What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-05 compared with 2021-08-06 · 468 added, 444 removed, 897 unchanged (50% of the section changed)

Financial Statements

SB Financial Group, Inc.

Condensed Consolidated Balance Sheets

December 2020

Financial Group, Inc.

Consolidated Balance Sheets

($ in thousands)

and due from banks

bearing time deposits

Available-for-sale

held for sale

net of unearned income

for loan losses

and equipment, net

Reserve and Federal Home Loan Bank Stock, at cost

assets held for sale, net

Cash and due from banks

Interest bearing time deposits

Available-for-sale securities

Loans held for sale

Loans, net of unearned income

Allowance for loan losses

Premises and equipment, net

Federal Reserve and Federal Home Loan Bank Stock, at cost

Foreclosed assets held for sale, net

Interest receivable

Cash value of life insurance

servicing rights

and shareholders' equity

bearing demand

Home Loan Bank advances

preferred securities

debt net of issuance costs

& Contingent Liabilities

Shareholders'

Mortgage servicing rights

Liabilities and shareholders’ equity

Non interest bearing demand

Interest bearing demand

Time deposits

Total deposits

Short-term borrowings

Federal Home Loan Bank advances

Trust preferred securities

Subordinated debt net of issuance costs

Interest payable

Other liabilities

Total liabilities

Commitments & Contingent Liabilities

Shareholders’ Equity

Preferred stock, no par value;

4 unchanged sentences

2021 - 8,180,712 shares issued, 2020 - 8,180,712 shares issued

paid-in capital

other comprehensive income

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income (loss)

Treasury stock, at cost;

(2021 - 1,206,790 common shares, 2020 - 808,456 common shares)

shareholders' equity

liabilities and shareholders' equity

See notes to condensed consolidated financial statements (unaudited)

The balance sheet at December 31, 2020 has been derived

from the audited consolidated financial statements at that date.

SB Financial Group, Inc.

Total shareholders’ equity

Total liabilities and shareholders’ equity

notes to condensed consolidated financial statements (unaudited)

The balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date.

Financial Group, Inc.

Consolidated Income Statement (unaudited)

in thousands, except per share data)

Interest Income

Total interest income

36 unchanged sentences

Average common shares outstanding (in thousands):

See notes to condensed consolidated

financial statements (unaudited)

notes to condensed consolidated financial statements (unaudited)

Financial Group, Inc.

Consolidated Statements of Comprehensive Income (unaudited)

5 unchanged sentences

Total comprehensive income

See notes to condensed consolidated financial statements (unaudited)

notes to condensed consolidated financial statements (unaudited)

Financial Group, Inc.

Consolidated Statements of Shareholders’ Equity (unaudited)

Additional Paid-in

Accumulated Other Comprehensive

($ in thousands, except per share data)

Income (Loss)

Preferred Stock

Additional Paid-in

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

Treasury Stock

January 1, 2021

4 unchanged sentences

Stock based compensation expense

March 31, 2021

Balance, March 31, 2021

Other comprehensive income

3 unchanged sentences

Balance, June 30, 2021

Additional Paid-in

Accumulated Other Comprehensive

Other comprehensive (loss)

Dividends on common, $ 0.11 per share

Restricted stock vesting

Repurchased stock ( 106,911 shares)

Stock based compensation expense

Balance, September 30, 2021

($ in thousands, except per share data)

Preferred Stock

Additional Paid-in

Retained Earnings

Accumulated Other Comprehensive Income

Treasury Stock

January 1, 2020

5 unchanged sentences

Stock based compensation expense

March 31, 2020

Balance, March 31, 2020

Other comprehensive income

3 unchanged sentences

Balance, June 30, 2020

See notes to condensed consolidated financial statements (unaudited)

SB Financial Group, Inc.

Condensed Consolidated Statements of Cash

Flows (unaudited)

Months Ended June 30,

Other comprehensive loss

Dividends on common, $ 0.10 per share

Restricted stock vesting

Repurchased stock ( 73,517 shares)

Stock based compensation expense

Balance, September 30, 2020

notes to condensed consolidated financial statements (unaudited)

Financial Group, Inc.

Consolidated Statements of Cash Flows (unaudited)

($ in thousands)

September 30,

Operating Activities

13 unchanged sentences

Interest payable & other liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Investing Activities

10 unchanged sentences

Financing Activities

Net increase in demand deposits, money market, interest checking & savings

Net increase in demand deposits, money market, interest checking & savings accounts

Net decrease in time deposits

6 unchanged sentences

Net cash provided by financing activities

Increase in cash and cash equivalents

Increase (Decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

9 unchanged sentences

Liabilities assumed

See notes to condensed consolidated financial statements (unaudited)

SB FINANCIAL GROUP, INC.

notes to condensed consolidated financial statements (unaudited)

NOTE 1 – BASIS OF PRESENTATION

SB Financial Group, Inc., an Ohio corporation

(the “Company”), is a financial holding company whose principal activity is the ownership and management of its wholly-owned

subsidiaries, including The State Bank and Trust Company (“State Bank”),SBFG Title, LLC (“Title”), SB Captive,

FINANCIAL GROUP, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1—BASIS OF PRESENTATION

Financial Group, Inc., an Ohio corporation (the “Company”), is a financial holding company whose principal activity is the

ownership and management of its wholly-owned subsidiaries, including The State Bank and Trust Company (“State Bank”), SBFG

Title, LLC (“Title”), SB Captive, Inc.

(“Captive”), RFCBC, Inc.

(“RFCBC”), Rurbanc Data Services, Inc.

dba RDSI Banking Systems (“RDSI”),

and Rurban Statutory Trust II (“RST II”).

RDSI is presently inactive and has had no material operations or employees since

January 1, 2018.

In addition, State Bank owns all of the outstanding stock of Rurban Mortgage Company (“RMC”), which is inactive,

and State Bank Insurance, LLC (“SBI”).

In June 2020, the Company acquired Edon Bancorp

and its subsidiary, The Edon State Bank Company of Edon, Ohio (collectively, “Edon”), which were merged with and into the

Company and State Bank, respectively.

This acquisition was completed effective June 5, 2020, and the acquisition resulted in an increase

in goodwill, which is detailed in Note 8.

