%20Liability%20Management) - Asset liability management focuses on maintaining liquidity, maximizing net interest income, and minimizing the impact of interest rate fluctuations on earnings and capital[188](index=188&type=chunk)[189](index=189&type=chunk) - The Company's primary market risk exposure is interest rate risk, which is managed through policies, procedures, and information systems, but currently does not utilize derivative financial instruments for this purpose[188](index=188&type=chunk)[193](index=193&type=chunk) - The Federal Reserve Board's Joint Agency Policy Statement on Interest Rate Risk guides the Company's management process, emphasizing active board and senior management oversight[191](index=191&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material change in market risk from disclosures in the Annual Report on Form 10-K for December 31, 2024 - No material change in market risk from the information contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated disclosure controls as effective, with no material changes in internal control over financial reporting - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025, ensuring timely and accurate reporting of required information[196](index=196&type=chunk)[198](index=198&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[197](index=197&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in ordinary course legal actions, with no material adverse effect expected on financial position - The Company is party to various legal actions arising in the ordinary course of business[200](index=200&type=chunk) - Management believes that the disposition or ultimate resolution of these claims will not have a material adverse effect on the Company's consolidated financial position, results of operations, and cash flow[200](index=200&type=chunk) [Item 1A. Risk Factors](index=56&type=page&id=Item%201A.%20Risk%20Factors) Refers to detailed risk factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - A detailed discussion of the Company's risk factors is included in 'Item 1A. Risk Factors' of Part I of the Annual Report on Form 10-K for the year ended December 31, 2024[201](index=201&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the share repurchase program, including 124,495 common shares repurchased during Q2 2025 - The Company has a share repurchase program, announced December 18, 2024, authorizing the repurchase of up to **500,000** common shares through December 31, 2026[202](index=202&type=chunk) | Period | Total Number of Shares Purchased | Weighted Average Price Paid per Share | | :---------------- | :------------------------------- | :------------------------------------ | | 04/01/25 - 04/30/25 | - | $0.00 | | 05/01/25 - 05/31/25 | 48,786 | $19.57 | | 06/01/25 - 06/30/25 | 75,709 | $18.00 | | Total | 124,495 | $18.62 | - As of June 30, 2025, **331,599** shares remained available for repurchase under the program[203](index=203&type=chunk) [Item 3. Defaults Upon Senior Securities](index=56&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for the reported period - This item is not applicable[204](index=204&type=chunk) [Item 4. Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the reported period - This item is not applicable[204](index=204&type=chunk) [Item 5. Other Information](index=56&type=section&id=Item%205.%20Other%20Information) Confirms no other reportable information and no Rule 10b5-1 trading arrangement changes by officers - No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[206](index=206&type=chunk) [Item 6. Exhibits](index=58&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including amendments, certifications, and Inline XBRL documents - The exhibits include Amended Articles of the Company, Certificates of Amendment, Amended and Restated Regulations, Rule 13a-14(a)/15d-14(a) Certifications, Section 1350 Certifications, and Inline XBRL documents[208](index=208&type=chunk) [Signatures](index=59&type=section&id=Signatures) Report signed by Chairman, President & CEO Mark A. Klein and EVP & CFO Anthony V. Cosentino on August 7, 2025 - The report was signed by Mark A. Klein, Chairman, President & CEO, and Anthony V. Cosentino, Executive Vice President & Chief Financial Officer, on August 7, 2025[212](index=212&type=chunk)

