SB Financial (SBFG) 8-K SB Financial Group, Inc. Announces Third-Quarter and Nine-Month 2015 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 Third-Quarter and Nine-Month 2015 Results

50% year-over-year GAAP earnings growth and 7% loan growth

DEFIANCE, Ohio, October 26, 2015 -- 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, item and statement processing services, today reported earnings for the third quarter and nine months ended September 30, 2015.

Third-quarter 2015 highlights over prior year include:

● GAAP net income of $2.3 million, an increase of 49.6 percent; Fully-diluted 33.5 percent

● Return on average assets of 1.26 percent, up from 0.90 percent

● Loan growth up $35.0 million, or 6.9 percent

● Fully tax equivalent (FTE) revenue up 9.3 percent

● Net interest margin (FTE) of 3.87 percent up 23 basis points

● Mortgage origination volume of $87.0 million, up $19.5 million, or 28.9 percent

● Positive operating leverage for the Company; expenses down 3.8 percent

Nine-Months 2015 highlights over the prior-year, period include:

● GAAP net income of $5.8 million, an increase of 53.9 percent

● Return on average assets of 1.07 percent, up from 0.75 percent

● Total revenue (FTE) up 16.8 percent

● Total operating expense up 2.5 percent

● Positive operating leverage of 6.6 times

Highlights	Three Months Ended									Nine Months Ended
($000’s except ratios and share data)	Sep. 2015			Sep. 2014			% Change			Sep. 2015			Sep. 2014			% Change
Operating revenue (FTE)	$	10,119		$	9,255			9.3	%	$	29,641		$	25,380			16.8	%
Interest income (FTE)		6,811			6,417			6.1			19,588			18,512			5.8
Interest expense		644			971			(33.7	)		1,938			2,795			(30.7	)
Net interest income (FTE)		6,167			5,446			13.2			17,650			15,717			12.3
Noninterest income		3,952			3,809			3.8			11,991			9,663			24.1
Noninterest expense		6,626			6,888			(3.8	)		20,088			19,593			2.5
Net income		2,264			1,513			49.6			5,751			3,738			53.9
Net income available to common		2,020			1,513			33.5			5,039			3,738			34.8
Earnings per diluted share		0.35			0.31			12.9			0.89			0.76			17.1
Net interest margin (FTE)		3.87	%		3.64	%		6.3			3.78	%		3.54	%		6.8
Return on assets		1.26	%		0.90	%		40.0			1.07	%		0.75	%		42.7
Return on common equity		11.42	%		10.14	%		12.6			9.84	%		8.54	%		15.2

“I am extremely pleased to report our operating results revealing the best earnings quarter for SB Financial since the fourth quarter of 2003,” said Mark Klein, Chairman, President and Chief Executive Officer of SB Financial. “For the full year, our fully diluted EPS of $0.89 per share is up 17.1 percent. In addition, we opened two new loan production offices; one in Tiffin, Ohio and our first in the Michigan market of Lambertville. Additionally, our new full-service location in Dublin, Ohio is set to open this week.”

RESULTS OF OPERATIONS

Consolidated Revenue

Total revenue, consisting of net interest income (FTE) and noninterest income, was up 9.3 percent from the third quarter of 2014, but down 1.8 percent from the linked quarter.

● Net interest income (FTE) was up 13.2 percent for the third quarter, and up 5.3 percent compared to the linked quarter.

● Net interest margin (FTE) was up 23 basis points for the third quarter, and up 9 basis points from the linked quarter.

● Net interest margin was impacted by the payoff of the fixed rate trust preferred securities late in the third quarter of 2014. For the third quarter of 2015, this early payoff increased margin by 16 basis points.

● Noninterest income was up 3.8 percent for the third quarter, but down 11.1 percent from the linked quarter.

● Total revenue (FTE), for the first nine months of 2015 was $29.6 million compared to $25.4 million for the first nine months of 2014, which is a 16.8 percent increase. The increase was due to higher mortgage volume of $87 million and Small Business Administration Loan (SBA) sale gains of $0.72 million.

