SB FINANCIAL GROUP INC
For the period ended Mar 31, 2025. Filed May 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 8, 2025
SBFG$28.43-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001213900-24-095338
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001213900-25-040974
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 61 previous paragraphs and 51 current paragraphs.
31 unchanged; 19 reworded; 1 added; 10 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 24 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (1)
Current report
Consolidated Noninterest Expense: Total noninterest expense for the first quarter of 2025 was $12.4 million, which was up $2.1 million compared to $10.3 million in the prior-year first quarter. The quarter included over $0.7 million in one-time merger-related expenses. Compared to the prior year, the 2025 first quarter included operating expenses for approximately 75 days of activity of Marblehead.
Removed paragraphs (10)
Previous report
RFCBC, Inc. (“RFCBC”) is an Ohio corporation and wholly owned subsidiary of SB Financial that was incorporated in August 2004. RFCBC operates as a loan subsidiary in servicing and working out problem loans.
Previous report
Consolidated Noninterest Expense: Total noninterest expense for the third quarter of 2024 was $11.0 million, which was up $0.5 million compared to $10.5 million in the prior-year third quarter. Commission expense for mortgage origination and adding additional talent have increased our compensation expense levels.
Previous report
Nine Months Ended September 30, 2024, compared to Nine Months Ended September 30, 2023
Previous report
Net Income: Net income for the first nine months of 2024 was $7.8 million compared to net income of $8.2 million for the first nine months of 2023, a decrease of 4.6 percent. Diluted earnings per share (“DEPS”) of $1.17 were down 0.8 percent compared to the DEPS of $1.18 for the first nine months of 2023. Net income for the first nine months of 2024 was negatively impacted by the Company’s impairment of $0.25 million on its mortgage servicing rights, while net income for the first nine months of 2023 was negatively impacted by an impairment of mortgage servicing rights of $0.04 million. Mortgage loan volume was up 7.3 percent during the first nine months of 2024, with a higher percentage of originated volume sold on the secondary market, as compared to the same period in 2023. Funding costs for the first nine months of 2024 were up nearly 40 percent as compared to the prior year first nine months.
Previous report
Provision for Credit Losses: The first nine months of 2024 provision for credit losses was $0.2 million as compared to $0.4 million in provision for the prior year first nine months. Net charge-offs for the current year were $68,000 compared to net charge-offs of $88,000 for the year-ago first nine months.
Previous report
NII for the first nine months of 2024 was $29.0 million, which was down $0.7 million from NII of $29.7 million for the prior year first nine months. The net interest margin for the first nine months of 2024 was 3.08 percent compared to 3.18 percent for the first nine months of 2023 as funding costs increased faster than the yield on earnings assets. Funding costs (interest paid to consumers and other entities) for interest bearing liabilities for the first nine months of 2024 were 2.52 percent compared to 1.85 percent for the prior year first nine months.
Previous report
Total noninterest income was $12.5 million for the first nine months of 2024, which was up $0.3 million from $12.2 million for the prior year first nine months. In addition to the mortgage revenue detailed below, impairment of our mortgage servicing rights decreased noninterest income in the first nine months by slightly over $0.2 million compared to the first nine months of 2023. Our title agency contributed revenue of $1.2 million in the first nine months of 2024, down $0.1 million from the prior year first nine months level of $1.3 million.
Previous report
State Bank originated $188.7 million of mortgage loans during the first nine months of 2024, of which $153.7 million was sold with the remainder of loans held for investment. This compares to $176.0 million originated for the first nine months of 2023, of which $127.8 million was sold with the remainder of loans held for investment. These 2024 year-to-date mortgage originations and subsequent sales resulted in $3.4 million of gains, up $0.5 million from the $2.9 million in gains for the first nine months of 2023. Net mortgage banking revenue was $4.7 million for the first nine months of 2024 compared to $4.4 million for the first nine months of 2023.
Previous report
Consolidated Noninterest Expense: Total noninterest expense for the first nine months of 2024 was $32.0 million, which was up $0.4 million compared to $31.6 million in the prior-year first nine months. Salaries and employee benefits expense was up compared to the prior year due to higher commission levels and higher medical insurance costs.
Previous report
Income Taxes: Income taxes for the first nine months of 2024 were $1.5 million (effective rate of 16.0 percent) compared to $1.7 million (effective rate of 17.0 percent) for the first nine months of 2023.
