2023 SB Financial Group, Inc.

 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 (Mark
One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2023

 OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the transition period from ___________ to ____________

 Commission
File Number 001-36785

 SB
FINANCIAL GROUP, INC.

 (Exact
name of Registrant as specified in its charter)

 Ohio

 34-1395608

 (State or other jurisdiction of

 (I.R.S. Employer

 incorporation or organization)

 Identification No.)

 401 Clinton Street, Defiance, Ohio

 43512

 (Address of principal executive offices)

 (Zip Code)

 Registrant's telephone number, including area code:

 (419) 783-8950

 Securities registered pursuant to Section 12(b) of the Act:

 Title of each class

 Trading Symbol(s)

 Name of each exchange on which

 Common Shares, No Par Value

 SBFG

 The NASDAQ Stock Market, LLC
 ( NASDAQ Capital Market)

 Securities
registered pursuant to Section 12(g) of the Act:

 Not
Applicable

mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes No

mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit such files). Yes No

mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. Non-Accelerated Filer Smaller Reporting Company

 If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. Yes No

 If securities are
registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
the filing reflect the correction of an error to previously issued financial statements.

mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The aggregate market
value of the common shares of the registrant held by non-affiliates computed by reference to the closing price of the common shares as
reported on the NASDAQ Capital Market as of June 30, 2023 (the last business day of the registrant's most recently completed second
fiscal quarter) was $ 85.9 million. For this purpose, executive officers and directors of the registrant are considered affiliates.

 The number of common
shares of the registrant outstanding at February 23, 2024 was 6,787,451.

 DOCUMENTS INCORPORATED
BY REFERENCE

 Portions of the
Registrant's definitive Proxy Statement for its Annual Meeting of Shareholders to be held on April 17, 2024 are incorporated by
reference into Part III of this Annual Report on Form 10-K.

 SB FINANCIAL GROUP, INC.

 2023 ANNUAL REPORT ON FORM 10-K

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Supplemental Item: Information about our Executive Officers

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6.

 [Reserved]

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative Disclosures about Market Risk

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item 14.

 Principal Accountant Fees and Services

 Item 15.

 Exhibits and Financial Statement Schedules

 Item 16.

 Form 10-K Summary

 Signatures

 i

 Item
1. Business.

 Certain statements contained in this Annual Report
on Form 10-K which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. See "Cautionary Statement Regarding Forward-Looking Information" under Item 1A. Risk Factors
 on page 14 of this Annual Report on Form 10-K.

 General

 SB Financial Group, Inc., an Ohio corporation
(the "SB Financial"), is a financial holding company subject to regulation under the Bank Holding Company Act of 1956, as
amended, and to inspection, examination and supervision by the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board" or the "FRB"). SB Financial was organized in 1983. The executive offices of the SB Financial are located at
401 Clinton Street, Defiance, Ohio 43512.

 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
in more detail below.

 As used in this Annual Report on Form 10-K, the
"Company" refers to SB Financial and its consolidated subsidiaries collectively, except where the context indicates the reference
relates solely to the registrant, SB Financial.

 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. State Bank offers a full range of commercial
banking services, including checking accounts, savings accounts, money market accounts and time certificates of deposit; automatic teller
machines ("ATMs"); commercial, consumer, agricultural and residential mortgage loans; personal and corporate trust services;
commercial leasing; bank credit card services; safe deposit box rentals; internet banking; private client group services; and other personalized
banking services. The trust and financial services division of State Bank offers various trust and financial services, including asset
management services for individuals and corporate employee benefit plans, as well as brokerage services through Cetera Investment Services,
an unaffiliated company. State Bank presently operates 22 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. At December 31, 2023, State Bank had 243 full-time equivalent employees.

 SBFG Title, LLC

 SBFG Title, LLC dba Peak Title Agency ("SBFG
Title") was formed as an Ohio limited liability company in January 2019 and purchased all of the assets and real estate of an Ohio-based
title agency effective March 15, 2019. SBFG Title is a wholly owned subsidiary of the Company. 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

 RFCBC, Inc. ("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,
2023.

 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.

 SBT Insurance

 SBT Insurance, LLC ("SBI") is an Ohio corporation and
wholly owned subsidiary of State Bank. SBI is an insurance company that engages in the sale of insurance products to retail and commercial
customers of State Bank. At December 31, 2023, SBI had no employees.

 SB Captive

 SB Captive, Inc. ("SB Captive") is
a Nevada corporation and wholly owned subsidiary of SB Financial. SB Captive is a self-insurance company that provides coverage to State
Bank and SB Financial. The purpose of the SB Captive is to mitigate insurance risk by participating in a pool with other banks. At December
31, 2023, SB Captive had no employees.

 Rurban Statutory Trust II

 Rurban Statutory Trust II ("RST II")
is a trust that was organized in August 2005. In September 2005, RST II closed a pooled private offering of 10,000 Capital Securities
with a liquidation amount of $1,000 per security. The proceeds of the offering were loaned to the Company in exchange for junior subordinated
debentures with terms similar to the Capital Securities. The sole assets of RST II are the junior subordinated debentures and the back-up
obligations, which in the aggregate, constitute a full and unconditional guarantee by the Company of the obligations of RST II under
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.

 Competition

 The Company experiences significant competition
in attracting depositors and borrowers. Competition in lending activities comes principally from other commercial banks in the lending
areas of State Bank, and to a lesser extent, from savings associations, insurance companies, governmental agencies, credit unions, securities
brokerage firms, finance companies, financial technology companies ("fintechs") and pension funds. The primary factors in
competing for loans are interest rates and overall banking services.

 State Bank's competition for deposits comes
from other commercial banks, savings associations, money market funds and credit unions as well as from insurance companies, securities
brokerage firms, and fintechs. The primary factors in competing for deposits are interest rates paid on deposits and convenience of office
location. State Bank operates in the highly competitive wealth management services field and its competition consists primarily of other
bank wealth management departments.

 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. 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.

 Regulation of Bank Holding Companies and Their Subsidiaries in General

 SB Financial is a financial holding company and,
as such, is subject to regulation under the Bank Holding Company Act of 1956, as amended (the "Bank Holding Company Act").
SB Financial is subject to the reporting requirements of, and examination and regulation by, the FRB. The FRB has extensive enforcement
authority over bank holding companies, including, without limitation, the ability to assess civil money penalties, issue cease and desist
or removal orders, and require that a bank holding company divest subsidiaries, including its subsidiary banks. In general, the FRB may
initiate enforcement actions for violations of laws and regulations and for unsafe or unsound practices. A bank holding company and its
subsidiaries are prohibited from engaging in certain tying arrangements in connection with extensions of credit and/or the provision of
other property or services to a customer by the bank holding company or its subsidiaries.

 The Bank Holding Company Act requires the prior
approval of the FRB before a financial or bank holding company may acquire direct or indirect ownership or control of more than 5 percent
of the voting shares of any bank (unless the bank is already majority owned by the bank holding company), acquire all or substantially
all of the assets of another bank or another financial or bank holding company, or merge or consolidate with any other bank holding company.
Subject to certain exceptions, the Bank Holding Company Act also prohibits a financial or bank holding company from acquiring 5 percent
or more of the voting shares of any company that is not a bank and from engaging in any business other than banking or managing or controlling
banks. The primary exception to this prohibition allows a bank holding company to own shares in any company the activities of which the
FRB had determined, as of November 19, 1999, to be so closely related to banking as to be a proper incident thereto.

 In April 2020, the FRB adopted a final rule to
revise its regulations related to determinations of whether a company has the ability to exercise a controlling influence over another
company for purposes of the Bank Holding Company Act. The final rule expands and codifies the presumptions for use in such determinations.
By codifying the presumptions, the final rule provides greater transparency on the types of relationships that the FRB generally views
as supporting a facts-and-circumstances determination that one company controls another company. The FRB's final rule applies to
questions of control under the Bank Holding Company Act but does not extend to the Change in Bank Control Act.

 As a result of the Gramm-Leach-Bliley Act of 1999,
also known as the Financial Services Modernization Act of 1999, which amended the Bank Holding Company Act, bank holding companies that
are financial holding companies may engage in any activity, or acquire and retain the shares of a company engaged in any activity, that
is either (1) financial in nature or incidental to such financial activity (as determined by the FRB in consultation with the Secretary
of the Treasury), or (2) complementary to a financial activity, and that does not pose a substantial risk to the safety and soundness
of depository institutions or the financial system generally. Activities that are financial in nature include securities underwriting
dealing and market-making, insurance underwriting and agency, and merchant banking activities. On January 2, 2019, SB Financial elected,
and received approval from the FRB, to become a financial holding company.

 Various requirements and restrictions under the
laws of the United States and the State of Ohio affect the operations of State Bank, including requirements to maintain reserves against
deposits, restrictions on the nature and amount of loans that may be made and the interest that may be charged thereon, restrictions relating
to investments and other activities, limitations on credit exposure to correspondent banks, limitations on activities based on capital
and surplus, limitations on payment of dividends, and limitations on branching.

 Various consumer laws and regulations also affect
the operations of State Bank. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act")
established the Consumer Financial Protection Bureau (the "CFPB"), which regulates consumer financial products and services
and certain financial services providers. The CFPB is authorized to prevent unfair, deceptive or abusive acts or practices and ensures
consistent enforcement of laws so that consumers have access to fair, transparent and competitive markets for consumer financial products
and services. Since it was established, the CFPB has exercised extensively its rulemaking and interpretative authority.

 The Federal Home Loan Bank (the "FHLB")
provide credit to their members in the form of advances. As a member of the FHLB of Cincinnati, State Bank must maintain certain minimum
investments in the capital stock of the FHLB of Cincinnati. State Bank was in compliance with these requirements at December 31, 2023.

 Federal Reserve System

 The FRB requires all depository institutions to
maintain reserves at specified levels against their transaction accounts, primarily checking accounts. In response to the COVID-19 pandemic,
the FRB reduced reserve requirement ratios to 0 percent effective on March 26, 2020, to support lending to households and businesses.
The reserve requirement ratio remained at 0 percent as of December 31, 2023.

 Economic Growth, Regulatory Relief and Consumer Protection Act

 On May 25, 2018, the Economic Growth, Regulatory
Relief and Consumer Protection Act (the "Regulatory Relief Act") was enacted, which repealed or modified certain provisions
of the Dodd-Frank Act and eased restrictions on all but the largest banks (those with consolidated assets in excess of $250 billion).
Bank holding companies with consolidated assets of less than $100 billion, including the Company, are no longer subject to enhanced prudential
standards. The Regulatory Relief Act also relieves bank holding companies and banks with consolidated assets of less than $100 billion,
including the Company, from certain record-keeping, reporting and disclosure requirements. Certain other regulatory requirements applied
only to banks with consolidated assets in excess of $50 billion and so did not apply to the Company even before the enactment of the Regulatory
Relief Act.

 Restrictions on Dividends

 There can be no assurance as to the amount of
dividends which may be declared in future periods with respect to the common shares of the Company, since such dividends are subject to
the discretion of the Company's Board of Directors, cash needs, and general business conditions, dividends from the Company's
subsidiaries and applicable governmental regulations and policies.

 The ability of the Company to obtain funds for
the payment of dividends and for other cash requirements is largely dependent on the amount of dividends that may be declared by State
Bank and the Company's other subsidiaries. State Bank may not pay dividends to the Company if, after paying such dividends, it would
fail to meet the required minimum levels under the risk-based capital guidelines and the minimum leverage ratio requirements. In addition,
State Bank must obtain the approval of the FRB and the Ohio Division of Financial Institutions (the "ODFI") if a dividend
in any year would cause the total dividends for that year to exceed the sum of the current year's net profits and the retained net
profits for the preceding two years, less required transfers to surplus. At December 31, 2023, State Bank had $30.3 million of excess
earnings over the preceding three years.

 Payment of dividends by State Bank may be restricted
at any time at the discretion of the regulatory authorities, if they deem such dividends to constitute an unsafe and/or unsound banking
practice. Moreover, the FRB expects the Company to serve as a source of strength to its subsidiary banks, which may require it to retain
capital for further investment in the subsidiary, rather than for dividends to shareholders of the Company.

 The Company's ability to pay dividends on
its shares is also conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated debentures underlying
the Company's trust preferred securities. In addition, under the terms of the Company's fixed-to-floating rate subordinated
debt, the Company's ability to pay dividends on its shares is conditioned upon the Company continuing to make required principal
and interest payments, and not incurring an event of default, with respect to the subordinated debt.

 Transactions with Affiliates and Insiders

 The Company and State Bank are separate and distinct
legal entities. The FRB's Regulation W and various other legal limitations restrict State Bank from lending funds to, or engaging
in other "covered transactions" with, the Company (or any other affiliate), generally limiting such covered transactions with
any one affiliate to 10 percent of State Bank's capital and surplus and limiting all such covered transactions with all affiliates
to 20 percent of State Bank's capital and surplus. Covered transactions, including extensions of credit, sales of securities or
assets and provision of services, also must be on terms and conditions consistent with safe and sound banking practices, including credit
standards, that are substantially the same or at least as favorable to State Bank as those prevailing at the time for transactions with
unaffiliated companies.

