SBFG's Net Income Jumps 28% on Strong Loan Growth, Marblehead Acquisition

TL;DR

**SBFG is a buy; strong loan growth and a strategic acquisition are fueling impressive earnings, making it a solid regional bank play.**

AI Summary

SB FINANCIAL GROUP, INC. (SBFG) reported a significant increase in net income for the nine months ended September 30, 2025, reaching $10.056 million, up 28.35% from $7.835 million in the same period of 2024. Total interest income grew to $54.648 million from $47.502 million, a 15.04% increase, primarily driven by a rise in taxable loan interest income to $47.752 million from $41.943 million. Net interest income after provision for credit losses also saw a substantial jump, increasing by 20.15% to $34.633 million from $28.825 million. The company's total assets expanded to $1.496 billion as of September 30, 2025, from $1.379 billion at December 31, 2024, largely due to a $63.81 million increase in loans, net of unearned income, and a $59.097 million increase in cash and cash equivalents. A key business change was the acquisition of Marblehead Bancorp on January 17, 2025, for $5.0 million in cash, which added $3.9 million in goodwill and $1.7 million in core deposit intangible assets. Total deposits increased by $109.917 million to $1.262 billion, with non-interest bearing demand deposits rising by $14.57 million. The company also increased its treasury stock by $4.467 million through repurchases during the nine months ended September 30, 2025.

Why It Matters

This strong performance by SB FINANCIAL GROUP, INC. signals robust growth in its core banking operations, particularly in loan generation and deposit accumulation, which is crucial for investor confidence in the regional banking sector. The acquisition of Marblehead Bancorp expands SBFG's market presence in Northwest Ohio, potentially increasing its competitive edge against other regional banks by diversifying its customer base and product offerings. For employees, this growth could mean increased job security and opportunities, while customers in the acquired Marblehead market gain access to SBFG's broader suite of financial products. The overall market benefits from a healthy, expanding regional bank, contributing to local economic stability.

Risk Assessment

Risk Level: medium — While SBFG shows strong growth, the increase in the allowance for credit losses to $15.943 million from $15.096 million at December 31, 2024, and the total provision for credit losses rising to $1.108 million for the nine months ended September 30, 2025, from $200,000 in the prior year, indicates a potential increase in credit risk. Additionally, the company's goodwill increased by $3.919 million to $27.158 million due to the Marblehead acquisition, which introduces impairment risk if the acquired assets do not perform as expected.

Analyst Insight

Investors should consider SBFG for its growth potential, driven by strong net interest income and strategic acquisitions. Monitor the allowance for credit losses and goodwill impairment risk, but the current trajectory suggests continued positive performance. Consider initiating a long position.

Financial Highlights

debt To Equity

N/A

revenue

$54,648,000

operating Margin

N/A

total Assets

$1,496,263,000

total Debt

$66,012,000

net Income

$10,056,000

eps

$1.57

gross Margin

N/A

cash Position

$85,025,000

revenue Growth

+15.04%

Revenue Breakdown

Key Numbers

• $10.056M — Net Income (Increased 28.35% for the nine months ended September 30, 2025, compared to $7.835 million in 2024.)
• $54.648M — Total Interest Income (Increased 15.04% for the nine months ended September 30, 2025, from $47.502 million in 2024.)
• $1.496B — Total Assets (Increased from $1.379 billion at December 31, 2024, to September 30, 2025.)
• $1.110B — Loans, net of unearned income (Increased from $1.046 billion at December 31, 2024, to September 30, 2025.)
• $1.262B — Total Deposits (Increased from $1.152 billion at December 31, 2024, to September 30, 2025.)
• $5.0M — Marblehead Bancorp Acquisition Cost (Total cash consideration paid on January 17, 2025.)
• $3.9M — Goodwill from Acquisition (Recorded in the first quarter of 2025 due to the Marblehead acquisition.)
• $0.64 — Basic EPS (Q3 2025) (Increased from $0.35 in Q3 2024.)
• $1.57 — Basic EPS (YTD 2025) (Increased from $1.17 for the nine months ended September 30, 2024.)
• $1.108M — Total Provision for Credit Losses (Increased from $200,000 for the nine months ended September 30, 2024.)

