What changed in this filing

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Item 1. Business

2025-03-07 compared with 2024-03-08 · 68 added, 139 removed, 608 unchanged (25% of the section changed)

12 unchanged sentences

Through its direct and indirect subsidiaries,

the SB Financial is engaged in a variety of financial activities, including commercial banking, and wealth management services, as explained

SB Financial is engaged in a variety of financial activities, including commercial banking, and wealth management services, as explained

in more detail below.

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relates solely to the registrant, SB Financial.

State Bank and Trust Company

The State Bank and Trust Company

The State Bank and Trust Company (“State

Bank”) is an Ohio state-chartered bank and wholly owned subsidiary of the Company.

Bank”) is an Ohio state-chartered bank and wholly owned subsidiary of SB Financial.

State Bank offers a full range of commercial

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State Bank presently operates 25 banking centers, located within the Ohio counties of Allen, Defiance, Franklin,

Fulton, Hancock, Lucas, Paulding, Williams and Wood, and one banking center located in Allen County, Indiana.

State Bank also presently

operates six loan production offices, located in Franklin and Lucas Counties, Ohio, Boone, Hamilton and Steuben Counties, Indiana, and

Monroe County, Michigan.

Fulton, Hancock, Lucas, Paulding, Ottawa, Williams and Wood, and one banking center located in Allen County, Indiana.

State Bank also

presently operates seven loan production offices, located in Franklin and Lucas Counties, Ohio, Boone, Hamilton and Steuben Counties,

Indiana, and Monroe County, Michigan.

At December 31, 2024, State Bank had 244 full-time equivalent employees.

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title agency effective March 15, 2019.

SBFG Title is a wholly owned subsidiary of the Company.

SBFG Title is a wholly owned subsidiary of SB Financial.

SBFG Title provides title insurance and

operates three locations located within the Ohio Counties of Franklin and Williams.

At December 31,

2023, SBFG Title had 8 full-time equivalent employees.

(“RFCBC”) is an Ohio

corporation and wholly owned subsidiary of the Company that was incorporated in August 2004.

RFCBC operates as a loan subsidiary in servicing

and working out problem loans and is presently inactive.

At December 31, 2023, RFCBC had no employees.

Rurbanc Data Services

Rurbanc Data Services, Inc.

dba RDSI Banking

Systems (“RDSI”) was formed in 1964 and became an Ohio corporation in June 1976.

In September 2006, RDSI acquired Diverse

Computer Marketers, Inc.

(“DCM”), which was merged into RDSI effective December 31, 2007.

Effective January 1, 2018, the

Company completed the sale of the customer contracts and certain other assets of RDSI’s remaining check and statement processing

business operated through the DCM division.

As a result of the sale, RDSI is presently inactive and had no employees at December 31,

Rurban Mortgage Company

Rurban Mortgage Company (“RMC”) is

an Ohio corporation and wholly owned subsidiary of State Bank.

RMC is a mortgage company and is presently inactive.

At December 31, 2023,

RMC had no employees.

operates two locations within the Ohio Counties of Franklin and Williams.

At December 31, 2024, SBFG Title had 8 full-time equivalent

SBT Insurance

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the Capital Securities.

SBFG Mortgage, LLC

SBFG Mortgage, LLC was formed as an Ohio limited

liability company in December 2019.

SBFG Mortgage, LLC is a mortgage company and is presently inactive.

At December 31, 2023, SBFG Mortgage,

LLC had no employees.

Dissolved Subsidiaries

In December 2024, the Company completed the dissolution

of four of its inactive subsidiaries:

RFCBC, Inc., Rurbanc Data Services Inc., Rurban Mortgage Company, and SBFG Mortgage, LLC.

The Company experiences significant competition

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Supervision and Regulation

The following is a summary discussion of the significant

statutes and regulations applicable to the Company and its subsidiaries.

This discussion is qualified in its entirety by reference to

the full text of the statutes, regulations and policies that are described.

Also, such statutes, regulations and policies are continually

under review by the U.S.

The following is a summary discussion of the

significant statutes and regulations applicable to the Company.

This discussion is qualified in its entirety by reference to the full

text of the statutes, regulations and policies that are described.

Also, such statutes, regulations and policies are continually under

review by the U.S.

Congress and state legislatures and federal and state regulatory agencies.

A change in statutes, regulations

or regulatory policies applicable to the Company or its subsidiaries could have a material effect on our business.

A change in statutes, regulations or regulatory

policies applicable to the Company could have a material effect on our business.

Regulation of Bank Holding Companies and Their Subsidiaries in General

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at any time at the discretion of the regulatory authorities, if they deem such dividends to constitute an unsafe and/or unsound banking

Moreover, the FRB expects the Company to serve as a source of strength to its subsidiary banks, which may require it to retain

Moreover, the FRB expects the Company to serve as a source of strength to its subsidiary bank, which may require it to retain

capital for further investment in the subsidiary, rather than for dividends to shareholders of the Company.

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of credit or the providing of any property or service.