(“RFCBC”), Rurbanc Data Services,

dba RDSI Banking Systems (“RDSI”), and Rurban Statutory Trust II (“RST II”).

RDSI is presently inactive

and has had no material operations or employees since January 1, 2018.

In addition, State Bank owns all of the outstanding stock of Rurban

Mortgage Company (“RMC”), which is inactive, and State Bank Insurance, LLC (“SBI”).

June 2020, the Company acquired Edon Bancorp and its subsidiary, The Edon State Bank Company of Edon, Ohio (collectively, “Edon”),

which were merged with and into the Company and State Bank, respectively.

This acquisition was completed effective June 5, 2020, and

the acquisition resulted in an increase in goodwill, which is detailed in Note 8.

The business combination summary is detailed in Note

In March 2019, the Company formed Title, which

purchased all of the assets and real estate of an Ohio based title agency.

The purchase was completed effective March 15, 2019, and the

purchase resulted in an increase in goodwill.

In March 2019, the Company formed Captive, which

is a captive insurance company based in Nevada.

The Captive allows the Company to share insurance risk among a pool of similar sized banks.

The consolidated financial statements include

the accounts of the Company, State Bank, RFCBC, RDSI, RMC, Title, Captive and SBI.

All significant intercompany accounts and transactions

have been eliminated in consolidation.

The accompanying unaudited condensed consolidated

financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information

and with the instructions for Form 10-Q.

Accordingly, they do not include all of the information and footnotes required by generally accepted

accounting principles for complete financial statements.

The financial statements reflect all adjustments that are, in the opinion of

management, necessary to fairly present the financial position, results of operations and cash flows of the Company.

Those adjustments

consist only of normal recurring adjustments.

Results of operations for the three and six months ended June 30, 2021, are not necessarily

indicative of results for the complete year.

The condensed consolidated balance sheet of the

Company as of December 31, 2020 has been derived from the audited consolidated balance sheet of the Company as of that date.

For further information, refer to the consolidated

financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

New and applicable accounting pronouncements:

Investments – Equity

Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) –

Clarifying the Interactions between Topic 321, Topic 323 and Topic 815

This guidance was issued in January 2020 to clarify

that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting

under Topic 323, Investments-Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance

with Topic 321 immediately before applying or upon discontinuing the equity method.

The amendments also clarify that when determining

the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise,

if the underlying securities would be accounted for under the equity method or fair value option.

The guidance is effective beginning

after December 15, 2020.

The impact of this new guidance did not have a material impact on the Company’s consolidated financial

Accounting Standards not yet adopted:

Reference Rate Reform –

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)

This guidance provides temporary options to ease

the potential burden in accounting for reference rate reform.

It is intended to help stakeholders during the global market-wide reference

rate transition period.

consolidated financial statements include the accounts of the Company, State Bank, RFCBC, RDSI, RMC, SBT Title, SB Captive and SBI.

significant intercompany accounts and transactions have been eliminated in consolidation.

accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting

principles for interim financial information and with the instructions for Form 10-Q.

Accordingly, they do not include all of the information

and footnotes required by generally accepted accounting principles for complete financial statements.

The financial statements reflect

all adjustments that are, in the opinion of management, necessary to fairly present the financial position, results of operations and

cash flows of the Company.

Those adjustments consist only of normal recurring adjustments.

Results of operations for the three and nine

months ended September 30, 2021, are not necessarily indicative of results for the complete year.

condensed consolidated balance sheet of the Company as of December 31, 2020 has been derived from the audited consolidated balance sheet

of the Company as of that date.

further information, refer to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form

10-K for the year ended December 31, 2020.

and applicable accounting pronouncements:

Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and

Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323 and Topic 815

guidance was issued in January 2020 to clarify that a company should consider observable transactions that require a company to either

apply or discontinue the equity method of accounting under Topic 323, Investments-Equity Method and Joint Ventures, for the purposes

of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method.

The amendments also clarify that when determining the accounting for certain forward contracts and purchased options a company should

not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair

value option.

The guidance is effective beginning after December 15, 2020.

The impact of this new guidance did not have a material impact

on the Company’s consolidated financial statements.

Standards not yet adopted:

Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)

guidance provides temporary options to ease the potential burden in accounting for reference rate reform.

It is intended to help stakeholders

during the global market-wide reference rate transition period.

The guidance is effective as of March 12, 2020 through December 31, 2022.

The Company anticipates being fully

prepared to implement a replacement for the reference rate and has determined that any change will not have a material impact on the Company’s

consolidated financial statements.

Financial Instruments

– Credit Losses (Topic 326)

This ASU, which is commonly known as “CECL,”

replaces the current GAAP incurred impairment methodology regarding credit losses with a methodology that reflects expected credit losses

and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The amendments

in this update affect an entity to varying degrees depending on the credit quality of the assets held by the entity, their duration, and

how the entity applies current GAAP.

The adoption of ASU 2016-13 is likely to result

in an increase in the allowance for loan losses as a result of changing from an “incurred loss” model, which encompasses allowances

for current known and inherent losses within the portfolio, to an “expected loss” model, which encompasses allowances for

losses expected to be incurred over the life of the portfolio.

Furthermore, ASU 2016-13 will necessitate that we establish an allowance

for expected credit losses on debt securities.

In December 2018, the Office of the

Comptroller of the Currency (“OCC”), the Federal Reserve Board, and the Federal Deposit Insurance Corporation (“FDIC”)

approved a final rule to address changes to credit loss accounting under GAAP, including banking organizations’ implementation of

The final rule provides banking organizations the option to phase in over a three-year period the day-one adverse effects on regulatory

capital that may result from the adoption of the new accounting standard.

On November 15, 2019, the FASB delayed

the effective date for certain small public companies and other private companies.

As the Company is currently a smaller reporting company,

the amendment will delay the effective date of ASU No.

2016-13 to the Company’s fiscal year beginning January 1, 2023.

While we are currently unable to reasonably

estimate the impact of adopting ASU 2016-13, we expect that the impact of adoption will be significantly influenced by the composition,

characteristics and quality of our loan and securities portfolios as well as the prevailing economic conditions and forecasts as of the

adoption date.

The Company implemented a process to track required data by utilizing accounting software in preparation for compliance.