 A bank's authority to extend credit to executive
officers, directors and greater than 10 percent shareholders, as well as entities such persons control, is subject to Sections 22(g) and
22(h) of the Federal Reserve Act and Regulation O promulgated thereunder by the FRB. Among other things, these loans must be made on terms
(including interest rates charged and collateral required) that are substantially the same as those offered to unaffiliated individuals
or be made as part of a benefit or compensation program and on terms widely available to employees, and must not involve a greater than
normal risk of repayment. In addition, the amount of loans a bank may make to these persons is based, in part, on the bank's capital
position, and certain approval procedures must be followed in making loans which exceed specified amounts.

 Federally insured banks are subject, with certain
exceptions, to certain additional restrictions (including collateralization) on extensions of credit to their parent holding companies
or other affiliates, on investments in the stock or other securities of affiliates and on the taking of such stock or securities as collateral
from any borrower. In addition, such banks are prohibited from engaging in certain tying arrangements in connection with any extension
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
31, 2021. 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
Act"). 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
standards.

 Regulatory Capital

 The risk-based capital guidelines adopted by the
federal banking agencies are based on the "International Convergence of Capital Measurement and Capital Standard" (Basel I),
published by the Basel Committee on Banking Supervision (the "Basel Committee"). In July 2013, the United States banking regulators
issued new capital rules applicable to smaller banking organizations which also implement certain of the provisions of the Dodd-Frank
Act (the "Basel III Capital Rules"). Community banking organizations, including the Company and State Bank, began transitioning
to the new rules on January 1, 2015. The new minimum capital requirements became effective on January 1, 2015, whereas a new capital conservation
buffer and deductions from common equity capital phased in from January 1, 2016 through January 1, 2019, and most deductions from common
equity tier 1 capital phased in from January 1, 2015 through January 1, 2019.

 The Basel III Capital Rules include (a) a minimum
common equity tier 1 capital ratio of 4.5%, (b) a minimum Tier 1 capital ratio of 6.0%, (c) a minimum total capital ratio of 8.0%, and
(d) a minimum leverage ratio of 4.0%.

 Common equity for the common equity tier 1 capital
ratio generally includes common stock (plus related surplus), retained earnings, accumulated other comprehensive income (unless an institution
elects to exclude such income from regulatory capital), and limited amounts of minority interests in the form of common stock, subject
to applicable regulatory adjustments and deductions.

 Tier 1 capital generally includes common equity
as defined for the common equity tier 1 capital ratio, plus certain non-cumulative preferred stock and related surplus, cumulative preferred
stock and related surplus, trust preferred securities that have been grandfathered (but which are not permitted going forward), and limited
amounts of minority interests in the form of additional Tier 1 capital instruments, less certain deductions.

 Tier 2 capital, which can be included in the total
capital ratio, generally consists of other preferred stock and subordinated debt meeting certain conditions plus limited amounts of the
allowance for credit losses ("ACL"), subject to specified eligibility criteria, less applicable deductions.

 The deductions from common equity tier 1 capital
include goodwill and other intangibles, certain deferred tax assets, mortgage-servicing assets above certain levels, gains on sale in
connection with a securitization, investments in a banking organization's own capital instruments and investments in the capital
of unconsolidated financial institutions (above certain levels).

 Under the guidelines, capital is compared to the
relative risk related to the balance sheet. To derive the risk included in the balance sheet, one of several risk weights is applied to
different balance sheet and off-balance sheet assets, primarily based on the relative credit risk of the counterparty. The capital amounts
and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

 The Basel III Capital Rules also place restrictions
on the payment of capital distributions, including dividends, and certain discretionary bonus payments to executive officers if the banking
organization does not hold a capital conservation buffer of greater than 2.5 percent composed of common equity tier 1 capital above its
minimum risk-based capital requirements, or if its eligible retained income is negative in that quarter and its capital conservation buffer
ratio was less than 2.5 percent at the beginning of the quarter.

 In September 2019, the FRB, along with other federal
bank regulatory agencies, issued a final rule, effective January 1, 2020, that gave community banks, including State Bank, the option
to calculate a simple leverage ratio to measure capital adequacy if the community banks met certain requirements. Under the rule, a community
bank was eligible to elect the Community Bank Leverage Ratio ("CBLR") framework if it had less than $10 billion in total consolidated
assets, limited amounts of certain assets and off-balance sheet exposures, and a leverage ratio greater than 9.0%. Qualifying institutions
that elected to use the CBLR framework (each, a "CBLR Bank") and that maintain a leverage ratio of greater than 9.0% will
be considered to have satisfied the risk-based and leverage capital requirements in the regulatory agencies' generally applicable capital
rules and to have met the well-capitalized ratio requirements. No CBLR Bank was required to calculate or report risk-based capital, and
each CBLR Bank could opt out of the framework at any time, without restriction, by reverting to the generally applicable risk-based capital
rule. Pursuant to the CARES Act, on August 26, 2020, the federal banking agencies adopted a final rule that temporarily lowered the CBLR
threshold and provided a gradual transition back to the prior level. Specifically, the CBLR threshold was reduced to 8.0% for the remainder
of 2020, increased to 8.5% for 2021, and returned to 9.0% on January 1, 2022. This final rule became effective on October 1, 2020. The
Company did not utilize the CBLR in assessing capital adequacy and continued to follow existing capital rules.

 In December 2018, the federal banking agencies
issued a final rule to address regulatory capital treatment of credit loss allowances under the current expected credit loss ("CECL")
model (accounting standard). The rule revised the federal banking agencies' regulatory capital rules to identify which credit loss
allowances under the CECL model are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase
in over three years the day-one adverse effects on regulatory capital that may result from the adoption of the CECL model. Upon the Company's
adoption of CECL effective January 1, 2023, the Company recognized a one-time cumulative effect adjustment (increase) to the ACL of $1.4 million and did not elect to utilize the three-year phase in. The Company's risk-based capital ratios
remained in excess of "well-capitalized" levels after the impact of the one-time cumulative effect adjustment.

 At December 31, 2023, State Bank was in compliance
with all of the regulatory capital requirements to which it was subject. For State Bank's capital ratios, see Note 16 to the Consolidated
Financial Statements under Item 8 of this Report on Form 10-K (the "Consolidated Financial Statements").

 The FRB has adopted regulations governing prompt
corrective action to resolve the problems of capital deficient and otherwise troubled state-chartered member banks. At each successively
lower defined capital category, a bank is subject to more restrictive and numerous mandatory or discretionary regulatory actions or limits,
and the FRB has less flexibility in determining how to resolve the problems of the institution. In addition, the FRB generally can downgrade
a bank's capital category, notwithstanding its capital level, if, after notice and opportunity for hearings, the bank is deemed
to be engaged in an unsafe or unsound practice, because it has not corrected deficiencies that resulted in it receiving a less than satisfactory
examination rating on matters other than capital or it is deemed to be in an unsafe or unsound condition. State Bank's capital at
December 31, 2023, met the standards for the highest capital category, a "well-capitalized" bank.

 In April 2015, the FRB issued a final rule which
increased the size limitation for qualifying bank holding companies under the FRB's Small Bank Holding Company Policy Statement
from $500 million to $1 billion of total consolidated assets. In August 2018, the FRB issued an interim final rule, as required by the
Regulatory Relief Act, to further increase size limitations under the Small Bank Holding Company Policy Statement to $3 billion of total
consolidated assets. The Company continues to qualify under the Small Bank Holding Company Policy Statement for exemption from the FRB's
consolidated risk-based capital and leverage rules at the holding company level.

 Federal Deposit Insurance Corporation

 The Federal Deposit Insurance Corporation (the
"FDIC") is an independent federal agency, which insures the deposits of federally insured banks and savings associations up
to certain prescribed limits and safeguards the safety and soundness of financial institutions. The general insurance limit is $250,000
per separately insured depositor. This insurance is backed by the full faith and credit of the United States government.

 As insurer, the FDIC is authorized to conduct
examinations of and to require reporting by insured institutions, including State Bank, to prohibit any insured institution from engaging
in any activity the FDIC determines to pose a threat to the Deposit Insurance Fund (the "DIF"), and to take enforcement actions
against insured institutions. The FDIC may terminate insurance of deposits of any institution if the FDIC finds that the institution has
engaged in unsafe and unsound practices, is in an unsafe or unsound condition or has violated any applicable law, regulation, rule, order
or condition imposed by the FDIC or other regulatory agency.

 The FDIC assesses a quarterly deposit insurance
premium on each insured institution based on risk characteristics of the insured institution to the DIF, with institutions deemed less
risky paying lower rates. Currently, assessments for institutions with less than $10 billion of total assets are based on financial measures
and supervisory ratings derived from statistical models that estimate the probability of failure within three years. The FDIC may increase
or decrease the range of assessments uniformly, except that no adjustments can deviate more than two basis points from the base assessment
without notice and comment rule making. The FDIC may also impose special assessments in emergency situations, which fund the DIF. The
FDIC has established 2 percent as the Designated Reserve Ratio ("DRR"), which is the amount in the DIF as a percentage of
all DIF insured deposits. In March 2016, the FDIC adopted final rules designed to meet the statutory minimum DRR of 1.35 percent by September
30, 2020, the deadline imposed by the Dodd-Frank Act. The Dodd-Frank Act required the FDIC to offset the effect on insured institutions
with assets of less than $10 billion of the increase in the statutory minimum DRR to 1.35% from the former statutory minimum of 1.15%.
Although the FDIC's rules reduced assessment rates on all banks, they imposed a surcharge on banks with assets of $10 billion or more
to be paid until the DRR reached 1.35%. The DRR met the statutory minimum of 1.35% on September 30, 2018. As a result, the previous surcharge
imposed on banks with assets of $10 billion or more was lifted. In addition, preliminary assessment credits have been determined by the
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. 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
of the DRR to 1.35% within eight years (September 30, 2028). The FDIC rules further changed the method of determining risk-based assessment
rates for established banks with less than $10 billion in assets to better ensure that banks taking on greater risks pay more for deposit
insurance than banks that take on less risk. As of September 30, 2022, the DRR was 1.26%. Because the DRR remained below the statutory
minimum, the FDIC adopted a final rule in October 2022 increasing the assessment rate from three basis points to five basis points beginning
with the first quarterly assessment period of 2023. 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,
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
rule implementing a special assessment to recover the loss to the DIF arising from the protection of uninsured depositors following the
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
deposits. 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 FDIC is authorized to prohibit any insured
institution from engaging in any activity that poses a serious threat to the insurance fund and may initiate enforcement actions against
a bank, after first giving the institution's primary regulatory authority an opportunity to take such action. The FDIC may also
terminate the deposit insurance of any institution that has engaged in or is engaging in unsafe or unsound practices, is in an unsafe
or unsound condition to continue operations or has violated any applicable law, order or condition imposed by the FDIC.

 Community Reinvestment Act

 The Community Reinvestment Act (the "CRA")
requires State Bank's primary federal regulatory agency, the FRB, to assess State Bank's record in meeting the credit needs
of the communities served by State Bank. The FRB assigns one of four ratings: outstanding, satisfactory; needs to improve or substantial
noncompliance. The rating assigned to a financial institution is considered in connection with various applications submitted by the financial
institution or its holding company to its banking regulators, including applications to acquire another financial institution or to open
or close a branch office. In addition, all subsidiary banks of a financial holding company must maintain a satisfactory or outstanding
rating in order for the financial holding company to avoid limitations on its activities. State Bank received a satisfactory rating in
its most recent CRA examination.

 On October 24, 2023, the federal banking agencies,
including the FRB, issued a final rule designed to strengthen and modernize the regulations implementing the CRA. The changes are designed
to encourage banks to expand access to credit, investment and banking services in low- and moderate-income communities, adapt to changes
in the banking industry, including mobile and internet banking, provide greater clarity and consistency in the application of the CRA
regulations, and tailor CRA evaluations and data collection to bank size and type. The applicability date for the majority of the changes
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.

 SEC and NASDAQ Regulation

 The Company is subject to the jurisdiction of
the Securities and Exchange Commission (the "SEC") and certain state securities authorities relating to the offering and sale
of its securities. The Company is subject to the registration, reporting and other regulatory requirements of the Securities Act of 1933,
as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules adopted by the SEC under those acts. The Company's common shares are listed on The NASDAQ Capital Market ("NASDAQ")
under the symbol "SBFG". As a result, the Company is subject to NASDAQ rules and regulations applicable to listed companies.

 The SEC has adopted rules and regulations governing,
among other matters, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate
information. The SEC has also approved corporate governance rules promulgated by NASDAQ. The Company has adopted and implemented a Code
of Conduct and Ethics and a copy of that policy can be found 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 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".