Reworded paragraphs (19)
Previous wording
Net Income: Net income for the third quarter of 2024 was $2.4 million compared to net income of $2.7 million for the third quarter of 2023, a decrease of 12.4 percent. Diluted earnings per share (“DEPS”) of $0.35 for the third quarter of 2024 were slightly lower compared to the DEPS of $0.39 for the third quarter of 2023. Net income for the third quarter of 2024 was positively impacted by higher interest income on loans, which was offset by higher interest expense on deposits and wholesale borrowings. Total interest income continues to improve and was up 11.8 percent compared to the prior year. Mortgage loan volume was up 15.5 percent compared to the prior year third quarter, while sales of originated loans were up 13.3 percent when compared to the third quarter of 2023.
Current wording
Net Income: Net income for the first quarter of 2025 was $2.2 million compared to net income of $2.4 million for the first quarter of 2024, a decrease of 8.9 percent. Diluted earnings per share (“DEPS”) of $0.33 for the first quarter of 2025 were slightly lower compared to the DEPS of $0.35 for the first quarter of 2024. Net income for the first quarter of 2025 was positively impacted by higher interest income on loans, which was offset by higher interest expense on deposits and wholesale borrowings. Total interest income continues to improve and was up 13.5 percent compared to the prior year first quarter. Mortgage loan volume was down slightly compared to the prior year first quarter; however, sales of originated loans were up 7.3 percent when compared to the first quarter of 2024. Included in the 2025 first quarter results were $0.7 million of merger related expenses and a little more than two months of activity from the Marblehead acquisition.
Previous wording
Provision for Credit Losses: The third quarter provision for credit losses was $200,000 as compared to a $6,000 recovery of provision for the prior year third quarter. The Company had net charge-offs of $27,000 for the third quarter of 2024 compared to net charge-offs of $5,000 for the year-ago quarter. Total delinquent loans (consisting of nonaccrual loans and loans greater than 30 days past due) ended the quarter at $6.7 million, or 0.65 percent of total loans. The Company adopted ASC 326 on January 1, 2023, which increased the allowance for credit losses (“ACL”) by $1.4 million.
Current wording
Provision for Credit Losses: The first quarter provision for credit losses was $387,000 as compared to a zero provision for the prior year first quarter. The Company had net charge-offs of $84,000 for the first quarter of 2025 compared to net charge-offs of $57,000 for the year-ago quarter. The provision expense included $13,000 for unfunded commitments, $224,000 due to the Marblehead acquisition and $150,000 of growth-related provision. Total delinquent loans (consisting of nonaccrual loans and loans greater than 30 days past due) ended the quarter at $5.9 million, or 0.54 percent of total loans.
Previous wording
Consolidated Revenue: Operating revenue, consisting of net interest income (“NII”) and noninterest income, was $14.3 million for the third quarter of 2024, an increase of $0.6 million, or 4.5 percent, from the $13.7 million generated during the third quarter of 2023.
Current wording
Consolidated Revenue: Operating revenue, consisting of net interest income (“NII”) and noninterest income, was $15.4 million for the first quarter of 2025, an increase of $2.3 million, or 17.2 percent, from the $13.1 million generated during the first quarter of 2024.
Previous wording
NII for the third quarter of 2024 was $10.2 million, which was up $0.65 million from the prior year third quarter’s $9.5 million. Comparing the third quarter of 2024 to the prior year third quarter, the Company’s earning assets increased $44.3 million, and the average yield on earning assets increased by 38 basis points. The net interest margin for the third quarter of 2024 was 3.17 percent compared to 3.08 percent for the third quarter of 2023. Funding costs (interest paid to consumers and other entities) for deposits and other interest-bearing liabilities for the third quarter of 2024 were 2.53 percent compared to 2.18 percent for the prior year third quarter.
Current wording
NII for the first quarter of 2025 was $11.3 million, which was up $2.1 million from the prior year first quarter’s $9.2 million. Comparing the first quarter of 2025 to the prior year first quarter, the Company’s earning assets increased $115.6 million, and the average yield on earning assets increased by 24 basis points. The net interest margin for the first quarter of 2025 was 3.40 percent compared to 2.99 percent for the first quarter of 2024. Funding costs (interest paid to consumers and other entities) for deposits and other interest-bearing liabilities for the first quarter of 2025 were 2.32 percent compared to 2.55 percent for the prior year first quarter.
Previous wording
Total noninterest income was $4.1 million for the third quarter of 2024, which decreased slightly compared to $4.2 million for the prior year third quarter. In addition to the mortgage revenue detailed below, wealth management revenue was slightly up from the prior year. Impairment of mortgage servicing rights decreased noninterest income by $0.47 million in the quarter, compared to an impairment of $0.08 million in the prior year third quarter. SBFG Title contributed revenue of $0.5 million in the third quarter of 2024, up $0.06 million from the prior year. Noninterest income as a percentage of average assets for the third quarter of 2024 was 1.20 percent compared to 1.24 percent for the prior year third quarter.