The Company anticipates being fully prepared to implement a replacement for the reference rate and has determined that any change will

not have a material impact on the Company’s consolidated financial statements.

Financial Instruments – Credit Losses (Topic 326)

ASU, which is commonly known as “CECL,” replaces the current GAAP incurred impairment methodology regarding credit losses

with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information

to inform credit loss estimates.

The amendments in this update affect an entity to varying degrees depending on the credit quality of

the assets held by the entity, their duration, and how the entity applies current GAAP.

adoption of ASU 2016-13 is likely to result in an increase in the allowance for loan losses as a result of changing from an “incurred

loss” model, which encompasses allowances for current known and inherent losses within the portfolio, to an “expected loss”

model, which encompasses allowances for losses expected to be incurred over the life of the portfolio.

Furthermore, ASU 2016-13 will

necessitate that we establish an allowance for expected credit losses on debt securities.

December 2018, the Office of the Comptroller of the Currency (“OCC”), the Federal Reserve Board, and the Federal Deposit

Insurance Corporation (“FDIC”) approved a final rule to address changes to credit loss accounting under GAAP, including banking

organizations’ implementation of CECL.

The final rule provides banking organizations the option to phase in over a three-year period

the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard.

November 15, 2019, the FASB delayed the effective date for certain small public companies and other private companies.

As the Company

is currently a smaller reporting company, the amendment delays the effective date of ASU No.

2016-13 to the Company’s fiscal year

beginning January 1, 2023.

we are currently unable to reasonably estimate the impact of adopting ASU 2016-13, we expect that the impact of adoption will be significantly

influenced by the composition, characteristics and quality of our loan and securities portfolios as well as the prevailing economic conditions

and forecasts as of the adoption date.

The Company implemented a process to track required data by utilizing accounting software in preparation

for compliance.

We anticipate being fully prepared for implementation by January 1, 2023.

Reclassifications:

Certain reclassifications have been made to prior

period financial statements to conform to the current financial statement presentation.

These reclassifications had no effect on net income.

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.

There were no anti-dilutive shares in 2021 or

The average number of common shares used in the computation of basic and diluted earnings per share are set forth in the tables

Three Months Ended

reclassifications have been made to prior period financial statements to conform to the current financial statement presentation.

reclassifications had no effect on net income.

2—EARNINGS PER SHARE

per share (EPS) have been computed based on the weighted average number of common shares outstanding during the periods presented.

were no anti-dilutive shares in 2021 or 2020.

Participating securities in the table reflect dividends on unvested restricted shares.

The average number of common shares used in the computation of basic and diluted earnings per share are set forth in the tables below:

Three Months Ended Sep.

($ and outstanding shares in thousands - except per share data)

9 unchanged sentences

Diluted earnings per common share

Six Months Ended

Nine Months Ended Sep.

($ and outstanding shares in thousands - except per share data)

11 unchanged sentences

Effective June 5, 2020, the Company acquired Edon

Bancorp and its subsidiary, The Edon State Bank Company of Edon, Ohio.

Edon was headquartered in Edon, Ohio and had one retail banking

At the closing of the acquisition, Edon Bancorp was merged with and into the Company, with the Company surviving, and Edon State

Bank (“Edon State Bank”) was merged with and into State Bank, with State Bank surviving.

Under the terms of the merger agreement,

shareholders of Edon received fixed consideration of $ 103.50 in cash for each share of Edon common stock for total consideration of $ 15.5

The Company accounted for the transaction under the acquisition method of accounting, which means that the acquired assets and

liabilities were recorded at fair value at the date of acquisition.

Bancorp and its subsidiary, The Edon State Bank Company of Edon, Ohio (“Edon”).

Edon was headquartered in Edon, Ohio and had

one retail banking office.

At the closing of the acquisition, Edon Bancorp was merged with and into the Company, with the Company surviving,

and Edon was merged with and into State Bank, with State Bank surviving.

Under the terms of the merger agreement, shareholders of Edon

received fixed consideration of $ 103.50 in cash for each share of Edon common stock for total consideration of $ 15.5 million.

accounted for the transaction under the acquisition method of accounting, which means that the acquired assets and liabilities were recorded

at fair value at the date of acquisition.

In accordance with ASC 805, the Company expensed

approximately $ 1.2 million of direct acquisition costs during the three months ended June 30, 2020, and no additional merger expense was

recorded in the three months ended June 30, 2021.

The $ 1.2 million in merger expense is split between data processing and professional

fees expense.

As a result of the acquisition, the Company recorded $ 4.3 million of goodwill and $ 0.7 million of intangible assets in the

second quarter of 2020.

The Company was able to increase both its deposit and loan base and acquire new households in a new market.

is expected that this transaction will result in business synergies and economies of scale.

The acquisition was consistent with the Company’s

strategy to expand its presence in Northwest Ohio and to increase profitability by introducing existing products and services to the acquired

customer base.

The intangible assets are related to core deposits, which are being amortized over 10 years on a straight-line basis.

tax purposes, goodwill is non-deductible but will be evaluated annually for impairment.

approximately $ 1.2 million of direct acquisition costs during the three months ended September 30, 2020.

The $ 1.2 million in merger expense

is split between data processing and professional fees expense.

As a result of the acquisition, the Company recorded $ 4.3 million of goodwill

and $ 0.7 million of intangible assets in the second quarter of 2020.

The Company was able to increase both its deposit and loan base and

acquire new households in a new market.

It is expected that this transaction will result in business synergies and economies of scale.

The acquisition was consistent with the Company’s strategy to expand its presence in Northwest Ohio and to increase profitability

by introducing existing products and services to the acquired customer base.

The intangible assets are related to core deposits, which

are being amortized over 10 years on a straight-line basis.

For tax purposes, goodwill is non-deductible but will be evaluated annually

for impairment.

The following table summarizes the fair value

2 unchanged sentences

information as it becomes available.

If, prior to the end of the one-year measurement period for finalizing the purchase price allocation,

relevant information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments

will be recorded in the reporting period in which the adjustment amounts are determined.

Potential adjustments, if any, will be related

to assets that may have changes to valuation amounts that were not readily determinable at the acquisition date.

