Sb Financial Group, Inc. · NASDAQ:SBFG
Sb Financial — Q2 2017 Earnings Presentation
65 slides from Sb Financial's earnings presentation, Aug 10, 2017
Slide 1: Investor Presentation
1 PRESENTATION NAME TO GO HERE INVESTOR PRESENTATION
Slide 2: Business Overview: Building a High-Performance Company
B USINESS OVERVIEW BUILDING A HIGH - PERFORMANCE COMPANY 2
Slide 3: Safe Harbor Statement
SB FINANCIAL GROUP. SAFE HARBOR STATEMENT Certain statements within this document, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties
Slide 4: Our Vision
OUR VISION Our Vision over the next three years is to become a high-performing (>90th percentile) $1 Billion, independent financial services company set apart by our staff and their passion for service, our holistic approach to client care, and our commitment to the communities and investors we serv
Slide 5: Our Value Proposition
OUR VALUE PROPOSITION Your financial services partner for life, delivering proactive and innovative solutions locally through employees with a passion for service.
Slide 6: Corporate Overview
SB FINANCIAL GROUP CORPORATE OVERVIEW pcm + NASDAQ: SBFG MICHIGAN MONROE + Defiance, Ohio - Headquarters Since 1902 + Corporate Staff Members-245, + Average Daily Volume for 2016-6,000 + Market Cap: $107 million ($16.88/share 6/30/2017) + 4.8 Million Common Shares; 1.4 Million INDIANA shares of SBFG
Slide 7: Our Organization & Leadership
OUR ORGANIZATION & LEADERSHIP CORPORATE LEADERSHIP + Mark Klein — Chairman, President and CEO + Tony Cosentino —- EVP and CFO SB FINANCIAL + Keeta Diller — SVP, Corporate Secretary GROUP (Dir. of Operations — State Bank) REGIONAL/COMMERCIAL LEADERSHIP + Jon Gathman, EVP and Senior Lender + David Hom
Slide 8: State Bank Business Line Leaders
SB FINANCIAL GROUP. STATE BANK BUSINESS LINE LEADERS RETAIL BANKING PRIVATE CLIENT GROUP. R iE BANKING. + Laura Kline— SVP Client + Mickey Cooper — VP-Toledo + Pam Benedict — SVP RRE Experience Officer Manager — NW Ohio/NE Jim Griest - VP - Fort Wayne Indiana + District Sales Managers + Sue West - V
Slide 9: Our Organization & Leadership
OUR ORGANIZATION & LEADERSHIP SB FINANCIAL GROUP RDSI/DCM LEADERSHIP + Mark Klein — Chairman, President and CEO + Gary Saxman, IT Technology Manager + Yvonne Swayze, VP-Operations + Bill Brandt, Sales STATE BANK
Slide 10: Unique Qualities
SB FINANCIAL GROUP UNIQUE QUALITIES LEVERAGE OUR BUSINESS-LINE EXPERTISE Retall/PCG Commercial/SBA Mortgage Banking Wealth Management/Brokerage Item Processing/Statement Production OPTIMIZE OUR DELIVERY CHANNELS: + Regional Sales Leadership + Business Line Strategic Plans SCALE OUR BRAND * Holistic
Slide 11: Key Initiatives
KEY INITIATIVES sb Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operational excellen
Slide 12: High-Level Performance Drivers
SB FINANCIAL GROUP. HIGH-LEVEL PERFORMANCE DRIVERS YTD 2017 +2016 2015 ROAA 1.03 % 1.11% 1.06 % Net Income Growth 10% 15% 45% Loan Growth 8% 16 % 8% Deposit Growth 9% 15% 6% SBA Volume soMM S8MM S9MM > Residential Volume $154 MM $383MM $323 MM 2 Ww
Slide 13: Return on Average Assets (ROAA)
