# SB FINANCIAL GROUP, INC. (SBFG)

Informational only - not investment advice.

CIK: 0000767405
SIC: 6022 State Commercial Banks
SIC breadcrumb: [Finance, Insurance, And Real Estate](/division/H/) > [Depository Institutions](/major-group/60/) > [SIC 6022 State Commercial Banks](/industry/6022/)
Latest 10-K filed: 2026-03-06
SEC page: https://www.sec.gov/edgar/browse/?CIK=767405
Filing source: https://www.sec.gov/Archives/edgar/data/767405/000121390026024471/ea0279644-10k_sbfinancial.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 48453000 | USD | 2025 | 2026-03-06 |
| Net income | 13974000 | USD | 2025 | 2026-03-06 |
| Assets | 1545367000 | USD | 2025 | 2026-03-06 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000767405.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | 23,343,000 | 25,853,000 | 28,386,000 | 33,267,000 | 36,307,000 | 36,429,000 |  | 39,399,000 | 39,273,000 | 39,922,000 | 48,453,000 |
| Net income |  | 8,784,000 | 11,065,000 | 11,638,000 | 11,973,000 | 14,944,000 | 18,277,000 | 12,521,000 | 12,095,000 | 11,470,000 | 13,974,000 |
| Diluted EPS |  | 1.38 | 1.74 | 1.51 | 1.51 | 1.96 | 2.56 | 1.77 | 1.75 | 1.72 | 2.19 |
| Operating cash flow |  | 14,026,000 | 9,803,000 | 13,850,000 | 18,829,000 | 23,907,000 | 17,257,000 | 25,569,000 | 13,989,000 | 9,451,000 | 24,039,000 |
| Capital expenditures |  | 1,636,000 | 3,714,000 | 1,999,000 | 2,043,000 | 1,980,000 | 2,427,000 | 1,896,000 | 958,000 | 1,229,000 | 2,602,000 |
| Dividends paid |  | 1,180,000 | 1,362,000 | 2,090,000 | 2,331,000 | 3,070,000 | 3,139,000 | 3,415,000 | 3,584,000 | 3,770,000 | 3,849,000 |
| Share buybacks |  | 1,168,000 | 1,785,000 | 109,000 | 5,050,000 | 7,166,000 | 9,520,000 | 5,900,000 | 3,471,000 | 4,768,000 | 5,686,000 |
| Assets |  | 816,005,000 | 876,627,000 | 986,828,000 | 1,038,577,000 | 1,257,839,000 | 1,330,854,000 | 1,335,633,000 | 1,343,249,000 | 1,379,517,000 | 1,545,367,000 |
| Liabilities |  | 729,457,000 | 782,627,000 | 856,393,000 | 902,483,000 | 1,114,916,000 | 1,185,925,000 | 1,217,205,000 | 1,218,907,000 | 1,252,009,000 | 1,404,131,000 |
| Stockholders' equity |  | 86,548,000 | 94,000,000 | 130,435,000 | 136,094,000 | 142,923,000 | 144,929,000 | 118,428,000 | 124,342,000 | 127,508,000 | 141,236,000 |
| Free cash flow |  | 12,390,000 | 6,089,000 | 11,851,000 | 16,786,000 | 21,927,000 | 14,830,000 | 23,673,000 | 13,031,000 | 8,222,000 | 21,437,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin |  | 33.98% | 38.98% | 34.98% | 32.98% | 41.02% |  | 31.78% | 30.80% | 28.73% | 28.84% |
| Return on equity |  | 10.15% | 11.77% | 8.92% | 8.80% | 10.46% | 12.61% | 10.57% | 9.73% | 9.00% | 9.89% |
| Return on assets |  | 1.08% | 1.26% | 1.18% | 1.15% | 1.19% | 1.37% | 0.94% | 0.90% | 0.83% | 0.90% |
| Liabilities / equity |  | 8.43 | 8.33 | 6.57 | 6.63 | 7.80 | 8.18 | 10.28 | 9.80 | 9.82 | 9.94 |

## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-07. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000767405.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2020-Q4 | 2020-12-31 | 9,750,000 |  |  | derived Q4 = FY annual - nine-month YTD |
| 2021-Q1 | 2021-03-31 | 9,625,000 |  |  | reported discrete quarter |
| 2021-Q3 | 2021-09-30 |  |  | 0.58 | reported discrete quarter |
| 2022-Q1 | 2022-03-31 |  |  | 0.40 | reported discrete quarter |
| 2022-Q2 | 2022-06-30 |  |  | 0.40 | reported discrete quarter |
| 2022-Q3 | 2022-09-30 |  |  | 0.47 | reported discrete quarter |
| 2022-Q4 | 2022-12-31 |  | 3,533,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2023-Q1 | 2023-03-31 |  | 2,450,000 | 0.35 | reported discrete quarter |
| 2023-Q2 | 2023-03-31 |  | 2,450,000 |  | reported discrete quarter |
| 2023-Q2 | 2023-06-30 | 9,829,000 |  | 0.44 | reported discrete quarter |
| 2023-Q3 | 2023-06-30 |  | 3,075,000 |  | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 9,536,000 |  | 0.39 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 9,584,000 | 3,883,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q3 | 2024-06-30 |  | 3,113,000 |  | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 10,186,000 |  | 0.35 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 10,897,000 | 3,635,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 | 11,279,000 | 2,158,000 | 0.33 | reported discrete quarter |
| 2025-Q2 | 2025-03-31 |  | 2,158,000 |  | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 12,128,000 |  | 0.60 | reported discrete quarter |
| 2025-Q3 | 2025-06-30 |  | 3,852,000 |  | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 12,334,000 |  | 0.64 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 12,712,000 | 3,918,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 12,712,000 | 4,296,000 | 0.69 | reported discrete quarter |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance
- [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States
- [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States
- [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States
- [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States
- [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States
- [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized
- [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized
- [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks
- [GDP](/indicator/GDP/): Gross Domestic Product
- [GPDI](/indicator/GPDI/): Gross Private Domestic Investment
- [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment
- [PCEC](/indicator/PCEC/): Personal Consumption Expenditures
- [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services
- [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt
- [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit
- [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts
- [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures
- [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing
- [USCONS](/indicator/USCONS/): All Employees, Construction
- [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade
- [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities
- [USGOVT](/indicator/USGOVT/): All Employees, Government
- [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private
- [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods
- [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- [BUSINV](/indicator/BUSINV/): Total Business Inventories
- [EXPGS](/indicator/EXPGS/): Exports of Goods and Services
- [IMPGS](/indicator/IMPGS/): Imports of Goods and Services
- [IR](/indicator/IR/): Import Price Index (End Use): All Commodities
- [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/767405/000121390026053234/ea0289130-10q_sbfinan.htm

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary.
Confidence: high
Filing date: 2026-05-07
Report date: 2026-03-31

Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking
Information

This Quarterly Report on Form 10-Q, including
Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains certain forward-looking statements,
which are not historical fact, that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking
statements, which are provided to assist in the understanding of anticipated future financial performance, provide current expectations
or forecasts of future events and are not guarantees of future performance. Examples of forward-looking statements include: (a) projections
of income or expense, earnings per share, the payment or non-payment of dividends, capital structure and other financial items; (b) statements
of plans and objectives of the Company or our management or Board of Directors, including those relating to products or services; (c)
statements of future economic performance; (d) statements regarding future customer attraction or retention; and (e) statements of assumptions
underlying such statements. Words such as “anticipates”, “believes”, “plans”, “intends”,
“expects”, “projects”, “estimates”, “should”, “may”, “would be”,
“will allow”, “will likely result”, “will continue”, “will remain”, or other similar
expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying those statements. Forward-looking
statements are based on management’s expectations and are subject to a number of risks and uncertainties. Although management believes
that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed
or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation:

●

current
and future economic and financial market conditions, either nationally or in the states in
which we do business, including conditions such as inflation, recession, unemployment, changes
in interest rates, fiscal and monetary policy, U.S. government shutdowns, an increasing federal
government budget deficit, the failure of the federal government to raise the federal debt
ceiling, slowing gross domestic product, energy price volatility, potential or imposed tariffs,
a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other
change in trade regulation, and other factors beyond our control, any of which may result
in adverse impacts on our deposit levels and composition, the quality of investment securities
available for purchase, demand for loans, the ability of our borrowers to repay their loans,
and the value of the collateral securing loans made by us;

●

recent
and future bank failures may reduce customer confidence, affect sources of funding and liquidity,
increase regulatory requirements and costs, adversely affect financial markets and/or have
a negative reputational ramification for the banking industry as a whole, any of which could
adversely affect the Company’s business, earnings and financial condition;

●

instability
in global economic conditions and geopolitical matters (including the ongoing military conflicts
in Ukraine and the Middle East), and volatility in financial markets, which could have a
material adverse effect on our results of operations and financial condition;

●

changes
in interest rates resulting from national and local economic conditions and the policies
of regulatory authorities, including monetary policies of the Board of Governors of the Federal
Reserve System, which may adversely affect interest rates, interest margins, loan demand
and interest rate sensitivity;

●

the
volatility of mortgage banking income, whether due to interest rates, demand, the fair value
of mortgage loans, or other factors;

●

factors
that can impact the performance of our loan portfolio, including changes in real estate values
and liquidity in our primary market areas, the financial health of our borrowers and the
success of construction projects that we finance;

32

●

changes
in customers’, suppliers’, and other counterparties’ performance and creditworthiness
may be different than anticipated due to inflationary pressures and/or other economic and
financial market conditions;

●

operational
risks, reputational risks, legal and compliance risks, and other risks related to potential
fraud or theft by employees or outsiders, unauthorized transactions by employees or operational
errors, or failures, disruptions or breaches in security of our systems, including those
resulting from computer viruses or cyber-attacks;

●

our
ability to secure sensitive or confidential client information against unauthorized disclosure
or access through computer systems and telecommunication networks, including those of our
third-party vendors and other service providers, which may prove inadequate;

●

a
failure in or breach of our operational or security systems or infrastructure, or those of
our third-party vendors and other service providers, resulting in failures or disruptions
in customer account management, general ledger, deposit, loan, or other systems, including
as a result of cyber-attacks;

●

competitive
pressures and factors among financial services organizations could increase significantly,
including product and pricing pressures, changes to third-party relationships and our ability
to recruit and retain qualified management and banking personnel;

●

unexpected
losses of services of our key management personnel, or the inability to recruit and retain
qualified personnel in the future;

●

risks
inherent in pursuing strategic growth initiatives, including integration and other risks
involved in past and possible future acquisitions;

●

uncertainty
regarding the nature, timing, cost and effect of legislative or regulatory changes in the
banking industry or otherwise affecting the Company, including major reform of the regulatory
oversight structure of the financial services industry and changes in laws and regulations
concerning taxes, FDIC insurance premium levels, pensions, bankruptcy, consumer protection,
rent regulation and housing, financial accounting and reporting, environmental protection,
insurance, bank products and services, bank and bank holding company capital and liquidity
standards, fiduciary standards, securities and other aspects of the financial services industry;

●

changes
in federal, state and/or local tax laws may adversely affect our reported financial condition
or results of operations;

●

changes
in accounting standards, policies and practices may adversely affect our reported financial
condition or results of operations;

●

litigation
and regulatory compliance exposure, including the costs and effects of any adverse developments
in legal proceedings or other claims and the costs and effects of unfavorable resolution
of regulatory and other governmental examinations or inquiries;

●

continued
availability of earnings and dividends from State Bank and excess capital sufficient for
us to service our debt and pay dividends to our shareholders in compliance with applicable
legal and regulatory requirements;

●

our
ability to adapt to or comply with regulatory requirements and increasing scrutiny and evolving
expectations from customers, regulators, investors and other stakeholders with respect to
the Company’s environmental, social and governance (ESG) practices, which could affect
our reputation and business and operating results;

●

our
ability to anticipate and successfully keep pace with technological changes affecting the
financial services industry;

●

an
unexpected inability to obtain needed liquidity which could adversely affect our business,
profitability, and viability as a going concern;

●

the
impact on our businesses, as well as on the risks described above, of various domestic or
international widespread natural or other disasters (including severe weather events), pandemics,
cybersecurity attacks, system failures, civil unrest, military or terrorist activities or
international conflicts, including Russia’s ongoing war in Ukraine and the conflict
in Iran (and the resulting disruptions to oil and other commodity markets and supply chains),
which can affect our earnings and capital as well as the ability of our customers to repay
loans; and

●

other
risks identified from time to time in the Company’s other filings with the Securities
and Exchange Commission, including the risks identified under the heading “Item 1A.
Risk Factors” of Part I of the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2025.

33

Undue reliance should
not be placed on the forward-looking statements, which speak only as of the date hereof. Except as may be required by law, the Company
undertakes no obligation to update any forward-looking statement to reflect unanticipated events or circumstances after the date on which
the statement is made.

Overview of SB Financial

SB Financial Group, Inc. (“SB Financial”)
is an Ohio corporation and a financial holding company registered with the Board of Governors of the Federal Reserve System (“Federal
Reserve Board”). SB Financial’s wholly owned subsidiary, The State Bank and Trust Company (“State Bank”), is
an Ohio-chartered bank engaged in commercial banking.

Rurban Statutory Trust II (“RST II”)
was established in August 2005. In September 2005, RST II completed a pooled private offering of 10,000 Trust Preferred Securities with
a liquidation amount of $1,000 per security. The proceeds of the offering were loaned to SB Financial in exchange for junior subordinated
debentures of SB Financial with terms substantially similar to the Trust Preferred Securities. The sole assets of RST II are the junior
subordinated debentures, and the back-up obligations, in the aggregate, constitute a full and unconditional guarantee by SB Financial
of the obligations of RST II.