COVID-19 Legislation and Initiatives

In response to the novel COVID-19 pandemic (“COVID-19”),

the Coronavirus Aid, Relief, and Economic Security Act of 2020, as amended (the “CARES Act”), was signed into law on March

27, 2020, to provide national emergency economic relief measures.

Many of the CARES Act’s programs were dependent upon the direct

involvement of U.S.

financial institutions, such as the Company and State Bank, were implemented through rules and guidance adopted by

federal departments and agencies, including the U.S.

Department of Treasury, the FRB and other federal banking agencies, including those

with direct supervisory jurisdiction over the Company and State Bank.

The CARES Act amended the loan program of the

Small Business Administration (the “SBA”), in which State Bank participates, to create a guaranteed, unsecured loan program,

the Paycheck Protection Program (“PPP”), to fund operational costs of eligible businesses, organizations and self-employed

persons during COVID-19.

These loans are eligible to be forgiven if certain conditions are satisfied and are fully guaranteed by the SBA.

In June 2020, the Paycheck Protection Program Flexibility Act was enacted, which, among other things, gave borrowers additional time and

flexibility to use PPP loan proceeds.

After previously being extended by Congress, the application deadline for PPP loans expired on May

No collateral or personal guarantees were required for PPP loans.

In addition, neither the government nor lenders have been

permitted to charge the recipients of PPP loans any fees.

On December 27, 2020, the President signed into law the Consolidated Appropriations

Act, 2021 (the “CAA”), which included the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “HHSB

Among other things, the HHSB Act renewed the PPP, allocating $284.45 billion for both new first-time PPP loans under the existing

PPP and the expansion of existing PPP loans for certain qualified, existing PPP borrowers.

In addition to extending and amending the PPP,

the HHSB Act also created a new grant program for “shuttered venue operators”.

On December 2, 2020, the federal bank regulatory

agencies issued an interim final rule that provided temporary relief for specified community banking organizations related to certain

regulations and reporting requirements as a result, in large part, of their growth in size from the response to COVID-19.

Community banking

organizations are subject to different rules and requirements based on their risk profile and asset size.

Due to their involvement in

federal COVID-19 response programs (such as the PPP) and other lending that supports the U.S.

economy, many community banking organizations

experienced rapid and unexpected increases in their sizes, which were generally expected to be temporary.

The temporary increase in size

could have subjected community banking organizations to new regulations or reporting requirements.

However, community banking organizations

with assets approaching the $10.0 billion asset threshold and that would otherwise have become subject to additional regulatory requirements

upon crossing such threshold, including requirements related to capital adequacy standards, debit card interchange fees and routing, and

management official interlocks, had until January 1, 2022 to either reduce their size or to prepare for the new regulatory and reporting

Regulatory Capital

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FDIC for banks with assets of less than $10 billion, which had previously contributed to the increase of the DRR to 1.35%.

On June 30, 2019, the DRR reached 1.40%, and the

FDIC applied credits for banks with assets of less than $10 billion (“small bank credits”) beginning September 30, 2019.

of June 30, 2020, the DRR fell below the minimum DRR to 1.30%.

On June 30, 2019, the DRR reached 1.40%, and

the FDIC applied credits for banks with assets of less than $10 billion (“small bank credits”) beginning September 30, 2019.

As of June 30, 2020, the DRR fell below the minimum DRR to 1.30%.

As a result, the FDIC adopted a restoration plan requiring the restoration

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In the FDIC’s most recent semiannual update for the Amended Restoration Plan

in November 2023, the FDIC noted that increased loss provisions associated with the failures of Silicon Valley Bank, Signature Bank and

First Republic Bank in 2023 that reduced the DIF balance, coupled with strong growth in insured deposits, resulted in the reserve ratio

declining 15 basis points from 1.25% as of December 2022 to 1.10% as of June 30, 2023.

Despite the decline in the reserve ratio, the FDIC

staff projected that the reserve ratio remains on track to reach the statutory minimum of 1.35% ahead of the deadline of September 30,

As a result, the FDIC staff recommended no changes to the Amended Restoration Plan and all scheduled assessment rates were maintained.

in October 2024, the FDIC noted a 6 basis point increase in the reserve ratio, from 1.15% as of December 31, 2023 to 1.21% as of June

The FDIC staff projected that the reserve ratio remains on track to reach the statutory minimum of 1.35% ahead of the deadline

of September 30, 2028.

As a result, the FDIC staff recommended no changes to the Amended Restoration Plan and all scheduled assessment

rates were maintained.

On November 16, 2023, the FDIC adopted a final

1 unchanged sentence

failures of Silicon Valley Bank and Signature Bank.

The assessment base for the special assessment is equal to an insured depository institution’s

estimated uninsured deposits reported for the quarter ended December 31, 2022, adjusted to exclude the first $5 billion in estimated uninsured

The FDIC will collect the special assessment at an annual rate of approximately 13.4 basis points, over eight quarterly assessment

periods, beginning with the first quarter of 2024.

Because State Bank’s uninsured deposits were less than $5 billion for the quarter

ended December 31, 2022, State Bank will not be subject to this special assessment.