The table includes any updates to assumptions determined within one year of the completion of the

The contractual principal of loans at the acquisition

date was $ 16.3 million and the estimate of the contractual cash flows not expected to be collected is $ 0.4 million.

date was $ 16.3 million and the estimate of the contractual cash flows not expected to be collected was $ 0.4 million.

Fair value of assets acquired

15 unchanged sentences

The following schedule includes the

pro forma results for the three and six months ended June 30, 2021 and 2020, as if the Edon acquisition had occurred as of the beginning

of the reporting periods presented.

The acquisition would have increased revenue by approximately $ 0.2 and $ 0.5 million respectively and

reduced net income by approximately $ 0.5 and $ 0.4 million respectively for the three and six months ended June 30, 2020.

pro forma results for the nine months ended September 30, 2021 and 2020, as if the Edon acquisition had occurred as of the beginning of

the reporting periods presented.

The acquisition would have increased revenue by approximately $ 0.5 million and reduced net income by

$ 0.4 million for the nine months ended September 30, 2020.

Summary of Operations ($ in thousands)

Three Months Ended

Nine Months Ended

SB Financial Consolidated

7 unchanged sentences

Basic earnings per share

Diluted earnngs per share

Six Months Ended

Net interest income

Provision for loan losses

Net interest income after provision

Non interest income

Non interest expense

Income before income taxes

Income tax expense

Basic earnings per share

Diluted earnngs per share

tax expense for Edon calculated using a 21 % statutory rate

Diluted earnings per share

* Income tax expense for Edon calculated using a 21 % statutory

Note 4 – AVAILABLE

1 unchanged sentence

The amortized cost and appropriate fair values,

together with gross unrealized gains and losses, of securities at June 30, 2021 and December 31, 2020 were as follows:

together with gross unrealized gains and losses, of securities at September 30, 2021 and December 31, 2020 were as follows:

($ in thousands)

June 30, 2021:

September 30, 2021

Treasury and Government agencies

8 unchanged sentences

The amortized cost and fair value of securities

available for sale at June 30, 2021, by contractual maturity, are shown below.

available for sale at September 30, 2021, by contractual maturity, are shown below.

Expected maturities will differ from contractual maturities

7 unchanged sentences

The fair value of securities pledged as collateral,

to secure public deposits and for other purposes, was $ 50.6 million at June 30, 2021 and $ 53.7 million at December 31, 2020.

value of securities delivered for repurchase agreements was $ 27.3 million at June 30, 2021 and $ 28.2 million at December 31, 2020.

to secure public deposits and for other purposes, was $ 62.1 million at September 30, 2021 and $ 53.7 million at December 31, 2020.

fair value of securities delivered for repurchase agreements was $ 25.2 million at September 30, 2021 and $ 28.2 million at December 31,

There were no realized gains and losses from sales

of available-for-sale securities for the three and six months ended June 30, 2021 or June 30, 2020.

of available-for-sale securities for the three and nine months ended September 30, 2021 or September 30, 2020.

Certain investments in debt securities are reported

1 unchanged sentence

Total fair value of these investments was $ 178.6

million at June 30, 2021, and $ 27.3 million at December 31, 2020, which was approximately 56 and 18 percent, respectively, of the Company’s

available-for-sale investment portfolio at such dates.

Based on evaluation of available evidence, including recent changes in market interest

rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for

these securities are temporary.

Should the impairment of any of these securities become other than temporary, the cost basis of the investment

will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

million at September 30, 2021, and $ 27.3 million at December 31, 2020, which was approximately 72 and 18 percent, respectively, of the

Company’s available-for-sale investment portfolio at such dates.

Based on evaluation of available evidence, including recent changes

in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines

in fair value for these securities are temporary.

Should the impairment of any of these securities become other than temporary, the cost

basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment

is identified.

Securities with unrealized losses, aggregated by investment class and

length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2021 and December 31, 2020 are

length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2021 and December 31, 2020

are as follows:

($ in thousands)

Less than 12 Months

12 Months or Longer

($ in thousands)

June 30, 2021

September 30, 2021

Unrealized Losses

16 unchanged sentences

The total unrealized loss in the securities portfolio

was $ 1.5 million as of June 30, 2021 compared to a $ 0.06 million unrealized loss at December 31, 2020.

was $ 2.6 million as of September 30, 2021 compared to a $ 0.06 million unrealized loss at December 31, 2020.

Management evaluates securities

4 unchanged sentences

Management has determined there is no

other-than-temporary-impairment on its securities as of June 30, 2021.

other-than-temporary-impairment on its securities as of September 30, 2021.

NOTE 5 – LOANS AND ALLOWANCE FOR LOAN LOSSES

58 unchanged sentences

for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

Categories of loans at June 30, 2021 and December 31, 2020 include:

Categories of loans at September 30, 2021 and December 31, 2020 include:

Nonaccrual Loans

($ in thousands)

September 2021

December 2020

September 2021

December 2020

61 unchanged sentences

The following tables present the activity in the

allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of June 30, 2021, December

31, 2020 and June 30, 2020.

allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of September 30, 2021,

December 31, 2020 and September 30, 2020.

($ in thousands)

For the Three Months Ended

June 30, 2021

For the Three Months Ended September 30, 2021

Commercial & industrial

Commercial real estate

Residential real estate

Beginning balance

Provision (credit)

Ending balance

For the Six Months Ended

June 30, 2021

l real estate

For the Nine Months Ended September 30, 2021

Commercial & industrial

Commercial real estate

Residential real estate

Beginning balance

Provision (credit)

Ending balance

For the Three Months Ended

June 30, 2020

For the Three Months Ended September 30, 2020

Commercial & industrial

Commercial real estate

Residential real estate

Beginning balance

Provision (credit)

Ending balance

For the Six Months Ended

June 30, 2020

For the Nine Months Ended September 30,

Commercial & industrial

Commercial real estate

Residential real estate

Beginning balance

Ending balance

Loans Receivable at

June 30, 2021

Receivable at September 30, 2021

Commercial & industrial

Commercial real estate

Residential real estate

Ending balance:

6 unchanged sentences

collectively evaluated for impairment

Loans Receivable at

December 31, 2020

Loans Receivable at December 31, 2020

Commercial & industrial

Commercial real estate

Residential real estate

Ending balance:

38 unchanged sentences

worthless asset, even though partial recovery may be possible at some time in the future.

