SB Financial (SBFG) 8-K SB Financial Group, Inc. Announces Fourth-Quarter and Full-Year 2013 Results

Exhibit 99.1

Investor Contact Information:

Anthony V. Cosentino

Executive Vice President and

Chief Financial Officer

Tony.Cosentino@YourStateBank.com

SB Financial Group, Inc. Announces Fourth-Quarter and Full-Year 2013 Results

Sees continued progress in expense reductions and gains in asset quality

· Full-year EPS rises 8.1 percent to $1.07 from 99 cents in 2012; fourth-quarter EPS lower on slowing mortgage origination environment

· Operating expense down 14.1 percent year over year; down 3.5 percent year-to-date

· Nonperforming assets declined to 1.1 percent of total assets; down 19.0 percent from year-end 2012

· Return on assets at 81 basis points and return on equity at 9.5 percent for full-year 2013

DEFIANCE, Ohio, January 21, 2014  -- SB Financial Group, Inc. (NASDAQ: SBFG), a diversified financial services company providing full-service community banking, mortgage banking, wealth management and item processing services, today reported earnings for the fourth-quarter and full-year ended December 31, 2013.

Highlights*	Three Months Ended						Full Year
(in $000’s except ratios and per share data)	Dec. 2013			Dec. 2012			2013			2012
Net interest income (FTE)	$	5,096		$	5,247		$	21,210		$	21,091
Noninterest income		2,949			4,648			14,046			14,845
Noninterest expense		6,199			7,212			26,511			27,484
Net income		1,224			1,524			5,205			4,814
Earnings per share		0.25			0.31			1.07			0.99
Net interest margin (FTE)		3.57	%		3.72	%		3.75	%		3.76	%
Return on assets		0.76			0.95			0.81			0.75
Return on equity		8.75			11.64			9.52			9.57

*Consolidated earnings for SB Financial include the results of the Company’s Banking Group, consisting primarily of The State Bank and Trust Company (“State Bank” or the “Bank”), and the Company’s data services subsidiary, Rurbanc Data Services, Inc. (dba “RDSI Banking Systems” or “RDSI”).

“Overall, we are pleased with our 2013 financial results, which reflect a year of steady progress for SB Financial Group.  We are even more pleased with our solid positioning as we enter 2014,” said Mark Klein, President and CEO of SB Financial Group.  “In the past 12 months, the Company accomplished a number of important initiatives, including rebranding the Company as SB Financial Group and strategically focusing our business efforts on our core banking competencies.”

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Mr. Klein added, “We continue to make significant progress in the execution of our strategic plan -- diversifying our sources of revenue, expanding our loan portfolio, reducing our expenses and improving our asset quality. The Board expressed its confidence in management’s long-term strategy for the Company by reinstating a dividend in the first quarter of 2013.  We continue to believe our strategic plan will allow us to become a top-quartile performing financial services company in the coming years.”

RESULTS OF OPERATIONS

Consolidated Revenue

Total revenue, consisting of net interest income on a fully tax equivalent (FTE) basis and noninterest income, was down 18.7 percent from the fourth quarter of 2012 and 1.9 percent for the full year.

· Net interest income (FTE) was down 2.9 percent for the fourth quarter and up 0.1 percent for the full year

· Net interest margin (FTE) was down 15 basis points for the fourth quarter and flat for the full year

· Noninterest income was down $1.7 million, or 36.6 percent, for the fourth quarter, and $0.8 million, or 5.4 percent, for the full year

Mr. Klein commented, “Two significant external factors affected revenue in 2013.  The first was the decline in yields on the loan portfolio, reflecting the general interest rate environment, which was partially offset by lower funding costs.  Secondly, mortgage originations declined across the country as the year progressed, largely due to the increase in prevailing interest rates and the shift away from a ‘refinance’ mindset. In the fourth quarter, SB Financial had a 28.1 percent decline in mortgage originations from the linked quarter.  Despite the shift in the refinance market, we continue to be successful in acquiring market share from competitors that are stepping away from mortgage origination.”

Mortgage Loan Business

Mortgage loan originations declined $53.9 million, or 57.6 percent, for the fourth quarter, and declined $83.8 million, or 25.2 percent, for the year.

