Exhibit 99.1
Investor Contact Information:
Anthony V. Cosentino
Executive Vice President and
Chief Financial Officer
419.785.3663
Tony.Cosentino@YourStateBank.com
SB Financial Group, Inc. Announces Improved Third Quarter 2013 Results
Gains in asset quality and revenues continue
| · | 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 (GlobeNewswire) -- 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.
2
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.
3
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 | % | ||||||||||
4
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.
5
| 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 | ||||||||||
6
| CONSOLIDATED STATEMENTS OF INCOME - (Unaudited) | ||||||||||||||||||||||||||||
| ($ in thousands, except share data) | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||
| September | June | March | December | September | September | September | ||||||||||||||||||||||
| 2013 | 2013 | 2013 | 2012 | 2012 | 2013 | 2012 | ||||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||
7
| 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 | ||||||||||||||||||||
8
| 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 | % | ||||||||||||||||||||
9
| Nine Months Ended September 30, 2013 | Nine Months Ended September 30, 2012 | |||||||||||||||||||||||
| Average | Average | Average | Average | |||||||||||||||||||||
| Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| 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 | % | ||||||||||||||||||||
10