State Bank Insurance, LLC (“SBI”)
is an Ohio corporation and a wholly owned subsidiary of State Bank incorporated in June 2010. SBI is an insurance company that engages
in the sale of insurance products to retail and commercial customers of State Bank.

SBFG Title, LLC (“SBFG Title”) is
an Ohio corporation that was formed in March 2019. SBFG Title engages in the sale of title insurance services.

SB Captive, Inc. (“SB Captive”) is
a Nevada corporation that was formed in March 2019. SB Captive pools insurance risk among like sized banking institutions.

Unless the context indicates otherwise, all references
herein to “we”, “us”, “our”, or the “Company” refer to SB Financial and its consolidated
subsidiaries.

Critical Accounting Policies

Note 1 to the condensed consolidated financial
statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, describes the significant
accounting policies used in the development and presentation of the Company’s financial statements. The accounting and reporting
policies of the Company are in accordance with accounting principles generally accepted in the United States and conform to general practices
within the banking industry. The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions. The Company’s financial position and results of operations can be affected by these
estimates and assumptions and are integral to the understanding of reported results. Critical accounting policies are those policies
that management believes are the most important to the portrayal of the Company’s financial condition and results, and they require
ma

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization.
Confidence: high

Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

SB
Financial Group, Inc. (“SB Financial”), is a financial holding company registered with the Federal Reserve Board and subject
to regulation under the Bank Holding Company Act of 1956, as amended. Through its direct and indirect subsidiaries, including The State
Bank and Trust Company (“State Bank”), SB Financial is engaged in commercial and retail banking, wealth management and private
client financial services.

The
following discussion provides a review of the consolidated financial condition and results of operations of SB Financial and its subsidiaries
(collectively, the “Company”). This discussion should be read in conjunction with the Company’s Consolidated Financial
Statements and related Notes as of and for the years ended December 31, 2025, and 2024 included in this Annual Report on Form 10-K.

Strategic
Discussion

The
focus and strategic goal of the Company is to grow into and remain a top decile (90th percentile) independent financial
services company, as measured by annual return on average assets compared to our defined peer group. The Company intends to achieve and
maintain that goal by executing our five key initiatives.

Increase
profitability through ongoing diversification of revenue streams: For the twelve months ended December 31, 2025, the Company generated
$17.1 million in noninterest income, or 26.1 percent of total operating revenue, from fee-based products. These revenue sources include
fees generated from saleable residential mortgage loans, retail deposit products, wealth management services, saleable business-based
loans (small business and farm service) and title agency revenue. For the twelve months ended December 31, 2024, the Company generated
$17.0 million in noninterest income, or 29.9 percent of total operating revenue, from fee-based products.

Strengthen
our penetration in all markets served: Over our 123-year history of continuous operation in Northwest Ohio, we have established a
significant presence in our traditional markets in Defiance, Fulton, Paulding and Williams counties in Ohio. In our newer markets of
Bowling Green, Columbus, Findlay, Toledo (Ohio) and Ft. Wayne (Indiana), our current market penetration is minimal, but we believe our
potential for growth is significant. Over the past few years, we have expanded and committed additional resources to our presence in
the Findlay and Edgerton markets in particular; however, we continue to seek to expand the presence and penetration in all of our markets.
On January 17, 2025, we established our presence in Ottawa County with the acquisition of The Marblehead Bank located in Marblehead,
Ohio. In late 2025, we expanded our Loan Production office in Angola, Indiana into a full service retail location and we expanded into
the neighboring community of Napoleon, Ohio with a hybrid retail location.

Expand
product utilization by new and existing customers: As of December 31, 2025, we operated in 15 counties in Northwest Ohio, Central
Ohio and Northeast Indiana with 27 full-service offices, 27 ATM’s and four loan production offices. Combined in the 15 counties
of operation, we command 0.93 percent of the deposit market share, which has steadily grown. In our traditional markets of Northwest
Ohio, the deposit market share is 4.63 percent, which is up from 4.40 percent in 2024.

Deliver
gains in operational excellence: Our management team believes that becoming and remaining a high-performance financial services company
will depend upon seamlessly and consistently delivering operational excellence, as demonstrated by the Company’s leadership in
the origination and servicing of residential mortgage loans. As of December 31, 2025, the Company serviced 8,886 residential mortgage
loans with an aggregate principal balance of $1.48 billion. As of December 31, 2024, the Company serviced 8,750 loans with an aggregate
principal balance of $1.43 billion.

Sustain
asset quality: As of December 31, 2025, the Company’s asset quality metrics remained strong. Specifically, total nonperforming
assets were $4.7 million, or 0.30 percent of total assets. Total delinquent loans at December 31, 2025, were 0.49 percent of total loans.
As of December 31, 2024, the Company
had total nonperforming assets of $5.5 million, or 0.40 percent of total assets. Total delinquent loans at December 31, 2024, were 0.63
percent of total loans.

31

The
successful execution of these five strategies has enabled the Company to improve financial performance across a broad series of metrics.
These metrics over the last five years are outlined in the following table. Specifically, the Company has increased total assets by $286.2
million, or 22.7 percent. The growth has been on both sides of the balance sheet over the five-year period, with loans growing $307.9
million, or 35.3 percent and deposits growing $258.2 million, or 24.6 percent.

During
the prior five-year period, the Company has raised capital through the issuance of debt securities to the market, which has improved
capital significantly and expanded liquidity for potential strategic expansion. Strategic expansion has also occurred during the period
with the acquisition of two small community banks (The Edon State Bank of Edon, Ohio in 2020 and The Marblehead Bank in January 2025),
the opening of five branch offices and the acquisition of two full-service title agencies.

Financial Highlights

Year Ended December 31,

($ in thousands, except per share data)

2025

2024

2023

2022

2021

Earnings

Interest income

$

73,920

$

64,349

$

58,152

$

44,569

$

41,904

Interest expense

25,467

24,427

18,879

5,170

4,020

Net interest income

48,453

39,922

39,273

39,399

37,884

Provision for loan losses

1,306

124

315

-

1,050

Noninterest income

17,107

17,017

17,721

18,231

30,697

Noninterest expense

46,999

42,959

41,962

42,314

44,808

Provision for income taxes

3,281

2,386

2,622

2,795

4,446

Net income

13,974

11,470

12,095

12,521

18,277

Net income available to common shareholders

13,974

11,470

12,095

12,521

18,277

Per Common Share Data

Basic earnings

$

2.19

$

1.72

$

1.77

$

1.79

$

2.58

Diluted earnings

2.19

1.72

1.75

1.77

2.56

Cash dividends declared

0.60

0.56

0.52

0.48

0.44

Total equity per share

22.65

19.64

18.50

17.08

21.05

Average Balances

Average total assets

$

1,499,323

$

1,361,274

$

1,334,644

$

1,318,781

$

1,322,253

Average equity

134,606

124,742

118,315

126,963

144,223

Ratios

Return on average total assets

0.93

%

0.84

%

0.91

%

0.95

%

1.38

%

Return on average equity

10.38

9.19

10.22

9.86

12.67

Cash dividend payout ratio1

27.54

32.87

29.62

27.25

17.18

Average equity to average assets

8.98

9.16

8.86

9.63

10.91

Period End Totals

Total assets

$

1,545,367

$

1,379,517

$

1,343,249

$

1,335,633

$

1,330,854

Available-for-sale securities

188,626

201,587

219,708

238,780

263,259

Loans held for sale

1,761

6,770

2,525

2,073

7,472

Total loans & leases

1,180,591

1,046,735

1,000,212

962,075

822,714

Allowance for credit losses

16,114

15,096

15,786

13,818

13,805

Total deposits

1,307,244

1,152,605

1,070,205

1,086,665

1,113,045

Advances from FHLB

35,000

35,000

83,600

60,000

5,500

Trust preferred securities

10,310

10,310

10,310

10,310

10,310

Subordinated debt, net

19,739

19,690

19,642

19,594

19,546

Total equity

141,236

127,508

124,342

118,428

144,929

1

Cash
dividends on common shares divided by net income available to common.