Net mortgage banking income, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $6.3 million for 2013, compared to $6.4 million for 2012. The mortgage servicing valuation adjustment for 2013 was ($0.02) million, compared to $0.2 million for the linked quarter. The mortgage servicing portfolio at year-end 2013 was $606.0 million, up $77.9 million, or 14.8 percent, from year-end 2012.

	Three Months Ended
Mortgage Banking ($000’s)	Dec. 2013			Sep. 2013			Jun. 2013			Mar. 2013			Dec. 2012
Mortgage originations	$	39,679		$	55,192		$	81,945		$	71,967		$	93,619
Mortgage sales		33,921			58,101			67,050			68,431			93,993
Mortgage servicing portfolio		605,993			597,030			575,091			548,493			528,086
Mortgage servicing rights		5,180			5,076			4,613			4,068			3,775
Mortgage servicing revenue:
Loan servicing fees		388			367			350			338			319
OMSR amortization		(126	)		(164	)		(205	)		(330	)		(362	)
Net administrative fees		262			203			145			8			(43	)
OMSR valuation adjustment		(21	)		205			273			171			195
Net loan servicing fees		241			408			418			179			152
Gain on sale of mortgages		776			1,356			1,450			1,484			2,136
Mortgage banking revenue, net	$	1,017		$	1,764		$	1,868		$	1,663		$	2,288

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Fee Income

SB Financial’s fee income includes revenue from a diversity of services, such as wealth management, deposit fees and income from bank-owned life insurance.  Wealth management increased by 13.7 percent for the fourth quarter as assets under management, which stood at $345.5 million at year-end 2013, grew by $30.3 million, or 9.6 percent, from year-end 2012. Full-year wealth management revenue rose by $0.15 million, or 6.1 percent.

Gross revenue generated by RDSI, including services provided to SB Financial and State Bank, was $2.3 million for 2013. Net data services fees, excluding SB Financial and State Bank intercompany transactions, were $1.5 million in 2013, down $1.0 million from 2012.

Data Services  ($000’s)	Dec. 2013			Sep. 2013			Jun. 2013			Mar. 2013			Dec. 2012
Data Processing & Network Services	$	-		$	104		$	207		$	270		$	179
Payment Solutions		376			403			493			484			549
Vendor Settlement		-			-			-			-			334
RDSI Gross Revenue		376			507			700			754			1,062
Less: Intercompany		(81	)		(174	)		(242	)		(340	)		(251	)
Net Data Services Fees	$	295		$	333		$	458		$	414		$	811
Core Data Service Fees	$	295		$	333		$	458		$	414		$	477

Loan Loss Provision

The loan loss provision was immaterial in the fourth quarter of 2013 and $0.9 million for the full year. Asset quality metrics included a 19.0 percent decline in non-accruing and restructured loans, and a 30.1 percent reduction in full-year net charge-offs compared with 2012.  The loan loss reserve at year-end 2013 was 1.5 percent of total loans, providing 105.8 percent coverage of nonperforming loans; this compares to reserve coverage of 103.8 percent at year-end 2012.

Noninterest Expense

For the fourth quarter of 2013, noninterest expense was down $1.0 million, or 14.1 percent, compared to the fourth quarter of 2012 and was down 3.5 percent for the full year.  FDIC insurance premiums were down 34.9 percent, a reflection of State Bank’s improved risk profile.

“We made a number of strategic decisions during the past year to reduce our expense levels. We had closed a branch, made changes to our benefit programs and implemented several efficiency measures.  We expect these changes should continue to improve our profitability going forward.”stated Mr. Klein.

Balance Sheet

Total assets as of December 31, 2013, were $631.8 million, down 1.0 percent from year-end 2012.  Total deposits as of December 31, 2013, were $518.2 million, down 1.7 percent from year-end 2012.

Total loans held for investment (HFI) were $477.3 million at December 31, 2013, up 3.0 percent from year-end 2012. Residential real estate loans accounted for the majority of growth, up $11.8 million, or 13.4 percent. Commercial and commercial real estate loans rose $7.8 million, or 2.8 percent, for the full year.