 USA Patriot Act and Anti-Money Laundering Act

 The Uniting and Strengthening of America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "Patriot Act") gives the United States government
powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing
and broadened anti-money laundering requirements. Title III of the Patriot Act encourages information sharing among bank regulatory agencies
and law enforcement bodies. Further, certain provisions of Title III impose affirmative obligations on a broad range of financial institutions.
Among other requirements, Title III and related regulations require regulated financial institutions to establish a program specifying
procedures for obtaining identifying information from customers seeking to open new accounts and establish enhanced due diligence policies,
procedures and controls designed to detect and report suspicious activity. State Bank has established policies and procedures that State
Bank believes comply with the requirements of the Patriot Act.

 The Anti-Money Laundering Act of 2020 (the "AMLA"),
which amends the Bank Secrecy Act of 1970 (the "BSA"), was enacted in January 2021. The AMLA is intended to be a comprehensive
reform and modernization to U.S. bank secrecy and anti-money laundering laws. Among other things, it codifies a risk-based approach to
anti-money laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal
processes for BSA compliance; expands enforcement-related and investigation-related authority, including increasing available sanctions
for certain BSA violations and instituting BSA whistleblower initiatives and protections.

 Office of Foreign Assets Control Regulation

 The U.S. Treasury Department's Office of
Foreign Assets Control ("OFAC") administers and enforces economic and trade sanctions against targeted foreign countries and
regimes, under authority of various laws, including designated foreign countries, nationals and others. OFAC publishes lists of specially
designated targets and countries. State Bank is responsible for, among other things, blocking accounts of, and transactions with, such
targets and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked transactions after their
occurrence. Failure to comply with these sanctions could have serious financial, legal and reputational consequences, including causing
applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit
such transactions even if approval is not required. Regulatory authorities have imposed cease and desist orders and civil money penalties
against institutions found to be violating these obligations.

 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 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.

 In June 2010, the FRB, the Office of the Comptroller
of the Currency (the "OCC") and the FDIC issued comprehensive final guidance on incentive compensation policies intended to
ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations
by encouraging excessive risk-taking. The guidance, which covers all employees that have the ability to materially affect the risk profile
of an organization, either individually or as part of a group, is based upon the key principles that a banking organization's incentive
compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the organization's ability to effectively
identify and manage risks, (ii) be compatible with effective internal controls and risk management and (iii) be supported by strong corporate
governance, including active and effective oversight by the organization's board of directors. These three principles are incorporated
into the proposed joint compensation regulations under the Dodd-Frank Act, described above.

 The FRB and the OCC review, as part of their respective
regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as the Company and State
Bank, that are not "large, complex banking organizations." These reviews are tailored to each organization based on the scope
and complexity of the organization's activities and the prevalence of incentive compensation arrangements. Deficiencies will be incorporated
into the organization's supervisory ratings, which can affect the organization's ability to make acquisitions and take other actions.
Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management
control or governance processes, pose a risk to the organization's safety and soundness and the organization is not taking prompt and
effective measures to correct the deficiencies.

 Public company compensation committee members
must meet heightened independence requirements and consider the independence of compensation consultants, legal counsel and other advisors
to the compensation committee. A compensation committee must have the authority to hire advisors and to have the public company fund reasonable
compensation of such advisors.

 SEC regulations require public companies to provide
various disclosures about executive compensation in annual reports and proxy statements and to present to their shareholders a non-binding
vote on the approval of executive compensation.

 Following the adoption of additional listing requirements
in 2023 to comply with the Dodd-Frank Act and rules adopted by the SEC in October 2022, public companies are now required, to adopt and
implement "clawback" policies for incentive compensation payments and to disclose the details of the procedures which allow
recovery of incentive compensation that was paid on the basis of erroneous financial information necessitating a restatement due to material
noncompliance with financial reporting requirements. This clawback policy is intended to apply to compensation paid within the three completed
fiscal years immediately preceding the date the issuer is required to prepare a restatement and would cover all executives who received
incentive awards. The Company's clawback policy adopted in accordance with these listing standards is included as Exhibit 97.

 Consumer Protection Laws and Regulations

 Banks are subject to regular examination to ensure
compliance with federal consumer protection statutes and regulations, including, but not limited to, the following:

 The
Equal Credit Opportunity Act (prohibiting discrimination in any credit transaction on the basis of any of various criteria);

 The
Truth in Lending Act (requiring that credit terms are disclosed in a manner that permits a consumer to understand and compare credit
terms more readily and knowledgeably);

 The
Fair Housing Act (making it unlawful for a lender to discriminate in housing-related lending activities against any person on the basis
of certain criteria);

 The
Home Mortgage Disclosure Act (requiring financial institutions to collect data that enables regulatory agencies to determine whether
financial institutions are serving the housing credit needs of the communities in which they are located);

 The
Real Estate Settlement Procedures Act (requiring that lenders provide borrowers with disclosures regarding the nature and cost of real
estate settlements and prohibits abusive practices that increase borrowers' costs); and

 Privacy
provisions of the Gramm-Leach-Bliley Act (requiring financial institutions to establish policies and procedures to restrict the sharing
of non-public customer data with non-affiliated parties and to protect customer information from unauthorized access).

 The banking regulators also use their authority
under the Federal Trade Commission Act to take supervisory or enforcement action with respect to unfair or deceptive acts or practices
by banks that may not necessarily fall within the scope of a specific banking or consumer finance law.

 Financial Privacy Provisions

 Federal and state regulations limit the ability
of banks and other financial institutions to disclose non-public information about consumers to non-affiliated third parties. These limitations
require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal
information to a non-affiliated third party. These regulations affect how consumer information is transmitted through diversified financial
companies and conveyed to outside vendors.

 State Bank is also subject to regulatory guidelines
establishing standards for safeguarding customer information. These guidelines describe the federal bank regulatory agencies' expectations
for the creation, implementation and maintenance of an information security program, which would include administrative, technical and
physical safeguards appropriate to the size and complexity of the institution and the nature and scope of its activities. The standards
set forth in the guidelines are intended to ensure the security and confidentiality of customer records and information, protect against
any anticipated threats or hazards to the security or integrity of such records and protect against unauthorized access to or use of such
records or information that could result in substantial harm or inconvenience to any customer.

 Cybersecurity

 In March 2015, federal regulators issued two related
statements regarding cybersecurity. One statement indicates that financial institutions should design multiple layers of security controls
to establish several lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer
credentials, including security measures to reliably authenticate customers accessing Internet-based services of the financial institution.
The other statement indicates that a financial institution's management is expected to maintain sufficient business continuity planning
processes to ensure the rapid recovery, resumption and maintenance of the financial institution's operations after a cyber-attack
involving destructive malware. A financial institution is also expected to develop appropriate processes to enable recovery of data and
business operations and address rebuilding network capabilities and restoring data if the financial institution or its critical service
providers fall victim to this type of cyber-attack. If State Bank fails to observe the regulatory guidance, it could be subject to various
regulatory sanctions, including financial penalties.

 In November 2021, the OCC, the FRB and the FDIC
issued a final rule, which became effective in May 2022, requiring banking organizations that experience a computer-security incident
to notify certain entities. A computer-security incident occurs when actual or potential harm to the confidentiality, integrity, or availability
of an information system or the information occurs, or there is a violation or imminent threat of a violation to banking security policies
and procedures. The affected bank must notify its respective federal regulator of the computer-security incident as soon as possible and
no later than 36 hours after the bank determines a computer-security incident that rises to the level of a notification incident has occurred.
These notifications are intended to promote early awareness of threats to banking organizations and will help banks react to those threats
before they manifest into larger incidents. This rule also requires bank service providers to notify their bank organization customers
of a computer-security incident that has caused, or is reasonably likely to cause, a material service disruption or degradation for four
or more hours.

 Furthermore, the Cyber Incident Reporting for
Critical Infrastructure Act, enacted in March 2022, will require, once administrative rules are adopted, certain covered entities, including
those in the financial services industry, to report a covered cyber incident to the U.S. Department of Homeland Security's Cybersecurity
& Infrastructure Security Agency ("CISA") within 72 hours after a covered entity reasonably believes an incident has occurred.
Separate reporting to CISA will also be required within 24 hours if a ransom payment is made as a result of a ransomware attack.

 State regulators have also been increasingly active
in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain
financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including
data encryption requirements. Many states have also recently implemented or modified their data breach notification and data privacy requirements.
The Company expects this trend of state-level activity in those areas to continue and is continually monitoring developments in the states
in which our customers are located.

 On July 26, 2023, the SEC adopted final rules
that require public companies to promptly disclose material cybersecurity incidents in Current Reports on Form 8-K and detailed information
regarding their cybersecurity risk management, strategy, and governance on an annual basis in their Annual Reports on Form 10-K. See ITEM
1C. 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.

 In the ordinary course of business, the Company
relies on electronic communications and information systems to conduct its operations and to store sensitive data. The Company employs
an in-depth, layered, defensive approach that leverages people, processes and technology to manage and maintain cybersecurity controls.
The Company employs a variety of preventative and detective tools to monitor, block, and provide alerts regarding suspicious activity,
as well as to report on any suspected advanced persistent threats. The Company also regularly invests in new products and technology to
further enhance these tools and mechanisms. Notwithstanding the strength of the Company's defensive measures, the threat from cyber-attacks
is severe, attacks are sophisticated and increasing in volume, and attackers respond rapidly to changes in defensive measures. While to
date, the Company has not detected a significant compromise, significant data loss or any material financial losses related to cybersecurity
attacks, the Company's systems and those of its customers and third-party service providers are under constant threat and it is
possible that the Company could experience a significant event in the future. Risks and exposures related to cybersecurity attacks are
expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as
due to the expanding use of Internet banking, mobile banking and other technology-based products and services by us and our customers.

 Effect of Environmental Regulation

 Compliance with federal, state and local provisions
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.

 Effects of Government Monetary Policy

 The earnings of the Company are affected by general
and local economic conditions and by the policies of various governmental regulatory authorities. In particular, the FRB regulates money
and credit conditions and interest rates to influence general economic conditions, primarily through open market acquisitions or dispositions
of United States Government securities, varying the discount rate on member bank borrowings and setting reserve requirements against member
and nonmember bank deposits. FRB monetary policies have had a significant effect on the interest income and interest expense of commercial
banks, including State Bank, and are expected to continue to do so in the future.

 Human Capital Resources

 Our employees are vital to our success in the
financial services industry. As a human-capital intensive business, the long-term success of our company depends on our people. Our goal
is to ensure that we have the right talent, in the right place, at the right time. We do that through our commitment to attracting, developing
and retaining our employees.

 We strive to attract individuals who are people-focused
and share our values. We have a comprehensive program dedicated to selecting new talent and enhancing the skills of our employees. In
our recruiting efforts, we strive to have a diverse group of candidates to consider for our roles.

 We have designed a compensation structure that
we believe is attractive to our current and prospective employees. We also offer our employees the opportunity to participate in a variety
of professional and leadership development programs. Our programs include a variety of industry, product, technical, professional, business
development, leadership and regulatory topics. These programs are available online and in-person. In addition, we encourage all employees
to be involved in the communities we serve through various volunteer activities.

 We seek to retain our employees by using their
feedback to create and continually enhance programs that support their needs. We use company-wide surveys to solicit feedback from our
employees. We have a formal annual goal setting and performance review process for our employees. We promote a values-based culture, an
important factor in retaining our employees. Our training, to share and communicate our culture to all employees, plays an important part
in this process. We are committed to having a diverse workforce, and an inclusive work environment is a natural extension of our culture.
We are committed to ensuring that all our employees feel welcomed, valued, respected and heard so that they can fully contribute their
unique talents for the benefit of our customers, their careers, our company and our communities.

 We monitor and evaluate various turnover and attrition
metrics throughout our organization. Our annualized voluntary turnover is relatively low, as is the case for turnover of our top performers,
a record which we attribute to our strong values-based culture, commitment to career development, and attractive compensation and benefit
programs.

 At December 31, 2023, the Company employed approximately
251 full-time equivalent employees to whom a variety of benefits are provided. Management considers its relationship with its employees
to be good.

 Item 1A.
 Risk Factors.

 Cautionary Statement Regarding Forward-Looking
Information

 Certain statements contained in this Annual Report
on Form 10-K, and in other statements that we make from time to time in filings by the Company with the SEC, in press releases, and in
oral and written statements made by or with the approval of the Company which are not statements of historical fact constitute forward-looking
statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act, and the Private Securities Litigation
Reform Act of 1995. Examples of forward-looking statements include: (a) projections of income or expense, earnings per share, the payment
or non-payment of dividends, capital structure and other financial items; (b) statements of plans and objectives of the Company or our
Board of Directors or management, including those relating to products and services; (c) statements of future economic performance; (d)
statements of future customer attraction or retention; and (e) statements of assumptions underlying these statements. Forward-looking
statements reflect our expectations, estimates or projections concerning future results or events. These statements are generally identified
by the use of forward-looking words or phrases such as "anticipates", "believes", "estimates", "expects",
"intends", "may", "plans", "projects", "should", "will allow",
"will continue", "will likely result", "will remain", "would be", or similar expressions.

 The Private Securities Litigation Reform Act of
1995 provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information so
long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important
factors that could cause actual results to differ materially from those discussed in the forward-looking statements. We desire to take
advantage of the "safe harbor" provisions of the Act.