The following tables present the credit risk

profile of the Company’s loan portfolio based on rating category as of June 30, 2021 and December 31, 2020.

The following tables present the credit risk profile

of the Company’s loan portfolio based on rating category as of September 30, 2021 and December 31, 2020.

($ in thousands)

June 30, 2021

real estate -

September 30, 2021

Commercial & industrial

Commercial real estate - owner occupied

Commercial real estate - nonowner occupied

Residential real estate

Special Mention (5)

1 unchanged sentence

December 31, 2020

real estate -

Commercial & industrial

Commercial real estate - owner occupied

Commercial real estate - nonowner occupied

Residential real estate

Special Mention (5)

3 unchanged sentences

The following tables present the Company’s

loan portfolio aging analysis as of June 30, 2021 and December 31, 2020.

loan portfolio aging analysis as of September 30, 2021 and December 31, 2020.

($ in thousands)

June 30, 2021

90 Days Past Due

September 30, 2021

Commercial & industrial

3 unchanged sentences

December 31, 2020

90 Days Past Due

Commercial & industrial

12 unchanged sentences

The following tables present impaired loan information as of and for

the three and six months ended June 30, 2021 and 2020, and for the twelve months ended December 31, 2020:

the three and nine months ended September 30, 2021 and 2020, and for the twelve months ended December 31, 2020:

($ in thousands)

Six Months Ended

Nine Months Ended

Unpaid Principal

1 unchanged sentence

Interest Income

June 30, 2021

September 30, 2021

With no related allowance recorded:

15 unchanged sentences

Interest Income

June 30, 2021

September 30, 2021

($ in thousands)

33 unchanged sentences

Residential real estate

Six Months Ended

Nine Months Ended

Three Months Ended

June 30, 2020

September 30, 2020

Average Recorded

35 unchanged sentences

concessions provided to borrowers include:

rate reduction:

A reduction of the stated interest rate to a nonmarket rate for the remaining

original life of the loan.

The Company also may grant interest rate concessions for a limited

timeframe on a case by case basis.

● Amortization

or maturity date change:

A change in the amortization or maturity date beyond what the collateral

supports, including a concession that does any of the following:

● Interest rate reduction:

A reduction of the stated

interest rate to a nonmarket rate for the remaining original life of the loan.

The Company also may grant interest rate concessions for

a limited timeframe on a case by case basis.

● Amortization or maturity date change:

in the amortization or maturity date beyond what the collateral supports, including a concession that does any of the following:

(1) Lengthens the amortization period of the amortized principal beyond market terms.

12 unchanged sentences

potentially require non-market terms and would then be reclassified as TDRs.

A concession that is not categorized as one of the concessions described above.

These concessions

include, but are not limited to:

principal forgiveness, collateral concessions, covenant

concessions, and reduction of accrued interest.

Principal forgiveness may result from any

TDR modification of any concession type.

The following table represents new TDR activity for the three and six

months ended June 30, 2021.

During the three and six months ended June 30, 2020, the Company had no new TDR activity.

A concession that is not categorized as

one of the concessions described above.

These concessions include, but are not limited to:

principal forgiveness, collateral concessions,

covenant concessions, and reduction of accrued interest.

Principal forgiveness may result from any TDR modification of any concession

The Company had no new TDR activity in the three

months ended September 30, 2021.

The following table represents new TDR activity for the nine months ended September 30, 2021.

the three and nine months ended September 30, 2020, the Company had no new TDR activity.

($ in thousands)

5 unchanged sentences

Total modifications

Interest Only

Total modifications

4 unchanged sentences

(deferral) agreements beyond the current three-month period before a loan is considered to be a TDR.

As of June 30, 2021, the Company

As of September 30, 2021, the Company

had no loans on COIVD-related deferral.

As of June 30, 2021, the company had $ 1.6 million

in commercial real estate in Foreclosed Assets Held for Sale.

As of September 30, 2021, the Company had $ 1.6

million in commercial real estate in Foreclosed Assets Held For Sale.

Foreclosed assets held for sale at December 31, 2020, was $.

2 unchanged sentences

The Company acquired loans in the acquisition

of The Edon State Bank Company of Edon, Ohio, effective June 5, 2020.

None of the acquired loans had evidence of deterioration of credit

quality since origination, and it was probable, at acquisition, that all contractually required payments would be collected.

of Edon effective June 5, 2020.

None of the acquired loans had evidence of deterioration of credit quality since origination, and it was

probable, at acquisition, that all contractually required payments would be collected.

The following table presents the carrying amount

of the acquired loans included in the consolidated balance sheet as of June 30, 2021:

of the acquired loans included in the consolidated balance sheet as of September 30, 2021:

($ in thousands)

September 30,

Commercial & industrial

2 unchanged sentences

Residential real estate

Accretable yield, or income expected to be collected as of June 30,

Accretable yield, or income expected to be collected as of September

30, 2021 was $ 0.3 million.

3 unchanged sentences

The unpaid principal balance of mortgage loans serviced for others approximated $ 1.3

billion at June 30, 2021 and $ 1.3 billion at December 31, 2020.

billion at September 30, 2021 and $ 1.3 billion at December 31, 2020.

Contractually specified servicing fees of $ 0.9 million and $ 2.5 million

were included in mortgage loan servicing fees in the consolidated income statement for the three months and six months ended June 30,

were included in mortgage loan servicing fees in the consolidated income statement for the three months and nine months ended September

30, 2021, respectively.

Servicing fees of $ 0.8 million and $ 1.5 million were included for the three and six months ended June 30, 2020, respectively.

Servicing fees of $ 0.8 million and $ 2.4 million were included for the three and nine months ended September 30,

2020, respectively.

The following table summarizes mortgage servicing

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

($ in thousands)

10 unchanged sentences

A summary of the activity in goodwill is presented

Six Months Ended

September 30,

in thousands)

1 unchanged sentence

Acquired goodwill

Measurement period adjustments

Ending balance

1 unchanged sentence

impairment annually, and on an interim basis if events or circumstances change that indicate an impairment may exist.

When assessing goodwill

for impairment, first, a qualitative assessment can be made to determine whether it is more likely than not that the estimated fair value

of a reporting unit is less that its estimated carrying value.

