SB FINANCIAL GROUP, INC. - FORM 8-K - EX-99.1 - NEWS RELEASE

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8-K - CURRENT REPORT - SB FINANCIAL GROUP, INC.	f8k102113_sbfinancial.htm

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.

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.

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	%

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.

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

SB FINANCIAL GROUP, INC.
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

SB FINANCIAL GROUP, INC.
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

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	%

	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	%

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SB FINANCIAL GROUP, INC. Reports