 Forward-looking statements involve risks and uncertainties.
Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events,
including those factors discussed in the Risk Factors below. There is also the risk that the Company's management or Board of Directors
incorrectly analyzes these risks and forces, or that the strategies the Company develops to address them are unsuccessful.

 Forward-looking statements speak only as of that
date on which they are made. Except as may be required by law, the Company undertakes no obligation to update any forward-looking statement
to reflect events or circumstances after the date on which the statement is made. All forward-looking statements attributable to the Company
or any person acting on our behalf are qualified in their entirety by the following cautionary statements.

 Risk Factors

 The following sets forth certain risk factors
that we are believe are relevant to the Company and its business. These risk factors are not presented in any particular order and do
not constitute all of the risks that may affect our business. Additional risks that are not presently known or that we currently deem
to be immaterial could also have a material adverse impact on our business, financial condition, or results of operations.

 Economic, Market and Political Risks:

 Changes in economic and political conditions
could adversely affect our earnings through declines in deposits, loan demand, the ability of our customers to repay loans and the value
of collateral securing our loans.

 Our success depends to a large extent upon
local and national economic conditions, as well as governmental fiscal and monetary policies. Conditions such as inflation,
recession, unemployment, changes in interest rates, fiscal and monetary policy, an increasing federal government budget deficit, the
failure of the federal government to raise the federal debt ceiling and/or possible future U.S. government shutdowns over budget
disagreements, slowing gross domestic product, tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements,
trade wars, and other factors beyond our control may adversely affect our deposit levels and composition, the quality of investment
securities available for purchase, demand for loans, the ability of our borrowers to repay their loans, and the value of the
collateral securing loans made by us. Disruptions in U.S. and global financial markets, and changes in oil production in the Middle
East also affect the economy and stock prices in the U.S., which can affect our earnings capital, as well as the ability of our
customers to repay loans. Because we have a significant amount of real estate loans, decreases in real estate values could adversely
affect the value of property used as collateral and our ability to sell the collateral upon foreclosure. Adverse changes in the
economy may also have a negative effect on the ability of our borrowers to make timely repayments of their loans, which would have
an adverse impact on our earnings and cash flows. In addition, our lending and deposit gathering activities are concentrated
primarily in Northwest Ohio. As a result, our success depends in large part on the general economic conditions of these areas,
particularly given that a significant portion of our lending relates to real estate located in this region. Therefore, adverse
changes in the economic conditions in these areas could adversely impact our earnings and cash flows.

 Instability in global economic conditions and
geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on our results of operations and
financial condition.

 The macroeconomic environment in the U.S. is susceptible
to global events and volatility in financial markets. In addition, trade negotiations between the U.S. and other nations remain uncertain
and could adversely impact economic and market conditions for the Company and our clients and counterparties. Instability in global economic
conditions and geopolitical matters, such as military conflicts in Ukraine and the Middle East, as well as volatility in financial markets,
could have a material adverse effect on our results of operations and financial condition. For example, on February 24, 2022, Russian
military forces invaded Ukraine, and sustained conflict and disruption in the region have occurred and remains likely to continue. In
addition, the October 7, 2023, attack by Hamas in Israel has resulted in prolonged conflict and disruption in the Middle East. Although
the length, impact and outcome of the ongoing war in Ukraine and the conflict in the Middle East are highly unpredictable, these conflicts
have resulted, and could continue to result, in significant market and other disruptions, including significant volatility in commodity
prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability,
changes in consumer or purchaser preferences, as well as increases in cyberattacks and espionage. The extent and duration of the military
action, sanctions and resulting market disruptions could be significant and could potentially have substantial impact on the global economy
and the Company's business for an unknown period of time. Any of the above-mentioned events or disruptions could affect our business,
financial condition and operating results, and may also magnify the impact of other risks described in this Form 10-K.

 We may be unable to manage interest rate risks,
which could reduce our net interest income.

 Our results of operations are affected principally
by net interest income, which is the difference between interest earned on loans and investments and interest expense paid on deposits
and other borrowings. The spread between the yield on our interest-earning assets and our overall cost of funds may be compressed, and
our net interest income may continue to be adversely impacted by changing rates. We cannot predict or control changes in interest rates.
National, regional and local economic conditions and the policies of regulatory authorities, including monetary policies of the FRB, affect
the movement of interest rates and our interest income and interest expense. If the interest rates paid on deposits and other borrowed
funds increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore
earnings, could be adversely affected. Earnings could also be adversely affected in a declining rate environment if the interest paid
for deposits decrease more slowly than the interest rates received on loans and other investments.

 In addition, certain assets and liabilities may
react in different degrees to changes in market interest rates. For example, interest rates on some types of assets and liabilities may
fluctuate prior to changes in broader market interest rates, while interest rates on other types may lag behind. While the bulk of our
variable rate commercial assets have interest rate floors, some of our assets, such as adjustable rate mortgages, have features that restrict
changes in their interest rates, including rate caps.

 We believe that the impact on our cost of funds
will depend on a number of factors, including but not limited to, the competitive environment in the banking sector for deposit pricing,
opportunities for clients to invest in other markets such as fixed income and equity markets, and the propensity of customers to invest
in their businesses. The effect on our net interest income from a change in interest rates will ultimately depend on the extent to which
the aggregate impact of loan re-pricings exceeds the impact of increases in our cost of funds.

 Changes in interest rates may affect the level
of voluntary prepayments on our loans and may also affect the level of financing or refinancing by customers. Changes in interest rates
may also negatively affect the ability of the Company's borrowers to repay their loans, particularly as interest rates rise and
adjustable rate loans become more expensive.

 Interest rates are highly sensitive to many factors
that are beyond our control. Some of these factors include: inflation, recession, unemployment, money supply, international disorders,
and instability in domestic and foreign financial markets. The Company's management uses various measures to monitor interest rate
risk and believes it has implemented effective asset and liability management strategies to reduce the potential adverse effects of changes
in interest rates on the Company's financial condition and results of operations. Management also periodically adjusts the mix of
assets and liabilities to manage interest rate risk. However, any significant, unexpected, prolonged change in market interest rates could
have a material adverse effect on our financial condition and results of operations.

 Risks Related to Our Business Operations:

 If our actual credit losses exceed our allowance
for credit losses, our net income will decrease.

 Our loan customers may not repay their loans according
to their terms, and the collateral securing the payment of these loans may be insufficient to pay any remaining loan balance. We may experience
significant credit losses, which could have a material adverse effect on our operating results. In accordance with accounting principles
generally accepted in the United States, we maintain an ACL to provide for loan defaults and
non-performance, which when combined, we refer to as the ACL. Our ACL may not be adequate
to cover actual credit losses, and future provisions for credit losses could have a material adverse effect on our operating results.
Our ACL is based on prior experience, as well as an evaluation of the risks in the current portfolio. The amount
of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates that may be
beyond our control, and these losses may exceed current estimates. Federal regulatory agencies, as an integral part of their examination
process, review our loans and ACL. We cannot guarantee that we will not further increase the ACL or that regulators will not require us to increase this allowance. Either of these occurrences could have a material adverse effect
on our financial condition and results of operations.

 Moreover, the Financial Accounting Standards Board
(the "FASB") has changed its requirements for establishing the ACL. On June 16, 2016, the FASB issued
Accounting Standard Update ("ASU") 2016-13 "Financial Instruments - Credit Losses", which replaces the incurred loss
model with an expected loss model and is referred to as the CECL model. Under the incurred loss model, loans are recognized as impaired
when there is no longer an assumption that future cash flows will be collected in full under the originally contracted terms. Under the
CECL model, financial institutions are required to use historical information, current conditions and reasonable forecasts to estimate
the expected loss over the life of the loan. The transition to the CECL model requires significantly greater data requirements and changes
to methodologies to accurately account for expected losses under the new parameters. If the methodologies and assumptions that we use
in the CECL model are proven to be incorrect or inadequate, the ACL may not be sufficient, resulting in the need
for additional ACL to be established, which could have a material adverse impact on our financial condition and
results of operations.

 The new CECL accounting guidance is effective
for annual reporting periods and interim reporting periods within those annual periods, beginning after December 15, 2019. However, the
FASB deferred the effective date for this ASU for smaller reporting companies, such as the Company, to annual reporting periods and interim
reporting periods within those annual periods, beginning after December 15, 2022. The Company recognized a one-time cumulative effect
adjustment (increase) to the ACL of $1.4 million upon adoption as of January 1, 2023. In addition, the Company
established a related reserve for unfunded commitments of $1.1 million as of January 1, 2023.

 If real
estate markets or the economy in general deteriorate, State Bank may experience increased delinquencies and credit losses. The ACL may not be sufficient to cover actual loan-related losses. Additionally, banking regulators may require State Bank to
increase its ACL in the future, which could have a negative effect on the Company's financial condition
and results of operations. Additions to the ACL will result in a decrease in net earnings and capital and could
hinder our ability to grow our assets.

 Any significant increase in our ACL or loan charge offs, including increases required by applicable regulatory authorities, might have a material adverse effect
on the Company's financial condition and results of operations.

 Our success depends upon our ability to attract
and retain key personnel.

 Our success depends upon the continued service
of our senior management team and upon our ability to attract and retain qualified financial services personnel. Competition for qualified
employees is intense. We cannot guarantee that we will be able to retain our existing key personnel or attract additional qualified personnel.
If we lose the services of our key personnel, or are unable to attract additional qualified personnel, our business, financial condition
and results of operations could be adversely affected.

 We depend upon the accuracy and completeness of information about
customers.

 In deciding whether to extend credit or enter
into other transactions with customers, we may rely on information provided to us by customers, including financial statements and other
financial information. We may also rely on representations of customers as to the accuracy and completeness of that information and, with
respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to a business,
we may assume that the customer's audited financial statements conform to generally accepted accounting principles and present fairly,
in all material respects, the financial condition, results of operations and cash flows of the customer, and we may also rely on the audit
report covering those financial statements. Our financial condition and results of operations could be negatively impacted to the extent
we rely on financial statements that do not comply with generally accepted accounting principles or that are materially misleading.

 We may not be able to grow, and if we do, we
may have difficulty managing that growth.

 Our business strategy is to continue to grow our
assets and expand our operations, including through potential strategic acquisitions. Our ability to grow depends, in part, upon our ability
to expand our market share, successfully attract core deposits, and to identify loan and investment opportunities as well as opportunities
to generate fee-based income. We can provide no assurance that we will be successful in increasing the volume of our loans and deposits
at acceptable levels and upon terms acceptable to us. We also can provide no assurance that we will be successful in expanding our operations
organically or through strategic acquisitions while managing the costs and implementation risks associated with this growth strategy.

 We expect to continue to experience growth in
the number of our employees and customers and the scope of our operations, but we may not be able to sustain our historical rate of growth
or continue to grow our business at all. Our success will depend upon the ability of our officers and key employees to continue to implement
and improve our operational and other systems, to manage multiple, concurrent customer relationships, and to hire, train and manage our
employees. In the event that we are unable to perform all these tasks and meet these challenges effectively, including continuing to attract
core deposits, our operations, and consequently our earnings, could be adversely impacted.

 Future acquisitions or other expansion may
adversely impact our financial condition and results of operations.

 In the future, we may acquire other financial
institutions or branches or assets of other financial institutions. We may also open new branches, enter into new lines of business, or
offer new products or services. Any such acquisition or expansion of our business will involve a number of expenses and risks, which may
include some or all of the following:

 the
time and expense associated with identifying and evaluating potential acquisitions or expansions;

 the
potential inaccuracy of estimates and judgments used to evaluate credit, operations, management and market risk with respect to target
institutions;

 the
time and costs of evaluating new markets, hiring local management and opening new offices, and the delay between commencing these activities
and the generation of profits from the expansion;

 any
financing required in connection with an acquisition or expansion;

 the
diversion of management's attention to the negotiation of a transaction and the integration of the operations and personnel of
the combining businesses;

 entry
into unfamiliar markets and the introduction of new products and services into our existing business;

 the
possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on our results of operations;
and

 the
risk of loss of key employees and customers.

 We may incur substantial costs to expand, and
we can give no assurance that such expansion will result in the levels of profits we expect. Neither can we assure that integration efforts
for any future acquisitions will be successful. We may issue equity securities in connection with acquisitions, which could dilute the
economic and voting interests of our existing shareholders.

 We are exposed to a number of operational risks.

 We are exposed to many types of operational risk,
including reputational risk, legal and compliance risk, cybersecurity risk, the risk of fraud or theft by employees or outsiders, unauthorized
transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled
computer or telecommunications systems.

 We rely heavily on communications and information
systems to conduct our business. Any failure, interruption or breach in security of these systems could result in failures or disruptions
in our customer relationship management, general ledger, deposit, loan and other systems.