The assessment base for the special assessment is equal to an insured depository

institution’s estimated uninsured deposits reported for the quarter ended December 31, 2022, adjusted to exclude the first $5 billion

in estimated uninsured deposits.

The FDIC began collecting the special assessment at an annual rate of approximately 13.4 basis points,

over eight quarterly assessment periods, beginning with the first quarter of 2024.

Because State Bank’s uninsured deposits were

less than $5 billion for the quarter ended December 31, 2022, State Bank is not subject to this special assessment.

The FDIC is authorized to prohibit any insured

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to the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027.

The Company cannot predict

the impact the changes to the CRA will have on its operations at this time.

The Company is still evaluating

and cannot predict the impact the changes to the CRA may have on its operations at this time.

SEC and NASDAQ Regulation

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“Corporate Overview” and then “Governance Documents”.

The Company has also adopted charters of the Audit and Risk

Management Committee, the Compensation Committee and the Governance and Nominating Committee, which charters are available on the Company’s

website at www.YourSBFinancial.com by first clicking “Corporate Overview” and then “Governance Documents”.

The Company has also adopted charters of the Audit Committee,

the Compensation Committee and the Governance and Nominating Committee, which charters are available on the Company’s website at

www.YourSBFinancial.com by first clicking “Corporate Overview” and then “Governance Documents”.

USA Patriot Act and Anti-Money Laundering Act

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Executive and Incentive Compensation

The Dodd-Frank Act requires that the federal banking

agencies, including the FRB and the FDIC, issue a rule related to incentive-based compensation.

No final rule implementing this provision

of the Dodd-Frank Act has, as of the date of the filing of this Annual Report on Form 10-K, been adopted, but a proposed rule was published

in 2016 that expanded upon a prior proposed rule published in 2011.

The Dodd-Frank Act requires that the federal

banking agencies, including the FRB and the FDIC, issue a rule related to incentive-based compensation.

No final rule implementing this

provision of the Dodd-Frank Act has, as of the date of the filing of this Annual Report on Form 10-K, been adopted, but a proposed rule

was published in 2016, and again in 2024, that expanded upon a prior proposed rule published in 2011.

The proposed rule is intended to:

(i) prohibit incentive-based payment

arrangements that the banking agencies determine could encourage certain financial institutions to take inappropriate risks by providing

excessive compensation or that could lead to material financial loss;

(ii) require the board of directors of those financial institutions

to take certain oversight actions related to incentive-based compensation;

and (iii) require those financial institutions to disclose

information concerning incentive-based compensation arrangements to the appropriate federal regulator.

Although a final rule has not been

issued, the Company has undertaken efforts to ensure that the Company’s incentive compensation plans do not encourage inappropriate

risks, consistent with the principles identified above.

(i) prohibit incentive-based payment arrangements that the banking agencies determine could encourage certain financial institutions

to take inappropriate risks by providing excessive compensation or that could lead to material financial loss;

(ii) require the board

of directors of those financial institutions to take certain oversight actions related to incentive-based compensation;

and (iii) require

those financial institutions to disclose information concerning incentive-based compensation arrangements to the appropriate federal

Although a final rule has not been issued, the Company has undertaken efforts to ensure that the Company’s incentive

compensation plans do not encourage inappropriate risks, consistent with the principles identified above.

In June 2010, the FRB, the Office of the Comptroller

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CYBERSECURITY.

Effective on or after December 18, 2023 (except for smaller reporting companies, such as the Company, which

are provided a 180-day deferral), public companies are required to report on Form 8-K any cybersecurity incident they determine to be

material within four business days of making that determination.

These SEC rules, and any other regulatory guidance, are in addition to

notification and disclosure requirements under state and federal banking laws and regulations.

Public companies are now required to report on Form 8-K any cybersecurity incident they determine to be material

within four business days of making that determination.

These SEC rules, and related regulatory guidance, are in addition to notification

and disclosure requirements under state and federal banking laws and regulations.

In the ordinary course of business, the Company

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regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a

material effect upon the capital expenditures, earnings or competitive position of the Company and its subsidiaries.

The Company believes

that the nature of the operations of its subsidiaries has little, if any, environmental impact.

The Company, therefore, anticipates no

material capital expenditures for environmental control facilities for its current fiscal year or for the near future.

The Company’s

subsidiaries may be required to make capital expenditures for environmental control facilities related to properties which they may acquire

through foreclosure proceedings in the future;

however, the amount of such capital expenditures, if any, is not currently determinable.

material effect upon the capital expenditures, earnings or competitive position of the Company.

The Company believes that the nature

of its operations has little, if any, environmental impact.

The Company, therefore, anticipates no material capital expenditures for

environmental control facilities for its current fiscal year or for the near future.

The Company may be required to make capital expenditures

for environmental control facilities related to properties which they may acquire through foreclosure proceedings in the future;

the amount of such capital expenditures, if any, is not currently determinable.

Effects of Government Monetary Policy

46 unchanged sentences

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-K

Item 1. Business