SB FINANCIAL GROUP. RETURN ON AVERAGE ASSETS (ROAA) 1.25 1.00 0.75 4 0.50 0.25 + 0.00 + 2013 2014 2015 2016 = YTD 2Q 2017 mSBFG @Peer Group 75th Percentile * Peer group consists of SNL 40 2016 data for 65 publicly traded bank holding companies in the U.S. on a major exchange with assets between $500
Slide 14: High Performance
SB FINANCIAL GROUP. HIGH PERFORMANCE 2016 7 Institutions * : gand goth (Including SBFG) © |financialoroup Percentile Percentile eer Banks with 10 Institutions an ROAA >1% Peer Banks Above Median 33 Institutions Peer Banks — Assets between 65 Insitutions $.5B and $1.2B 14
Slide 15: Key Initiatives
KEY INITIATIVES sb Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operational excellen
Slide 16: Increase Profitability Through Diversification of Revenue Streams
INCREASE PROFITABILITY THROUGH DIVERSIFI 1ON OF EVENUE STREAMS REVENUE/NET INCOME $50 $10 =—=SBA $45 $8.6 $9 =ros! $40 $8 4 $7 Petorgaye = 330 Lot 55 = w = 3 $25 $5 BG =ASerice a 8 Charges 3 820 ga 2 ria ti eaWealth $15 $3 Z Managem ent $10 $2 cant Interest $5 $1 Margin sensi so Income 2013 2014 201
Slide 17: Increase Profitability: Non-Interest Income
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS YTD 6/30/2017 ANNUALIZED NON-INTEREST INCOME $16.5 MILLION « Non-Interest Income to Total Revenue at 38% = Mortgage Banking (88" Percentile) - Peer Median* 20% Boavics Fees - Top Quartile* 24% = Wealth Management ultem Processing =SBA
Slide 18: Mortgage Gain on Sale/Volume
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS MORTGAGE GAIN ON SALE/VOLUME $7 + ~ $450 a $383 $400 = 8 4 + $350 xX $6 3 $300 z $250 5 w $3 $200 $ $150 £ sz g $100 1 ~ $50 $0 $0 2013 2014 2015 2016 YTD 2Q 2017 Annualized ‘=INW Chio maColumbus sxiFindlay =Total $ Originations MORTG
Slide 19: SBA Gain on Sale
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS. SBA GAIN ON SALE $1.6 g ° GAIN ON SALE (MIL) 8 & $0.6 $0.4 $0.2 $0.0 2013 2014 2015 2016 YTD 2Q2017 Annualized @aSBA Gains -#Loan Volume
Slide 20: Increase Profitability Through Diversification of Revenue Streams
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS + Expand Residential Real Estate Lending + Retain Servicing/Build Portfolio - Leverage SBA Business Line Expertise - Build Wealth Management Bench - Add Commercial Leasing Product Line
Slide 21: Key Initiatives
®@ financial KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operationa
Slide 22: Strengthen Market Penetration in All Markets Served
STRENGTHEN MARKET PENETRATION IN ALL MARKETS SERVED. MICHIGAN Toledo 27% MONROE: wituams Defiance 9% DEFIANCE Ft. Wayne 13% Findlay 154% INDIANA Columbus 24% Data as of 12/31/2016
Slide 23: Balance Sheet Strength & Diversity
STRENGTHEN MARKET PENETRATION BALANCE SHEET STRENGTH & DIVERSITY LOAN PORTFOLIO = $652 MILLION TOTAL ASSETS = $848 MILLION Consumer & Other Cash & Other 2%, Due 8% 2%. Securities 13%. Commercial 41-4 Family. 21% Loan to Deposit June 2017 - 92% Top Quartile Performance Data as of 6/30/2017
Slide 24: Deposit Portfolio
STRENGTHEN MARKET PENETRATION CAL PRESENCE Capital Other pin hy Borrowings 5% DEPOSIT PORTFOLIO = $707 MILLION Non- Interest_ 18% Transactional deposits = 69% of total deposits Weighted average cost of deposits = 46 bps Data as of 6/30/2017 4
Slide 25: Strengthen Market Penetration in All Markets Served