Key Players & Entities

• SB FINANCIAL GROUP, INC. (company) — registrant
• The State Bank and Trust Company (company) — wholly-owned subsidiary
• SBFG Title, LLC (company) — wholly-owned subsidiary
• SB Captive, Inc. (company) — wholly-owned subsidiary
• State Bank Insurance, LLC (company) — subsidiary of State Bank
• Marblehead Bancorp (company) — acquired entity
• The Marblehead Bank (company) — subsidiary of Marblehead Bancorp
• NASDAQ Stock Market, LLC (regulator) — exchange where SBFG is registered
• Financial Accounting Standards Board (regulator) — issuer of accounting standards
• SEC (regulator) — filing recipient

FAQ

Risk Factors

• Interest Rate Sensitivity [medium — financial]: The company's profitability is sensitive to changes in interest rates, which can affect net interest income. Fluctuations in market interest rates can impact the value of its investment securities and the cost of its funding.
• Integration of Acquisitions [medium — operational]: The successful integration of acquired entities, such as Marblehead Bancorp, presents operational risks. Failure to effectively integrate systems, processes, and personnel could disrupt operations and impact financial performance.
• Regulatory Compliance [high — regulatory]: As a financial institution, SBFG is subject to extensive regulation. Changes in regulations or failure to comply with existing ones could result in fines, penalties, and reputational damage.
• Economic Downturn [medium — market]: A general economic downturn could lead to increased loan delinquencies and defaults, impacting the company's provision for credit losses and overall asset quality.
• Credit Risk [high — financial]: The company's loan portfolio is subject to credit risk, which is the risk of loss due to a borrower's failure to repay a loan according to contractual terms. An increase in the allowance for credit losses to $15.943 million from $15.096 million reflects this ongoing concern.

Industry Context

SB Financial Group operates within the highly competitive U.S. banking industry, characterized by increasing consolidation and evolving regulatory landscapes. Trends include a focus on digital transformation, customer experience, and managing interest rate risk. The industry is also navigating the aftermath of recent regional bank stresses, leading to heightened scrutiny on capital and liquidity.

Regulatory Implications

The company must adhere to stringent capital adequacy requirements (e.g., Basel III) and consumer protection laws. The recent acquisition of Marblehead Bancorp may trigger additional regulatory review and integration compliance obligations. Changes in accounting standards, such as ASU 2024-03 regarding expense disaggregation, will require prospective adoption and potential system adjustments.

What Investors Should Do

1. Monitor loan growth and credit quality trends.
2. Analyze the impact of the Marblehead Bancorp acquisition.
3. Evaluate interest rate sensitivity and net interest margin trends.
4. Review capital allocation strategies, including share repurchases.

Key Dates

• 2025-01-17: Acquisition of Marblehead Bancorp — Expanded the company's asset base and deposit funding, adding $3.9 million in goodwill and $1.7 million in core deposit intangibles.
• 2025-09-30: End of Nine Months Reporting Period — Reported significant net income growth of 28.35% to $10.056 million, driven by strong interest income performance.
• 2025-09-30: Balance Sheet Date — Total assets grew to $1.496 billion, with notable increases in loans and cash, reflecting business expansion and acquisition impact.

Glossary

Goodwill

An intangible asset that arises when one company acquires another for a price greater than the fair market value of its assets and liabilities. (Recorded as a result of the Marblehead Bancorp acquisition, indicating the premium paid over the net identifiable assets acquired.)

Core Deposit Intangible Assets

An intangible asset representing the value of a stable, low-cost deposit base acquired in a business combination. (Recognized from the Marblehead Bancorp acquisition, highlighting the value of its deposit relationships.)

Provision for Credit Losses

An expense set aside by a financial institution to cover potential losses from loans that may default. (Increased significantly to $1.108 million for the nine months ended September 30, 2025, indicating a more cautious outlook on loan portfolio quality or increased risk.)