Mortgage Loan Business

Mortgage loan originations for the third quarter of 2015 were $87.0 million, up $19.5 million, or 28.8 percent, from the year-ago third quarter. For the year, originations are $255.5 million, up $87.9 million or 52.4 percent. Total sales of originated loans are up 55.2 percent to $214.2 million for the year.

Net mortgage banking income, consisting of gains on the sale of mortgage loans and net loan servicing fees, was $1.79 million for the third quarter of 2015, compared to $1.73 million for the year-ago quarter. The mortgage servicing valuation adjustment for the third-quarter 2015 was a negative $0.14 million. The aggregate servicing valuation impairment ended the quarter at $0.36 million. The mortgage servicing portfolio at September 30, 2015, was $751.0 million, up $101.3 million, or 15.6 percent, from $649.7 million at September 30, 2014.

Mr. Klein noted, “The third quarter production represented another quarter of solid mortgage production with a total of $87 million; a 29 percent increase from the prior year. This quarter, our new money production accounted for 93 percent of our volume, and our gain on sale was a healthy 1.49 percent. Both of these metrics represent a strong performance in all of our markets served, as well as new business and disciplined pricing for State Bank.”

2

Mortgage Banking ($000’s)
	Sep. 2015			Jun. 2015			Mar. 2015			Dec. 2014			Sep. 2014
Mortgage originations	$	86,965		$	93,605		$	74,955		$	52,058		$	67,502
Mortgage sales		70,081			79,806			64,360			43,542			60,982
Mortgage servicing portfolio		750,958			723,100			684,390			662,662			649,669
Mortgage servicing rights		6,798			6,548			5,860			5,704			5,720
Mortgage servicing revenue:
Loan servicing fees		459			438			420			410			400
OMSR amortization		(223	)		(219	)		(282	)		(174	)		(175	)
Net administrative fees		236			219			138			236			225
OMSR valuation adjustment		(138	)		268			(80	)		(193	)		62
Net loan servicing fees		98			487			58			43			287
Gain on sale of mortgages		1,687			1,805			1,400			1,003			1,442
Mortgage banking revenue, net	$	1,785		$	2,292		$	1,458		$	1,046		$	1,729

Fee Income and Noninterest Expense

SB Financial’s fee income includes revenue from a diverse group of services, such as wealth management, deposit fees and income from bank-owned life insurance. Wealth management assets under management stood at $310.7 million as of September 30, 2015. For the third quarter of 2015, fee income as a percentage of total revenue was 39.4 percent and 40.8 percent year to date.

For the third quarter of 2015, noninterest expense (NIE) was down $0.3 million, or 3.8 percent, compared to the same quarter last year. Compared to the linked quarter, NIE was down $0.2 million, or 2.8 percent.

Mr. Klein stated, “Total fee income, while slightly down from a strong linked quarter, still represented over 39 percent of total revenue. We are especially pleased with our mortgage production and now we are gaining traction from our SBA lending group, which has increased loan-sale-gains by 390 percent on a year to date basis.”

Fee Income / Noninterest Expense ($000’s)
	Sep. 2015			Jun. 2015			Mar. 2015			Dec. 2014			Sep. 2014
Fee Income	$	3,952		$	4,443		$	3,596		$	3,164		$	3,809
Fee Income / Total Revenue		39.4	%		43.5	%		39.4	%		36.5	%		41.6	%
Fee Income / Average Assets		2.2	%		2.5	%		2.0	%		1.8	%		2.3	%
Noninterest Expense	$	6,626		$	6,818		$	6,644		$	6,364		$	6,888
Efficiency Ratio		65.6	%		66.3	%		72.2	%		72.8	%		74.6	%
NIE / Average Assets		3.7	%		3.8	%		3.7	%		3.7	%		4.1	%

3

Balance Sheet

Total assets as of September 30, 2015, were $719.2 million, up 8.2 percent from a year ago. Total equity as of September 30, 2015, was $80.3 million, up 33.3 percent from a year ago. Equity balances included the net impact of the capital-raise completed in the fourth quarter of 2014, which added $14.0 million to total equity through the public offering of depository shares, each representing a 1/100^th interest in the 6.50 percent Noncumulative Convertible Preferred Shares, Series A.