Core Insights - The company reported a net income of $3.9 million for Q2 2025, with diluted EPS of $0.60, marking a nearly 28% increase compared to Q2 2024 [20][24][47] - Adjusted EPS was $0.58, and tangible book value per share rose to $16.44, reflecting a 7.7% year-over-year increase [3][20] - Net interest income reached $12.1 million, up over 25% from $9.7 million in Q2 2024, with a 30% annualized growth rate from the previous quarter [3][20][41] Financial Performance - Total loan growth was approximately $90 million, or 8.9% year-over-year, with a 1% increase from the linked quarter [4][20][31] - Total deposits grew by $135 million, or 12% year-over-year, although there was a decline of $21 million from the linked quarter due to seasonal factors [4][21][30] - Noninterest income increased by 15.1% year-over-year to $5 million, driven by mortgage gains and service fees [5][27] Asset Quality and Credit Metrics - The allowance for credit losses was 1.43% of total loans, covering 265% of nonperforming assets, which totaled $6.2 million [6][37] - Charge-offs fell to fewer than two basis points, returning to historic levels, while criticized and classified loans slightly increased to $7.2 million [7][36] Strategic Initiatives and Growth Outlook - The company emphasized the successful integration of the Marblehead acquisition, with nearly full deposit retention and operational alignment [13][30] - A strong mortgage pipeline of $34 million was reported, with management targeting consistent originations for the following quarter [13][22] - The company plans to focus on organic growth, margin expansion, and capturing market share amid regional competitive disruptions [13][34] Market Position and Future Expectations - The company was added to the Russell 2000 Index, reflecting strong financial performance and commitment to growth [8][23] - Management anticipates further margin expansion, projecting a net interest margin of approximately 3.7% [14][65] - The company is exploring potential M&A opportunities while maintaining a disciplined approach to capital allocation [70][71]

Group 1: Company Highlights - Celestica (CLS) is one of the largest electronics manufacturing services companies globally, serving various industries, with a 9.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - SB Financial Group (SBFG) is a financial services holding company providing a full range of services for consumers and small businesses, also experiencing a 9.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - HomeTrust Bancshares (HTB) focuses on attracting deposits and investing in loans secured by mortgages, with a 7.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3] - Houlihan Lokey (HLI) is a global investment bank specializing in mergers and acquisitions, with a 6.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [4] - Udemy (UDMY) offers online courses across various subjects, with a 4.7% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [5]

[Financial and Operational Highlights](index=1&type=section&id=Financial_and_Operational_Highlights) SB Financial Group reported strong Q2 2025 results, with net income up 23.7% to $3.9 million and diluted EPS rising 27.7% to $0.60, driven by robust loan growth Q2 & H1 2025 Earnings Highlights (YoY) | Earnings Highlights ($ in thousands, except per share) | Three Months Ended Jun. 2025 | Three Months Ended Jun. 2024 | % Change | Six Months Ended Jun. 2025 | Six Months Ended Jun. 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Operating revenue** | $17,176 | $14,045 | 22.3% | $32,562 | $27,176 | 19.8% | | **Net interest income** | $12,128 | $9,659 | 25.6% | $23,408 | $18,839 | 24.3% | | **Net income** | $3,852 | $3,113 | 23.7% | $6,010 | $5,481 | 9.7% | | **Earnings per diluted share** | $0.60 | $0.47 | 27.7% | $0.93 | $0.82 | 13.4% | - GAAP net income was **$3.9 million**, or **$0.60** per diluted share, a significant increase from **$3.1 million**, or **$0.47** per diluted share, in the prior-year quarter[6](index=6&type=chunk) - Loan portfolio grew by **$89.3 million (8.9%)** and deposits grew by **$134.6 million (12.1%)** year-over-year, partly driven by the Marblehead acquisition[6](index=6&type=chunk)[7](index=7&type=chunk) - Tangible book value (TBV) per share increased by **7.7%** year-over-year to **$16.44**[6](index=6&type=chunk) [Results of Operations](index=2&type=section&id=Results_of_Operations) Total operating revenue grew 22.3% year-over-year to $17.2 million in Q2 2025, driven by a 25.6% increase in net interest income and a 36 basis point expansion in net interest margin - Total operating revenue increased **22.3%** YoY to **$17.2 million**, driven by growth in both net interest income and noninterest income[8](index=8&type=chunk) - Net interest margin expanded by **36 basis points** year-over-year to **3.48%**, reflecting stronger interest-earning asset performance and stabilized funding costs[8](index=8&type=chunk) [Mortgage Loan Business](index=2&type=section&id=Mortgage_Loan_Business) The mortgage loan business showed strong Q2 2025 performance, with net mortgage banking revenue reaching $2.2 million and originations increasing to $97.9 million Mortgage Banking Highlights (Q2 2025 vs Q2 2024) | Metric ($ in thousands) | Jun. 2025 | Jun. 2024 | Prior Year Growth | | :--- | :--- | :--- | :--- | | Mortgage originations | $97,901 | $75,110 | $22,791 | | Mortgage sales | $74,313 | $55,835 | $18,478 | | Mortgage banking revenue, net | $2,159 | $1,842 | $317 | - The mortgage servicing portfolio grew to **$1.46 billion**, an increase of **$66.6 million** from the prior year[10](index=10&type=chunk) [Noninterest Income and Noninterest Expense](index=3&type=section&id=Noninterest_Income_and_Noninterest_Expense) Noninterest income rose 15.1% to $5.0 million in Q2 2025, while noninterest expense increased 11.1% to $11.9 million, leading to an improved efficiency ratio of 68.9% - Noninterest income totaled **$5.0 million**, up **$0.661 million (15.1%)** YoY, primarily due to increased gains on sales of mortgage loans and title service revenue[11](index=11&type=chunk)[12](index=12&type=chunk) - Noninterest expense was **$11.9 million**, an **11.1%** increase from the prior year, driven by higher salary and benefit expenses, data processing, and professional fees[12](index=12&type=chunk) - The efficiency ratio improved to **68.9%** in Q2 2025, compared to **80.0%** in the linked quarter and **75.9%** in the prior-year quarter[12](index=12&type=chunk)[13](index=13&type=chunk) [Balance Sheet Analysis](index=3&type=section&id=Balance_Sheet_Analysis) As of June 30, 2025, total assets were $1.49 billion, with loans growing 8.9% to $1.09 billion and deposits increasing 12.1% to $1.25 billion, supported by acquisitions and share repurchases - Total assets stood at **$1.49 billion** as of June 30, 2025, with loan growth of **$89.3 million (8.9%)** and deposit growth of **$134.6 million (12.1%)** year-over-year[14](index=14&type=chunk)[15](index=15&type=chunk) - The loan growth included **$18.0 million** from the Marblehead acquisition, while organic loan growth was **$71.3 million**[14](index=14&type=chunk)[17](index=17&type=chunk) - Shareholders' equity increased by **$8.2 million** from the prior year to **$133.6 million**[15](index=15&type=chunk) - The company repurchased **124,000 shares** during Q2 2025, demonstrating a commitment to returning value to shareholders[16](index=16&type=chunk) [Loan Portfolio](index=4&type=section&id=Loan_Portfolio) Total loans reached $1.09 billion in Q2 2025, an 8.9% year-over-year increase, primarily driven by a 20.9% growth in the Commercial Real Estate portfolio Loan Balances by Type (June 30, 2025) | Loan Type | Balance ($ in thousands) | % of Total | Annual Growth (%) | | :--- | :--- | :--- | :--- | | Commercial RE | $525,671 | 48.0% | 20.9% | | Residential RE | $310,126 | 28.3% | -1.9% | | Commercial | $118,984 | 10.9% | -3.5% | | Consumer & Other | $79,014 | 7.2% | 18.7% | | Agriculture | $60,924 | 5.6% | -5.3% | | **Total Loans** | **$1,094,719** | **100.0%** | **8.9%** | [Deposit Portfolio](index=4&type=section&id=Deposit_Portfolio) Total deposits grew to $1.25 billion, a 12.1% increase year-over-year, with notable growth in Savings (21.8%) and Non-Interest bearing DDA (15.8%) Deposit Balances by Type (June 30, 2025) | Deposit Type | Balance ($ in thousands) | % of Total | Annual Growth (%) | | :--- | :--- | :--- | :--- | | Savings | $282,311 | 22.6% | 21.8% | | Time Deposits | $271,149 | 21.7% | 4.9% | | Money Market | $249,536 | 20.0% | 10.6% | | Non-Int DDA | $241,245 | 19.3% | 15.8% | | Interest DDA | $205,581 | 16.4% | 7.7% | | **Total Deposits** | **$1,249,822** | **100.0%** | **12.1%** | [Asset Quality](index=4&type=section&id=Asset_Quality) SB Financial maintained strong asset quality in Q2 2025, with nonperforming assets at $6.2 million (0.42% of total assets) and a robust allowance for credit losses at 1.43% of total loans - Nonperforming assets totaled **$6.2 million**, or **0.42%** of total assets, compared to **$5.2 million (0.39%)** in the prior