32

Critical
Accounting Policies and Estimates

The
accounting and reporting policies of the Company are in accordance with U.S. GAAP and conform to general practices within the banking
industry. The Company’s significant accounting policies are described in detail in the Notes to the Company’s Consolidated
Financial Statements for the years ended December 31, 2025, and 2024. The preparation of financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions. The Company’s financial position and results of operations can be affected
by these estimates and assumptions and are integral to the understanding of reported results. Critical accounting policies are those
policies that management believes are the most important to the portrayal of the Company’s financial condition and results, and
they require management to make estimates that are difficult, subjective or complex.

Allowance
for Credit Losses: The Company believes the determination of the ACL involves a higher degree of judgment and complexity than its
other significant accounting policies. The ACL is calculated with the objective of maintaining a reserve level believed by management
to be sufficient to absorb estimated credit losses over the life of an asset or an off-balance sheet credit exposure. Management’s
determination of the adequacy of the ACL is based on periodic evaluations of past events, including historical credit loss experience
on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability
of the remaining cash flows over the contractual term of the financial assets. However, this evaluation has subjective components requiring
material estimates, including expected default probabilities, the expected loss given default, the amounts and timing of expected future
cash flows on individually evaluated loans, and estimated losses based on historical loss experience and forecasted economic conditions.
All of these factors may be susceptible to significant change. To the extent that actual results differ from management estimates, additional
provisions for credit losses may be required that would adversely impact earnings in future periods.

Goodwill
and Other Intangibles: The Company records all assets and liabilities acquired in purchase acquisitions, including goodwill and other
intangibles, at fair value as required. Goodwill is subject, at a minimum, to annual tests for impairment. Other intangible assets are
amortized over their estimated useful lives using straight-line and accelerated methods, and are subject to impairment if events or circumstances
indicate a possible inability to realize the carrying amount. The initial goodwill and other intangibles recorded and subsequent impairment
analysis requires management to make subjective judgments concerning estimates of how the acquired asset will perform in the future.
Events and factors that may significantly affect the estimates include, among others, customer attrition, changes in revenue growth trends,
specific industry conditions and changes in competition.

Income
Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and
liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts
and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets
to the amount expected to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future
taxable income and recoverable taxes paid in prior years. Although realization is not assured, management believes it is more likely
than not that all of the deferred tax assets will be realized.
The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

An
effective tax rate of 21% is used to determine after-tax components of other comprehensive income (loss) included in the statements of
shareholders’ equity.

A
tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in
a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is
greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test,
no tax benefit is recorded.

Changes
in Financial Condition

Total
assets at December 31, 2025, were $1.55 billion, compared to $1.38 billion at December 31, 2024. Loans (excluding loans held for sale)
were $1.18 billion at December 31, 2025, compared to $1.05 billion at December 31, 2024. Total deposits were $1.31 billion at December
31, 2025, compared to $1.15 billion at December 31, 2024. The Company continued to allocate the reductions in our bond portfolio, from
scheduled amortization, into higher yielding loan balances.

33

The
following are the condensed average balance sheets of the Company for the years ending December 31, which include the interest earned
or paid, and the average interest rate, on each asset and liability:

2025

2024

2023

($ in thousands)

Average

Average

Average

Average

Average

Average

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Assets

Taxable securities/cash

$

196,831

$

4,495

2.28

%

$

247,026

$

5,490

2.22

%

$

254,133

$

6,092

2.40

%

Non-taxable securities

6,243

144

2.31

%

6,393

146

2.28

%

7,181

170

2.37

%

Overnight Cash

87,283

3,840

4.40

%

43,171

1,354

3.14

%

-

-

0.00

%

Loans, net1

1,108,531

65,441

5.90

%

1,014,375

57,359

5.65

%

985,217

51,890

5.27

%

Total earning assets

1,398,888

73,920

5.28

%

1,310,965

64,349

4.91

%

1,246,531

58,152

4.67

%

Cash and due from banks

5,390

4,388

4,035

Allowance for credit losses

(15,631

)

(15,536

)

(15,478

)

Premises and equipment

21,624

20,929

22,990

Other assets

89,052

40,528

76,566

Total assets

$

1,499,323

$

1,361,274

$

1,334,644

Liabilities

Savings and interest-bearing demand deposits

$

742,153

$

13,092

1.76

%

$

643,710

$

11,073

1.72

%

$

619,906

$

7,599

1.23

%

Time deposits

273,228

9,398

3.44

%

259,818

9,962

3.83

%

236,665

7,109

3.00

%

Repurchase agreements & other

12,085

95

0.79

%

14,336

154

1.07

%

15,765

74

0.47

%

Advances from FHLB

35,011

1,467

4.19

%

39,092

1,721

4.40

%

55,044

2,603

4.73

%

Trust preferred securities

10,310

637

6.18

%

10,310

739

7.17

%

10,310

716

6.94

%

Subordinated debt

19,713

778

3.95

%

19,655

778

3.96

%

19,616

778

3.97

%

Total interest-bearing liabilities

1,092,500

25,467

2.33

%

986,921

24,427

2.48

%

957,306

18,879

1.97

%

Demand deposits

251,820

227,445

237,976

Other liabilities

20,397

22,156

21,047

Total liabilities

1,364,717

1,236,522

1,216,329

Shareholders’ equity

134,606

124,742

118,315

Total liabilities and shareholders’ equity

$

1,499,323

$

1,361,264

$

1,334,644

Net interest income (tax equivalent basis)

$

48,453

$

39,922

$

39,273

Net interest income as a percent of average
interest-earning assets - GAAP measure

3.46

%

3.05

%

3.15

%

Net interest income as a percent of average

interest-earning assets - Non-GAAP measure 2

3.47

%

3.06

%

3.16

%

-- Computed on a fully tax equivalent basis (FTE)

1

Nonaccruing
loans and loans held for sale are included in the average balances.

2

Interest
on tax exempt securities and loans is computed on a tax equivalent basis using a 21 percent statutory tax rate, and added to the net
interest income. The tax equivalent adjustment was $0.13, $0.14 and $0.14 million in 2025, 2024 and 2023, respectively.