Accumulated Other Comprehensive Loss

A component of shareholders' equity that includes unrealized gains and losses on available-for-sale securities and other items not included in net income. (Decreased from a loss of $30.234 million to $23.412 million, primarily due to unrealized gains on investment securities.)

Treasury Stock

Stock that a company has repurchased from the open market. (Increased by $4.467 million due to share repurchases during the nine months ended September 30, 2025, indicating a return of capital to shareholders.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, SB Financial Group has demonstrated robust growth, with net income increasing by 28.35% to $10.056 million and total interest income rising by 15.04%. Total assets have expanded to $1.496 billion, bolstered by strategic acquisitions and organic growth in loans and deposits. While revenue and profitability have improved, the provision for credit losses has seen a substantial increase, suggesting a more cautious stance on credit risk management in the current economic climate.

Filing Documents

• ea0264171-10q_sbfinan.htm (10-Q) — 2300KB
• ea026417101ex31-1_sbfinan.htm (EX-31.1) — 8KB
• ea026417101ex31-2_sbfinan.htm (EX-31.2) — 8KB
• ea026417101ex32-1_sbfinan.htm (EX-32.1) — 4KB
• ea026417101ex32-2_sbfinan.htm (EX-32.2) — 5KB
• 0001213900-25-107030.txt ( ) — 13279KB
• sbfg-20250930.xsd (EX-101.SCH) — 70KB
• sbfg-20250930_cal.xml (EX-101.CAL) — 74KB
• sbfg-20250930_def.xml (EX-101.DEF) — 360KB
• sbfg-20250930_lab.xml (EX-101.LAB) — 655KB
• sbfg-20250930_pre.xml (EX-101.PRE) — 391KB
• ea0264171-10q_sbfinan_htm.xml (XML) — 3449KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 1 Item 1.

Financial Statements

Financial Statements 1 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 35 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 43 Item 4.

Controls and Procedures

Controls and Procedures 43

– OTHER INFORMATION

PART II – OTHER INFORMATION 44 Item 1.

Legal Proceedings

Legal Proceedings 44 Item 1A.

Risk Factors

Risk Factors 44 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 44 Item 3. Defaults Upon Senior Securities 44 Item 4. Mine Safety Disclosures 44 Item 5. Other Information 44 Item 6. Exhibits 45

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements SB Financial Group, Inc. Condensed Consolidated Balance Sheets ($ in thousands) September 2025 (unaudited) December 2024 Assets Cash and due from banks $ 85,025 $ 25,928 Interest bearing time deposits 2,025 1,565 Available-for-sale securities 193,190 201,587 Loans held for sale 4,736 6,770 Loans, net of unearned income 1,110,545 1,046,735 Allowance for credit losses ( 15,943 ) ( 15,096 ) Premises and equipment, net 21,764 20,456 Federal Reserve and Federal Home Loan Bank Stock, at cost 5,466 5,223 Foreclosed assets and other assets held for sale, net 237 - Interest receivable 5,455 4,908 Goodwill 27,158 23,239 Cash value of life insurance 32,004 30,685 Mortgage servicing rights 15,347 14,868 Other assets 9,254 12,649 Total assets $ 1,496,263 $ 1,379,517 Liabilities and shareholders' equity Liabilities Deposits Non interest bearing demand $ 246,725 $ 232,155 Interest bearing demand 194,420 201,085 Savings 290,111 237,987 Money market 261,953 222,161 Time deposits 269,313 259,217 Total deposits 1,262,522 1,152,605 Repurchase agreements 10,976 10,585 Federal Home Loan Bank advances 35,000 35,000 Trust preferred securities 10,310 10,310 Subordinated debt net of issuance costs 19,726 19,690 Interest payable 2,739 2,351 Other liabilities 18,051 21,468 Total liabilities 1,359,324 1,252,009 Commitments & Contingent Liabilities Shareholders' Equity Preferred stock, no par value; authorized 200,000 shares; 2025 - 0 shares outstanding, 2024 - 0 shares outstanding - - Common stock, no par value; 2025 - 10,500,000 shares authorized, 8,525,375 shares issued; 2024 - 10,500,000 shares authorized, 8,525,375 shares issued 61,319 61,319 Additional paid-in capital 15,086 15,194 Retained earnings 123,370 116,186 Accumulated other comprehensive loss ( 23,412 ) ( 30,234 ) Treasury stock, at cost; (2025 - 2,216

financial statements (unaudited)

financial statements (unaudited) 2 SB Financial Group, Inc. Condensed Consolidated Statements of Comprehensive Income (unaudited) Three Months Ended September 30, Nine Months Ended September 30, ($ in thousands) 2025 2024 2025 2024 Net income $ 4,046 $ 2,354 $ 10,056 $ 7,835 Other comprehensive income Available for sale investment securities: Gross unrealized holding gains arising in the period 2,633 8,773 8,636 6,280 Related tax expense ( 553 ) ( 1,842 ) ( 1,814 ) ( 1,319 ) Net effect on other comprehensive income 2,080 6,931 6,822 4,961 Total comprehensive income $ 6,126 $ 9,285 $ 16,878 $ 12,796 See notes to condensed consolidated financial 3 SB Financial Group, Inc. Condensed Consolidated Statements of Shareholders' Equity (unaudited) Common Additional Paid-in Retained Accumulated Other Comprehensive Treasury ($ in thousands, except per share data) Stock Capital Earnings Loss Stock Total Balance, January 1, 2025 $ 61,319 $ 15,194 $ 116,186 $ ( 30,234 ) $ ( 34,957 ) $ 127,508 Net income 2,158 2,158 Other comprehensive income 3,362 3,362 Cash dividends on common, $ 0.145 per share ( 947 ) ( 947 ) Restricted stock vesting ( 396 ) 396 - Repurchased stock ( 33,478 shares) ( 712 ) ( 712 ) Stock based compensation expense 157 157 Balance, March 31, 2025 $ 61,319 $ 14,955 $ 117,397 $ ( 26,872 ) $ ( 35,273 ) $ 131,526 Net income 3,852 3,852 Other comprehensive income 1,380 1,380 Cash dividends on common, $ 0.15 per share ( 976 ) ( 976 ) Repurchased stock ( 124,495 shares) ( 2,318 ) ( 2,318 ) Stock based compensation expense 184 184 Balance, June 30, 2025 $ 61,319 $ 15,139 $ 120,273 $ ( 25,492 ) $ ( 37,591 ) $ 133,648 Net income 4,046 4,046 Other comprehensive income 2,080 2,080 Cash dividends on common, $ 0.15 per share ( 949 ) ( 949 ) Restricted stock vesting ( 174 )

financial statements

financial statements. 6 ASU No. 2024-03: Income Statement – Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income certain categories of expenses such as employee compensation, depreciation and intangible asset amortization that are components of existing expense captions presented on the face of the income statement. The ASU should be applied prospectively for annual reporting periods beginning after December 15, 2026, with retrospective application and early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company's consolidated financial statements. NOTE 2 - EARNINGS PER SHARE Earnings per share ("EPS") have been computed based on the weighted average number of common shares outstanding during the periods presented. The average number of common shares used in the computation of basic and diluted earnings per share are set forth in the table below. There were no anti-dilutive shares in 2025 or 2024. Participating securities in the table reflect nonvested restricted shares that participate in dividends declared and paid by the Company on its common shares prior to vesting of the restricted shares. Three Months Ended Sep. 30, ($ and outstanding shares in thousands - except per share data) 2025 2024 Distributed earnings allocated to common shares $ 949 $ 943 Undistributed earnings allocated to common shares 3,091 1,403 Net earnings allocated to common shares 4,040 2,346 Net earnings allocated to participating securities 6 8 Net Income allocated to common shares and participating securities $ 4,046 $ 2,354 Weighted a

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