Current wording
Total noninterest income was $4.1 million for the first quarter of 2025, which increased slightly compared to $4.0 million for the prior year first quarter. In addition to the mortgage revenue detailed below, wealth management revenue was flat compared to the prior year. Recapture of mortgage servicing rights increased noninterest income by $0.01 million in the quarter, compared to a recapture of $0.18 million in the prior year first quarter. SBFG Title contributed revenue of $0.4 million in the first quarter of 2025, up $0.13 million from the prior year. Noninterest income as a percentage of average assets for the first quarter of 2025 was 1.14 percent compared to 1.19 percent for the prior year first quarter.
Previous wording
State Bank originated $70.7 million of mortgage loans during the third quarter of 2024, of which $61.3 million were sold with the remainder of loans held for investment. This compares to $61.2 million originated for the third quarter of 2023, of which $54.1 million were sold with the remainder of loans held for investment. These third quarter 2024 originations and subsequent sales resulted in $1.3 million of gains, up $0.1 million from the gains for the third quarter of 2023. Net mortgage banking revenue was $1.35 million for the third quarter of 2024 compared to $1.65 million for the third quarter of 2023.
Current wording
State Bank originated $39.8 million of mortgage loans during the first quarter of 2025 and sold $39.3 million, with $3.8 million of loans held for investment. This compares to $42.9 million originated for the first quarter of 2024, of which $36.6 million were sold with the remainder of loans held for investment. These first quarter 2025 originations and subsequent sales resulted in $0.9 million of gains, up $0.01 million from the gains for the first quarter of 2024. Net mortgage banking revenue was $1.46 million for the first quarter of 2025 compared to $1.54 million for the first quarter of 2024.
Previous wording
Income Taxes: Income taxes for the third quarter of 2024 were $0.75 million compared to $0.54 million for the third quarter of 2023.
Current wording
Income Taxes: Income taxes for the first quarter of 2025 were $0.43 million (16.7 percent) compared to $0.48 million (16.9 percent) for the first quarter of 2024.
Previous wording
Total assets at September 30, 2024, were $1.39 billion, up $50.7 million or 3.8 percent since December 31, 2023. Total loans, net of unearned income, were $1.03 billion as of September 30, 2024, up $29.7 million, or 3.0 percent, from year-end. Total deposits at September 30, 2024, were $1.16 billion, an increase of $89.3 million, or 8.3 percent, since 2023 year end.
Current wording
Total assets at March 31, 2025, were $1.5 billion, up $121.5 million, or 8.8 percent, since December 31, 2024. Total loans, net of unearned income, were $1.09 billion as of March 31, 2025, up $41.5 million, or 4.0 percent, from year-end. Total deposits at March 31, 2025, were $1.27 billion, an increase of $118.6 million, or 10.3 percent, since 2024 year end.
Previous wording
Borrowed funds (consisting of FHLB advances, repurchase (“REPO”) agreements, trust preferred securities and subordinated debt) totaled $80.2 million at September 30, 2024. This is down from year-end 2023 when borrowed funds totaled $126.9 million due to the paydown of FHLB advances. Total shareholders’ equity for the Company of $132.8 million now stands at 9.5 percent of total assets compared to the December 31, 2023, level of $124.3 million or 9.3 percent of total assets. Adjusting for the temporary impairment of Accumulated Other Comprehensive Loss, total equity would increase to $157.7 million or 11.3 percent of total assets.
Current wording
Borrowed funds (consisting of FHLB advances, repurchase (“REPO”) agreements, trust preferred securities and subordinated debt) totaled $76.1 million at March 31, 2025. This is up slightly from year-end 2024 when borrowed funds totaled $75.6 million. Total shareholders’ equity for the Company of $131.5 million now stands at 8.8 percent of total assets compared to the December 31, 2024, level of $127.5 million or 9.2 percent of total assets. Adjusting for the temporary impairment of Accumulated Other Comprehensive Loss, total equity would increase to $158.4 million or 10.6 percent of total assets.
Previous wording
The allowance for credit losses of $15.3 million is down $0.5 million from the December 2023 year-end level due to $0.07 million of net charge-offs and $0.44 million in negative provision for loans, offset by an increase due to unfunded commitments. The Company has had stable asset quality through the first nine months of 2024, with the non-performing asset ratio at 40 basis points and coverage on non-performing loans at 277 percent.