The
following table sets forth the effect of volume and rate changes on interest income and expense for the periods indicated. For purposes
of these tables, changes in interest due to volume and rate were determined as follows:

●

Volume
variance - change in volume multiplied by the previous year’s rate.

●

Rate variance - change in rate multiplied by the previous year’s volume.

●

Rate/volume variance - change in volume multiplied by the change in rate. This variance allocates the volume variance and rate variance in proportion to the relationship of the absolute dollar amount of the change in each.

34

Total

Variance

Variance Attributable To

($ in thousands)

2025/2024

Volume

Rate

Interest income

Taxable securities

$

(995

)

$

(1,116

)

$

121

Overnight Cash

2,486

1,384

1,102

Non-taxable securities1

(2

)

(3

)

1

Loans, net of unearned income and deferred fees1

8,082

5,324

2,758

Total interest income

9,571

5,589

3,982

Interest expense

Savings and interest-bearing demand deposits

2,019

1,693

326

Time deposits

(564

)

514

(1,078

)

Repurchase agreements & other

(59

)

(24

)

(35

)

Advances from FHLB

(254

)

(180

)

(74

)

Trust preferred securities

(102

)

-

(102

)

Subordinated debt

-

-

-

Total interest expense

1,040

2,003

(963

)

Net interest income

$

8,531

$

3,586

$

4,945

1

Interest
on non-taxable securities and loans has been adjusted to fully tax equivalent

The
maturity distribution and weighted-average interest rates of debt securities available-for-sale at December 31, 2025, are set forth in
the table below. The weighted-average interest rates are based on coupon rates for securities purchased at par value and on effective
interest rates considering amortization or accretion for securities purchased at a premium or discount:

Maturing

Weighted

Weighted

Weighted

Weighted

Weighted

Within

Average

1-5

Average

5-10

Average

After

Average

Average

($
in thousands)

1
Year

Yield

Years

Yield

Years

Yield

10
Years

Yield

Total

Yield

Available-for-sale:

U.S.
Treasury and Government agencies

$

-

$

782

3.51

%

$

4,421

1.46

%

-

$

5,203

1.77

%

Mortgage-backed
securities

-

17,044

1.38

%

16,041

1.78

%

126,867

1.89

%

159,952

1.82

%

State
and political subdivisions

275

4.99

%

1,119

3.82

%

2,461

3.72

%

5,994

2.35

%

9,849

2.93

%

Other
corporate securities

-

-

13,622

3.64

%

-

13,622

3.64

%

Total
securities by maturity

$

275

4.99

%

$

18,945

1.61

%

$

36,545

2.57

%

$

132,861

1.91

%

$

188,626

2.01

%

($ in thousands)

Years Ended December 31,

Total loans

2025

2024

% Change

Commercial business & agriculture

$

190,942

$

189,298

0.9

%

Commercial real estate

596,983

479,573

24.5

%

Residential real estate

304,741

308,378

-1.2

%

Consumer & other

88,475

69,340

27.6

%

Total loans

1,181,141

1,046,589

12.9

%

Net deferred costs (fees)

(550

)

146

-476.7

%

Total loans, net deferred costs (fees)

1,180,591

1,046,735

12.8

%

Loans held for sale

$

1,761

$

6,770

-74.0

%

35

Total deposits

2025

2024

% Change

Noninterest bearing demand

$

254,063

$

232,155

9.4

%

Interest-bearing demand

202,501

201,085

0.7

%

Savings & money market

577,380

460,148

25.5

%

Time deposits

273,300

259,217

5.4

%

Total deposits

1,307,244

1,152,605

13.4

%

Total shareholders’ equity

$

141,236

$

127,508

10.8

%

Loans
held for investment (“HFI”) increased $133.9 million, or 12.8 percent, to $1.18 billion at December 31, 2025, which was due
to an increase in commercial real estate and agricultural lending during 2025. The Company allowed its residential real estate portfolio
to amortize with minimal new production generated on the balance sheet during 2025.

Concentrations
of Credit Risk: The Company makes commercial, real estate and installment loans to customers located mainly in the Tri-State region
of Ohio, Indiana and Michigan. Commercial loans are expected to be repaid from cash flow from operations of businesses and include loans
collateralized by commercial real estate, business assets and, in the case of agricultural loans, crops and farm equipment. As of December
31, 2025, commercial business and agricultural loans made up approximately 16.1 percent of the HFI loan portfolio while commercial real
estate loans accounted for approximately 50.6 percent of the HFI loan portfolio. As of December 31, 2025, residential first mortgage
loans, which are secured by first mortgages on residential real estate, made up approximately 25.8 percent of the HFI portfolio, while
consumer loans to individuals, which are primarily secured by consumer assets, made up approximately 7.5 percent of the HFI loan portfolio.

Maturities
and Sensitivities of Loans to Changes in Interest Rates: The following table shows the maturity distribution of loans outstanding
as of December 31, 2025. The amounts have been categorized between loans with a fixed or floating interest rate (floating rate loans
have an adjustable interest rate that changes based on a rate index).

Maturities and Sensitivities of Loans
to Changes in Interest Rates

As of December 31, 2025

($ in thousands)

Within one year

After one, but within five years

After five, but within fifteen years

After fifteen years

Total

Loans with fixed interest rates:

Commercial & industrial

$

1,137

$

30,979

$

13,017

$

15

$

45,148

Commercial real estate - owner occupied

3,803

7,395

5,418

-

16,616

Commercial real estate - nonowner occupied

5,585

62,637

2,268

201

70,691

Agricultural

1,264

4,873

6,093

1,558

13,788

Residential real estate

2,819

885

10,824

31,459

45,987

HELOC

2

3

150

153

308

Consumer

3,699

7,206

2,889

499

14,293

Total

$

18,309

$

113,978

$

40,659

$

33,885

$

206,831

Loans with floating interest rates:

Commercial & industrial

$

22,405

$

12,939

$

31,306

$

2,080

$

68,730

Commercial real estate - owner occupied

11,087

15,961

57,416

60,006

144,470

Commercial real estate - nonowner occupied

12,176

99,865

109,650

143,515

365,206

Agricultural

4,547

3,322

22,375

32,482

62,726

Residential real estate

1,118

1,678

7,429

248,529

258,754

HELOC

22

364

43,041

25,438

68,865

Consumer

877

2,911

1,221

-

5,009

Total

$

52,232

$

137,040

$

272,438

$

512,050

$

973,760

Total loans:

Commercial & industrial

$

23,542

$

43,918

$

44,323

$

2,095

$

113,878

Commercial real estate - owner occupied

14,890

23,356

62,834

60,006

161,086

Commercial real estate - nonowner occupied

17,761

162,502

111,918

143,716

435,897

Agricultural

5,811

8,195

28,468

34,040

76,514

Residential real estate

3,937

2,563

18,253

279,988

304,741

HELOC

24

367

43,191

25,591

69,173

Consumer

4,576

10,117

4,110

499

19,302

Total loans

$

70,541

$

251,018

$

313,097

$

545,935

$

1,180,591

36

Total
deposits increased $154.6 million, or 13.4 percent, to $1.31 billion at December 31, 2025. Inclusive of that growth was approximately
$47 million in acquired deposits.