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Mr. Klein stated, “We are pleased with our loan growth over the past year, and we are encouraged by the additional opportunities we are seeing across our markets.  We believe that as a regionally focused bank we are well positioned to capture successfully these new business opportunities.  In particular, our commercial loan growth rose in the latter part of the year, as we continued to focus on targeted marketing efforts.  Approximately $3.8 million of the full-year growth in commercial loans came in the fourth quarter.”

Loan Portfolio ($000’s)	Dec. 2013			Sep. 2013			Jun. 2013			Mar. 2013			Dec. 2012			Variance YOY
Commercial	$	85,368		$	81,571		$	84,766		$	80,431		$	81,491		$	3,877
% of Total		17.9	%		17.2	%		18.3	%		17.7	%		17.6	%		4.8	%
Commercial RE		205,301			209,739			199,795			199,615			201,392			3,909
% of Total		43.0	%		44.1	%		43.1	%		43.8	%		43.5	%		1.9	%
Agriculture		39,210			39,636			38,552			37,950			42,276			(3,066	)
% of Total		8.2	%		8.3	%		8.3	%		8.3	%		9.1	%		(7.3	%)
Residential RE		99,620			96,477			93,292			89,669			87,859			11,761
% of Total		20.9	%		20.3	%		20.1	%		19.7	%		19.0	%		13.4	%
Consumer & Other		47,804			47,810			47,630			47,778			50,371			(2,567	)
% of Total		10.0	%		10.1	%		10.3	%		10.5	%		10.9	%		(5.1	%)
Total Loans	$	477,303		$	475,233		$	464,035		$	455,443		$	463,389		$	13,914
Total Growth Percentage																	3.0	%

Asset Quality

SB Financial continues to improve its asset quality, reporting nonperforming assets of $7.2 million at year-end 2013, declining by $1.7 million, or 19.0 percent, from year-end 2012.  Delinquency levels have declined, with the 30-89 day category totaling $0.9 million at the end of the 2013, compared to $2.6 million at year-end 2012.

Summary of Nonperforming Assets ($000’s)
Nonperforming Loan Category	Dec. 2013			Sep. 2013			Jun. 2013			Mar. 2013			Dec. 2012
Commercial	$	2,316		$	2,738		$	982		$	1,135		$	1,246
% of Total Commercial loans		2.7	%		3.4	%		1.2	%		1.4	%		1.5	%
Commercial RE loans		532			642			519			457			782
% of Total CRE loans		0.3	%		0.3	%		0.3	%		0.2	%		0.4	%
Agriculture		-			-			-			-			-
% of Total Ag loans		-			-			-			-			-
Residential RE		1,651			1,837			2,285			2,614			2,631
% of Total Res. RE loans		1.7	%		1.9	%		2.5	%		2.9	%		3.0	%
Consumer & Other		345			363			600			605			646
% of Consumer & Other loans		0.7	%		0.8	%		1.3	%		1.3	%		1.3	%
Total Nonaccruing Loans		4,844			5,580			4,386			4,811			5,305
% of Total Loans		1.0	%		1.2	%		1.0	%		1.0	%		1.1	%
Accruing Restructured Loans		1,739			1,756			1,262			1,273			1,258
Total Nonaccruing & Restructured	$	6,583		$	7,336		$	5,648		$	6,084		$	6,563
% of Total Loans		1.4	%		1.5	%		1.2	%		1.3	%		1.4	%
OREO & Repossessed Vehicles		651			1,430			1,955			2,270			2,367
Total Nonperforming Assets	$	7,233		$	8,766		$	7,603		$	8,354		$	8,930
% of Total Assets		1.1	%		1.4	%		1.2	%		1.3	%		1.4	%

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Capitalization

Improving capital ratios remains an important focus of management. The tangible equity ratio improved by 63 basis points over the past year and stood at 6.3 percent as of December 31, 2013. All bank regulatory ratios remain in excess of "well-capitalized" levels. At December 31, 2013, State Bank's Total Risk-Based Capital was estimated to be $60.8 million, $22.0 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, and one banking 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.

