SB Financial Group NASDAQ: SBFG reported second-quarter 2026 net income of $4.5 million, or $0.72 per diluted share, compared with $0.60 per diluted share a year earlier, as higher net interest income and fee revenue supported profitability. Chairman, President and CEO Mark Klein said the company’s results reflected loan and deposit growth, controlled expenses and continued improvement in asset quality.
The company said it has now recorded 62 consecutive quarters of operational profitability. Tangible book value per share rose about 16% from a year earlier to $19.04, while adjusted tangible book value excluding accumulated other comprehensive income was $22.57.
Revenue and margin performance
Total operating revenue increased 4.5% year over year to $17.9 million and rose 3% from the prior quarter, according to Chief Financial Officer Tony Cosentino. Net interest income increased 6.8% to $13 million from $12.1 million in the second quarter of 2025, as interest income growth outpaced higher interest expense.
Net interest margin was 3.43%, compared with 3.48% in both the prior-year and linked quarters. Cosentino said the decline partly reflected elevated liquidity during the period, but management expects loan growth and low-cost deposit gathering to support margins in the second half. He said the company expects margin to remain at or above current levels and potentially trend toward a range of roughly 3.45% to 3.55%.
Non-interest income totaled $5 million, representing approximately 28% of operating revenue. Mortgage banking contributed $1.9 million, down from $2.2 million a year earlier but up from $1.8 million in the first quarter. Mortgage servicing fees were $934,000, while mortgage gain-on-sale revenue was $1.5 million. The company said its mortgage gain-on-sale percentage improved to 2.19%, its highest level since the second quarter of 2024.
Adjusted diluted earnings per share, excluding mortgage servicing rights valuation adjustments, rose nearly 26% to $0.73 from $0.58 a year earlier, Cosentino said.
Loans, deposits and expansion markets
Loans ended the quarter at approximately $1.19 billion, up about $95 million, or 8.7%, from a year earlier and $8.4 million from the first quarter. The company said this marked its ninth consecutive quarter of sequential loan growth. Commercial real estate loans totaled $611 million, while office exposure accounted for less than 5.5% of the loan portfolio.
During the question-and-answer session, management said it expects stronger loan production in the second half of the year. Cosentino said the company could generate approximately $50 million to $70 million of balance-sheet loan growth through year-end before normal repayments, with roughly half expected from Columbus and half from other markets.
Total deposits rose $141 million, or more than 11%, from a year earlier to $1.39 billion, including a $19.3 million sequential increase. Noninterest-bearing checking balances increased $17.3 million year over year to nearly $260 million. Klein said the company has captured $130 million in cumulative deposits from regional banking-market disruption as it works toward a longer-term target of $500 million.
Management also highlighted its de novo markets in Angola, Indiana, and Napoleon, Ohio. The two offices recorded $19.3 million in loans and $22.5 million in deposits during the first quarter, according to Klein. Cosentino said the company expects a large institutional deposit relationship of roughly $40 million to move to the wholesale market later in 2026, but said the anticipated loss should not be material to earnings and could be covered by current excess liquidity and retail deposit growth.
Mortgage, wealth and expenses
Mortgage originations increased 21% sequentially to $79.3 million but remained below the $97.9 million reported a year ago. Purchase and construction activity represented 81% of mortgage volume. Klein said mortgage rates above 6% have constrained refinancing activity, although the residential pipeline has stabilized in a range of $25 million to $30 million.
The company sold 88.5% of mortgage production during the quarter and ended with a mortgage servicing portfolio of $1.5 billion. Klein said SB Financial has maintained its mortgage processing infrastructure and could handle substantially higher production without adding significant overhead. He also cited growth in Cincinnati, where mortgage volume totaled nearly $20 million in the first half, more than 50% above the comparable 2025 period.
Peak Title generated $577,000 in revenue, up nearly 20% sequentially and flat from a year earlier. Wealth management fees increased to $955,000, while assets under management approached $557 million. Klein said the company’s relationship with Advisory Health is now operational and is intended to broaden investment offerings for clients.
Non-interest expense totaled $12.1 million, up 2.4% from a year earlier, primarily reflecting lender hires and $7 million in salaries and benefits. Lower data-processing costs partially offset those increases. The efficiency ratio improved to 67.3%, while pre-tax, pre-provision income rose 9% year over year to $5.8 million.
Asset quality and capital
Nonperforming assets declined to $4.4 million, or 0.27% of total assets, from $6.2 million a year earlier. The allowance for credit losses was $16.4 million, or 1.38% of loans, and covered nonperforming loans by 470%. Gross delinquencies were below 35 basis points, while net charge-offs were six basis points during the quarter.
Total shareholders’ equity increased 9.8% from a year earlier to nearly $147 million. The company repurchased more than 28,000 shares at an average price of $22.06, though Cosentino said buybacks have been moderated in 2026 to preserve capital flexibility.
SB Financial declared a quarterly dividend of $0.16 per share payable in August. Klein said the payout ratio was approximately 22% and that the company remains on track for its 14th consecutive year of annual dividend increases.
About SB Financial Group (NASDAQ:SBFG)
SB Financial Group, Inc NASDAQ: SBFG is the bank holding company for Star Financial Bank, a full-service community bank headquartered in Fort Wayne, Indiana. Through its wholly owned subsidiary, the company offers a broad portfolio of commercial and consumer banking products, including deposit accounts, lending solutions, mortgage origination and servicing, and cash management services.
In its commercial banking division, SB Financial Group provides working capital loans, equipment financing, commercial real estate lending and treasury management solutions designed for small- and mid-sized businesses.
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