The
average amount of deposits and weighted-average rates paid are summarized as follows for the years ended December 31:

2025

2024

2023

Average

Average

Average

Average

Average

Average

($ in thousands)

Amount

Rate

Amount

Rate

Amount

Rate

Savings and interest bearing demand deposits

$

742,153

1.76

%

$

643,710

1.72

%

$

619,906

1.23

%

Time deposits

273,228

3.44

%

259,818

3.83

%

236,665

3.00

%

Non interest bearing demand deposits

251,820

-

227,445

-

237,976

-

Totals

$

1,267,201

1.77

%

$

1,130,973

1.86

%

$

1,094,547

1.35

%

Time
deposits that exceeded the FDIC insurance limit of $250,000 are summarized as follows:

($ in thousands)

2025

2024

Three months or less

$

6,813

$

4,912

Over three months through six months

8,420

7,249

Over six months and through twelve months

3,370

6,533

Over twelve months

5,258

4,750

Total

$

23,861

$

23,444

Shareholders’
equity at December 31, 2025, was $141.2 million, or 9.1 percent of total assets compared to $127.5 million or 9.2 percent of total assets,
at December 31, 2024. Retained earnings increased during the year due to earnings of $14.0 million less dividends paid to common shareholders
of $3.8 million and repurchases of Company common shares of $5.4 million. The fair market value of the bond portfolio increased during
2025 due to the valuation adjustment on the portfolio, which resulted in accumulated other comprehensive loss (“AOCI”) declining
to $21.5 million at December 31, 2025, from $30.2 million at December 31, 2024.

The
Company continued to repurchase its own common shares during the year under the Company’s publicly announced share repurchase program.
Specifically, the Company repurchased 283,490 shares during 2025 at an average price of $19.47 per share. On December 18, 2024, the Company’s
Board of Directors approved a share repurchase program authorizing the repurchase of 500,000 shares through December 31, 2026. As of
December 31, 2025, the Company had repurchased a total of 300,950 shares, and 199,050 shares remained available for purchase, under this
program.

Asset Quality

Years Ended December 31,

($ in thousands)

2025

2024

% Change

Nonaccruing loans

$

4,579

$

5,516

-17.0

%

Foreclosed assets and other assets held for sale, net

104

-

N/M

Nonperforming assets

4,683

5,516

-15.1

%

Net charge-offs/(recoveries)

261

250

4.4

%

Provision for credit losses

1,306

124

953.2

%

Allowance for credit losses

16,114

15,096

6.7

%

Nonaccruing loans/total loans

0.39

%

0.53

%

-26.4

%

Allowance/nonaccruing loans

351.9

%

273.7

%

28.6

%

Nonperforming assets/total assets

0.30

%

0.40

%

-24.2

%

Net charge offs/average loans

0.02

%

0.01

%

100.0

%

Allowance/loans

1.36

%

1.44

%

-5.4

%

Allowance/nonperforming loans

351.9

%

273.7

%

28.6

%

Nonperforming
assets totaled $4.7 million, or 0.30 percent of total assets, at December 31, 2025, a decrease of $0.8 million, or 15.1 percent, from
December 31, 2024. The Company had total net charge-offs on loans of $261,000 in 2025, as compared to net charge-offs of $250,000 in
2024. The Company’s ACL at December 31, 2025, now covers nonperforming loans at 351.9 percent, up from 273.7 percent at December
31, 2024.

37

The
following schedule presents an analysis of the ACL, average loan data and related ratios at December 31 for the years indicated:

($ in thousands)

Provision for

Credit Losses

Net (Chargeoffs)

Recoveries

Average Loans

Ratio of

annualized net

(chargeoffs)

recoveries to

average loans

December 31, 2025

Commercial & industrial

$

(673

)

$

(177

)

$

120,891

-0.15

%

Commercial real estate - owner occupied

427

-

142,734

0.00

%

Commercial real estate - nonowner occupied

1,123

2

386,153

0.00

%

Agricultural

(576

)

-

63,260

0.00

%

Residential real estate

617

(16

)

311,773

-0.01

%

HELOC

154

(1

)

60,770

0.00

%

Consumer

202

(69

)

14,760

-0.47

%

Total

$

1,274

$

(261

)

$

1,100,341

-0.02

%

December 31, 2024

Commercial & industrial

$

891

$

(228

)

$

123,238

-0.19

%

Commercial real estate - owner occupied

(146

)

-

131,168

0.00

%

Commercial real estate - nonowner occupied

3

-

311,855

0.00

%

Agricultural

444

-

63,580

0.00

%

Residential real estate

(1,603

)

(3

)

314,066

0.00

%

HELOC

10

-

50,240

0.00

%

Consumer

(39

)

(19

)

13,204

-0.14

%

Total

$

(440

)

$

(250

)

$

1,007,351

-0.02

%

December 31, 2023

Commercial & industrial

$

110

$

-

$

124,435

0.00

%

Commercial real estate - owner occupied

202

-

118,583

0.00

%

Commercial real estate - nonowner occupied

119

-

301,072

0.00

%

Agricultural

23

-

59,720

0.00

%

Residential real estate

190

(52

)

313,034

-0.02

%

HELOC

39

-

46,576

0.00

%

Consumer

5

(40

)

15,470

-0.26

%

Total

$

688

$

(92

)

$

978,890

-0.01

%

The
ACL balance and the provision for credit losses are determined by management based upon periodic reviews of the loan portfolio. In addition,
management considers the level of charge offs on loans, as well as the fluctuations of charge offs and recoveries on loans, in the factors
which caused these changes. Estimating the risk of loss and the amount of loss is necessarily subjective. Accordingly, the allowance
is maintained by management at a level considered adequate to cover losses that are currently anticipated based on past loss experience,
economic conditions, information about specific borrower situations, including their financial position and collateral values, and other
factors and estimates which are subject to change over time.

38

The
Company has substantially increased its reserve level over the last several years. Specifically, the Company’s ACL balance has
increased from $12.6 million at December 31, 2020, to $16.1 million at December 31, 2025, which reflects an increase of $3.5 million,
or 28 percent. This increase was the result of $2.8 million in provision expense during the period and $0.4 million in net charge-offs
over the five-year period. The reserve increased during 2023 due to the one-time CECL adjustment of $1.4 million taken in January of
2023 upon the Company’s adoption of the CECL methodology.