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SB FINANCIAL GROUP, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Unaudited)
	December			September			June			March			December
($ in Thousands)	2013			2013			2013			2013			2012
ASSETS
Cash and due from banks	$	13,137		$	19,016		$	10,750		$	28,031		$	19,144
Securities available for sale, at fair value		89,793			86,620			95,379			98,390			98,702
Other securities - FRB and FHLB Stock		3,748			3,748			3,748			3,748			3,748
Total investment securities		93,541			90,368			99,127			102,138			102,450
Loans held for sale		3,366			2,407			10,715			8,560			6,147
Loans, net of unearned income		477,303			475,233			464,035			455,443			463,389
Allowance for loan losses		(6,964	)		(7,120	)		(7,013	)		(6,992	)		(6,811	)
Net loans		470,339			468,113			457,022			448,451			456,578
Premises and equipment, net		12,213			12,399			12,483			12,738			12,633
Purchased software		394			320			289			300			330
Cash surrender value of life insurance		12,906			12,826			12,742			12,659			12,577
Goodwill		16,353			16,353			16,353			16,353			16,353
Core deposits and other intangibles		655			784			913			1,066			1,219
Foreclosed assets held for sale, net		651			1,430			1,955			2,270			2,367
Mortgage servicing rights		5,180			5,076			4,613			4,068			3,775
Accrued interest receivable		1,281			1,694			1,575			1,618			1,235
Other assets		1,738			2,626			2,955			3,048			3,426
Total assets	$	631,754		$	633,412		$	631,492		$	641,300		$	638,234
LIABILITIES AND EQUITY
Deposits
Non interest bearing demand	$	81,570		$	78,217		$	76,355		$	79,579		$	77,799
Interest bearing demand		119,551			124,860			118,957			123,748			117,289
Savings		61,652			61,899			61,513			62,404			57,461
Money market		79,902			78,406			78,487			81,130			80,381
Time deposits		175,559			178,161			176,066			185,398			194,071
Total deposits		518,234			521,543			511,378			532,259			527,001
Notes payable		589			680			1,148			1,424			1,702
Advances from Federal Home Loan Bank		16,000			16,000			30,000			17,500			21,000
Repurchase agreements		14,696			14,836			9,314			10,983			10,333
Trust preferred securities		20,620			20,620			20,620			20,620			20,620
Accrued interest payable		639			448			715			515			138
Other liabilities		4,707			3,748			3,930			3,704			4,156
Total liabilities		575,485			577,875			577,105			587,005			584,950
Equity
Preferred stock		-			-			-			-			-
Common stock		12,569			12,569			12,569			12,569			12,569
Additional paid-in capital		15,412			15,399			15,392			15,381			15,374
Retained earnings		29,899			28,846			27,648			26,476			25,280
Accumulated other comprehensive income		74			415			496			1,623			1,830
Treasury stock		(1,685	)		(1,692	)		(1,718	)		(1,754	)		(1,769	)
Total equity		56,269			55,537			54,387			54,295			53,284
Total liabilities and equity	$	631,754		$	633,412		$	631,492		$	641,300		$	638,234

