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"In addition to our financial results, we are pleased that we were able to close on the Marblehead acquisition earlier this month. Their presence will add substantial liquidity via their low-cost deposit base and will expand our market presence in Northern Ohio.”

Interest income for the quarter grew by 11.4 percent to $16.8 million, driven by strong loan performance. Loans increased by $46.5 million, compared to the prior year, and by $16.8 million from the linked quarter. Deposits also rose by $82.4 million, or 7.7 percent, to $1.15 billion, a testament to the trust our clients place in us. Tangible book value per share climbed by 6.8 percent to $16.00, underscoring our commitment to delivering shareholder value.

We achieved $64.3 million in total interest income for the year, a 10.7 percent increase over 2023, which partially offset a slight decline in net income to $11.5 million. These results highlight our disciplined approach to growth, operational efficiency, and long-term value creation for our stakeholders. As we move into 2025, we remain focused on leveraging our momentum and strengthening our financial position.”

RESULTS OF OPERATIONS

Consolidated Revenue

In the fourth quarter of 2024, total operating revenue increased to $15.5 million, a 2.2 percent rise from $15.1 million in the prior year and an 8.0 percent increase from the linked quarter, driven by growth in both net interest income and noninterest income. Net interest income reached $10.9 million, a strong 13.7 percent year-over-year increase, reflecting higher interest income on loans, which rose by $1.5 million to $15.0 million. However, rising deposit costs contributed to a 7.4 percent increase in total interest expense, partially offsetting the gains in interest income. Despite this, the net interest margin expanded by 24 basis points year-over-year to 3.35 percent, reflecting the continued strength of our interest-earning assets and disciplined funding cost management.

Noninterest income for the quarter declined by 17.6 percent year-over-year to $4.6 million due to the Visa B share sale recorded in the prior year quarter. However, it improved by 10.5 percent compared to the linked quarter, highlighting recovery in key areas. Gains on the sale of mortgage loans and OMSR increased by $448,000 year over year to $1.2 million, while wealth management fees and title insurance revenue rose by $78,000 and $100,000, respectively. Moving forward, we remain focused on maintaining a balanced approach to driving revenue growth and managing costs to deliver consistent shareholder value.

Mortgage Loan Business

"Our mortgage banking operations delivered another quarter of strong results, reflecting our strategic focus on origination growth, portfolio expansion, and servicing efficiency. Mortgage originations surged to $72.5 million, an impressive year-over-year increase of $33.0 million, or 83.3 percent,” continued Mr. Klein. “The Indianapolis team contributed 43 percent of our volume this quarter and our newest market, Cincinnati, had volume of $2.3 million in the quarter. Correspondingly, mortgage sales rose to $62.3 million, marking an 86.7 percent increase compared to the same period, last year.”

The mortgage servicing portfolio expanded to $1.43 billion, achieving a year-over-year increase of $60.7 million, or 4.4 percent, further strengthening our recurring revenue streams, and highlighting the effectiveness of our servicing retention strategies.

Net mortgage banking revenue for the quarter reached $2.0 million, up $703,000 from the prior year quarter, and for the year was $6.7 million up 18.1 percent compared to 2023. Gains on the sale of mortgages remained a key revenue driver, increasing by $448,000 year-over-year to $1.2 million. Loan servicing fees added $886,000 to revenue, reflecting an increase of $31,000 from the previous year quarter. Notably, the OMSR net valuation adjustment for full year 2024 was a positive $42,000 compared to a negative $51,000 for the full year of 2023.

Noninterest Income and Noninterest Expense

"Noninterest income for the fourth quarter of 2024 totaled $4.6 million, with linked quarter noninterest income increasing by $434,000 or 10.5 percent, primarily due to increased revenue in net mortgage loan servicing fees and higher wealth management fees. Compared to the prior year quarter, wealth management fees grew modestly by $78,000 year over year, and title insurance revenue added $100,000, reflecting our ability to deliver consistent performance across core revenue categories,” Mr. Klein noted.

Noninterest expense for the fourth quarter of 2024 was unchanged at $11.0 million compared to the third quarter but increased by $634,000, or 6.1 percent, year-over-year. The year-over-year increase was primarily driven by a $533,000 increase in salaries and employee benefits, reflecting investments in talent to support operational growth and increased business activity.

Noninterest expense increases were partially offset by reductions in discretionary expense categories, including a $61,000 decrease in state, local, and other taxes, as well as a $44,000 reduction in net occupancy expense. Postage and delivery expenses also saw a modest decline of $51,000.

“Our efficiency ratio improved to 71.09 percent in the fourth quarter of 2024 from 76.78 percent in the linked quarter, highlighting our ability to manage costs while investing strategically in growth areas. With a year-end headcount of 252 full-time equivalent employees, we remain focused on balancing growth with operational efficiency” stated Mr. Klein.