year[20](index=20&type=chunk) - The allowance for credit losses stood at **1.43%** of total loans, covering nonperforming loans by **265.0%**, reflecting a conservative risk management approach[21](index=21&type=chunk) Nonperforming Assets (June 30, 2025 vs June 30, 2024) | Metric ($ in thousands) | Jun. 2025 | Jun. 2024 | Annual Change | | :--- | :--- | :--- | :--- | | Total Nonaccruing Loans | $5,904 | $4,734 | $1,170 | | Foreclosed Assets and Other | $284 | $510 | ($226) | | **Total Nonperforming Assets** | **$6,188** | **$5,244** | **$944** | | % of Total assets | 0.42% | 0.39% | 18.0% | [Financial Statements and Supplementary Data](index=7&type=section&id=Financial_Statements_and_Supplementary_Data) This section presents SB Financial Group's unaudited consolidated financial statements and supplementary data for periods ended June 30, 2025, including balance sheets, income statements, and key financial highlights [Consolidated Balance Sheets](index=7&type=section&id=Consolidated_Balance_Sheets) The Consolidated Balance Sheet as of June 30, 2025, shows total assets of $1.486 billion, total liabilities of $1.353 billion, and shareholders' equity of $133.6 million Key Balance Sheet Items (As of June 30) | ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total assets | $1,486,301 | $1,342,186 | | Loans, net of allowance | $1,079,074 | $989,778 | | Total deposits | $1,249,822 | $1,115,188 | | Total liabilities | $1,352,653 | $1,216,707 | | Total shareholders' equity | $133,648 | $125,479 | [Consolidated Statements of Income](index=8&type=section&id=Consolidated_Statements_of_Income) The Consolidated Statement of Income details Q2 2025 performance, with net interest income of $12.1 million and net income of $3.85 million Key Income Statement Items | ($ in thousands) | Three Months Ended Jun. 30, 2025 | Six Months Ended Jun. 30, 2025 | | :--- | :--- | :--- | | Net interest income | $12,128 | $23,407 | | Provision for credit losses | $597 | $984 | | Noninterest income | $5,048 | $9,155 | | Noninterest expense | $11,852 | $24,262 | | **Net income** | **$3,852** | **$6,010** | [Consolidated Financial Highlights](index=10&type=section&id=Consolidated_Financial_Highlights) This section provides key performance metrics for Q2 2025, including ROAA of 1.03%, ROE of 11.67%, net interest margin of 3.48%, and tangible book value per share of $16.44 Key Performance Ratios (Q2 2025 vs Q2 2024) | Performance Ratio | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Return on average assets (ROAA) | 1.03% | 0.93% | | Return on average equity (ROE) | 11.67% | 10.22% | | Net interest margin | 3.48% | 3.12% | | Efficiency ratio | 68.90% | 75.86% | | Tangible book value per share | $16.44 | $15.26 | [Rate Volume Analysis](index=12&type=section&id=Rate_Volume_Analysis) The rate volume analysis shows Q2 2025 GAAP net interest margin at 3.48%, a 36 basis point improvement, with yield on earning assets at 5.29% and cost of interest-bearing liabilities at 2.33% - The yield on total earning assets for Q2 2025 was **5.29%**, up from **5.05%** in Q2 2024[38](index=38&type=chunk) - The cost of total interest-bearing liabilities for Q2 2025 was **2.33%**, down from **2.48%** in Q2 2024[38](index=38&type=chunk) [Non-GAAP Reconciliation](index=14&type=section&id=Non-GAAP_Reconciliation) This table reconciles GAAP earnings to adjusted non-GAAP figures, showing Q2 2025 adjusted net income of $3.7 million ($0.58 diluted EPS) versus GAAP net income of $3.9 million ($0.60 diluted EPS) GAAP to Non-GAAP Reconciliation (Q2 2025) | ($ in thousands, except per share) | GAAP | Adjustments | Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Net Income | $3,852 | ($126) | $3,726 | | Diluted EPS | $0.60 | ($0.02) | $0.58 | | Return on Avg. Assets | 1.03% | -0.03% | 1.00% | | Return on Avg. Equity | 11.67% | -0.38% | 11.29% |