If the results of the qualitative assessment are not conclusive, a quantitative

goodwill test is performed.

Alternatively, a quantitative goodwill test can be performed without performing a qualitative assessment.

Goodwill was assessed for impairment using a quantitative

test performed as of September 30, 2020 and reevaluated as of December 31, 2020.

The Company again reviewed goodwill as of June 30, 2021

and the estimated fair value of the reporting unit exceeded the net carrying value, and therefore no goodwill impairment existed as of

No events or circumstances since the December 31, 2020 impairment test were noted that would indicate it was more likely than

not a goodwill impairment exists.

As of September 30, 2021 and December 31, 2020

the carrying amount of goodwill was $ 22.1 million.

There have been no changes in the carrying amount of the goodwill for the three and

nine months ended September 30, 2021 Goodwill is assessed for impairment annually as of December 31, or more frequently if events occur

or circumstances change that indicate an impairment may exist.

When assessing goodwill for impairment, first, a qualitative assessment

can be made to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its estimated

carrying value.

If the results of the qualitative assessment are not conclusive, a quantitative goodwill test is performed.

Alternatively,

a quantitative goodwill test can be performed without performing a qualitative assessment.

Goodwill was assessed for impairment using a qualitative test performed

as of September 30, 2021..

The results of the test indicated no goodwill impairment existed as of that date.

NOTE 9 – DERIVATIVE FINANCIAL INSTRUMENTS

32 unchanged sentences

The table below presents the notional amount and

fair value of the Company’s interest rate swaps, IRLCs and forward contracts utilized as of June 30, 2021 and December 31, 2020.

June 30, 2021

fair value of the Company’s interest rate swaps, IRLCs and forward contracts utilized as of September 30, 2021 and December 31,

September 30, 2021

December 31, 2020

3 unchanged sentences

Interest rate swaps associated with loans

Forward contracts

Total contracts

10 unchanged sentences

The following table presents the amounts included

in the consolidated statements of income for non-hedging derivative financial instruments for the six months ended June 30, 2021 and 2020.

in the consolidated statements of income for non-hedging derivative financial instruments for the nine months ended September 30, 2021

Three Months Ended

Six Months Ended

September 30,

($ in thousands)

1 unchanged sentence

Interest rate swap contracts

Other expense

Gain on sale of mortgage loans & OMSR

2 unchanged sentences

The following table shows the offsetting of financial assets and derivative

assets at June 30, 2021 and December 31, 2020.

assets at September 30, 2021 and December 31, 2020.

Gross amounts

offset in the

Net amounts of

presented in the

Gross amounts not offset in the

consolidated balance sheet

consolidated balance

($ in thousands)

Gross amounts

of recognized

offset in the

balance sheet

the consolidated

balance sheet

Cash collateral

June 30, 2021

September 30, 2021

Interest rate swaps

1 unchanged sentence

Interest rate swaps

The following table shows the offsetting of financial liabilities and

derivative liabilities at June 30, 2021 and December 31, 2020.

The following table shows the offsetting of financial liabilities

and derivative liabilities at September 30, 2021 and December 31, 2020.

Gross amounts

of liabilities

Gross amounts

offset in the

Net amounts of

presented in the

Gross amounts not offset in the

consolidated balance sheet

consolidated balance

($ in thousands)

Gross amounts

of recognized

offset in the

balance sheet

the consolidated

balance sheet

Cash collateral

June 30, 2021

September 30, 2021

Interest rate swaps

10 unchanged sentences

through 2051.

As of June 30, 2021, these repurchase agreements were secured by securities totaling $ 27.3 million.

The repurchase agreements

mature within one month.

As of September 30, 2021, these repurchase agreements were secured by securities totaling $ 25.2 million.

The repurchase

agreements mature within one month.

The Company has borrowing capabilities at the

Federal Reserve Discount Window by pledging either securities or loans as collateral.

As of June 30, 2021, there was no collateral pledged

or borrowings drawn at the Discount Window.

The Company participated in the Paycheck Protection

Program (“PPP”) and, as a result, has the ability to borrow from the Federal Reserve’s special purpose Paycheck Protection

Program Liquidity Facility (“PPPLF”) for additional funding.

At June 30, 2021, there were no borrowings from the PPPLF.

At June 30, 2021 and December 31, 2020, the Company

had $ 41.0 million in federal funds lines, of which none was drawn.

As of September 30, 2021, there was no collateral

pledged or borrowings drawn at the Discount Window.

At September 30, 2021 and December 31, 2020, the

Company had $ 41.0 million in federal funds lines, of which none was drawn.

NOTE 11 – FEDERAL HOME LOAN BANK ADVANCES

The Company’s FHLB advances were secured

by $ 147.5 million in mortgage loans at June 30, 2021.

by $ 155.4 million in mortgage loans at September 30, 2021.

Advances, at interest rates from 2.88 to 2.93 percent, are subject to restrictions

or penalties in the event of prepayment.

Aggregate annual maturities of FHLB advances at June 30, 2021 were:

Aggregate annual maturities of FHLB advances at September 30, 2021 were:

($ in thousands)

4 unchanged sentences

Distributions on the Capital Securities are payable quarterly at a variable rate that is based upon the 3-month LIBOR plus

1.80 percent and are included in interest expense in the consolidated financial statements.

These securities may be included in Tier 1

capital and may be prepaid at any time without penalty (with certain limitations applicable) under current regulatory guidelines and interpretations .

The balance of the Capital Securities as of June 30, 2021 and December 31, 2020 was $ 10.3 million, with a maturity date of September 15,

1.80%, currently at 1.92%, and are included in interest expense in the consolidated financial statements.

These securities may be included

in Tier 1 capital and may be prepaid at any time without penalty (with certain limitations applicable) under current regulatory guidelines

and interpretations .

The balance of the Capital Securities as of September 30, 2021 and December 31, 2020 was $ 10.3 million, with a maturity

date of September 15, 2035 .

NOTE 13 – SUBORDINATED DEBT

5 unchanged sentences

placement exempt from the registration requirements under the Securities Act of 1933, as amended.

The Notes mature on June 1, 2031 and 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

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 Company may redeem the Notes at any time after May 31, 2026, and at any time in whole, but not in part, upon the occurrence

of certain events.