Balance Sheet

As of December 31, 2024, SB Financial reported total assets of $1.38 billion, higher from both the linked quarter and the previous year. This growth was primarily driven by a robust increase in the loan portfolio, which reached $1.05 billion, marking a $46.5 million or 4.7 percent increase year over year. The strategic reallocation of liquidity contributed to this expansion, as evidenced by a decline in cash and available-for-sale securities, demonstrated the Company’s focus on maximizing returns while maintaining a solid financial position.

Total deposits increased to $1.15 billion, growing $82.4 million or 7.7 percent year over year, reflecting SB Financial’s strength in deposit gathering and customer engagement. Shareholders’ equity ended the year at $127.5 million, representing a $3.2 million increase from the prior year. This growth reflects management's commitment to enhancing shareholder value and the Company’s disciplined approach to capital management.

During the fourth quarter, SB Financial repurchased 130,465 shares, continuing its active buyback program. This reflects the Company's dedication to returning value to shareholders through dividends and share repurchases while retaining sufficient capital to fund its long-term growth strategies.

"As we conclude 2024, our balance sheet strength and strategic allocation of resources highlight our unwavering commitment to disciplined growth," said Mr. Klein, Chairman, President, and CEO. "Despite a challenging rate environment, we achieved our third consecutive quarter of loan growth, with balances increasing by $46.5 million from the previous year. This performance underscores our ability to deepen client relationships while navigating competitive dynamics. Our strong asset quality, supported by top-decile coverage ratios, remains a cornerstone of our financial stability, positioning us to capitalize on emerging opportunities while maintaining operational excellence. Looking ahead, we remain focused on driving shareholder value and sustaining robust financial performance in the evolving economic landscape."

Asset Quality

As of December 31, 2024, SB Financial Group maintained strong asset quality metrics. Nonperforming assets totaled $5.5 million, representing 0.40 percent of total assets, an increase of $2.2 million compared to the $3.3 million or 0.25 percent of total assets reported in the prior year. This year-over-year growth was driven by weakness in three credits that we expect to resolve favorably by mid-year 2025.

The allowance for credit losses remained robust at 1.44 percent of total loans, providing 273.7 percent coverage of nonperforming loans, a level slightly lower than the linked quarter but indicative of the institution's conservative approach to risk management. This strength underscores SB Financial's commitment to disciplined credit administration amidst evolving economic conditions. The net loan charge-offs to average loans ratio remained modest at 7 basis points and for the full year just 2 basis points, reflecting effective collateral management and a strong credit culture.

"Our asset quality metrics demonstrate resilience and our commitment to disciplined risk management," stated Mark Klein, Chairman, President, and CEO. "While we observed an uptick in nonperforming assets compared to the prior year, our reserve coverage ratio and low charge-off levels underscore the performance of our loan portfolio. We remain focused on preserving the integrity of our credit processes while positioning our balance sheet for long-term growth." This balanced approach reflects SB Financial's efforts to maintain top-tier asset quality ratios, support lending growth, and ensure financial stability for the future.

Webcast and Conference Call

The Company will hold the fourth quarter 2024 earnings conference call and webcast on January 24, 2025, at 11:00 a.m. EDT. Interested parties may access the conference call by dialing 1-888-338-9469. The webcast can be accessed at ir.yourstatebank.com. An audio replay of the call will be available on the Company’s website.

About SB Financial Group

Headquartered in Defiance, Ohio, SB Financial is a diversified financial services holding company for the State Bank & Trust Company (State Bank) and SBFG Title, LLC dba Peak Title (Peak Title). State Bank provides a full range of financial services for consumers and small businesses, including wealth management, private client services, mortgage banking and commercial and agricultural lending, operating through a total of 25 offices: 24 in ten Ohio counties and one in Fort Wayne, Indiana, and 25 ATMs. State Bank has seven loan production offices located throughout the Tri-State region of Ohio, Indiana and Michigan. Peak Title provides title insurance and title opinions throughout the Tri-State region. SB Financial’s common stock is listed on the NASDAQ Capital Market with the ticker 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 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

This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures, specifically pre-tax, pre-provision income, tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common equity, total interest income – FTE, net interest income – FTE and net interest margin – FTE are used by the Company’s management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. In addition, the Company excludes the OMSR valuation adjustment and any gain on sale of assets from net income to report a non-GAAP adjusted net income level. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Investor Contact Information:

Mark A. Klein
Chairman, President and
Chief Executive Officer
Mark.Klein@YourStateBank.com

Anthony V. Cosentino
Executive Vice President and
Chief Financial Officer
Tony.Cosentino@YourStateBank.com