 Given the volume of transactions we process, certain
errors may be repeated or compounded before they are discovered and successfully rectified. Our necessary dependence upon automated systems
to record and process our transaction volume may further increase the risk that technical system flaws or employee tampering or manipulation
of those systems will result in losses that are difficult to detect. We may also be subject to disruptions of our operating systems arising
from events that are wholly or partially beyond our control (for example, cyberattacks or electrical or telecommunications outages), which
may give rise to disruption of service to customers and to financial loss or liability. We are further exposed to the risk that our external
vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by
their respective employees as we are) and to the risk that our (or our vendors') consumer compliance, business continuity and data
security systems prove to be inadequate.

 Negative public opinion can result from our actual
or alleged conduct in any number of activities, including lending practices, corporate governance, acquisitions, social media and other
marketing activities, and the implementation of environmental, social and governance ("ESG") practices, and from actions taken by governmental
regulators and community organizations in response to any of the foregoing activities. Negative public opinion could adversely affect
our ability to attract and keep customers, could expose us to potential litigation and regulatory action, and could have a material adverse
effect on the price of our common shares or result in heightened volatility of our stock price.

 Recent and future bank failures may adversely
affect the Company's business, earnings and financial condition.

 The failure of other banks can have significant
impacts on the national, regional and local banking industry and the business environment in which the Company operates. The recent bank
failures of Silicon Valley Bank in California, Signature Bank in New York, and First Republic Bank in California during the first and
second quarters of 2023 have caused a degree of panic and uncertainty in the investor community and among bank customers generally. While
the Company does not believe that the circumstances of these three bank failures are indicators of broader issues with the banking system,
these and any future bank failures may reduce customer confidence, affect sources of funding and liquidity (for example, by increasing
the withdrawal or transfer of deposits by customers), increase regulatory requirements and costs, adversely affect financial markets and/or
have a negative reputational ramification for the banking industry as a whole. The Company will continue to monitor the ongoing events
concerning these three banks, as well as any future potential bank failures and/or volatility within the banking industry in general,
along with any responsive measures taken by the banking regulators to mitigate or manage potential turmoil in the banking industry.

 We could experience an unexpected inability
to obtain needed liquidity which could adversely affect our business, profitability, and viability a going concern.

 Liquidity measures the ability to meet current
and future cash flow needs as they become due. The liquidity of a financial institution reflects its ability to meet loan requests, to
accommodate possible outflows in deposits, and to take advantage of interest rate market opportunities and is essential to a financial
institution's business. The ability of a financial institution to meet its current financial obligations is a function of its balance
sheet structure, its ability to liquidate assets, and its access to alternative sources of funds. The bank failures in 2023 exemplify
the potential serious results of the unexpected inability of insured depository institutions to obtain needed liquidity to satisfy deposit
withdrawal requests, including how quickly such requests can accelerate once uninsured depositors lose confidence in an institution's
ability to satisfy its obligations to depositors. We seek to ensure our funding needs are met by maintaining a level of liquidity through
asset and liability management. If we become unable to obtain funds when needed, it could have a material adverse effect on our business,
financial condition, and results of operations.

 Our information systems may experience an interruption
or security breach.

 We rely heavily on communications and information
systems to conduct our business. Any failure, interruption or breach in security of these systems could result in failures or disruptions
in our customer relationship management, general ledger, deposit, loan and other systems. While we have policies and procedures designed
to prevent or limit the effect of the possible failure, interruption or security breach of our information systems, there can be no assurance
that any such failure, interruption or security breach will not occur or, if they do occur, that they will be adequately addressed. The
occurrence of any failure, interruption or security breach of our information systems could damage our reputation, result in a loss of
customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability.

 Unauthorized disclosure of sensitive or confidential
client information, or breaches in security of our systems, could severely harm our business.

 We collect, process and store sensitive consumer
data by utilizing computer systems and telecommunications networks operated by both third-party service providers and us. State Bank's
necessary dependence upon automated systems to record and process State Bank's transactions poses the risk that technical system
flaws, employee errors, tampering or manipulation of those systems, or attacks by third parties will result in losses and may be difficult
to detect. We have security and backup and recovery systems in place, as well as a business continuity plan, to ensure the computer systems
will not be inoperable, to the extent possible. We also routinely review documentation of such controls and backups related to third party
service providers. Our inability to use or access these information systems at critical points in time could unfavorably impact the timeliness
and efficiency of our business operations. In recent years, some banks have experienced cyberattacks with the goal and effect of disrupting
the ability of the bank to process transactions. Other businesses have been victims of ransomware attacks in which the business becomes
unable to access its own information and is presented with a demand to pay a ransom in order to once again have access to its information.

 We could be adversely affected if one of our employees
or a third-party service provider causes a significant operational breakdown or failure, either as a result of human error or where an
individual purposefully sabotages or fraudulently manipulates our operations or systems. State Bank is further exposed to the risk that
the third-party service providers may be unable to fulfill their contractual obligations (or will be subject to the same risks as we are).
These disruptions may interfere with service to our customers, cause additional regulatory scrutiny and result in a financial loss or
liability. We are also at risk of the impact of natural disasters, terrorism and international hostilities on our systems or for the effects
of outages or other failures involving power or communications systems operated by others.

 Misconduct by employees could include fraudulent,
improper or unauthorized activities on behalf of clients or improper use of confidential information. We may not be able to prevent employee
errors or misconduct, and the precautions we take to detect this type of activity might not be effective in all cases. Employee errors
or misconduct could subject us to civil claims for negligence or regulatory enforcement actions, including fines and restrictions on our
business.

 In addition, there have been instances where financial
institutions have been victims of fraudulent activity in which criminals pose as customers to initiate wire and automated clearinghouse
transactions out of customer accounts. Although we have policies and procedures in place to verify the authenticity of our customers,
we cannot assure that such policies and procedures will prevent all fraudulent transfers.

 We have implemented security controls to prevent
unauthorized access to our computer systems, and we require that our third-party service providers maintain similar controls. However,
the Company's management cannot be certain that these measures will be successful. A security breach of the computer systems and
loss of confidential information, such as customer account numbers and related information, could result in a loss of customers'
confidence and, thus, loss of business. We could also lose revenue if competitors gain access to confidential information about our business
operations and use it to compete with us. While we maintain specific "cyber" insurance coverage, which would apply in the
event of various breach scenarios, the amount of coverage may not be adequate in any particular case. Furthermore, because cyber threat
scenarios are inherently difficult to predict and can take many forms, some breaches may not be covered under our cyber insurance coverage.

 Further, we may be affected by data breaches at
retailers and other third parties who participate in data interchanges with us and our customers that involve the theft of customer credit
and debit card data, which may include the theft of our debit card PIN numbers and commercial card information used to make purchases
at such retailers and other third parties. Such data breaches could result in us incurring significant expenses to reissue debit cards
and cover losses, which could result in a material adverse effect on our results of operations.

 There can be no assurance that we will not suffer
such cyber-attacks or other information security breaches (or attempted breaches) or incur resulting losses in the future. Our risk and
exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, and our plans to continue
to implement internet and mobile banking capabilities to meet customer demand. As cyber and other data security threats continue to evolve,
we may be required to expend significant additional resources to continue to modify and enhance protective measures or to investigate
and remediate any security vulnerabilities.

 All of the types of cybersecurity incidents discussed
above could result in damage to the Company's reputation, loss of customer business, litigation, increased regulatory scrutiny and
potential enforcement actions, repairs of system damage, increased investments in cybersecurity (such as obtaining additional technology,
making organizational changes, deploying additional personnel, training personnel and engaging consultants), increased insurance premiums,
and loss of investor confidence and a reduction in the price of our common shares, all of which could result in financial loss and material
adverse effects on the Company's results of operations and financial condition.

 Our business could be adversely affected through
third parties who perform significant operational services on our behalf.

 The third parties performing operational services
for the Company are subject to risks similar to those faced by the Company relating to cybersecurity, breakdowns or failures of their
own systems, or misconduct of their employees. Like many other community banks, State Bank also relies, in significant part, on a single
vendor for the systems which allow State Bank to provide banking services to State Bank's customers.

 One or more of the third parties utilized by us
may experience a cybersecurity event or operational disruption and, if any such event does occur, it may not be adequately addressed,
either operationally or financially, by such third party. Certain of these third parties may have limited indemnification obligations
to us in the event of a cybersecurity event or operational disruption or may not have the financial capacity to satisfy their indemnification
obligations.

 Financial or operational difficulties of a third-party
provider could also impair our operations if those difficulties interfere with such third party's ability to serve the Company.
If a critical third-party provider is unable to meet the needs of the Company in a timely manner, or if the services or products provided
by such third party are terminated or otherwise delayed and if the Company is not able to develop alternative sources for these services
and products quickly and cost-effectively, our business could be materially adversely affected.

 Additionally, regulatory guidance adopted by federal
banking regulators addressing how banks select, engage and manage their third-party relationships, affects the circumstances and conditions
under which we work with third parties and the cost of managing such relationships.

 Strong competition within our market area may
reduce our ability to attract and retain deposits and originate loans.

 We face competition both in originating loans
and in attracting deposits within our market area. We compete for clients by offering personal service and competitive rates on our loans
and deposit products. The type of institutions we compete with include large regional financial institutions, community banks, thrifts
and credit unions operating within our market areas. Nontraditional sources of competition for loan and deposit dollars come from captive
auto finance companies, mortgage banking companies, internet banks, brokerage companies, insurance companies, fintechs and direct mutual
funds. As a result of their size and ability to achieve economies of scale, certain of our competitors offer a broader range of products
and services than we offer. We expect competition to remain intense in the future due to legislative, regulatory and technological changes
and the continuing trend of consolidation in the financial services industry. In addition, to stay competitive in our markets we may need
to adjust the interest rates on our products to match the rates offered by our competitors, which could adversely affect our net interest
margin. As a result, our profitability depends upon our continued ability to successfully compete in our market areas while achieving
our investment objectives.

 We may be required to repurchase loans we have
sold or indemnify loan purchasers under the terms of the sale agreements, which could adversely affect our liquidity, results of operations
and financial statements.

 When State Bank sells a mortgage loan, it agrees
to repurchase or substitute a mortgage loan if it is later found to have breached any representation or warranty State Bank made about
the loan or if the borrower is later found to have committed fraud in connection with the origination of the loan. While we have underwriting
policies and procedures designed to avoid breaches of representations and warranties as well as borrower fraud, there can be no assurance
that no breach or fraud will ever occur. Required repurchases, substitutions or indemnifications could have an adverse impact on our liquidity,
results of operations and financial statements.

 We are subject to environmental liability risk associated with lending
activities.

 A significant portion of our loan portfolio is
secured by real property. During the ordinary course of business, we foreclose on and take title to properties securing certain loans.
In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are
found, we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws and evolving regulation
may require us to incur substantial expenses and may materially reduce the affected property's value or limit our ability to use
or sell the affected property. In addition, future laws and regulations or more stringent interpretations or enforcement policies with
respect to existing laws or regulations may increase our exposure to environmental liability. Environmental reviews of real property before
initiating foreclosure actions may not be sufficient to detect all potential environmental hazards. The remediation costs and any other
financial liabilities associated with an environmental hazard could have a material adverse effect on our business, financial condition
and results of operations.

 Legislative, Legal and Regulatory Risks:

 FDIC insurance premiums may increase materially,
which could negatively affect our profitability.

 The FDIC insures deposits at FDIC insured financial
institutions, including State Bank. The FDIC charges the insured financial institutions premiums to maintain the DIF at a certain level.
During 2008 and 2009, there were higher levels of bank failures which dramatically increased resolution costs of the FDIC and depleted
the deposit insurance fund. The FDIC collected a special assessment in 2009 to replenish the DIF and also required a prepayment of an
estimated amount of future deposit insurance premiums. In October 2022, the FDIC adopted a final rule increasing the assessment rate
from three basis points to five basis points beginning with the first quarterly assessment period of 2023. The FDIC recently adopted
rules revising the assessments in a manner benefiting banks with assets totaling less than $10 billion. There can be no assurance, however,
that assessments will not be changed in the future.

 We operate in a highly regulated industry,
and the laws and regulations that govern our operations, corporate governance, executive compensation and financial accounting, or reporting,
including changes in, or failure to comply with the same, may adversely affect the Company.

 The banking industry is highly regulated. We
are subject to supervision, regulation and examination by various federal and state regulators, including the FRB, the SEC, the CFPB,
the FDIC, Financial Industry Regulatory Authority, Inc. ("FINRA"), and various state regulatory agencies. The statutory and
regulatory framework that governs the Company is generally designed to protect depositors and customers, the DIF, the U.S. banking and
financial system, and financial markets as a whole and not to protect shareholders. These laws and regulations, among other matters,
prescribe minimum capital requirements, impose limitations on our business activities (including foreclosure and collection practices),
limit the dividends or distributions that we can pay, and impose certain specific accounting requirements that may be more restrictive
and may result in greater or earlier charges to earnings or reductions in capital than would otherwise be required under generally accepted
accounting principles in the United States of America. Compliance with laws and regulations can be difficult and costly, and changes
to laws and regulations often impose additional compliance costs. Both the scope of the laws and regulations and the intensity of the
supervision to which we are subject have increased in recent years in response to the perceived state of the financial services industry,
as well as other factors such as technological and market changes. Such regulation and supervision may increase our costs and limit our
ability to pursue business opportunities. Further, our failure to comply with these laws and regulations, even if the failure was inadvertent
or reflects a difference in interpretation, could subject the Company to restrictions on business activities, fines, and other penalties,
any of which could adversely affect results of operations, the capital base, and the price of our common shares. Further, any new laws,
rules, or regulations could make compliance more difficult or expensive or otherwise adversely affect our business and financial condition.