Any redemption of the Notes will be subject to prior regulatory approval.

The Company incurred debt issuance costs

for placement fees, legal and other out-of-pocket expenses of approximately $ 0.5 million, which are being amortized over the life of the

The Notes mature on June 1, 2031 and

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 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 Company may redeem the Notes at any

time after May 31, 2026, and at any time in whole, but not in part, upon the occurrence of certain events.

Any redemption of the Notes

will be subject to prior regulatory approval.

The Company incurred debt issuance costs for placement fees, legal and other out-of-pocket

expenses of approximately $ 0.5 million, which are being amortized over the life of the Notes.

NOTE 14 – FAIR VALUE OF ASSETS AND LIABILITIES

4 unchanged sentences

levels of inputs that may be used to measure fair value:

Level 1 Quoted

prices in active markets for identical assets or liabilities

Level 2 Observable

inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities;

Level 1 Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as

quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or

Level 3 Unobservable

inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

or other inputs that are observable or

can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs that are supported by little or

no market activity and that are significant to the fair value of the assets or liabilities

Following is a description of the valuation methodologies

29 unchanged sentences

of assets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements

fell at June 30, 2021 and December 31, 2020.

fell at September 30, 2021 and December 31, 2020.

($ in thousands)

Fair Values at

Fair value at

September 30,

Treasury and Government Agencies

6 unchanged sentences

($ in thousands)

Fair Values at

Fair value at

Treasury and Government Agencies

10 unchanged sentences

ending balances of recurring fair value measurements recognized in the accompanying consolidated balance sheets using significant unobservable

(Level 3) inputs for the three and six months ended June 30, 2021 and 2020.

(Level 3) inputs for the three and nine months ended September 30, 2021 and 2020.

for the Three Months Ended

for the Six Months Ended

September 30,

for the Nine Months Ended

September 30,

($ in thousands)

20 unchanged sentences

review policy.

All impaired loans held by the Company were collateral dependent at June 30, 2021 and December 31, 2020.

All impaired loans held by the Company were collateral dependent at September 30, 2021 and December 31, 2020.

Mortgage Servicing Rights

14 unchanged sentences

($ in thousands)

Fair values at

Fair value at

September 30,

Impaired loans

1 unchanged sentence

($ in thousands)

Fair values at

Fair value at

Impaired loans

6 unchanged sentences

about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.

Fair value at

Range (weighted-

($ in thousands)

Fair value at

September 30,

Valuation technique

Unobservable inputs

(weighted-average)

Collateral-dependent impaired loans

11 unchanged sentences

Loan closing rates

Fair Value at

Range (weighted-

in thousands)

Unobservable inputs

(weighted-average)

Collateral-dependent impaired loans

11 unchanged sentences

Loan closing rates

were no changes in the inputs or methodologies used to determine fair value at June 30, 2021 as compared to December 31, 2020.

following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated

balance sheets at amounts other than fair value.

and Due From Banks, Federal Reserve and Federal Home Loan Bank Stock and Accrued Interest Receivable and Payable

carrying amount approximates the fair value.

Held for Sale

fair value of loans held for sale is based upon quoted market prices, where available, or is determined by discounting estimated cash

flows using interest rates approximating the Company’s current origination rates for similar loans and adjusted to reflect the

inherent credit risk.

estimated fair value of loans as of June 30, 2021 follows the guidance in ASU 2016-01, which prescribes an “exit price” approach

in estimating and disclosing fair value of financial instruments.

The fair value calculation at that date discounted estimated future

cash flows using rates that incorporated discounts for credit, liquidity, and marketability factors.

FHLB Advances & Repurchase Agreements

include demand deposits, savings accounts, and certain money market deposits.

There were no changes in the inputs or methodologies

used to determine fair value at September 30, 2021 as compared to December 31, 2020.

The following methods were used to estimate the

fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value.

Cash and Due From Banks, Federal Reserve and

Federal Home Loan Bank Stock and Accrued Interest Receivable and Payable

The carrying amount approximates the fair value.

The estimated

fair value for fixed-maturity time deposits, as well as borrowings, is based on estimates of the rate State Bank could pay on similar

instruments with similar terms and maturities at June 30, 2021 and December 31, 2020.

fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining

terms of the agreements and the present creditworthiness of the counterparties.

The estimated fair values for other financial instruments

and off-balance-sheet loan commitments approximate cost at June 30, 2021 and December 31, 2020 and are not considered significant to

this presentation.

Preferred Securities

fair value for Trust Preferred Securities is estimated by discounting the cash flows using an appropriate discount rate.

fair value for subordinated debt is estimated by discounting the cash flows using a discount rate equal to the rate currently offered

on similar borrowings.

following table presents estimated fair values of the Company’s other financial instruments carried at other than fair value.

fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments

by management and uncertainties.

Fair value is the estimated amount at which financial assets or liabilities could be exchanged in a

current transaction between willing parties, other than in a forced or liquidation sale.

Because no market exists for certain of these

financial instruments, and because management does not intend to sell these financial instruments, the Company does not know whether

the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.

Loans Held for Sale

The fair value of loans held for sale is based

upon quoted market prices, where available, or is determined by discounting estimated cash flows using interest rates approximating the

Company’s current origination rates for similar loans and adjusted to reflect the inherent credit risk.

The estimated fair value of loans as of September

30, 2021 follows the guidance in ASU 2016-01, which prescribes an “exit price” approach in estimating and disclosing fair

value of financial instruments.

The fair value calculation at that date discounted estimated future cash flows using rates that incorporated

discounts for credit, liquidity, and marketability factors.

Deposits, FHLB Advances & Repurchase Agreements

Deposits include demand deposits, savings accounts,

and certain money market deposits.

The carrying amount approximates the fair value.

The estimated fair value for fixed-maturity time deposits,

as well as borrowings, is based on estimates of the rate State Bank could pay on similar instruments with similar terms and maturities

at September 30, 2021 and December 31, 2020.

Loan Commitments

The fair value of commitments is estimated using

the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present

creditworthiness of the counterparties.

The estimated fair values for other financial instruments and off-balance-sheet loan commitments

approximate cost at September 30, 2021 and December 31, 2020 and are not considered significant to this presentation.