STRENGTHEN MARKET PENETRATION N ALL MARKETS SERVED Goal is $1 Billion (Scale) + Expand “in-market” presence/resources + Organic entrance into contiguous “urban” markets + M&A opportunities - Household growth via Residential Business Line
Slide 26: Key Initiatives
® financial KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operational
Slide 27: Products/Services and Households
EXPAND PRODUCT UTILIZATION BY NEW AND EXISTING CUSTOMERS PRODUCTS/SERVICES AND HOUSEHOLDS 90,000 27,368 28,192 26,076 76,647 PRODUCTS & SERVICES a a 2 S S 2013 2014 2015 2016 YTD 2Q 2017 m= Products & Services -@ Households \ in total number of produ Increase of households HOUSEHOLDS
Slide 28: Referrals/New Business
EXPAND PRODUCT UTILIZATION ‘BY NEW AND EXISTING CUSTOMERS, REFERRALS/NEW BUSINESS $103.5 1 REFERRALS > 8 1,920 2013 2014 2015 2016 YTD 2Q 2017 Annualized m=Gross mmClosed --New Business $40 $20 $0
Slide 29: Expand Product Utilization
EXPAND PRODUCT UTILIZATION More and Deeper Relationships (Scope) * Clients “for life” - Business Lines working “Interdependently” - Retail “on-boarding” Process - Holistic Client Care
Slide 30: Key Initiatives
® financial KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operational
Slide 31: Electronic Transactions / In-Store Transactions
DELIVER GAINS IN OPERATIONAL EXCELLENCE ELECTRONIC TRANSACTION /IN-STORE TRANSACTIONS one Bose ae == NN w ous ° ELECTRONIC TRANSACTIONS PER YEAR (MIL) eo oa 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2Q “= Electronic Transactions In-Store Transaction?017 IN-STORE TRANSACTIONS PER YEAR (000’S)
Slide 32: Mortgage Servicing Portfolio
DELIVE R GAINS IN OPERATIONAL EXCELLENCE $ OF LOANS ($MIL) MORTGAGE SERVICING PORTFOLIO. 2013 2014 2015 2016 YTD 2Q 2017 s=Senicing Portfolio peNumber of Loans Serviced
Slide 33: Operations as a Competitive Advantage
DELIVER GAINS IN OPERATIONAL EXCELLENCE Operations as a Competitive Advantage « Client Contact Preference - Transactions/Interactions + Benchmark “High-Performing Bank” metrics - Technology Deployment (24/7) + Inspect/Expect
Slide 34: Key Initiatives
®@ financial KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operationa
Slide 35: Non-Performing Assets / Total Assets
SUSTAIN ASSET QUALITY NON-PERFORMING ASSETS / TOTAL ASSETS 2.80 2.26 np 3 PERCENTAGE eS é 0.70 0.00 . ae : 2013 2014 2015 2016 maSBFG “Peer Group Median” © Top Quartile * Peer group consists of SNL 412016 data for 65 publicly traded bank holding companies in the U.S. on # major exchange with assets
Slide 36: NCOs / Average Loans
SUSTAIN ASSET QUALITY NCOs/AVG. LOANS 0.45% 0.23% 0.00% -.- 2013 2014 2015 2016 2017 +>SBFG Peer Median* ~>Top Quartile* * Peer group consists of SNL 40 2016 data for 65 publicly tradad bank holding companies in he U.S. on a major exchange with assets between $500 milion and $1.2 billion.
Slide 37: Sustain Asset Quality: Solid Foundation
SUSTAIN ASSET QUALITY Solid Foundation » Experienced Lenders/Shared Values - Conscious Prospecting - Robust Loan Reviews - Decisive Collections
Slide 38: Key Initiatives
®@ financial KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operationa
Slide 39: SB Financial Group, Inc.
SB FINANCIAL GROUP, INC.
Slide 40: Our Vision
OUR VISION Our Vision over the next three years is to become a high-performing (>90th percentile) $1 Billion, independent financial services company set apart by our staff and their passion for service, our holistic approach to client care, and our commitment to the communities and investors we serv
Slide 41: Top-Quartile Performance Metrics
TOP-QUARTILE PERFORMANCE METRICS Peer Group Top Quartile* 2016 Return On Assets. 0.78% 0.81% Net interest Margin 3.78 3.73 3.57] Noninterest Income/Avg. Assets 1.97 227) 218 178 219) Noninterest Expense/Avg. Assets | 3! 3.62 3.72 3.70 414 Net NIE/Avg. Assets (Low) 1 165 155 154 192 1.95 Efficiency R
Slide 42: Key Initiatives
® financial KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operational
Slide 43: Fee Income / Total Revenue
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS. 45% FEE INCOME/TOTAL REVENUE (%) 40% SS 35% 30% 25% 20% 15% 10% 5% 0% 2013 2014 2015 2016 YTD 2017 m=Peer Median* mm=Peer Top Quartile’ -SBFG * Peer group consists of SNL 40 2016 data for 65 publicly traded bank holding companies in
Slide 44: Revenue from Sale of Loans
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS. Revenue ($000's) $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Revenue from Sale of Loans 2015 @RRE SBA #FSA YTD 2Q 2017 Annualized 44
Slide 45: Wealth Management Revenue
INCREASE PROFITABILITY THROUGH DIVERSIFICATION OF REVENUE STREAMS $3.00 $2.50 a 8 o s TOTAL REVNUE ($MIL) 2 2 2 a Ss s $0.50 $0.00 Wealth Management Revenue $2.74 $2.68 $2.71 52.64 $2.61 2014 2015 2016 YTD 2017 m=Wealth Management smm™Brokerage Total Revenue R = Ss WEALTH MANAGEMENT AUM ($MIL) a 3
Slide 46: Key Initiatives
® financial KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operational
Slide 47: Loan and Deposit Portfolio Percentage by Region
STRENGTHEN MARKET PENETRATION LOAN PORTFOLIO PERCENTAGE DEPOSIT PORTFOLIO PERCENTAGE BY REGION BY REGION Lima 5% Lima ay Findlay Defiance Findlay ima W Fulton) OL” 5% Paulding 2% Defiance/ Williams 27% Paulding 10% Williams 42% 23% Ft. Wayne 7% Toledo 21% Toledo 17% Columb coumiais Columbus Data as
Slide 48: Growth Markets: Loan Growth by Region
UALS MARKET PENETRATION & DIVERSITY GROWTH MARKETS LOAN GROWTH BY REGION 50% 45% 40% 30% 0% ec e 2013 2014 2015 2016 YTD 2Q 2017 Annualized “@COLUMBUS TOLEDO -®@FT.WAYNE ~-®FINDLAY
Slide 49: Legacy Markets: Loan Growth by Region
STRENGTHEN MARKET PENETRATION SHEET STRENGTH & DIVERSITY LEGACY MARKETS LOAN GROWTH BY REGION 0% al al 2013 2014 2015 2016 YTD 2Q 2017 Annualized “Defiance/Paulding -#Lima -®-Fulton/Williams
Slide 50: Key Initiatives
@ financial KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operational
Slide 51: Referral Business: Closed Referrals
EXPAND PRODUCT UTILIZATION BY NEW AND EXISTING CUSTOMERS Closed Referrals (SMIL) $120 $100 $80 $60 £ & $20 $0 2013 Referral Business 2014 2015 $103.5 2016 2Q 2017 Annualized = Mortgage = Commercial m Retail m Wealth Management Total Closed Referrals 51
Slide 52: Key Initiatives
@ financial KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operational
Slide 53: Mortgage Servicing Portfolio