 Legislative or regulatory changes or actions
could adversely impact our business.

 The financial services industry is extensively
regulated. We are subject to extensive state and federal regulation, supervision and legislation that govern almost all aspects of our
operations. Laws and regulations may change from time to time and are primarily intended for the protection of consumers, depositors,
borrowers, the DIF and the banking system as a whole, and not to benefit our shareholders.

 Regulations affecting banks and financial services
businesses are undergoing continuous change, and management cannot predict the effect of these changes. While such changes are generally
intended to lessen the regulatory burden on financial institutions, the impact of any changes to laws and regulations or other actions
by regulatory agencies may negatively impact us or our ability to increase the value of our business. Regulatory authorities have extensive
discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation
of a financial institution, the classification of assets held by a financial institution, the adequacy of a financial institution's
ACL and the ability to complete acquisitions. Additionally, actions by regulatory agencies against us could cause
us to devote significant time and resources to defending our business and may lead to penalties that materially affect us and our shareholders.
Even the reduction of regulatory restrictions could have an adverse effect on us and our shareholders if such lessening of restrictions
increases competition within our industry or our market area.

 Changes in accounting standards could influence
our results of operations.

 The accounting standard setters, including the
FASB, the SEC and other regulatory bodies, periodically change the financial accounting and reporting standards that govern the preparation
of our consolidated financial statements. These changes can be difficult to predict and can materially affect how we record and report
our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively,
which would result in the restatement of our financial statements for prior periods.

 The preparation of consolidated financial statements
in conformity with U.S. Generally Accepted Accounting Principles ("GAAP") requires management to make significant estimates
that affect the financial statements. Due to the inherent nature of these estimates, actual results may vary materially from management's
estimates.

 Noncompliance with the Bank Secrecy Act (BSA)
and other anti-money laundering statutes and regulations could cause a material financial loss.

 The BSA and the Patriot Act contain anti-money
laundering and financial transparency provisions intended to detect and prevent the use of the U.S. financial system for money laundering
and terrorist financing activities. The BSA, as amended by the Patriot Act, requires depository institutions and their holding companies
to undertake activities including maintaining an anti-money laundering program, verifying the identity of clients, monitoring for and
reporting suspicious transactions, reporting on cash transactions exceeding specified thresholds, and responding to requests for information
by regulatory authorities and law enforcement agencies. The Financial Crimes Enforcement Network ("FinCEN"), a unit of the
U.S. Department of the Treasury that administers the BSA, is authorized to impose significant civil money penalties for violations of
those requirements and has recently engaged in coordinated enforcement efforts with the federal bank regulatory agencies, as well as
the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service. The AMLA is intended to be a comprehensive
reform and modernization to U.S. bank secrecy and anti-money laundering laws, which includes a codified risk-based approach to anti-money
laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal processes
for BSA compliance; expands enforcement-related and investigation-related authority, including increasing available sanctions for certain
BSA violations and instituting BSA whistleblower incentives and protections.

 There is also increased scrutiny of compliance
with the rules enforced by the Office of Foreign Assets Control ("OFAC"). If the Company's policies, procedures, and
systems are deemed deficient, or if the policies, procedures, and systems of the financial institutions that the Company has already
acquired or may acquire in the future are deficient, the Company may be subject to liability, including fines and regulatory actions
such as restrictions on State Bank's ability to pay dividends and the necessity to obtain regulatory approvals to proceed with
certain planned business activities, including acquisition plans, which could negatively impact our business, financial condition, and
results of operations. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also
have serious reputational consequences for the Company.

 We may be the subject of litigation, which
could result in legal liability and damage to our business and reputation.

 From time to time, we may be subject to claims
or legal action from customers, employees or others. Financial institutions like the Company and State Bank are facing a growing number
of significant class actions, including those based on the manner of calculation of interest on loans and the assessment of overdraft
fees. Future litigation could include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts
of damages. We are also involved from time to time in other reviews, investigations and proceedings (both formal and informal) by governmental
and other agencies regarding our business. These matters also could result in adverse judgments, settlements, fines, penalties, injunctions
or other relief. Like other large financial institutions, we are also subject to risk from potential employee misconduct, including non-compliance
with policies and improper use or disclosure of confidential information.

 Our insurance may not cover all claims that may
be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Should
the ultimate judgments or settlements in any litigation exceed our insurance coverage, they could have a material adverse effect on our
financial condition and results of operations. In addition, we may not be able to obtain appropriate types or levels of insurance in
the future, nor may we be able to obtain adequate replacement policies with acceptable terms, if at all.

 We could face legal and regulatory risk arising
out of our residential mortgage business.

 Numerous federal and state governmental, legislative
and regulatory authorities are investigating practices in the business of mortgage and home equity lending and servicing and in the mortgage-related
insurance and reinsurance industries. We could face the risk of class actions, other litigation and claims from: the owners of or purchasers
of such loans originated or serviced by us, homeowners involved in foreclosure proceedings or various mortgage-related insurance programs,
downstream purchasers of homes sold after foreclosure, title insurers, and other potential claimants. Included among these claims are
claims from purchasers of mortgage and home equity loans seeking the repurchase of loans where the loans allegedly breached origination
covenants, representations, and warranties made to the purchasers in the purchase and sale agreements. The CFPB has issued new rules
for mortgage origination and mortgage servicing. Both the origination and servicing rules create new private rights of action for consumers
against lenders and servicers in the event of certain violations.

 Risks Related to Our Capital and Common
Shares:

 Our ability to pay cash dividends is limited,
and we may be unable to pay cash dividends in the future even if we elect to do so.

 We are dependent primarily upon the earnings
of our operating subsidiaries for funds to pay dividends on our common shares. The payment of dividends by us is also subject to regulatory
restrictions. As a result, any payment of dividends in the future will be dependent, in large part, on our ability to satisfy these regulatory
restrictions and our subsidiaries' earnings, capital requirements, financial condition and other factors. There can be no assurance
as to if or when the Company may pay dividends or as to the amount of any dividends which may be declared and paid to shareholders in
future periods. Failure to pay dividends on our shares could have a material adverse effect on the market price of our shares.

 A limited trading market exists for our common
shares, which could lead to price volatility.

 The ability to sell our common shares depends
upon the existence of an active trading market for those shares. While our shares are listed for trading on the NASDAQ Capital Market,
there is moderate trading volume in these shares. As a result, shareholders may be unable to sell our shares at the volume, price and
time desired. The limited trading market for our shares may cause fluctuations in the market value of our shares to be exaggerated, leading
to price volatility in excess of that which would occur in a more active trading market. In addition, even if a more active market of
our shares should develop, we cannot guarantee that such a market will continue.

 The market price of our common shares may
be subject to fluctuations and volatility.

 The market price of our common shares may fluctuate
significantly due to, among other things, changes in market sentiment regarding our operations, financial results or business prospects,
the banking industry generally or the macroeconomic outlook. Certain events or changes in the market or banking industry generally are
beyond our control. In addition to the other risk factors contained or incorporated by reference herein, factors that could affect our
trading price:

 our actual or anticipated operating
 and financial results, including how those results vary from the expectations of management,
 securities analysts and investors;

 changes in financial estimates or
 publications of research reports and recommendations by financial analysts or actions taken
 by rating agencies with respect to us or other financial institution;

 failure to declare dividends on
 our common shares from time to time;

 reports in the press or investment
 community generally or relating to our reputation or the financial services industry;

 developments in our business or
 operations or in the financial sector generally;

 any future offerings by us of our
 common shares;

 any future offerings by us of debt
 or preferred shares, which would be senior to our common shares upon liquidation and for
 purposes of dividend distributions;

 legislative or regulatory changes
 affecting our industry generally or our business and operations specifically;

 the operating and share price performance
 of companies that investors consider to be comparable to us;

 announcements of strategic developments,
 acquisitions, restructurings, dispositions, financings and other material events by us or
 our competitors;

 actions by our current shareholders,
 including future sales of common shares by existing shareholders, including our directors
 and executive officers;

 proposed or final regulatory changes
 or developments;

 anticipated or pending regulatory
 investigations, proceedings, or litigation that may involve or affect us; and

 other changes in U.S. or global
 financial markets, global economies and general market conditions, such as interest or foreign
 exchange rates, stock, commodity, credit or asset valuations or volatility.

 Equity markets in general and our shares have
experienced volatility over the past few years. The market price of our shares may continue to be subject to volatility unrelated to
our operating performance or business prospects, which could result in a decline in the market price of our shares.

 Investors could become subject to regulatory
restrictions upon ownership of our common shares.

 Under the Federal
Change in Bank Control Act, a person may be required to obtain prior approval from the Federal Reserve Board before acquiring 10 percent
or more of our common shares or the power to directly or indirectly control our management, operations, or policies.

 We have implemented anti-takeover devices
that could make it more difficult for another company to purchase us, even though such a purchase may increase shareholder value.

 In many cases, shareholders may receive a premium
for their shares if we were purchased by another company. Ohio law and our Amended Articles of Incorporation, as amended ("Articles"),
and Amended and Restated Regulations, as amended ("Regulations"), make it difficult for anyone to purchase us without the
approval of our Board of Directors. Consequently, a takeover attempt may prove difficult, and shareholders may not realize the highest
possible price for their securities.

 We may be compelled to seek additional capital
in the future, but capital may not be available when needed.

 We are required by federal and state regulatory
authorities to maintain adequate levels of capital to support our operations. In addition, federal banking agencies have proposed extensive
changes to their capital requirements; including raising required amounts and eliminating the inclusion of certain instruments from the
calculation of capital. In addition, we may elect to raise additional capital to support our business or to finance acquisitions, if
any, or we may otherwise elect to raise additional capital. Our ability to raise additional capital, if needed, will depend on conditions
in the capital markets, economic conditions and a number of other factors, many of which are outside our control, and on our financial
performance. Accordingly, we cannot be assured of our ability to raise additional capital if needed or on terms acceptable to us. If
we cannot raise additional capital when needed, it may have a material adverse effect on our financial condition, results of operations
and prospects.

 General Risk Factors:

 Our earnings are significantly affected by
the fiscal and monetary policies of the federal government and its agencies.

 The policies of the FRB impact us significantly.
The FRB regulates the supply of money and credit in the United States. Its policies directly and indirectly influence the rate of interest
earned on loans and paid on borrowings and interest-bearing deposits and can also affect the value of financial instruments we hold.
Those policies determine to a significant extent our cost of funds for lending and investing. Changes in those policies are beyond our
control and are difficult to predict. FRB policies can also affect our borrowers, potentially increasing the risk that they may fail
to repay their loans. For example, a tightening of the money supply by the FRB could reduce the demand for a borrower's products
and services. This could adversely affect the borrower's earnings and ability to repay its loan, which could have a material adverse
effect on our financial condition and results of operations.

 Changes in tax laws could adversely affect
our performance.

 We are subject to extensive federal, state and
local taxes, including income, excise, sales/use, payroll, franchise, withholding and ad valorem taxes. Changes to tax laws could have
a material adverse effect on our results of operations; fair values of net deferred tax assets and obligations of state and political
subdivisions held in our investment securities portfolio. In addition, our customers are subject to a wide variety of federal, state
and local taxes. Changes in taxes paid by our customers may adversely affect their ability to purchase homes or consumer products, which
could adversely affect their demand for our loans and deposit products. In addition, such negative effects on our customers could result
in defaults on the loans we have made.

 The preparation of our financial statements
requires the use of estimates that may vary from actual results.

 The preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the U.S. requires management to make significant estimates that affect
the financial statements. Two of our most critical estimates are the level of the ACL and the accounting for
goodwill and other intangibles. Because of the inherent nature of these estimates, we cannot provide complete assurance that we will
not be required to adjust earnings for significant unexpected loan losses, nor that we will not recognize a material provision for impairment
of our goodwill. For additional information regarding these critical estimates, see Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations beginning on page 32 of this Annual Report on Form 10-K.

 We may experience increasing scrutiny and
evolving expectations from customers, regulators, investors, and other stakeholders with respect to the Company's environmental,
social and governance practices.

 Financial institutions are facing increasing
scrutiny from customers, regulators, investors, and other stakeholders related to their ESG
practices and disclosure. Investor advocacy groups, investment funds, and influential investors are also increasingly focused on these
practices, especially as they relate to the environment, health and safety, diversity, labor conditions, and human rights. Increased
ESG-related compliance costs for the Company as well as among our suppliers, vendors and various other parties within our supply chain
could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or
stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, access to
capital, and the price of our common shares. New government regulations could also result in new or more stringent forms of ESG oversight
and expanding mandatory and voluntary reporting, diligence, and disclosure.