Current wording
The allowance for credit losses of $15.4 million is up $0.3 million from the December 2024 year-end level due to $0.09 million of net charge-offs, $0.23 million due to the Marblehead acquisition, and $0.15 million of growth-related provision expense. The Company has had stable asset quality through the first three months of 2025, with the non-performing asset ratio at 41 basis points and coverage on non-performing loans at 254 percent.
Previous wording
As of September 30, 2024, based on the computations for the FFIEC 041 Consolidated Reports of Condition and Income filed by State Bank with the Federal Reserve Board, State Bank was classified as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as well capitalized, State Bank must maintain capital ratios as set forth in the table below. There are no conditions or events since September 30, 2024, that management believes have changed State Bank’s capital classification. The Company adopted CECL on January 1, 2023, which reduced capital levels by $2.0 million. The Company elected to not phase in the impact of CECL as the reduction in capital did not have a material impact to tangible and regulatory capital levels.
Current wording
As of March 31, 2025, based on the computations for the FFIEC 041 Consolidated Reports of Condition and Income filed by State Bank with the Federal Reserve Board, State Bank was classified as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as well capitalized, State Bank must maintain capital ratios as set forth in the table below. There are no conditions or events since March 31, 2025, that management believes have changed State Bank’s capital classification.
Previous wording
Liquidity relates primarily to the Company’s ability to fund loan demand, meet deposit customers’ withdrawal requirements and provide for operating expenses. Assets used to satisfy these needs consist of cash and due from banks, federal funds sold, interest-earning deposits in other financial institutions, securities available-for-sale and loans held for sale. These assets are commonly referred to as liquid assets. Liquid assets totaled $271.5 million at September 30, 2024, compared to $246.7 million at December 31, 2023.
Current wording
Liquidity relates primarily to the Company’s ability to fund loan demand, meet deposit customers’ withdrawal requirements and provide for operating expenses. Assets used to satisfy these needs consist of cash and due from banks, federal funds sold, interest-earning deposits in other financial institutions, securities available-for-sale and loans held for sale. These assets are commonly referred to as liquid assets. Liquid assets totaled $310.7 million at March 31, 2025, compared to $235.9 million at December 31, 2024.
Previous wording
The Company’s commercial real estate, first mortgage residential, agricultural and multi-family mortgage portfolio of $838.3 million at September 30, 2024, and $807.8 million at December 31, 2023, which can and has been used to collateralize borrowings, is an additional source of liquidity. Management believes the Company’s current liquidity level, without these borrowings, is sufficient to meet its liquidity needs. At September 30, 2024, all eligible commercial real estate, first mortgage residential, agricultural and multi-family mortgage loans were pledged under an FHLB blanket lien.
Current wording
The Company’s commercial real estate, first mortgage residential, agricultural and multi-family mortgage portfolio of $890.3 million at March 31, 2025, and $852.6 million at December 31, 2024, which can and has been used to collateralize borrowings, is an additional source of liquidity. Management believes the Company’s current liquidity level, without these borrowings, is sufficient to meet its liquidity needs. At March 31, 2025, all eligible commercial real estate, first mortgage residential, agricultural and multi-family mortgage loans were pledged under an FHLB blanket lien.
Previous wording
The cash flow statements for the periods presented provide an indication of the Company’s sources and uses of cash, as well as an indication of the ability of the Company to maintain an adequate level of liquidity. A discussion of the cash flow statements for the nine months ended September 30, 2024, and September 30, 2023 follows.
Current wording
The cash flow statements for the periods presented provide an indication of the Company’s sources and uses of cash, as well as an indication of the ability of the Company to maintain an adequate level of liquidity. A discussion of the cash flow statements for the three months ended March 31, 2025, and March 31, 2024 follows.
Previous wording
The Company experienced positive cash flows from operating activities for the nine months ended September 30, 2024, and September 30, 2023. Net cash provided by operating activities was $3.5 million for the nine months ended September 30, 2024, and $7.2 million for the nine months ended September 30, 2023. Highlights for the current year include $153.7 million in proceeds from the sale of loans, which is up $25.9 million from the prior year. Originations of loans held for sale was a use of cash of $158.3 million, which is up $31.1 million from the prior year . For the nine months ended September 30, 2024, there was a gain on sale of loans of $3.5 million, and depreciation and amortization on premises and equipment of $1.6 million.
Current wording
The Company experienced positive cash flows from operating activities for the three months ended March 31, 2025, and March 31, 2024. Net cash provided by operating activities was $6.7 million for the three months ended March 31, 2025, and $0.3 million for the three months ended March 31, 2024. Highlights for the current year include $39.3 million in proceeds from the sale of loans, which is up from $36.6 million in the prior year. Originations of loans held for sale was a use of cash of $36.3 million, which is down from $38.4 million in the prior year . For the three months ended March 31, 2025, there was a gain on sale of loans of $0.9 million, and depreciation and amortization on premises and equipment of $0.5 million.