DELIVER GAINS IN OPERATIONAL EXCELLENCE $ OF LOANS ($MIL) g 3 $200 $0 MORTGAGE SERVICING PORTFOLIO. $2,298 $1,444 2013 2014 mmServicing Portfolio 2015 2016 30-Jun-17, Income from Servicing
Slide 54: Net Non-Interest Expense vs Peers
DELIVER GAINS IN OPERATIONAL EXCELLENCE Net Non Interest 2013 2014 2015 2016 YTD 2017 0.00% 0.50% 1.00% 1.50% oe —- -2- -2- - o 2.50% “SBFG -®@Peer Median* -®Peer Top Quartile” * Peer group consists of SNL 40 2016 data for 65 publicly traded bank holding companies in he U.S. on a major exchange with
Slide 55: Key Initiatives
®@ financial KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operationa
Slide 56: Loan Loss Reserve
SUSTAIN ASSET QUALITY Loan Loss Reserve (%) 2.50% 2.00% 1.50% & 1.00% 0.50% 0.00% 2013 2014 2015 2016 YTD 2017 *SBFG -@ Peer Median* “© Top Quartile” * Peer group consists of SNL 40 2016 data for 65 publicly traded bank holding companies in he U.S. on a major exchange with assets between $500 milion
Slide 57: Non-Performing Assets and Coverage Ratio
SUSTAIN ASSET QUALITY 0.80% NON PERFORMING ASSETS. 2016-80th NPAs/COVERAGE RATIO. Percentile 2013 2014 2015 2016 YTD 2Q 2017 @ENPA's ~©-Coverage Ratio Annualized 250% 200% 150% 100% 50% 0% COVERAGE RATIO 57
Slide 58: Classified Loans / Loan Growth
SUSTAIN ASSET QUALITY Classified Loans ($MIL) $10 $2 $0 2013 CLASSIFIED LOANS/ LOAN GROWTH 2014 2015 2016 m™Classified Loans 9-@Loan Growth YTD 2Q 2017 Annualized $100 $90 $80 $70 $60 $50 $30 $20 $10 Loan Growth (SMIL)
Slide 59: Key Initiatives
@ financial KEY INITIATIVES Become a Top-Decile, Independent Financial Services Company Increase profitability through ongoing diversification of revenue streams Strengthen penetration in all markets served Expand product service utilization by new and existing customers Deliver gains in operational
Slide 60: Capital Performance
CAPITAL PERFORMANCE CAPITAL STOCK COMPOSITION OWNERSHIP SUMMARY ~~ , ESOP, Preferred, Insider 9% $10,310 12% Ownership, 3% Preferred BE Tangible Other Retail Equity, ‘ > tiff Ownership, $13,983 17% copinen Equity, 631, 719 Tangible Common Equity (000's) 56,143 Shares Outstanding (6/30/17) 4,806,540
Slide 61: Capital Performance: Tangible Book Value
CAPITAL PERFORMANCE TANGIBLE BOOK VALUE PER dian - Pri ngibl al ARE Median - Price/Tangible Book Bist anasona BorcraKte $14.00 - 250% 138% 31% ne $1200 wi $10.00 siegss —Ssegi00 © Sate by Asset Sine $2.00 Median - Price/EPS «+ GNYSE &NASDAQ GOTCMKTS $6.00 $2.00 $0.00 2013 7, 0 016 ro) ‘Y & (7 ee <1
Slide 62: SB Financial Group, Inc.
SB FINANCIAL GROUP, INC.
Slide 63: Stock Performance
STOCK PERFORMANCE Total Return Performance fi iqroun 700.00% inancialgrou 600,00% 500.00% 400.00% 300.00% 200,00% 100.00% 0.00% 2011 2012 2013 2014 2015 2016 —SB Financial Group, Inc. —-NASDAQ Composite —SNL U.S, Bank NASDAQ
Slide 64: Stock Performance: Price Appreciation
STOCK PERFORMANCE Price Appreciation 2nd Half Full Year 2016 2016 By Brood Market Renewed Optimism for Bank SBFG (2.4%) 47.7% 44.1% 40.1% Stocks with Trump’s election: S&P 500 27% 6.7% 95% 10.9% 1, Lower tax rate DIA 2.3% 10.2% 13.4% 78% 2. Reduced regulatory NASDAQ (3.3%) «11.2% = 7.5% = 12.9% burd
Slide 65: SB Financial Group, Inc.
SB FINANCIAL GROUP, INC.