Financial Data and Key Metrics Changes - For Q2 2025, net income was $3,900,000 with diluted earnings per share of $0.60, an increase of nearly 28% compared to the prior year quarter [5] - Tangible book value per share increased to $16.44, up from $15.26 last year, representing a 7.7% increase [5] - Net interest income totaled $12,100,000, an increase of over 25% from $9,700,000 in the second quarter of last year [5] - Operating expenses decreased approximately 4.5% from the linked quarter [7] - Noninterest income rose 15.1% from the prior year quarter to $5,000,000 [11] Business Line Data and Key Metrics Changes - Mortgage originations for the quarter were just short of $98,000,000, reflecting a strong rebound [9] - Loan growth for the quarter was approximately $90,000,000, up 8.9% from the prior year [5] - The wealth management division faced challenges but remains a valued part of the product suite [12] - Commercial real estate loans grew by approximately $91,000,000, while consumer loans increased by over $12,000,000 [18] Market Data and Key Metrics Changes - Deposits grew by over 12% year-over-year, including Marblehead deposits of £51,000,000 [6] - Excluding Marblehead deposits, deposit growth was approximately 7.5% [14] - The loan book grew $89,000,000 or approximately 9% from the prior year [15] Company Strategy and Development Direction - The company focuses on five key initiatives: revenue diversity, organic growth, deepening client relationships, operational excellence, and top-tier asset quality [8] - The company aims to capitalize on market disruptions to drive organic growth and maintain operational efficiency [17] - The integration of the Marblehead acquisition has been successful, retaining legacy relationships and community connections [13] Management Comments on Operating Environment and Future Outlook - Management expressed optimism for the second half of 2025, anticipating positive resolutions to several nonperforming credits [30] - The company expects continued solid loan growth and stable to slightly lower funding costs, which should support margin expansion [30] - Management highlighted the potential for increased residential mortgage volume with anticipated rate reductions [30] Other Important Information - The company was added to the Russell 2000 Index during the recent rebalancing, reflecting strong financial performance [8] - The allowance for credit losses remained robust at 1.43% of total loans, providing 265% coverage of nonperforming assets [20] Q&A Session Summary Question: Mortgage outlook and potential for $300,000,000 in volume - Management remains optimistic about achieving $300,000,000 in mortgage volume, especially with strong performance in key markets like Indianapolis [36][38] Question: Gain on sale margin consistency - The gain on sale margin is expected to remain stable, projected in the range of $2.15 to $2.25 for the rest of 2025 [40] Question: Loan growth outlook and pipeline status - Management is optimistic about loan growth, with a strong pipeline and some modest payoffs noted [42][47] Question: Margin stabilization and future expectations - The margin is expected to improve slightly, potentially reaching around 3.70% [56][57] Question: Capital management and M&A considerations - The company is exploring M&A opportunities while also focusing on organic growth, with a potential slowdown in share buybacks [62][64] Question: Expense management and future run rates - Management indicated that expenses are expected to rise with increased mortgage production, but overall efficiency is improving [66][68]

Company Performance - SB Financial Group, Inc. (SBFG) reported quarterly earnings of $0.58 per share, exceeding the Zacks Consensus Estimate of $0.54 per share, and up from $0.46 per share a year ago, representing an earnings surprise of +7.41% [1] - The company posted revenues of $17.18 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.85%, compared to year-ago revenues of $14.05 million [2] - Over the last four quarters, SB Financial Group has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance and Outlook - SB Financial Group shares have declined approximately 5.6% since the beginning of the year, while the S&P 500 has gained 8.1% [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $0.54 for the coming quarter and $2.03 for the current fiscal year [4][7] - The estimate revisions trend for SB Financial Group was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Zacks Industry Rank for Banks - Northeast, to which SB Financial Group belongs, is currently in the top 23% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Core Viewpoint - SB Financial Group, Inc. reported strong financial results for the second quarter of 2025, highlighting significant growth in net income, operating revenue, and loan balances, driven by strategic acquisitions and effective operational management [1][4][5]. Financial Performance - Operating revenue for Q2 2025 was $17.2 million, a 22.3% increase from $14.0 million in Q2 2024 [4][7]. - Net interest income rose to $12.1 million, reflecting