Total loans held for investment were $540.9 million at September 30, 2015, up $35.0 million, or 6.9 percent, from September 30, 2014. Residential real estate loans accounted for the majority of growth, up $19.1 million, or 17.8 percent. Commercial real estate and agricultural loans also rose $18.3 million and $1.9 million, or 8.6 percent, and 4.4 percent, respectively.

The investment portfolio, including Federal Reserve Bank and Federal Home Loan Bank stock, of $99.2 million represented 13.8 percent of assets at September 30, 2015, and was up 16.9 percent from a year ago. Deposit balances of $573.6 million at September 30, 2015, increased by $38.3 million, or 7.2 percent, since September 30, 2014. Growth from the prior year included $19.2 million in checking and $19.1 million in savings and time deposit balances.

Mr. Klein said, “Loan volume accelerated this quarter, as we had balance growth from the linked quarter of $18.5 million or 14 percent annualized. Nonperforming assets were impacted by a commercial real estate credit that has been periodically delinquent over the past year. While this specific credit moved our NPA ratio above 1 percent for the first time since March of 2014, we feel it will be resolved positively in the near term.”

Loan Portfolio ($000’s)	Sep. 2015			Jun. 2015			Mar. 2015			Dec. 2014			Sep. 2014			Variance YOY
Commercial	$	83,741		$	84,297		$	85,022		$	88,329		$	90,407		$	(6,666	)
% of Total		15.5	%		16.0	%		16.6	%		17.1	%		17.9	%		(7.4	%)
Commercial RE		231,249			223,994			217,610			217,030			212,964			18,285
% of Total		42.8	%		42.9	%		42.5	%		42.0	%		42.1	%		8.6	%
Agriculture		46,102			45,724			44,266			46,217			44,162			1,940
% of Total		8.5	%		8.8	%		8.7	%		9.0	%		8.7	%		4.4	%
Residential RE		126,840			116,944			114,702			113,214			107,712			19,128
% of Total		23.5	%		22.4	%		22.4	%		21.9	%		21.3	%		17.8	%
Consumer & Other		52,957			51,444			50,184			51,546			50,679			2,278
% of Total		9.7	%		9.9	%		9.8	%		10.0	%		10.0	%		4.5	%
Total Loans	$	540,889		$	522,403		$	511,784		$	516,336		$	505,924		$	34,965
Total Growth Percentage																	6.9	%

Deposit Bal. ($000’s)	Sep. 2015			Jun. 2015			Mar. 2015			Dec. 2014			Sep. 2014			Variance YOY
Non-Int DDA	$	102,460		$	96,322		$	96,638		$	97,853		$	90,261		$	12,199
% of Total		17.9	%		17.1	%		16.7	%		17.8	%		16.9	%		13.5	%
Interest DDA		126,816			127,362			133,145			121,043			119,805			7,011
% of Total		22.1	%		22.6	%		23.0	%		22.0	%		22.4	%		5.9	%
Savings		77,809			78,729			75,445			64,107			61,770			16,039
% of Total		13.6	%		14.0	%		13.1	%		11.6	%		11.5	%		26.0	%
Money Market		107,538			100,315			106,325			104,602			96,506			11,032
% of Total		18.7	%		17.8	%		18.4	%		19.0	%		18.0	%		11.4	%
Certificates		158,945			160,198			166,730			163,301			166,919			(7,974	)
% of Total		27.7	%		28.5	%		28.8	%		29.6	%		31.2	%		(4.8	%)
Total Deposits	$	573,568		$	562,926		$	578,283		$	550,906		$	535,261		$	38,307
Total Growth Percentage																	7.2	%

4

Asset Quality

SB Financial continues to maintain above peer median asset quality, reporting nonperforming assets of $8.5 million as of September 30, 2015, up $3.1 million, or 58.6 percent, from the year-ago quarter. The increase was the result of an existing delinquent commercial real estate credit that has moved to foreclosure. The Company feels the valuation of the property will approximate the loan commitment when the situation is resolved. SB Financial’s 1.18 percent of nonperforming assets to total assets remains near the top quartile in its 64-bank peer group. The coverage of problem loans by the loan loss allowance was 85.1 percent at September 30, 2015, down from the 139.2 percent at September 30, 2014.