Trust Preferred Securities

The fair value for Trust Preferred Securities

is estimated by discounting the cash flows using an appropriate discount rate.

Subordinated Debt

The fair value for subordinated debt is estimated

by discounting the cash flows using a discount rate equal to the rate currently offered on similar borrowings.

The following table presents estimated fair values

of the Company’s other financial instruments carried at other than fair value.

The fair values of certain of these instruments were

calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties.

Fair value is the

estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties, other than

in a forced or liquidation sale.

Because no market exists for certain of these financial instruments, and because management does not

intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the

respective financial instruments could be sold individually or in the aggregate.

($ in thousands)

Fair value measurements using

June 30, 2021

September 30, 2021

Financial assets

26 unchanged sentences

Interest payable

15 – SHARE BASED COMPENSATION

April 2017, the Company’s shareholders approved a new share-based incentive compensation plan, the SB Financial Group, Inc.

Stock Incentive Plan (the “2017 Plan”), which replaced the Company’s 2008 Stock Incentive Plan.

NOTE 15 – SHARE BASED COMPENSATION

In April 2017, the Company’s shareholders

approved a new share-based incentive compensation plan, the SB Financial Group, Inc.

2017 Stock Incentive Plan (the “2017 Plan”),

which replaced the Company’s 2008 Stock Incentive Plan.

The 2017 Plan permits the Company to grant or award incentive stock options,

nonqualified stock options, stock appreciation rights, restricted stock, and restricted stock units to employees and directors of the

Company and its subsidiaries.

A total of 500,000 common shares of the Company are available for grants or awards under the 2017 Plan,

of which 89,833 shares had been granted under the plan as of September 30, 2021.

The 2017 Plan is intended to advance the interests

of the Company and its shareholders by offering employees, directors and advisory board members of the Company and its subsidiaries an

opportunity to acquire or increase their ownership interest in the Company through grants of equity-based awards.

The 2017 Plan permits

the Company to grant or award incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, and restricted

stock units to employees and directors of the Company and its subsidiaries.

A total of 500,000 common shares of the Company are available

for grants or awards under the 2017 Plan, of which 89,763 shares had been granted under the plan as of June 30, 2021.

2017 Plan is intended to advance the interests of the Company and its shareholders by offering employees, directors and advisory board

members of the Company and its subsidiaries an opportunity to acquire or increase their ownership interest in the Company through grants

of equity-based awards.

The 2017 Plan permits equity-based awards to be used to attract, motivate, reward and retain highly competent

individuals upon whose judgment, initiative, leadership and efforts are key to the success of the Company by encouraging those individuals

to become shareholders of the Company.

option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant and those

option awards vest based on 5 years of continuous service and have 10-year contractual terms.

The fair value of each option award is

estimated on the date of grant using the Black-Scholes valuation model.

of June 30, 2021, there were no stock options outstanding, and no unrecognized compensation cost related to stock option awards.

options were granted in the first six months of 2021.

February 5, 2013, the Company adopted a Long Term Incentive (LTI) Plan, which provides for awards of restricted stock in the Company

to certain key executives.

These restricted stock awards vest over a four-year period and are intended to assist the Company in retention

of key executives.

During 2020, the Company met certain performance targets under the LTI Plan and restricted stock awards were approved

and issued in February 2021.

The compensation cost charged against income for the LTI Plan was $ 0.2 million, with a total income tax

benefit recognized in the income statement of $ 0.04 million.

of June 30, 2021, there was $ 0.74 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements

related to the restricted stock awards under the 2017 Plan which were granted in accordance with the LTI plan.

That cost is expected

to be recognized over a weighted-average period of 2.6 years.

summary of restricted stock activity under the Company’s 2017 Plan as of June 30, 2021 and changes during the quarter then ended,

is presented below:

equity-based awards to be used to attract, motivate, reward and retain highly competent individuals upon whose judgment, initiative, leadership

and efforts are key to the success of the Company by encouraging those individuals to become shareholders of the Company.

Stock option awards are granted with an exercise

price equal to the market price of the Company’s stock at the date of grant and those option awards vest based on 5 years of continuous

service and have 10-year contractual terms.

The fair value of each option award is estimated on the date of grant using the Black-Scholes

valuation model.

As of September 30, 2021, there were no stock

options outstanding, and no unrecognized compensation cost related to stock option awards.

No stock options were granted in the nine months

On February 5, 2013, the Company adopted a Long

Term Incentive (LTI) Plan, which provides for awards of restricted stock in the Company to certain key executives.

These restricted stock

awards vest over a four-year period and are intended to assist the Company in retention of key executives.

During 2020, the Company met

certain performance targets under the LTI Plan and restricted stock awards were approved and issued in February 2021.

The compensation

cost charged against income for the LTI Plan was $ 0.4 million, with a total income tax benefit recognized in the income statement of $ 0.08

As of September 30, 2021, there was $ 0.65 million

of total unrecognized compensation cost related to non-vested share-based compensation arrangements related to the restricted stock awards

under the 2017 Plan which were granted in accordance with the LTI plan.

That cost is expected to be recognized over a weighted-average

period of 2.6 years.

The table below is a summary of restricted stock

activity under the Company’s 2017 Plan for the nine months ended September 30, 2021.

Average Value

Nonvested, beginning of year

Nonvested, end of year

16 – GENERAL LITIGATION

Company is subject to claims and lawsuits that arise primarily in the ordinary course of business.

Additionally, the Company is subject

to periodic examinations by various regulatory agencies.

It is the opinion of management that the disposition or ultimate resolution

of any such claims, lawsuits and examinations pending at June 30, 2021, will not have a material adverse effect on the consolidated financial

position, results of operations and cash flow of the Company.

Nonvested, January 1, 2021

Nonvested, September 30, 2021

NOTE 16 – GENERAL LITIGATION

The Company is subject to claims and lawsuits

that arise primarily in the ordinary course of business.

Additionally, the Company is subject to periodic examinations by various regulatory

It is the opinion of management that the disposition or ultimate resolution of any such claims, lawsuits and examinations pending

at September 30, 2021, will not have a material adverse effect on the consolidated financial position, results of operations and cash

flow of the Company.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements