SB FINANCIAL GROUP, INC. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures With the participation of the Chief Executive Officer (the principal executive officer) and the Chief Financial Officer (the principal financial officer) of the Company, the Company’s management has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the fiscal year covered by this Annual Report on Form 10-K. Based on that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer have concluded that: ● Information required to be disclosed by the Company in this Annual Report on Form 10-K and other reports which the Company files or submits under the Exchange Act would be accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure; ● Information required to be disclosed by the Company in the Annual Report on Form 10-K and other reports which the Company files or submits under the Exchange Act would be recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and ● The Company’s disclosure controls and procedures were effective as of the end of the fiscal year covered by this Annual Report on Form 10-K. Management’s Report on Internal Control Over Financial Reporting The Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in conformity with U.S. generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: ● Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company and its consolidated subsidiaries; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company and its consolidated subsidiaries are being made only in accordance with authorizations of management and directors of the Company; and ● Provide reasonable assurance regarding prevention of timely detection of unauthorized acquisition, use or disposition of the assets of the Company and its consolidated subsidiaries that could have a material effect on the financial statements. With the supervision and participation of our Chief Executive Officer and our Chief Financial Officer, management assessed the effectiveness of the Company’s internal controls over financial reporting as of December, 31, 2020, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment and those criteria, management concluded that, as of December 31, 2020, the Company’s internal control over financial reporting is effective. This Annual Report includes an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Changes in Internal Controls Over Financial Reporting There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the Company’s fiscal quarter ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Item 9B. Other Information. Not Applicable. 48 PART III Item 10. Directors, Executive Officers and Corporate Governance . Directors and Executive Officers The information required by Item 401 of SEC Regulation S-K concerning the directors of the Company and the nominees for election as directors of the Company at the Annual Meeting of Shareholders to be held on April 21, 2021 (the “2021 Annual Meeting”), is incorporated herein by reference from the disclosure included in the Company’s definitive Proxy Statement relating to the 2021 Annual Meeting (the “2021 Proxy Statement”), under the caption “PROPOSAL NO. 1 – ELECTION OF DIRECTORS”. The information concerning the executive officers of the Company required by Item 401 of SEC Regulation S-K is set forth in the portion of Part I of this Annual Report on Form 10-K entitled “Supplemental Item: Information about our Executive Officers.” Compliance with Section 16(a) of the Exchange Act The information required by Item 405 of SEC Regulation S-K is incorporated herein by reference from the disclosure included in the Company’s 2020 Proxy Statement under the caption “DELINQUENT SECTION 16(a) REPORTS.” Committee Charters and Code of Conduct and Ethics The Company’s Board of Directors has adopted charters for each of the Audit Committee, the Compensation Committee and the Governance and Nominating Committee. Copies of these charters are available on the Company’s Internet website at www.YourSBFinancial.com by first clicking “Corporate Governance” and then “Supplementary Info”. The Company has adopted a Code of Conduct and Ethics that applies to the Company’s directors, officers and employees. A copy of the Code of Conduct and Ethics is available on the Company’s Internet website at www.YourSBFinancial.com under the “Corporate Governance” tab. Interested persons may also obtain copies of the Code of Conduct and Ethics, the Audit Committee charter, the Compensation Committee charter and the Governance and Nominating Committee charter, without charge, by writing to SB Financial Group, Inc., Attn: Keeta J. Diller, 401 Clinton Street, Defiance, OH 43512. 49 Audit Committee The information required by Items 407(d)(4) and 407(d)(5) of SEC Regulation S-K is incorporated herein by reference from the disclosure included under the caption “MEETINGS AND COMMITTEES OF THE BOARD – Audit & Risk Management Committee” in the Company’s 2021 Proxy Statement. Item 11. Executive Compensation . The executive compensation information required by this item is incorporated herein by reference to the information contained in the Company’s 2021 Proxy Statement under the captions “COMPENSATION OF EXECUTIVE OFFICERS”, “EQUITY INCENTIVE PLAN INFORMATION”, “DIRECTOR COMPENSATION”, and “COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION”. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . The information required by Item 403 of SEC Regulation S-K is incorporated herein by reference from the disclosure included in the Company’s 2021 Proxy Statement under the caption “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT”. Equity Compensation Plan Information The SB Financial Group, Inc. 2008 Stock Incentive Plan (the “2008 Plan”) was approved by the shareholders of the Company at the 2008 Annual Meeting of Shareholders. The SB Financial Group, Inc. 2017 Stock Incentive Plan (the “2017 Plan”) was approved by the shareholders of the Company at the 2017 Annual Meeting of Shareholders. The following table shows, as of December 31, 2020, the number of common shares issuable upon exercise of outstanding stock options, the weighted-average exercise price of those stock options, and the number of common shares remaining for future issuance under the Company’s equity compensation plans (excluding common shares issuable upon exercise of outstanding stock options): Equity compensation plans approved by security holders ($ in thousands, except per share data) 2017 Plan 2008 Plan Total a) Number of securities to be issued upon exercise of outstanding options, warrants and rights - - - b) Weighted-average exercise price of outstanding options, warrants and rights $ - $ - $ - c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in row a) 444,541 - 444,541 Item 13. Certain Relationships and Related Transactions, and Director Independence . The information required by Item 404 of SEC Regulation S-K is incorporated herein by reference from the disclosure contained in the Company’s 2021 Proxy Statement under the caption “TRANSACTIONS WITH RELATED PERSONS”. The information required by Item 407(a) of SEC Regulation S-K is incorporated herein by reference from the disclosure contained in the Company’s 2021 Proxy Statement under the caption “CORPORATE GOVERNANCE – Director Independence”. Item 14. Principal Accountant Fees and Services. The information required to be disclosed in this Item 14 is incorporated herein by reference from the disclosure contained in the Company’s 2021 Proxy Statement under the caption “AUDIT & RISK MANAGEMENT COMMITTEE DISCLOSURE” – Pre-Approval of Services Performed by Independent Registered Public Accounting Firm” and “AUDIT & RISK MANAGEMENT COMMITTEE DISCLOSURE” – Services of Independent Registered Public Accounting Firm”. 50 PART IV Item 15. Exhibits and Financial Statement Schedules. Financial Statements The following consolidated financial statements are incorporated by reference from Item 8 hereof: ● Report of Independent Registered Public Accounting Firm (BKD, LLP), Opinion on Financial Statements ● Consolidated Balance Sheets as of December 31, 2020 and 2019 ● Consolidated Statements of Income for the Years ended December 31, 2020 and 2019 ● Consolidated Statements of Comprehensive Income for the Years ended December 31, 2020 and 2019 ● Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2020 and 2019 ● Consolidated Statements of Cash Flows for Years ended December 31, 2020 and 2019 ● Notes to Consolidated Financial Statements Financial Statement Schedules All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. Item 16. Form 10-K Summary. Not Applicable. 51 Exhibits Exhibit No. Description Location 3.1 Amended Articles of the Company Incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (File No. 01-36785). 3.2 Certificate of Amendment to the Amended Articles of the Company as filed with the Ohio Secretary of State on April 27, 1993 Incorporate herein by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (File No. 31-36785). 3.3 Certificate of Amendment to the Amended Articles of the Company as filed with the Ohio Secretary of State on April 30, 1997 Incorporated herein by reference to Exhibit 3(c) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 0-13507). 3.4 Certificate of Amendment to the Amended Articles of the Company as filed with the Ohio Secretary of State on May 27, 2011 Incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed June 1, 2011 (File No. 0-13507). 3.5 Certificate of Amendment to the Amended Articles of the Company as filed with the Ohio Secretary of State on April 12, 2013 Incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed April 18, 2013 (File No. 0-13507). 3.6 Certificate of Amendment by Directors or Incorporators to Articles filed with the Secretary of State of the State of Ohio on November 6, 2014 Incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 12, 2014 (File No. 0-13507). 3.7 Amended Articles of the Company, as amended (reflecting amendments through November 6, 2014) [for SEC reporting compliance purposes only – not filed with the Ohio Secretary of State] Incorporate herein by reference to Exhibit 3.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (File No. 01-36785). 3.8 Amended and Restated Regulations of the Company Incorporated herein by reference to Exhibit 3.5 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-13507). 3.9 Certificate Regarding Adoption of Amendment to Section 2.01 of the Amended and Restated Regulations of the Company by the Shareholders on April 16, 2009 Incorporate herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed April 22, 2009 (File No. 0-13507). 52 Exhibit No. Description Location 4.1 Form of Certificate for 6.50% Noncumulative Convertible Perpetual Preferred Shares, Series A, of the Company Incorporated herein by reference to Exhibit 4.1 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 filed on November 6, 2014 (File No. 333-198879). 4.2 Form of Depositary Receipt of the Company Incorporated herein by reference to Exhibit 4.2 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 filed on November 6, 2014 (File No. 333-198879). 4.3 Deposit Agreement, dated November 6, 2014, by and among the Company, Computershare Inc. and Computershare Trust Company, N.A. as Depositary, and the Holders from time to time of the Depositary Receipts described therein Incorporated herein by reference to Exhibit 4.3 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 filed on November 6, 2014 (File No. 333-198879). 4.4 Indenture, dated as of September 15, 2005, by and between the Company and Wilmington Trust Company, as Debenture Trustee, relating to Floating Rate Junior Subordinated Deferrable Interest Debentures Incorporated herein by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005 (File No. 0-13507). 4.5 Amended and Restated Declaration of Trust of Rurban Statutory Trust II, dated as of September 15, 2005 Incorporated herein by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005 (File No. 0-13507). 4.6 Guarantee Agreement, dated as of September 15, 2005, by and between the Company and Wilmington Trust Company, as Guarantee Trustee Incorporated herein by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005 (File No. 0-13507). 4.7 Agreement to furnish instruments and agreements defining rights of holders of long-term debt Filed herewith. 4.8 Description of Common Shares of the Company Filed herewith. 10.1* The Company’s Plan to Allow Directors to Elect to Defer Compensation Incorporated herein by reference to Exhibit 10(v) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (File No. 0-13507). 10.2* 2008 Stock Incentive Plan of the Company Incorporated herein by reference to Exhibit 10 to the Company’s Current Report on Form 8-K filed April 22, 2008 (File No. 0-13507). 10.3* Form of Restricted Stock Award Agreement (For Employees) under the Company’s 2008 Stock Incentive Plan Incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K for the fiscal year ended April 22, 2008 (File No. 0-13507). 53 Exhibit No. Description Location 10.4* Form of Incentive Stock Option Agreement with Five-Year Vesting under the Company’s 2008 Stock Incentive Plan Incorporated herein by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (File No. 0-13507). 10.5* Form of Non-Qualified Stock Option Award Agreement with Five-Year Vesting under the Company’s 2008 Stock Incentive Plan Incorporated herein by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (File No. 0-13507). 10.6* Employees’ Stock Ownership and Savings Plan of the Company Incorporated herein by reference to Exhibit 10(y) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 0-13507). 10.7* Employee Stock Purchase Plan of the Company Incorporated herein by reference to Exhibit 10(z) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File No. 0-13507). 10.8* Amended and Restated Employment Agreement, dated January 22, 2018, between the Company and Mark A. Klein Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 26, 2018 (File No. 01-36785). 10.9* Amended and Restated Change of Control Agreement, dated January 22, 2018, between the Company and Mark A. Klein Incorporated herein by reference to Exhibit 10.2(a) to the Company’s Current Report on Form 8-K filed January 26, 2018 (File No. 01-36785). 10.10* Amended and Restated Change of Control Agreement, dated January 22, 2018, between the Company and Anthony V. Cosentino Incorporated herein by reference to Exhibit 10.2(b) to the Company’s Current Report on Form 8-K filed January 26, 2018 (File No. 01-36785). 10.11* Amended and Restated Change of Control Agreement, dated January 22, 2018, between the Company and Jonathan R. Gathman Exhibit 10.2(c) to the Company’s Current Report on Form 8-K filed January 26, 2018 (File No. 01-36785). 10.12* Amended Supplemental Executive Retirement Plan Agreement, dated as of January 22, 2018 by and between the Company and Mark A. Klein Incorporated by reference to Exhibit 10.3(a) to the Company’s Current Report on Form 8-K filed January 26, 2018 (File No 01-36785). 10.13* Amended Supplemental Executive Retirement Plan Agreement, dated as of January 22, 2018 by and between the Company and Anthony V. Cosentino Incorporated by reference to Exhibit 10.3(b) to the Company’s Current Report on Form 8-K filed January 26, 2018 (File No 01-36785). 10.14* 2017 Split Dollar Agreement and Endorsement, dated as of January 22, 2018, between and The State Bank and Trust Company and Mark A. Klein Incorporated by reference to Exhibit 10.4(a) to the Company’s Current Report on Form 8-K filed January 26, 2018 (File No 01-36785). 54 Exhibit No. Description Location 10.15* 2017 Split Dollar Agreement and Endorsement, dated as of January 22, 2018, between and The State Bank and Trust Company and Anthony V. Cosentino Incorporated by reference to Exhibit 10.4(b) to the Company’s Current Report on Form 8-K filed January 26, 2018 (File No 01-36785). 10.16* Non-Qualified Deferred Compensation Plan of the Company effective as of January 1, 2007 Incorporated herein by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 0-13507). 10.17* Long-Term Incentive Compensation Plan for the Company and Affiliates Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 20, 2012 (File No. 0-13507). 10.18* SB Financial Group 2017 Stock Incentive Plan Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No. 01-36785). 11 Statement Regarding Computation of Per Share Earnings Included in Note 2 of the Notes to Consolidated Financial Statements of Registrant filed herewith as Exhibit 13. 13 2019 Annual Report of Registrant (not deemed filed except for portions thereof which are specifically incorporated by reference in this Annual Report on Form 10-K) Specified portions filed herewith. 21 Subsidiaries of Registrant Filed herewith. 23 Consent of BKD, LLP Filed herewith. 24 Power of Attorney of Directors and Executive Officers Included on signature page of this Annual Report on Form 10-K. 31.1 Rule 13a-14(a)/15d-14(a) Certification – Principal Executive Officer Filed herewith. 31.2 Rule 13a-14(a)/15d-14(a) Certification – Principal Financial Officer Filed herewith. 32.1 Section 1350 Certification – Principal Executive Officer and Principal Financial Officer Filed herewith. 101 The following materials from SB Financial Group Inc.’s 2020 Annual Report and incorporated therefrom in SB Financial Group, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, formatted in XBRL (extensible business reporting language) pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of December 31, 2020 and 2019; (ii) the Consolidated Statements of Income for the years ended December 31, 2020 and 2019; (iii) the Consolidated Statements of Comprehensive Income for the years ended December 31, 2020 and 2019; (iv) the Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2020 and 2019; (v) the Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019; and (vi) the Notes to Consolidated Financial Statements (electronically submitted herewith). * Management contract or compensatory plan or arrangement. 55 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. SB FINANCIAL GROUP, INC. Date: March 8, 2021 By: /s/ Anthony V. Cosentino Anthony V. Cosentino, Executive Vice President and Chief Financial Officer Power of Attorney KNOW ALL MEN BY THESE PRESENTS, that each undersigned officer and/or director of SB Financial Group, Inc., an Ohio corporation (the “Company”), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 2020, hereby constitutes and appoints Mark A. Klein and Anthony V. Cosentino, and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign both the Annual Report on Form 10-K and any and all amendments and documents related thereto, and to file the same, and any and all exhibits, financial statements and schedules related thereto, and other documents in connection therewith, with the Securities and Exchange Commission and the NASDAQ Stock Market, granting unto said attorneys-in-fact and agents, and substitute or substitutes, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all things that each of said attorneys-in-fact and agents, or either of them or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Name Date Capacity /s/ Mark A. Klein March 8, 2021 Chairman, President and Chief Executive Officer Mark A. Klein /s/ Anthony V. Cosentino March 8, 2021 Executive Vice President and Chief Financial Officer Anthony V. Cosentino /s/ George W. Carter March 8, 2021 Director George W. Carter /s/ Robert A. Fawcett, Jr. March 8, 2021 Director Robert A. Fawcett, Jr. /s/ Gaylyn J. Finn March 8, 2021 Director Gaylyn J. Finn /s/ Richard L. Hardgrove March 8, 2021 Director Richard L. Hardgrove /s/ Tom R. Helberg March 8, 2021 Director Tom R. Helberg /s/ Rita A. Kissner March 8, 2021 Director Rita A. Kissner /s/ Mark A. Klein March 8, 2021 Director Mark A. Klein /s/ William G. Martin March 8, 2021 Director William G. Martin /s/ Timothy J. Stolly March 8, 2021 Director Timothy J. Stolly Date: March 8, 2021 56