 We need to constantly update our technology
in order to compete and meet customer demands.

 The financial services market, including banking
services, is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. In addition
to better serving customers, the effective use of technology increases efficiency and may enable us to reduce costs. Our future success
will depend, in part, on our ability to use technology to provide products and services that provide convenience to customers and to
create additional efficiencies in our operations. Some of our competitors have substantially greater resources to invest in technological
improvements. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these
products and services to our customers. Failure to successfully keep pace with technological changes affecting the financial services
industry could negatively affect our growth, revenue and profit.

 Climate change, severe weather, natural disasters,
acts of war or terrorism and other external events could significantly impact our business.

 Natural disasters, including severe weather events
of increasing strength and frequency due to climate change, acts of war or terrorism, and other adverse external events could have a
significant impact on our ability to conduct business or upon third parties who perform operational services for us or our customers.
Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value
of collateral securing loans, cause significant property damage, result in lost revenue or cause us to incur additional expenses.

 Item 1B. Unresolved Staff Comments

 None.

 Item 1C. Cybersecurity

 The Company regularly assesses risks from cybersecurity
threats, monitors its information systems for potential vulnerabilities, and tests those systems pursuant to the Company's cybersecurity
policies, standards, processes, and practices, which are integrated into the Company's overall risk management program. We have
adopted aspects of the NIST cybersecurity framework, to which risk management in relation to our information systems is aligned. We categorize
our information systems as either Tier 1 (critical) or Tier 2 or Tier 3 (essential), depending on business value and/or risk of financial
or compliance impact of cybersecurity incidents. Our information security team uses a multifaceted approach to monitor, assess, identify,
and manage material risks to the Company from cybersecurity threats, including testing of the effectiveness of our cybersecurity incident
prevention and response systems; conducting routine vulnerability scanning of information systems assets; network/endpoint detection
and response coupled with advanced identification-enhanced logging capabilities powered by artificial intelligence software; discovery
through collaboration with the Company's internal audit team; monitoring of threat intelligence feeds provided by industry associations/groups,
service providers, and federal/state authorities; and professional service engagements, such as retaining the services of an external
24/7 security operations center and partnering with third parties in testing our information systems for vulnerabilities from external,
internal, and social engineering perspectives and assessing the effectiveness of our cybersecurity controls.

 The Company partners with third-party service
providers and employs processes to assess, identify, and manage material risks from cybersecurity threats arising from the use of such
third-party service providers. Our latest assessment attempted to identify vulnerabilities in our network and systems from external,
internal, and social engineering perspectives. Our cybersecurity practices (including with respect to third-party service providers)
have been assessed to represent a level of maturity consistent with industry best practices.

 Risks from cybersecurity threats, including as
a result of any previous cybersecurity incidents, have not materially affected the Company, including its business strategy, results
of operations, and financial condition. For more information about these and other risks, see ITEM 1A. RISK FACTORS.

 Our board of directors oversees the Company's
risk management process, including cybersecurity risks, directly and through its committees. The Audit & Risk Management Committee
and the Board provides structured oversight of the Company's risk management program, which focuses on the most significant short,
intermediate, and long-term risks the Company faces. The Company has an Information Security Council (the "Council") that
is responsible for overseeing the development and upkeep of written policies and procedures aimed at safeguarding the Company's
information systems and the nonpublic information stored within them. In addition, the Council plays a crucial role in the governance
of the cybersecurity risk management process. This involves collaborating with third-party industry experts and the Company's internal
audit team to conduct risk assessments of the Company's information security program (the "Program"). The assessments
encompass an evaluation of the Company's adherence to the Program, including the elements of the Program that are dictated by relevant
laws, regulations, and the Company's information security policy and procedures. Reports of the Council are shared regularly throughout
the year with the board of directors. Furthermore, the Company conducts periodic cybersecurity assessments and preparedness analyses,
supervised by our designated Chief Technology & Innovation Officer ("CTIO").

 The Company routinely engages third-party industry
experts to perform risk assessments of the Program. At least annually, our internal audit team conducts a formal risk assessment and
develops an audit plan that identifies, assesses, and prioritizes risks that include cybersecurity. The results of the risk assessment
and the proposed audit plan are communicated to various leaders within the Company as well as the Audit & Risk Management Committee
for input. The audit plan is reassessed throughout the year, and the plan is subject to modification by our internal audit team, e.g.,
based on such considerations as changes to resources, business operations, or internal or external risk factors.

 Item 2. Properties.

 The Company's principal executive offices
are located at 401 Clinton Street, Defiance, Ohio. State Bank owns this facility, with a portion of the facility utilized as a retail
banking center. In addition, State Bank owns the land and buildings occupied by 21 of its banking centers and leases two other properties
used as banking centers. The Company also occupies office space from various parties for loan production and other business purposes
on varying lease terms. There is no outstanding mortgage debt on any of the properties which are owned by State Bank.

 Listed below are the banking centers, loan production
offices and service facilities of the Company and their addresses, all of which are located in Allen, Defiance, Delaware, Franklin, Fulton,
Hancock, Lucas, Paulding, Williams and Wood counties of Ohio; Allen, Boone, Hamilton and Steuben counties of Indiana; and Monroe county
of Michigan:

 SB Financial Group, Inc. Property List as of

 Description/Address

 Leased/

Owned

 Total

12/31/23

 Main Banking Center & Corporate Office

 Clinton Street, Defiance, OH

 Owned

 $
 254,499

 Banking Centers/Drive-Thru's

 1419

 West High Street, Bryan, OH

 Owned

 56,400

 Third Street, Defiance, OH (Drive-thru)

 Owned

 N/A

 1600

 North Clinton Street, Defiance, OH

 38,898

 Main Street, Delta, OH

 Owned

 20,504

 4080

 West Dublin Granville Road, Dublin, OH

 Owned

 79,995

 North Michigan Avenue, Edgerton, OH

 Owned

 12,508

 East Lincoln Street, Findlay, OH

 Owned

 21,823

 South Main Street Suite A, Findlay, OH

 12832

 Coldwater Road, Fort Wayne, IN

 Owned

 29,364

 1232

 North Main Street, Bowling Green, OH

 Owned

 22,454

 Main Street, Luckey, OH

 Owned

 29,324

 East Morenci Street, Lyons, OH

 Owned

 23,672

 West Market Street, Lima, OH

 Owned

 58,987

 1201

 East Main Street, Montpelier, OH

 Owned

 42,167

 North First Street, Oakwood, OH

 Owned

 24,413

 North Main Street, Paulding, OH

 Owned

 70,841

 East South Boundary Street, Perrysburg, OH

 Owned

 14,232

 South State Street, Pioneer, OH

 Owned

 38,644

 6401

 Monroe Street, Sylvania, OH

 Owned

 57,552

 Main Street, Walbridge, OH

 Owned

 30,982

 North Michigan Street, Edon, OH

 Owned

 59,472

 1379

 North Shoop Avenue, Wauseon, OH

 Owned

 83,371

 Loan Production Offices

 North Wayne Street, Angola, IN

 Owned

 N/A

 10100

 Lantern Road, Suite 240, Fishers, IN

 N/A

 Granville Street, Gahanna, OH

 Owned

 N/A

 8204

 Secor Road, Lambertville, MI

 N/A

 1900

 Monroe Street, Suite 108, Toledo, OH

 N/A

 South Main Street, Suite 102, Zionsville, IN

 N/A

 Service Facilities (SBT/ SBFG Title)

 East Holland Street, Archbold, OH

 N/A

 West Butler Street, Bryan OH

 Owned

 N/A

 9101

 Antares Avenue, Columbus, OH

 Owned

 N/A

 1911

 Baltimore Road, Defiance, OH

 N/A

 $

 SB Captive operates from office space located at 101 Convention Center
Dr., Suite 850, Las Vegas, NV 89109.

 The Company's
subsidiaries have several noncancellable leases for business use that expire over the next five years. Aggregate rental expense for these
leases was $0.20 million and $0.19 million for the years ended December 31, 2023 and 2022, respectively.

 Future minimum lease payments under operating leases are:

 2024

 $

 2025

 2026

 2027

 2028

 Thereafter

 Total minimum lease payments

 $
 1,301

 Item 3. Legal Proceedings.

 In the ordinary course of our business, the Company
and its subsidiaries are parties to various legal actions, which we believe are incidental to the operation of our business. Although
the ultimate outcome and amount of liability, if any, with respect to these legal actions cannot presently be ascertained with certainty,
in the opinion of management, based upon information currently available to us, any resulting liability is not likely to have a material
adverse effect on the Company's consolidated financial position, results of operations or cash flows.

 Item 4. Mine Safety Disclosures.

 Not Applicable

 Supplemental Item: Information about our Executive
Officers

 The following table lists the names and ages
of the executive officers of the Company as of February 24, 2024, the positions presently held by each executive officer, and the principal
occupation(s) and business experience of each executive officer during the past five years. Unless otherwise indicated, each person has
held his or her principal occupation(s) for more than five years.

 Name

 Age

 Position(s)
 Held with the Company and its Subsidiaries and Principal Occupation(s)

 Mark A. Klein

 Chairman of the Company since April 2015; Director of the Company since February 2010; President and Chief Executive Officer of the Company since January 2010 and of State Bank since January 2006; Director of State Bank since 2006; President of RDSI since October 2011; Member of State Bank Trust Investment Review Committee since March 2007.

 Anthony V. Cosentino

 Executive Vice President and Chief Financial Officer of the Company and State Bank since March 2010; Chief Financial Officer of RDSI since October 2011; Member of State Bank Trust Investment Review Committee since June 2010.

 Ernesto Gaytan

 Executive Vice President and Chief Technology Innovation Officer of the Company and State Bank since November 2017.

 Steven R. Walz

 Executive Vice President and Chief Lending Officer of State Bank since December 2021; Senior Vice President and Chief Lending Officer of State Bank from September 2021 through December 2021; Senior Vice President and Chief Credit Officer of State Bank from November 2017 through November 2019; Vice President and Senior Credit Analyst of State Bank from September 2012 through November 2017; Assistant Vice President and Commercial Services Officer of State Bank from September 2011 to September 2012; Assistant Vice President and Credit Analyst of State Bank from January 2010 through September 2012; Began working for State Bank in October 2007 as a Credit Analyst; Mr. Walz left State Bank in November 2019 to work as President for K&P Medical Transport, LLC. prior to rejoining State Bank in September 2021.

 Keeta J. Diller

 Executive Vice President of the Company since July 2019; Executive Vice President and Chief Operations Officer of State Bank since August 2023; Executive Vice President and Chief Risk Officer from July 2019 to August 2023; Senior Vice President and Chief Enterprise Risk Management Officer of State Bank from August 2018 through July 2019; Senior Vice President and Audit Coordinator and Director of Operations of State Bank from December 2011 through August 2018; Vice President and Internal Auditor of State Bank from January 2010 through December 2011; Corporate Secretary for the Company since 1996; Began working for State Bank in February 1990 as the Accounting Supervisor.

 David A. Homoelle

 Columbus Regional President and Residential Real Estate Executive of State Bank since May 2021; Columbus Regional President of State Bank from November 2007 through May 2021; Began working for State Bank in November 2007 as a Columbus Regional President.

 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Market Information

 Our common shares are traded on the NASDAQ Capital
Market under the symbol "SBFG". There were 6,719,676 common shares outstanding as of December 31, 2023, which were held by
approximately 1,162 record holders.

 The Company paid quarterly dividends on its common
shares in the aggregate amounts of $0.52 per share and $0.48 per share in 2023 and 2022, respectively. The Company presently anticipates
continuing to pay quarterly dividends in the future at similar levels. However, there is no guarantee that dividends on our common shares
will continue in the future.

 The ability of the Company to obtain funds for
the payment of dividends and for other cash requirements is largely dependent on the amount of dividends that may be declared by State
Bank and the Company's other subsidiaries. Payment of dividends by State Bank may be restricted at any time at the discretion of
the regulatory authorities, if they deem such dividends to constitute an unsafe and/or unsound banking practice. These provisions could
have the effect of limiting the Company's ability to pay dividends on its outstanding shares. Moreover, the Federal Reserve Board
expects the Company to serve as a source of strength to its subsidiary banks, which may require it to retain capital for further investment
in State Bank, rather than for dividends to shareholders of the Company. The Company's ability to pay dividends on its shares is
also conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated debentures underlying the Company's
trust preferred securities. In addition, under the terms of the Company's fixed-to-floating rate subordinated debt, the Company's
ability to pay dividends on its shares is conditioned upon the Company continuing to make required principal and interest payments, and
not incurring an event of default, with respect to the subordinated debt.

 Performance Graph

 The following performance graph compares the
five-year total shareholder return of the Company's common shares, based on an initial investment on December 31, 2018, and assuming
reinvestment of dividends, against two indices – the NASDAQ Composite Index and the KBW NASDAQ Bank Index. This Performance
Graph shall not be deemed to be "soliciting material" or to be "filed" with the SEC, nor shall such information
be deemed to be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that
the Company specifically incorporates this Performance Graph by reference into such filing.