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SB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
($ in thousands, except share data)	Three Months Ended														Twelve Months Ended
	December			September		June			March			December			December			December
Interest income	2013			2013		2013			2013			2012			2013			2012
Loans
Taxable	$	5,428			5,649		5,874		$	5,883		$	5,840		$	22,834		$	23,911
Nontaxable		13			14		16			24			22			67			90
Securities
Taxable		313			305		296			330			330			1,244			1,515
Nontaxable		181			178		174			170			157			703			606
Total interest income		5,935			6,146		6,360			6,407			6,349			24,848			26,122
Interest expense
Deposits		513			539		573			606			653			2,231			2,969
Other borrowings		10			11		12			14			15			47			64
Repurchase Agreements		4			2		3			2			3			11			142
Federal Home Loan Bank advances		82			83		84			90			92			339			333
Trust preferred securities		330			336		338			403			431			1,407			1,882
Total interest expense		939			971		1,010			1,115			1,194			4,035			5,390
Net interest income		4,996			5,175		5,350			5,292			5,155			20,813			20,732
Provision for loan losses		-			401		200			299			400			900			1,350
Net interest income after provision
for loan losses		4,996			4,774		5,150			4,993			4,755			19,913			19,382
Noninterest income
Wealth Management Fees		689			669		652			643			606			2,653			2,501
Customer service fees		673			659		639			616			648			2,587			2,624
Gain on sale of mtg. loans & OMSR's		776			1,356		1,450			1,484			2,136			5,066			6,284
Mortgage loan servicing fees, net		241			408		418			179			152			1,246			124
Gain on sale of non-mortgage loans		303			44		82			156			94			585			264
Data service fees		295			333		458			414			811			1,500			2,515
Net gain on sales of securities		-			28		-			20			-			48			-
Gain/(loss) on sale/disposal of assets		(265	)		15		(129	)		(105	)		(54	)		(484	)		(311	)
Other income		237			198		250			160			255			845			844
Total non-interest income		2,949			3,710		3,820			3,567			4,648			14,046			14,845
Noninterest expense
Salaries and employee benefits		3,027			3,343		3,688			3,439			3,825			13,497			14,518
Net occupancy expense		494			507		513			541			494			2,055			2,085
Equipment expense		651			701		703			755			692			2,810			2,837
FDIC insurance expense		108			98		94			109			100			409			628
Fixed asset and software impairment		-			-		-			-			65			-			65
Data processing fees		254			189		194			77			132			714			469
Professional fees		443			456		499			429			686			1,827			1,912
Marketing expense		136			135		92			108			115			471			393
Printing and office supplies		55			49		151			46			46			301			230
Telephone and communication		110			156		158			158			146			582			580
Postage and delivery expense		173			199		209			215			204			796			856
State, local and other taxes		138			140		138			134			136			550			502
Employee expense		154			125		126			152			113			557			456
Intangible amortization expense		129			129		153			153			158			564			630
OREO Impairment		-			-		-			33			-			33			58
Other expenses		327			335		362			321			300			1,345			1,265
Total non-interest expense		6,199			6,562		7,080			6,670			7,212			26,511			27,484
Income before income tax expense		1,746			1,922		1,890			1,890			2,191			7,448			6,743
Income tax expense		522			578		571			572			667			2,243			1,929
Net income	$	1,224			1,344		1,319		$	1,318		$	1,524		$	5,205		$	4,814
Common share data:
Basic earnings per common share	$	0.25			0.28		0.27		$	0.27		$	0.31		$	1.07		$	0.99
Diluted earnings per common share	$	0.25			0.28		0.27		$	0.27		$	0.31		$	1.07		$	0.99
Average shares outstanding ($ in thousands):
Basic:		4,870			4,867		4,866			4,863			4,862			4,866			4,862
Diluted:		4,882			4,881		4,870			4,870			4,862			4,878			4,862