The
following schedule provides a breakdown of the ACL allocated by type of loan and related ratios at December 31 for the years indicated:

Percentage

Percentage

Percentage

of Loans

of Loans

of Loans

In Each

In Each

In Each

Category

Category

Category

Allowance

to Total

Allowance

to Total

Allowance

to Total

Amount

Loans

Amount

Loans

Amount

Loans

($ in thousands)

2025

2024

2023

Commercial & industrial

$

1,821

11.3

%

$

2,666

17.7

%

$

2,003

12.7

%

Commercial real estate - owner occupied

2,233

13.9

%

1,806

12.0

%

1,952

12.4

%

Commercial real estate - nonowner occupied

6,846

42.5

%

5,721

37.9

%

5,718

36.2

%

Agricultural

308

1.9

%

884

5.9

%

440

2.8

%

Residential real estate

3,931

24.4

%

3,330

22.1

%

4,936

31.3

%

HELOC

673

4.2

%

520

3.4

%

510

3.2

%

Consumer

302

1.9

%

169

1.1

%

227

1.4

%

$

16,114

100.0

%

$

15,096

100.0

%

$

15,786

100.0

%

Regulatory
capital reporting is required for State Bank only, as the Company is currently exempt from quarterly regulatory capital level measurement
pursuant to the Small Bank Holding Company Policy Statement. As of December 31, 2025, State Bank met all regulatory capital levels required
to be considered well-capitalized (see Note 16 to the Consolidated Financial Statements).

On
May 27, 2021, the Company issued and sold $20.0 million in aggregate principal amount of its 3.65% Fixed to Floating Rate Subordinated
Notes due 2031 in a private placement exempt from the registration requirements under the Securities Act. The Subordinated Notes bear
interest at a fixed rate of 3.65% through May 31, 2026. From June 1, 2026 to the maturity date or earlier redemption of the Subordinated
Notes, the interest rate will reset quarterly to an interest rate per annum, equal to the then-current-three-month Secured Overnight
Financing Rate (“SOFR”) provided by the Federal Reserve Bank of New York plus 296 basis points. The Subordinated Notes have
a maturity of 10 years.

Earnings
Summary – 2025 vs. 2024

Net
income for 2025 was $14.0 million, or $2.19 per diluted common share, compared with net income of $11.5 million, or $1.72 per diluted
common share, for 2024. State Bank reported net income for 2025 of $15.9 million, which was up from the $13.0 million of net income in
2024. SBFG Title reported net income for 2025 of $0.58 million, which was up from net income of $0.36 million for 2024.

39

Positive
results for 2025 included loan growth of $133.9 million, with deposits higher by $154.6 million. Loan and deposit growth were supplemented
by our acquisition of The Marblehead Bank in the first quarter of 2025, adding $18 million and $47 million of loans and deposits, respectively.
Residential real estate loan production was $277.7 million, with $5.0 million of revenue from gains on sale. The level of mortgage origination
was up from the $261.3 million in 2024. The Company’s loans serviced for others ended the year at $1.48 billion, up from $1.43
billion at December 31, 2024.

Operating
revenue was higher at $65.6 million in 2025, compared to $56.9 million in 2024 as balance sheet growth and margin improvement drove net
interest income higher, supplemented by higher mortgage revenues. SBFG Title revenue expanded by $0.4 million compared to the prior year.

Operating
expense increased by $4.0 million, or 9.4 percent, from $43.0 million in 2024 to $47.0 million in 2025, due to higher incentive and commission
levels. Operating expense included conversion expenses of $0.8 million and almost a full year of Marblehead operations.

Results
of Operations

Years Ended December 31,

($ in thousands, except per share data)

2025

2024

% Change

Total assets

$

1,545,367

$

1,379,517

12.0

%

Total investments

188,626

201,588

-6.4

%

Loans held for sale

1,761

6,770

-74.0

%

Loans, net of unearned income

1,180,591

1,046,735

12.8

%

Allowance for credit losses

16,114

15,096

6.7

%

Total deposits

1,307,244

1,152,605

13.4

%

Total operating revenue1

$

65,560

$

56,939

15.1

%

Net interest income

48,453

39,922

21.4

%

Loan loss provision

1,306

124

953.2

%

Noninterest income

17,107

17,017

0.5

%

Noninterest expense

46,999

42,959

9.4

%

Net income

13,974

11,470

21.8

%

Diluted earnings per share

2.19

1.72

27.3

%

1

Operating
revenue equals net interest income plus noninterest income.

Net
interest income was $48.4 million for 2025 and increased by 21 percent from net interest income of $40.0 million for 2024. Average earning
assets increased to $1.40 billion in 2025, compared to $1.31 billion in 2024, primarily due to the increase in our loan portfolio, with
higher overnight cash offset by lower securities. The consolidated 2025 full year net interest margin on a fully-taxable equivalent (“FTE”)
basis was 3.47 percent compared to 3.06 percent for the full year of 2024.

Provision
for credit losses was taken in 2025 in the amount of $1.31 million compared to $0.12 million taken during 2024. For 2025, net charge-offs
totaled $0.26 million, or 0.02 percent of average loans, compared to net charge-offs of $0.25 million, or 0.02 percent of average loans,
for 2024.

Noninterest Income

Years Ended December 31,

($ in thousands)

2025

2024

% Change

Wealth management fees

$

3,535

$

3,511

0.7

%

Customer service fees

3,544

3,467

2.2

%

Gains on sale of residential loans & OMSR’s

5,015

4,564

9.9

%

Mortgage loan servicing fees, net

1,562

2,183

28.4

%

Gain on sale of non-mortgage loans

143

146

-2.1

%

Title insurance income

2,048

1,635

25.3

%

Other

1,260

1,511

-16.6

%

Total noninterest income

$

17,107

$

17,017

0.5

%

40

Total
noninterest income was $17.1 million for 2025 compared to $17.0 million for 2024, representing an increase of $0.17 million, or 0.5 percent,
year-over-year. Gains on sale of residential mortgage loans was up from 2024 by $0.45 million, or 9.9 percent. The Company sold $250.4
million of originated mortgages into the secondary market in 2025, which due to being higher than the amortization on the serviced portfolio,
increased the size of our serviced loan portfolio to $1.48 billion at December 31, 2025 from $1.43 billion at December 31, 2024. Sales
of non-mortgage loans (small business and farm credits) in 2025 was just $1.0 million, resulting in gain on sale of $0.14 million. The
Company saw its wealth management assets under management increase by $18.3 million to $566.0 million at December 31, 2025, with total
wealth management fees of $3.5 million.

Noninterest Expense

Years Ended December 31,

($ in thousands)

2025

2024

% Change

Salaries & employee benefits

$

25,077

$

23,603

6.2

%

Net occupancy expense

3,309

2,884

14.7

%

Equipment expense

4,535

4,333

4.7

%

Data processing fees

3,840

3,075

24.9

%

Professional fees

3,594

2,927

22.8

%

Marketing expense

651

821

-20.7

%

Telephone and communications

511

525

-2.7

%

Postage and delivery expense

541

447

21.0

%

State, local and other taxes

1,091

907

20.3

%

Employee expense

763

733

4.1

%

Other expense

3,087

2,704

14.2

%

Total noninterest expense

$

46,999

$

42,959

9.4

%

Total
noninterest expense was $47.0 million for 2025 compared to $43.0 million for 2024, representing a $4.0 million, or 9.4 percent, increase
year-over-year. Included in the 2025 expense levels are $0.8 million in one-time conversion expenses and almost a full year of Marblehead
operations. Total full-time equivalent employees ended 2025 at 252, which was flat from year end 2024.

Earnings
Summary – 2024 vs. 2023

Net
income for 2024 was $11.5 million, or $1.72 per diluted common share, compared with net income of $12.1 million, or $1.75 per diluted
common share, for 2023. State Bank reported net income for 2024 of $13.0 million, which was down slightly from the $13.3 million of net
income in 2023. SBFG Title reported net income for 2024 of $0.36 million, which was up from net income of $0.24 million for 2023.

Positive
results for 2024 included loan growth of $46.5 million, with deposits higher by $82.4 million. Deposit growth was boosted by the Company’s
participation in the State of Ohio’s Homebuyer Plus program. For the full year of 2024, residential real estate loan production
was $261.3 million, with $4.6 million of revenue from gains on sale. The level of mortgage origination was up from the $215.5 million
in 2023.
The Company’s loans serviced for others ended the year at $1.427 billion, up slightly from $1.367 billion at December 31, 2023.

41

Operating
revenue for 2024 was steady at $57.0 million, as increased mortgage volume offset the sale of Visa B shares that occurred in 2023 of
$1.4 million. SBFG Title revenue also remained level at $1.64 million.

Operating
expense increased by $1.0 million, or 2.4 percent, from $42.0 million in 2023 to $43.0 million in 2024, due to higher incentive and commission
levels, which were partially offset by moving higher medical costs to SB Captive.

Goodwill,
Intangibles and Capital Purchases

The
Company completed its most recent annual goodwill impairment review as of December 31, 2025. Due to declines in the Company’s share
price, a quantitative evaluation of goodwill was completed as of September 30, 2024, which revealed that impairment was not warranted.
No triggering events have occurred since that assessment, which would warrant impairment. At December 31, 2025, the Company concluded
that it was more likely than not that the fair value of the reporting unit exceeded its carrying value, resulting in no impairment. The
Company’s goodwill is further discussed in Note 6 to the Consolidated Financial Statements.

Management
plans to continue from time to time to purchase additional premises and equipment and improve current facilities to meet the current
and future needs of the Company’s customers. These purchases will include buildings, leasehold improvements, furniture and equipment.
Management expects that cash on hand and cash generated from current operations will fund these capital expenditures and purchases.

Liquidity

Liquidity
relates primarily to the Company’s ability to fund loan demand, meet deposit customers’ withdrawal requirements and provide
for operating expenses. Sources used to satisfy these needs consist of cash and due from banks, interest-bearing deposits in other financial
institutions, securities available-for-sale, loans held for sale, and borrowings from various sources. These assets, excluding the borrowings,
are commonly referred to as liquid assets. Liquid assets were $263.1 million at December 31, 2025, which included pledged available-for-sale
securities of $141.2 million, compared to liquid assets of $235.9 million at December 31, 2024.

The
Company does not have material cash requirements for capital expenditures over the next year. Any cash needs for capital requirements
would be funded by cash existing at the Company.

The
Company’s commercial real estate, first mortgage residential, agricultural and multi-family mortgage portfolio of $978.2 million
at December 31, 2025, can and is readily used to collateralize borrowings, which is an additional source of liquidity. Management believes
the Company’s current liquidity level, without these borrowings, is sufficient to meet its current and anticipated liquidity needs.
At December 31, 2025, all eligible commercial real estate, residential first, multi-family mortgage and agricultural loans were pledged
under a FHLB blanket lien.

Significant
additional off balance-sheet liquidity is available in the form of FHLB advances, unused federal funds lines from correspondent banks
and the national certificate of deposit market. Management expects the risk of changes in off-balance-sheet arrangements to be immaterial
to earnings. Based on the current collateralization requirements of the FHLB, approximately $159.9 million of additional borrowing capacity
existed at December 31, 2025.

At
December 31, 2025, and 2024, the Company had $41.0 million in federal funds lines available. The Company also had $47.4 million in unpledged
securities at December 31, 2025, available for additional borrowings.

42

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 2025 and 2024
follows:

The
Company experienced positive cash flows from operating activities in 2025 and 2024. Net cash from operating activities was $24.0 million
and $9.5 million for the years ended December 31, 2025, and 2024, respectively. Significant operating items for 2025 included gain on
sale of loans of $5.2 million and net income of $14.0 million. Cash provided by the sale of loans held for sale was $251.7 million. Cash
used in the origination of loans held for sale were $244.0 million.

The
Company experienced negative cash flows from investing activities in 2025 and 2024. Net cash used in investing activities was $68.1 million
and $28.9 million for the years ended December 31, 2025, and 2024, respectively. A net increase in loans of $115.6 million was the primary
change in 2025. The primary change for 2024 was a net increase in loans of $46.8 million. The Company had proceeds from repayments, maturities,
sales and calls of securities of $53.8 million and $18.8 million in 2025 and 2024, respectively.

The
Company experienced positive cash flows from financing activities in 2025 and 2024. Net cash provided by financing activities was $89.7
million and $22.5 million for the years ended December 31, 2025, and 2024, respectively. The increase in deposits of $101.6 million and
$82.4 million attributed to the positive cash flows in 2025 and 2024, respectively.

The
Company uses an Economic Value of Equity (“EVE”) analysis to measure risk in the balance sheet incorporating all cash flows
over the estimated remaining life of all balance sheet positions. The EVE analysis calculates the net present value of the Company’s
assets and liabilities in rate shock environments that range from -400 basis points to +400 basis points. The results of this analysis
are reflected in the following table, which reflects the Company’s neutral balance sheet that directionally is trending to a liability
sensitive position:

Economic Value of Equity

December 31, 2025

($ in thousands)

Change in rates

$ Amount

$ Change

% Change

+400 basis points

$

287,836

$

29,143

11.27

%

+300 basis points

283,095

24,402

9.43

%

+200 basis points

275,227

16,534

6.39

%

+100 basis points

267,386

8,693

3.36

%

Base Case

258,693

-

-

-100 basis points

245,130

(13,563

)

-5.24

%

-200 basis points

226,992

(31,701

)

-12.25

%

-300 basis points

206,265

(52,428

)

-20.27

%

-400 basis points

212,241

(46,452

)

-17.96

%

Economic Value of Equity

December 31, 2024

($ in thousands)

Change in rates

$ Amount

$ Change

% Change

+400 basis points

$

258,979

$

10,652

4.29

%

+300 basis points

258,247

9,920

3.99

%

+200 basis points

253,713

5,386

2.17

%

+100 basis points

250,545

2,218

0.89

%

Base Case

248,327

-

-

-100 basis points

240,798

(7,529

)

-3.03

%

-200 basis points

229,540

(18,787

)

-7.57

%

-300 basis points

213,379

(34,948

)

-14.07

%

-400 basis points

190,188

(58,139

)

-23.41

%

43