Summary of Nonperforming Assets ($000’s)

Nonperforming Loan Category	Sep. 2015			Jun. 2015			Mar. 2015			Dec. 2014			Sep. 2014			Variance YOY
Commercial	$	453		$	702		$	1,413		$	1,387		$	1,397		$	(944	)
% of Total Commercial loans		0.54	%		0.84	%		1.66	%		1.77	%		1.55	%		(67.5	%)
Commercial RE		5,393			2,023			1,932			2,092			616			4,777
% of Total CRE loans		2.33	%		0.90	%		0.89	%		0.96	%		0.29	%		775.5	%
Residential RE		795			772			967			992			1,015			(220	)
% of Total Res. RE loans		1.72	%		0.66	%		0.84	%		0.88	%		0.94	%		(21.7	%)
Consumer & Other		101			112			138			138			174			(73	)
% of Total Cons. & Other loans		0.08	%		0.22	%		0.27	%		0.27	%		0.34	%		(42.0	%)
Total Nonaccruing Loans		6,742			3,609			4,450			4,609			3,202			3,540
% of Total Loans		1.25	%		0.69	%		0.87	%		0.93	%		0.63	%		110.6	%
Accruing Restructured Loans		1,576			1,595			1,524			1,384			1,620
Total Nonaccruing & Restructured Loans	$	8,318		$	5,204		$	5,974		$	5,993		$	4,822		$	3,496
% of Total Loans		1.54	%		1.00	%		1.17	%		1.16	%		0.95	%		72.5	%
Foreclosed Assets		188			180			207			285			540
Total Nonperforming Assets	$	8,506		$	5,384		$	6,181		$	6,278		$	5,362		$	3,144
% of Total Assets		1.18	%		0.76	%		0.86	%		0.92	%		0.81	%		58.6	%

Webcast and Conference Call

The Company will hold a related conference call and webcast on October 27, 2015, at 2:30 p.m. EST. Interested parties may access the conference call by dialing 1-888-338-9469. The webcast can be accessed at http://www.yoursbfinancial.com/investorrelations.html. An audio replay of the call will be available on the SB Financial website.

About SB Financial Group

Headquartered in Defiance, Ohio, SB Financial is a diversified financial services holding company with two wholly-owned operating subsidiaries: State Bank and RDSI. State Bank provides a full range of financial services for consumers and small businesses, including wealth management, mortgage banking and commercial and agricultural lending, operating through 17 banking centers in eight Ohio counties and one center in Fort Wayne, Indiana, with 18 full service ATMs. The Company has four loan production offices located throughout the Tri-State region of Ohio, Indiana and Michigan. RDSI provides item processing services to community banks located primarily in the Midwest. SB Financial’s common stock is listed on the NASDAQ Capital Market under the symbol “SBFG”. SB Financial’s depository shares, each representing a 1/100^th interest in the preferred shares, Series A are listed on the NASDAQ Capital Market under the symbol “SBFGP”.

5

In May 2015, SB Financial was ranked #163 on the American Banker Magazine’s list of Top 200 Publicly Traded Community Banks and Thrifts based on three-year average return on equity (“ROE”) as of December 31, 2014.

Forward-Looking Statements

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

Non-GAAP Financial Measures

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. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results.

###

6

SB FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS - (Unaudited)