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SB FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)
($ in thousands, except per share data)	Three Months Ended															Twelve Months Ended
	December			September			June			March			December			December			December
SUMMARY OF OPERATIONS	2013			2013			2013			2013			2012			2013			2012
Net interest income	$	4,996			5,175			5,350			5,292			5,155			20,813			20,732
Tax-equivalent adjustment	$	100			99			98			100			92			397			359
Tax-equivalent net interest income	$	5,096			5,274			5,448			5,392			5,247			21,210			21,091
Provision for loan loss	$	-			401			200			299			400			900			1,350
Noninterest income	$	2,949			3,710			3,820			3,567			4,648			14,046			14,845
Total revenue, tax-equivalent	$	8,045			8,984			9,268			8,959			9,895			35,256			35,936
Noninterest expense	$	6,199			6,562			7,080			6,670			7,212			26,511			27,484
Pre provision pretax income	$	1,746			2,323			2,090			2,189			2,591			8,348			8,093
Pretax income	$	1,746			1,922			1,890			1,890			2,191			7,448			6,743
Net income	$	1,224			1,344			1,319			1,318			1,524			5,205			4,814
PER SHARE INFORMATION:
Basic & diluted earnings per share	$	0.25			0.28			0.27			0.27			0.31			1.07			0.99
Common dividends	$	0.035			0.03			0.055			-			-			0.12			-
Book value per common share	$	11.55			11.42			11.17			11.16			10.96			11.55			10.96
Tangible book value per common share	$	7.98			7.83			7.57			7.52			7.28			7.98			7.28
PERFORMANCE RATIOS:
Return on average assets		0.76	%		0.84	%		0.82	%		0.83	%		0.95	%		0.81	%		0.75	%
Return on average common equity		8.75	%		9.82	%		9.70	%		9.82	%		11.64	%		9.52	%		9.57	%
Return on avg. tangible common equity		12.71	%		14.43	%		14.35	%		14.68	%		17.73	%		14.03	%		15.00	%
Efficiency ratio		76.40	%		72.40	%		75.54	%		73.56	%		71.96	%		74.43	%		75.48	%
Earning asset yield		4.31	%		4.40	%		4.58	%		4.65	%		4.50	%		4.43	%		4.72	%
Cost of interest bearing liabilities		0.76	%		0.79	%		0.81	%		0.90	%		0.96	%		0.81	%		1.07	%
Net interest margin		3.50	%		3.65	%		3.79	%		3.78	%		3.65	%		3.68	%		3.70	%
Tax equivalent effect		0.07	%		0.07	%		0.07	%		0.08	%		0.07	%		0.07	%		0.06	%
Net interest margin - fully tax equivalent basis		3.57	%		3.72	%		3.86	%		3.86	%		3.72	%		3.75	%		3.76	%
ASSET QUALITY RATIOS:
Gross charge-offs	$	163			307			213			136			300			819			1,328
Recoveries	$	7			13			34			18			15			72			260
Net charge-offs	$	156			294			179			118			285			747			1,068
Nonaccruing loans/ Total loans		1.01	%		2.21	%		0.95	%		1.06	%		1.14	%		1.01	%		1.14	%
Nonperforming loans/ Total loans		1.38	%		2.58	%		1.22	%		1.34	%		1.42	%		1.38	%		1.42	%
Nonperforming assets/ Loans & OREO		1.51	%		2.87	%		1.63	%		1.83	%		1.92	%		1.51	%		1.92	%
Nonperforming assets/ Total assets		1.14	%		2.16	%		1.20	%		1.30	%		1.40	%		1.14	%		1.40	%
Allowance for loan loss/ Nonperforming loans		105.8	%		58.2	%		124.2	%		114.9	%		103.8	%		105.80	%		103.8	%
Allowance for loan loss/ Total loans		1.46	%		1.50	%		1.51	%		1.54	%		1.47	%		1.46	%		1.47	%
Net loan charge-offs/ Average loans (ann.)		0.13	%		0.25	%		0.15	%		0.10	%		0.25	%		0.16	%		0.23	%
Loan loss provision/ Net charge-offs		0.00	%		136.39	%		111.73	%		253.39	%		140.56	%		120.48	%		126.40	%
CAPITAL & LIQUIDITY RATIOS:
Loans/ Deposits		92.10	%		91.12	%		90.74	%		85.57	%		87.93	%		92.10	%		87.93	%
Equity/ Assets		8.91	%		8.77	%		8.61	%		8.47	%		8.35	%		8.91	%		8.35	%
Tangible equity/ Tangible assets		6.33	%		6.18	%		6.00	%		5.87	%		5.70	%		6.33	%		5.70	%
END OF PERIOD BALANCES
Total loans	$	477,303			475,233			464,035			455,443			463,389			477,303			463,389
Total assets	$	631,754			633,412			631,492			641,300			638,234			631,754			638,234
Deposits	$	518,234			521,543			511,378			532,259			527,001			518,234			527,001
Stockholders equity	$	56,269			55,537			54,387			54,295			53,284			56,269			53,284
Intangibles	$	17,402			17,457			17,555			17,719			17,902			17,402			17,902
Tangible equity	$	38,867			38,080			36,832			36,576			35,382			38,867			35,382
Full-time equivalent employees		200			196			198			204			204			200			204
Period end basic shares outstanding		4,870			4,864			4,867			4,863			4,862			4,870			4,862
AVERAGE BALANCES
Total loans	$	479,701			474,349			464,105			459,988			455,705			469,603			455,516
Total earning assets	$	571,332			567,787			564,050			559,383			564,564			565,390			560,858
Total assets	$	645,148			636,437			640,382			638,801			639,048			639,920			638,035
Deposits	$	525,334			516,669			520,259			524,901			522,970			521,648			522,412
Stockholders equity	$	55,925			54,758			54,398			53,711			52,351			54,700			50,300
Intangibles	$	17,404			17,504			17,633			17,810			17,968			17,590			18,217
Tangible equity	$	38,521			37,254			36,765			35,901			34,383			37,110			32,083