a 25.6% year-over-year increase, attributed to strong loan growth and stabilized funding costs [4][5][7]. - Net income for the quarter was $3.9 million, up 23.7% from $3.1 million in the prior year, with diluted earnings per share (DEPS) increasing to $0.60, a 27.7% rise [4][5][7]. Loan and Deposit Growth - Total loans increased by $89.3 million, or 8.9%, year-over-year, with a sequential growth of $6.4 million from the previous quarter [5][14][18]. - Deposits grew by $134.6 million, or 12.1%, year-over-year, reaching $1.25 billion, bolstered by the Marblehead acquisition [5][15][19]. Noninterest Income and Expenses - Noninterest income for Q2 2025 was $5.0 million, a 15.1% increase from the prior year, driven by gains on mortgage loans and title insurance [10][11]. - Noninterest expenses rose to $11.9 million, an 11.1% increase from the previous year, primarily due to higher salary and benefit costs [12][13]. Asset Quality - Nonperforming assets totaled $6.2 million, representing 0.42% of total assets, an increase from 0.39% in the prior year [21][22]. - The allowance for credit losses was 1.43% of total loans, providing 265% coverage of nonperforming loans, indicating a conservative risk management approach [22][23]. Balance Sheet Highlights - As of June 30, 2025, total assets were $1.49 billion, with a robust loan portfolio of $1.09 billion, marking an 8.9% year-over-year increase [14][15]. - Shareholders' equity increased to $133.6 million, reflecting a commitment to enhancing shareholder value through solid earnings performance [15][30]. Strategic Outlook - The company aims to leverage its balance sheet strength and strategic resource management to support long-term growth ambitions, even amid uncertain economic conditions [17].

Company Overview - SB Financial Group, Inc. (SBFG) is located in Defiance and operates within the Finance sector. The stock has experienced a price decline of 9.47% since the beginning of the year [3]. Dividend Information - The company currently pays a dividend of $0.15 per share, resulting in a dividend yield of 3.17%, which is higher than the Banks - Northeast industry's yield of 2.72% and the S&P 500's yield of 1.55% [3]. - SBFG's annualized dividend of $0.60 has increased by 7.1% compared to the previous year. Over the past five years, the company has raised its dividend five times, achieving an average annual increase of 9.81% [4]. - The current payout ratio for SBFG is 32%, indicating that the company distributes 32% of its trailing 12-month earnings per share as dividends [4]. Earnings Growth Expectations - For the fiscal year 2025, SBFG anticipates solid earnings growth, with the Zacks Consensus Estimate projecting earnings of $2.03 per share, reflecting a year-over-year growth rate of 18.71% [5]. Investment Considerations - SBFG is considered a compelling investment opportunity due to its strong dividend profile and the current Zacks Rank of 3 (Hold). The company is positioned well for income investors, especially in a market where high-yielding stocks may face challenges during rising interest rates [6].

Core Points - SB Financial Group, Inc. has been included in the Russell 3000 and Russell 2000 indices, marking a significant recognition of its financial performance and business resilience [1][3] - The Russell 3000 Index includes the 4,000 largest US stocks ranked by total market capitalization, with membership lasting for one year [2] - The inclusion in the Russell indices enhances SB Financial's visibility within the investment community and reflects its commitment to delivering consistent financial results and long-term value [3] Company Overview - SB Financial Group is headquartered in Defiance, Ohio, and operates as a diversified financial services holding company for The State Bank and Trust Company and SBFG Title, LLC [4] - The State Bank offers a comprehensive range of financial services, including wealth management, mortgage banking, and commercial lending, through 26 offices and 26 ATMs across Ohio and Indiana [4] - SB Financial Group's common stock is listed on the NASDAQ Capital Market under the ticker symbol "SBFG" [4] Industry Context - FTSE Russell, a global index leader, provides benchmarking and analytics solutions for investors, with approximately $18.1 trillion benchmarked to its indexes [5] - FTSE Russell's indexes cover 98% of the investable market globally, making them a preferred choice for asset owners and investment banks [5]