	September			June			March			December			September
($ in Thousands)	2015			2015			2015			2014			2014
ASSETS
Cash and due from banks	$	18,372			21,709			49,765			28,197			21,870
Securities available for sale, at fair value		95,482			98,786			94,056			85,240			81,148
Other securities - FRB and FHLB Stock		3,748			3,748			3,748			3,748			3,748
Total investment securities		99,230			102,534			97,804			88,988			84,896
Loans held for sale		8,517			10,067			8,667			5,168			6,736
Loans, net of unearned income		540,889			522,403			511,784			516,336			505,924
Allowance for loan losses		(7,076	)		(7,006	)		(6,830	)		(6,771	)		(6,713	)
Net loans		533,813			515,397			504,954			509,565			499,211
Premises and equipment, net		17,619			16,432			15,407			13,604			13,256
Cash surrender value of life insurance		13,364			13,291			13,219			13,148			13,074
Goodwill		16,353			16,353			16,353			16,353			16,353
Core deposits and other intangibles		120			174			229			283			338
Foreclosed assets held for sale, net		188			180			207			285			540
Mortgage servicing rights		6,798			6,548			5,860			5,704			5,720
Accrued interest receivable		1,817			1,506			1,554			1,346			1,853
Other assets		3,046			3,017			3,536			1,587			709
Total assets	$	719,237			707,208			717,555			684,228			664,556
LIABILITIES AND EQUITY
Deposits
Non interest bearing demand	$	102,460			96,322			96,638			97,853			90,261
Interest bearing demand		126,816			127,362			133,145			121,043			119,805
Savings		77,809			78,729			75,445			64,107			61,770
Money market		107,538			100,315			106,325			104,602			96,506
Time deposits		158,945			160,198			166,730			163,301			166,919
Total deposits		573,568			562,926			578,283			550,906			535,261
Notes payable		-			-			-			-			7,000
Advances from Federal Home Loan Bank		30,000			34,000			30,000			30,000			30,000
Repurchase agreements		16,911			15,169			14,648			12,740			17,902
Trust preferred securities		10,310			10,310			10,310			10,310			10,310
Accrued interest payable		341			289			334			264			355
Other liabilities		7,782			6,391			6,880			4,325			3,462
Total liabilities		638,912			629,085			640,455			608,545			604,290
Equity
Preferred stock		13,983			13,983			13,983			13,983			-
Common stock		12,569			12,569			12,569			12,569			12,569
Additional paid-in capital		15,444			15,424			15,413			15,461			15,418
Retained earnings		38,705			36,930			35,429			34,379			33,075
Accumulated other comprehensive income		1,157			750			1,264			918			831
Treasury stock		(1,533	)		(1,533	)		(1,558	)		(1,627	)		(1,627	)
Total equity		80,325			78,123			77,100			75,683			60,266
Total liabilities and equity	$	719,237			707,208			717,555			684,228			664,556

7

SB FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)