8

SB FINANCIAL GROUP, INC.
Rate Volume Analysis - (Unaudited)
For the Three and Twelve Months Ended December 31, 2013 and 2012
($ in Thousands)	Three Months Ended December 31, 2013								Three Months Ended December 31, 2012
	Average					Average			Average					Average
Assets	Balance			Interest		Rate			Balance			Interest		Rate
Taxable securities	$	73,306			313		1.71	%	$	84,945			330		1.56	%
Non-taxable securities		18,325			274		5.99	%		15,985			238		5.96	%
Federal funds sold		-			-		N/A			-			-		N/A
Loans, net		479,701			5,448		4.54	%		463,635			5,873		5.07	%
Total earning assets		571,332			6,035		4.23	%		564,565			6,441		4.56	%
Cash and due from banks		22,369								18,185
Allowance for loan losses		(7,075	)							(6,842	)
Premises and equipment		13,811								15,344
Other assets		44,711								47,595
Total assets	$	645,148							$	638,847
Liabilities
Savings and interest-bearing demand	$	265,258			18		0.03	%	$	247,866			44		0.07	%
Time deposits		176,609			495		1.12	%		198,657			608		1.23	%
Repurchase agreements		15,131			4		0.11	%		11,711			3		0.10	%
Advances from FHLB		16,000			82		2.05	%		18,245			92		2.03	%
Junior subordinated debentures		20,620			330		6.40	%		20,620			419		8.13	%
Notes payable & other borrowed funds		634			10		6.31	%		1,791			27		6.03	%
Total interest-bearing liabilities		494,252			939		0.76	%		498,890			1,194		0.96	%
Non interest-bearing demand		83,467								76,447
Other liabilities		11,504								11,159
Total liabilities		589,223								586,496
Equity		55,925								52,351
Total liabilities and equity	$	645,148							$	638,847
Net interest income (tax equivalent basis)				$	5,096							$	5,247
Net interest income as a percent of average interest-earning assets							3.57	%

9

	Twelve Months Ended December 31, 2013								Twelve Months Ended December 31, 2013
	Average					Average			Average					Average
Assets	Balance			Interest		Rate			Balance			Interest		Rate
Taxable securities	$	78,520			1,244		1.58	%	$	90,182			1,515		1.68	%
Non-taxable securities		17,267			1,065		6.17	%		15,160			919		6.06	%
Federal funds sold		-			-		N/A			-			-		N/A
Loans, net		469,603			22,936		4.88	%		455,516			24,047		5.28	%
Total earning assets		565,390			25,245		4.47	%		560,858			26,481		4.72	%
Cash and due from banks		20,827								20,728
Allowance for loan losses		(6,962	)							(6,591	)
Premises and equipment		14,635								15,360
Other assets		46,030								47,680
Total assets	$	639,920							$	638,035
Liabilities
Savings and interest-bearing demand	$	262,954			75		0.03	%	$	245,528			210		0.09	%
Time deposits		180,154			2,156		1.20	%		206,135			2,759		1.34	%
Repurchase agreements		12,011			11		0.09	%		15,180			142		0.94	%
Advances from FHLB		18,551			339		1.83	%		15,547			333		2.14	%
Junior subordinated debentures		20,620			1,407		6.82	%		20,620			1,815		8.80	%
Notes payable & other borrowed funds		1,074			47		4.38	%		2,058			131		6.36	%
Total interest-bearing liabilities		495,364			4,035		0.81	%		505,067			5,390		1.07	%
Non interest-bearing demand		78,540								70,749
Other liabilities		11,316								11,919
Total liabilities		585,220								587,735
Equity		54,700								50,300
Total liabilities and equity	$	639,920							$	638,035
Net interest income (tax equivalent basis)				$	21,210							$	21,091
Net interest income as a percent of average interest-earning assets							3.75	%							3.76	%

10