Previous wording
The Company experienced negative cash flows from investing activities for the nine months ended September 30, 2024, and September 30, 2023. Net cash used in investing activities was $14.9 million for the nine months ended September 30, 2024, and $10.3 million for the nine months ended September 30, 2023. Highlights for the current year include an increase of $29.8 million in loans, which is up $2.7 million from the prior year nine-month period. These cash payments were offset by $14.1 million in proceeds from maturities and sales of securities, which is down $2.9 million from the prior year nine-month period.
Current wording
The Company experienced positive cash flows from investing activities for the three months ended March 31, 2025, and March 31, 2024. Net cash provided by investing activities was $9.2 million for the three months ended March 31, 2025, and $11.7 million for the three months ended March 31, 2024. Highlights for the current year include an increase of $23.0 million in loans, which is up $31.6 million from the prior year three-month period, and $3.0 million paid for the Marblehead acquisition, net of cash acquired. These cash payments were offset by $6.1 million in proceeds from maturing securities, and $30.1 million in proceeds from the sale of securities which were acquired from Marblehead.
Previous wording
The Company experienced positive cash flows from financing activities for the nine months ended September 30, 2024, and negative cash flows from financing activities for the nine months ended September 30, 2023. Net cash provided by financing activities was $37.8 million for the nine months ended September 30, 2024, and net cash used in financing activities was $5.6 million for the nine months ended September 30, 2023. Highlights for the current period include a $79.8 million increase in transaction deposits and a $9.6 million increase in time deposits for the nine months ended September 30, 2024. This compares to the prior year nine-month period where transaction deposits decreased by $54.2 million and time deposits increased by $52.9 million. Net repayments of Federal Home Loan Bank advances for the nine months ended September 30, 2024, were $48.6 million, compared to $0.5 million for the prior year nine-month period.
Current wording
The Company experienced positive cash flows from financing activities for the three months ended March 31, 2025, and negative cash flows from financing activities for the three months ended March 31, 2024. Net cash provided by financing activities was $63.3 million for the three months ended March 31, 2025, and net cash used in financing activities was $8.4 million for the three months ended March 31, 2024. Highlights for the current period include a $45.5 million increase in transaction deposits and a $20.1 million increase in time deposits for the three months ended March 31, 2025. This reflects a $0.6 million increase in transaction deposits from the prior year three-month period and a $22.8 million increase in time deposits. Net repayments of Federal Home Loan Bank advances for the three months ended March 31, 2025, were $1.0 million, compared to $48.6 million for the prior year three-month period.
Previous wording
The Company’s commercial real estate, first mortgage residential, agricultural and multi-family mortgage portfolios in the total amount of $838.3 million were pledged to meet FHLB collateralization requirements as of September 30, 2024. Based on the current collateralization requirements of the FHLB, the Company had approximately $136.9 million of additional borrowing capacity at September 30, 2024. The Company also had $63.6 million in unpledged securities available to pledge for additional borrowings.
Current wording
The Company’s commercial real estate, first mortgage residential, agricultural and multi-family mortgage portfolios in the total amount of $890.3 million were pledged to meet FHLB collateralization requirements as of March 31, 2025. Based on the current collateralization requirements of the FHLB, the Company had approximately $145.4 million of additional borrowing capacity at March 31, 2025. The Company also had $64.5 million in unpledged securities available to pledge for additional borrowings.
Previous wording
The Company has contractual obligations consisting of long-term debt obligations and operating lease obligations. In addition, as of September 30, 2024, the Company had commitments to sell mortgage loans totaling $16.9 million. The Company believes that it has adequate resources to fund commitments as they arise and that it can adjust the rate on savings and time deposits to retain deposits in changing interest rate environments. If the Company requires funds beyond its internal funding capabilities, advances from the FHLB of Cincinnati and other financial institutions are available.
Current wording
The Company has contractual obligations consisting of long-term debt obligations and operating lease obligations. In addition, as of March 31, 2025, the Company had commitments to sell mortgage loans totaling $23.3 million. The Company believes that it has adequate resources to fund commitments as they arise and that it can adjust the rate on savings and time deposits to retain deposits in changing interest rate environments. If the Company requires funds beyond its internal funding capabilities, advances from the FHLB of Cincinnati and other financial institutions are available.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Consolidated Revenue: Operating revenue, consisting of net interest income (NII) and noninterest income, was $41.5 million for the first nine months of 2024, a decrease of $0.4 million, or 0.9 percent, from the $41.9 million generated during the first nine months of 2023.