($ in thousands, except share data)	At and for the Three Months Ended														Nine Months Ended
	September		June			March			December			September			September			September
	2015		2015			2015			2014			2014			2015			2014
Interest income
Loans
Taxable	$	6,152		5,835			5,619			5,707			5,855			17,606			16,750
Nontaxable		10		9			6			6			9			25			38
Securities
Taxable		382		395			372			300			279			1,149			898
Nontaxable		173		175			177			177			178			525			532
Total interest income		6,717		6,414			6,174			6,190			6,321			19,305			18,218
Interest expense
Deposits		492		500			495			483			500			1,487			1,501
Repurchase Agreements & Other		5		4			5			53			23			14			38
Federal Home Loan Bank advances		94		94			92			95			94			280			239
Trust preferred securities		53		53			51			54			354			157			1,017
Total interest expense		644		651			643			685			971			1,938			2,795
Net interest income		6,073		5,763			5,531			5,505			5,350			17,367			15,423
Provision for loan losses		100		500			350			150			150			950			300
Net interest income after provisionfor loan losses		5,973		5,263			5,181			5,355			5,200			16,417			15,123
Noninterest income
Wealth Management Fees		636		666			659			679			670			1,961			1,951
Customer service fees		734		702			632			686			730			2,068			2,005
Gain on sale of mtg. loans & OMSR's		1,687		1,805			1,400			1,003			1,442			4,892			3,225
Mortgage loan servicing fees, net		98		486			58			43			287			642			688
Gain on sale of non-mortgage loans		296		288			288			143			71			872			178
Data service fees		294		306			317			324			337			917			965
Net gain on sales of securities		-		-			-			104			-			-			56
Gain/(loss) on sale/disposal of assets		-		(1	)		(19	)		(15	)		(15	)		(20	)		(64	)
Other income		207		191			261			197			287			659			659
Total non-interest income		3,952		4,443			3,596			3,164			3,809			11,991			9,663
Noninterest expense
Salaries and employee benefits		3,650		3,935			3,477			3,179			3,435			11,062			10,006
Net occupancy expense		481		480			503			521			508			1,464			1,566
Equipment expense		568		524			565			625			616			1,657			1,900
Data processing fees		286		247			263			230			238			796			698
Professional fees		416		426			440			465			435			1,282			1,238
Marketing expense		146		142			149			166			105			437			398
Telephone and communication		96		98			90			91			94			284			313
Postage and delivery expense		198		201			234			197			195			633			586
State, local and other taxes		130		128			129			94			89			387			276
Employee expense		126		138			153			111			122			417			377
Intangible amortization expense		54		55			54			55			55			163			317
Other expenses		475		444			587			630			996			1,506			1,918
Total non-interest expense		6,626		6,818			6,644			6,364			6,888			20,088			19,593
Income before income tax expense		3,299		2,888			2,133			2,155			2,121			8,320			5,193
Income tax expense		1,035		897			637			631			607			2,569			1,454
Net income	$	2,264		1,991			1,496			1,524			1,513			5,751			3,738
Preferred Stock Dividends		244		244			225			-			-			712			-
Net income available to common		2,020		1,747			1,271			1,524			1,513			5,039			3,738
Common share data:
Basic earnings per common share	$	0.41		0.36			0.26			0.31			0.31			1.03			0.77
Diluted earnings per common share	$	0.35		0.31			0.23			0.30			0.31			0.89			0.76
Average shares outstanding ($ in thousands):
Basic:		4,884		4,884			4,879			4,875			4,875			4,882			4,873
Diluted:		6,390		6,382			6,379			5,044			4,900			6,422			4,896

8

SB FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS - (Unaudited)

($ in thousands, except per share data)	At and for the Three Months Ended															Nine Months Ended
	September			June			March			December			September			September			September
SUMMARY OF OPERATIONS	2015			2015			2015			2014			2014			2015			2014
Net interest income	$	6,073			5,763			5,531			5,505			5,350			17,367			15,423
Tax-equivalent adjustment	$	94			95			94			94			96			283			294
Tax-equivalent net interest income	$	6,167			5,858			5,625			5,599			5,446			17,650			15,717
Provision for loan loss	$	100			500			350			150			150			950			300
Noninterest income	$	3,952			4,443			3,596			3,164			3,809			11,991			9,663
Total revenue, tax-equivalent	$	10,119			10,301			9,221			8,763			9,255			29,641			25,380
Noninterest expense	$	6,626			6,818			6,644			6,364			6,888			20,088			19,593
Pre provision pretax income	$	3,399			3,388			2,483			2,305			2,271			9,270			5,493
Pretax income	$	3,299			2,888			2,133			2,155			2,121			8,320			5,193
Net income	$	2,264			1,991			1,496			1,524			1,513			5,751			3,738
Income available to common shareholders	$	2,020			1,747			1,271			1,524			1,513			5,039			3,738
PER SHARE INFORMATION:
Basic earnings per share	$	0.41			0.36			0.26			0.31			0.31			1.03			0.77
Diluted earnings per share	$	0.35			0.31			0.23			0.30			0.31			0.89			0.76
Common dividends	$	0.050			0.050			0.045			0.045			0.040			0.145			0.115
Book value per common share	$	12.68			12.33			12.18			11.96			12.36			12.68			12.36
Tangible book value per common share	$	10.21			9.75			9.53			9.24			8.94			10.21			8.94
Market price per common share	$	10.27			10.59			10.55			9.40			9.05			10.27			9.05
PERFORMANCE RATIOS:
Return on average assets		1.26	%		1.11	%		0.84	%		0.89	%		0.90	%		1.07	%		0.75	%
Return on average equity		11.42	%		10.26	%		7.82	%		9.40	%		10.14	%		9.84	%		8.54	%
Return on avg. tangible common equity		18.55	%		16.90	%		13.03	%		13.03	%		14.09	%		16.20	%		12.00	%
Efficiency ratio		65.56	%		66.26	%		72.20	%		72.78	%		74.60	%		67.87	%		76.84	%
Earning asset yield		4.27	%		4.18	%		4.14	%		4.18	%		4.29	%		4.20	%		4.16	%
Cost of interest bearing liabilities		0.49	%		0.49	%		0.49	%		0.53	%		0.76	%		0.49	%		0.74	%
Net interest margin		3.81	%		3.70	%		3.64	%		3.66	%		3.58	%		3.72	%		3.47	%
Tax equivalent effect		0.06	%		0.06	%		0.07	%		0.07	%		0.06	%		0.06	%		0.07	%
Net interest margin - fully tax equivalent basis		3.87	%		3.76	%		3.71	%		3.73	%		3.64	%		3.78	%		3.54	%
ASSET QUALITY RATIOS:
Gross charge-offs	$	58			350			303			101			94			711			747
Recoveries	$	29			26			11			9			90			66			196
Net charge-offs	$	29			324			292			92			4			645			551
Nonaccruing loans/ Total loans		1.25	%		0.69	%		0.87	%		0.89	%		0.63	%		1.25	%		0.63	%
Nonperforming loans/ Total loans		1.54	%		1.00	%		1.17	%		1.16	%		0.95	%		1.54	%		0.95	%
Nonperforming assets/ Loans & OREO		1.57	%		1.03	%		1.21	%		1.22	%		1.06	%		1.57	%		1.06	%
Nonperforming assets/ Total assets		1.18	%		0.76	%		0.86	%		0.92	%		0.81	%		1.18	%		0.81	%
Allowance for loan loss/ Nonperforming loans		85.07	%		134.63	%		114.33	%		112.98	%		139.22	%		85.07	%		139.22	%
Allowance for loan loss/ Total loans		1.31	%		1.34	%		1.33	%		1.31	%		1.33	%		1.31	%		1.33	%
Net loan charge-offs/ Average loans (ann.)		0.02	%		0.25	%		0.23	%		0.07	%		N/M			0.16	%		0.15	%
Loan loss provision/ Net charge-offs		344.83	%		154.32	%		119.86	%		163.04	%		N/M			147.29	%		54.45	%
CAPITAL & LIQUIDITY RATIOS:
Loans/ Deposits		94.30	%		92.80	%		88.50	%		93.72	%		94.52	%		94.30	%		94.52	%
Equity/ Assets		11.17	%		11.05	%		10.74	%		11.06	%		9.07	%		11.17	%		9.07	%
Tangible equity/ Tangible assets		7.10	%		6.89	%		6.64	%		6.75	%		6.73	%		7.10	%		6.73	%
Tangible equity adjusted for conversion		9.09	%		8.92	%		8.63	%		8.84	%		6.73	%		9.09	%		6.73	%
END OF PERIOD BALANCES
Total loans	$	540,889			522,403			511,784			516,336			505,924			540,889			505,924
Total assets	$	719,237			707,208			717,555			684,228			664,556			719,237			664,556
Deposits	$	573,568			562,926			578,283			550,906			535,261			573,568			535,261
Stockholders equity	$	80,325			78,123			77,100			75,683			60,266			80,325			60,266
Intangibles	$	16,473			16,527			16,582			16,636			16,691			16,473			16,691
Preferred equity	$	13,983			13,983			13,983			13,983			-			13,983			-
Tangible equity	$	49,869			47,613			46,535			45,064			43,575			49,869			43,575
Full-time equivalent employees		209			207			198			190			195			209			195
Period end basic shares outstanding		4,884			4,884			4,881			4,875			4,875			4,884			4,875
Period end outstanding (Series A Converted)		1,451			1,451			1,451			1,451			-			1,451			-
AVERAGE BALANCES
Total loans	$	538,646			521,477			516,004			516,517			512,151			525,459			496,421
Total earning assets	$	638,266			622,643			605,956			600,851			598,223			622,407			592,515
Total assets	$	718,591			716,736			711,100			687,674			673,213			715,670			664,589
Deposits	$	572,801			576,250			568,885			551,906			534,841			572,500			530,314
Stockholders equity	$	79,301			77,649			76,534			64,846			59,684			77,871			58,330
Intangibles	$	16,500			16,555			16,609			16,664			16,719			16,555			16,827
Preferred equity	$	13,983			13,983			13,983			1,398			-			13,983			-
Tangible equity	$	48,818			47,111			45,942			46,784			42,965			47,333			41,503
Average basic shares outstanding		4,884			4,884			4,879			4,875			4,875			4,882			4,873
Average diluted shares outstanding		6,390			6,382			6,379			5,044			4,900			6,422			4,896

9

SB FINANCIAL GROUP, INC.

Rate Volume Analysis - (Unaudited)

At and for the Three & Nine Months Ended September 30, 2015 and 2014

($ in Thousands)	Three Months Ended September 30, 2015								Three Months Ended September 30, 2014
	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
Assets
Taxable securities	$	82,015			382		1.86	%	$	68,275			279		1.63	%
Nontaxable securities		17,605			262		5.96	%		17,797			270		6.08	%
Loans, net		538,646			6,167		4.58	%		512,151			5,869		4.58	%
Total earning assets		638,266			6,811		4.27	%		598,223			6,417		4.29	%
Cash and due from banks		27,300								23,672
Allowance for loan losses		(7,023	)							(6,652	)
Premises and equipment		17,173								13,791
Other assets		42,875								44,179
Total assets	$	718,591							$	673,213
Liabilities
Savings and interest bearing demand	$	311,337			91		0.12	%	$	271,848			40		0.06	%
Time deposits		160,519			401		1.00	%		172,886			460		1.06	%
Repurchase agreements & Other		17,573			5		0.11	%		20,639			6		0.12	%
Advances from Federal Home Loan Bank		30,043			94		1.25	%		30,000			94		1.25	%
Trust preferred securities		10,310			53		2.06	%		18,043			371		8.22	%
Total interest bearing liabilities		529,782			644		0.49	%		513,416			971		0.76	%
Non interest bearing demand		100,945					0.41	%		90,107					0.64	%
Other liabilities		8,563								10,006
Total liabilities		639,290								613,529
Equity		79,301								59,684
Total liabilities and equity	$	718,591							$	673,213
Net interest income (tax equivalent basis)				$	6,167							$	5,446
Net interest income as a percent of average interest-earning assets							3.87	%							3.64	%

	Nine Months Ended September 30, 2015								Nine Months Ended September 30, 2014
	Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
Assets
Taxable securities	$	79,141			1,149		1.94	%	$	77,134			898		1.55	%
Nontaxable securities		17,807			795		5.95	%		18,960			806		5.67	%
Loans, net		525,459			17,644		4.48	%		496,421			16,808		4.51	%
Total earning assets		622,407			19,588		4.20	%		592,515			18,512		4.16	%
Cash and due from banks		41,123								21,095
Allowance for loan losses		(6,938	)							(6,804	)
Premises and equipment		15,899								13,739
Other assets		43,179								44,044
Total assets	$	715,670							$	664,589
Liabilities
Savings and interest bearing demand	$	310,542			251		0.11	%	$	270,086			105		0.05	%
Time deposits		163,076			1,236		1.01	%		173,480			1,396		1.07	%
Repurchase agreements & Other		16,160			14		0.12	%		18,457			21		0.15	%
Advances from Federal Home Loan Bank		30,029			280		1.24	%		22,371			239		1.42	%
Trust preferred securities		10,310			157		2.03	%		19,589			1,034		7.04	%
Total interest bearing liabilities		530,117			1,938		0.49	%		503,983			2,795		0.74	%
Non interest bearing demand		98,882					0.41	%		86,748					0.63	%
Other liabilities		8,800								15,528
Total liabilities		637,799								606,259
Equity		77,871								58,330
Total liabilities and equity	$	715,670							$	664,589
Net interest income (tax equivalent basis)				$	17,650							$	15,717
Net interest income as a percent of average interest-earning assets							3.78	%							3.54	%

10