 Period Ending

 12/31/18

 12/31/19

 12/31/20

 12/31/21

 12/31/22

 12/31/23

 100.00

 122.20

 116.41

 128.29

 119.26

 112.17

 NASDAQ Composite Index

 100.00

 136.69

 198.10

 242.03

 163.28

 236.17

 KBW NASDAQ Bank Index

 100.00

 136.13

 122.09

 168.88

 132.75

 131.57

 Source: S&P Global Market Intelligence

 2024

 Issuer Purchases of Equity Securities

 The table below reflects the common shares repurchased
by the Company during the three months ended December 31, 2023. As of December 31, 2023, the Company had 236,357 shares remaining of
the 500,000 approved under the Company's existing share repurchase program which was authorized by the Company's Board of
Directors on December 21, 2022 and expires December 31, 2024.

 (a)

 (b)

 (c)

 (d)

 Period

 Total Number of

Shares Purchased

 Weighted Average

Price Paid per

Share

 Total Number of

Shares Purchased

as Part of Publicly

Announced Plans

or Programs

 Maximum Number

of Shares that May

Yet be Purchased

Under the Plans or

Programs

 10/01/23 - 10/31/23

 17,752

 $
 13.14

 17,752

 272,056

 11/01/23 - 11/30/23

 13,988

 13.59

 13,988

 258,068

 12/01/23 - 12/31/23

 21,711

 14.76

 21,711

 236,357

 Total

 53,451

 $
 13.92

 53,451

 236,357

 Item 6. [Reserved].

 Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.

 SB Financial Group, Inc. ("SB Financial"),
is a financial holding company registered with the Federal Reserve Board and subject to regulation under the Bank Holding Company Act
of 1956, as amended. Through its direct and indirect subsidiaries, including The State Bank and Trust Company ("State Bank"),
SB Financial is engaged in commercial and retail banking, wealth management and private client financial services.

 The following discussion provides a review of
the consolidated financial condition and results of operations of SB Financial and its subsidiaries (collectively, the "Company").
This discussion should be read in conjunction with the Company's Consolidated Financial Statements and related Notes as of and
for the years ended December 31, 2023 and 2022 included in this Annual Report on Form 10-K.

 Strategic Discussion

 The focus and strategic goal of the Company is
to grow into and remain a top decile (>90 th percentile) independent financial services company. The Company intends to
achieve and maintain that goal by executing our five key initiatives.

 Increase profitability through ongoing diversification
of revenue streams: For the twelve months ended December 31, 2023, the Company generated $17.7 million in noninterest income, or
31.1 percent of total operating revenue, from fee-based products. These revenue sources include fees generated from saleable residential
mortgage loans, retail deposit products, wealth management services, saleable business-based loans (small business and farm service)
and title agency revenue. For the twelve months ended December 31, 2022, the Company generated $18.2 million in noninterest income, or
31.6 percent of total operating revenue from fee-based products.

 Strengthen our penetration in all markets
served: Over our 119-year history of continuous operation in Northwest Ohio, we have established a significant presence in our traditional
markets in Defiance, Fulton, Paulding and Williams counties in Ohio. In our newer markets of Bowling Green, Columbus, Findlay, Toledo
(Ohio) and Ft. Wayne (Indiana), our current market penetration is minimal but we believe our potential for growth is significant. Over
the past few years, we have expanded and committed additional resources to our presence in the Findlay and Edgerton markets in particular;
however, we continue to seek to expand the presence and penetration in all of our markets.

 Expand product utilization by new and existing
customers: As of December 31, 2023, we operated in 14 counties in Northwest Ohio, Central Ohio and Northeast Indiana with 23 full
service offices, 23 ATM's and six loan production offices. Combined in the 14 counties of operation, we command 4.4 percent of
the deposit market share, which has steadily grown.

 Deliver gains in operational excellence:
Our management team believes that becoming and remaining a high-performance financial services company will depend upon seamlessly and
consistently delivering operational excellence, as demonstrated by the Company's leadership in the origination and servicing of
residential mortgage loans. As of December 31, 2023, the Company serviced 8,549 residential mortgage loans with an aggregate principal
balance of $1.37 billion. As of December 31, 2022, the Company serviced 8,514 loans with an aggregate principal balance of $1.35 billion.

 Sustain asset quality: As of December
31, 2023, the Company's asset quality metrics remained strong. Specifically, total nonperforming assets were $3.3 million, or 0.25
percent of total assets. Total delinquent loans at December 31, 2023 were 0.15 percent of total loans. As of December 31, 2022, the Company
had total nonperforming assets of $5.1 million, or 0.38 percent of total assets. Total delinquent loans at December 31, 2022 were 0.27
percent of total loans.

 The successful execution of these five strategies
have enabled the Company to improve financial performance across a broad series of metrics. These metrics over the last five years are
outlined in the following table. Specifically, the Company has increased total assets by $303.8 million, or 29.3 percent. The growth
has been on both sides of the balance sheet over the five year period, with loans growing $174.7 million or 21.2 percent and deposits
growing $230.0 million or 27.4 percent.

 During the prior five-year period, the Company
has raised capital through the issuance of debt securities to the market, which has improved capital significantly and expanded liquidity
for potential strategic expansion. Strategic expansion has also occurred during the period with the acquisition of a small community
bank (The Edon State Bank of Edon, Ohio) in 2020, the opening of three branch offices and the acquisition of two full service title agencies.

 Financial Highlights

 Year Ended December 31,

 2023

 2022

 2021

 2020

 2019

 Earnings

 Interest income

 $
 58,152

 $
 44,569

 $
 41,904

 $
 42,635

 $
 44,400

 18,879

 5,170

 4,020

 6,705

 9,574

 39,273

 37,884

 35,930

 34,826

 Provision for loan losses

 -

 1,050

 4,500

 Noninterest income

 17,721

 18,231

 30,697

 30,096

 18,016

 Noninterest expense

 41,962

 42,314

 44,808

 43,087

 37,410

 Provision for income taxes

 2,622

 2,795

 4,446

 3,495

 2,659

 18,277

 14,944

 11,973

 Preferred stock dividends

 -

 -

 -

 -

 Net income available to common shareholders

 18,277

 14,944

 11,023

 Per Common Share Data

 Basic earnings

 $
 1.77

 $
 1.79

 $
 2.58

 $
 1.96

 $
 1.71

 Diluted earnings

 1.75

 1.77

 2.56

 1.96

 1.51

 Cash dividends declared

 0.52

 0.48

 0.44

 0.40

 0.36

 Total equity per share

 18.50

 17.08

 21.05

 19.39

 17.53

 Average Balances

 Average total assets

 $
 1,334,644

 $
 1,318,781

 $
 1,322,253

 $
 1,161,396

 $
 1,027,932

 Average equity

 118,315

 126,963

 144,223

 139,197

 133,190

 Ratios

 Return on average total assets

 0.91
 %

 0.95
 %

 1.38
 %

 1.29
 %

 1.16
 %

 Return on average equity

 10.22

 9.86

 12.67

 10.74

 8.99

 Cash dividend payout ratio 1

 29.62

 27.25

 17.18

 20.54

 23.84

 Average equity to average assets

 8.86

 9.63

 10.91

 11.99

 12.96

 Period End Totals

 $
 1,342,387

 $
 1,335,633

 $
 1,330,854

 $
 1,257,839

 $
 1,038,577

 Available-for-sale securities

 238,780

 263,259

 149,406

 100,948

 2,525

 2,073

 7,472

 7,234

 7,258

 Total loans & leases

 822,714

 872,723

 825,510

 13,805

 12,574

 8,755

 1,113,045

 1,049,011

 840,219

 Advances from FHLB

 83,600

 60,000

 5,500

 8,000

 16,000

 Subordinated debt, net

 19,642

 19,594

 19,546

 -

 -

 Total equity

 144,929

 142,923

 136,094

 Cash dividends on common shares divided by net income available
to common.

 Critical Accounting Policies and Estimates

 The accounting and reporting policies of the
Company are in accordance with generally accepted accounting principles in the United States and conform to general practices within
the banking industry. The Company's significant accounting policies are described in detail in the Notes to the Company's
Consolidated Financial Statements for the years ended December 31, 2023 and 2022. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make estimates and assumptions. The Company's financial position
and results of operations can be affected by these estimates and assumptions and are integral to the understanding of reported results.
Critical accounting policies are those policies that management believes are the most important to the portrayal of the Company's
financial condition and results, and they require management to make estimates that are difficult, subjective or complex.

 Allowance for Credit
Losses: The Company believes the determination of the ACL involves a higher degree of judgment and complexity
than its other significant accounting policies. The ACL is calculated with the objective of maintaining a reserve
level believed by management to be sufficient to absorb estimated credit losses over the life of an asset or an off-balance sheet credit
exposure. Management's determination of the adequacy of the ACL is based on periodic evaluations of past
events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable
and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets.
However, this evaluation has subjective components requiring material estimates, including expected default probabilities, the expected
loss given default, the amounts and timing of expected future cash flows on individually evaluated loans, and estimated losses based
on historical loss experience and forecasted economic conditions. All of these factors may be susceptible to significant change. To the
extent that actual results differ from management estimates, additional provisions for credit losses may be required that would adversely
impact earnings in future periods.

 Goodwill and Other Intangibles: The Company
records all assets and liabilities acquired in purchase acquisitions, including goodwill and other intangibles, at fair value as required.
Goodwill is subject, at a minimum, to annual tests for impairment. Other intangible assets are amortized over their estimated useful
lives using straight-line and accelerated methods, and are subject to impairment if events or circumstances indicate a possible inability
to realize the carrying amount. The initial goodwill and other intangibles recorded and subsequent impairment analysis requires management
to make subjective judgments concerning estimates of how the acquired asset will perform in the future. Events and factors that may significantly
affect the estimates include, among others, customer attrition, changes in revenue growth trends, specific industry conditions and changes
in competition.

 Income Taxes: Income tax expense is the
total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and
liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities,
computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes
paid in prior years. Although realization is not assured, management believes it is more likely than not that all of the deferred tax
assets will be realized. The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

 An effective tax rate of 21% is used to determine
after-tax components of other comprehensive income (loss) included in the statements of shareholders' equity.

 A tax position is recognized as a benefit only
if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being
presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination.
For tax positions not meeting the "more likely than not" test, no tax benefit is recorded.

 Changes in Financial Condition

 Total assets at December 31, 2023, were
$1.343 billion, compared to $1.335 billion at December 31, 2022. Loans (excluding loans held for sale) were $1.000 billion at
December 31, 2023, compared to $962.1 million at December 31, 2022. Total deposits were $1.070 billion at December 31, 2023,
compared to $1.087 billion at December 31, 2022. As client balance sheets and liquidity was utilized in the economy, deposit levels
moderated and assets were reallocated from cash and securities into loans.

 The following are the condensed average balance
sheets of the Company for the years ending December 31 and includes the interest earned or paid, and the average interest rate, on each
asset and liability:

 2023

 2022

 2021

 Balance

 Interest

 Rate

 Balance

 Interest

 Rate

 Balance

 Interest

 Rate

 Assets

 Taxable securities/cash

 $

 254,133

 $

 6,092

 2.40

 %

 $

 330,549

 $

 5,798

 1.75

 %

 $

 380,770

 $

 3,386

 0.89

 %

 Non-taxable securities

 7,181

 2.37

 %

 8,106

 2.44

 %

 7,802

 4.52

 %

 Loans, net 1

 985,217

 51,890

 5.27

 %

 888,116

 38,573

 4.34

 %

 854,521

 38,165

 4.47

 %

 Total earning assets

 1,246,531

 58,152

 4.67

 %

 1,226,771

 44,569

 3.63

 %

 1,243,093

 41,904

 3.37

 %

 Cash and due from banks

 4,035

 7,296

 7,290

 (15,478

)

 (13,808

)

 (13,422

)

 Premises and equipment

 22,990

 24,137

 24,710

 76,566

 74,385

 60,582

 $

 1,334,644

 $

 1,318,781

 $

 1,322,253

 Liabilities

 Savings and interest-bearing demand deposits

 $

 619,906

 $

 7,599

 1.23

 %

 $

 693,271

 $

 2,258

 0.33

 %

 $

 672,296

 $

 1,813

 0.27

 %

 236,665

 7,109

 3.00

 %

 159,401

 1,219

 0.76

 %

 177,918

 1,316

 0.74

 %

 Repurchase agreements & other

 15,765

 0.47

 %

 20,481

 0.19

 %

 22,821

 0.18

 %

 Advances from FHLB

 55,044

 2,603

 4.73

 %

 16,420

 3.14

 %

 6,507

 2.89

 %

 6.94

 %

 3.50

 %

 1.93

 %

 Subordianted debt

 19,616

 3.97

 %

 19,570

 3.98

 %

 12,057

 3.83

 %

 Total interest-bearing liabilities

 957,306

 18,879

 1.97

 %

 919,453

 5,170

 0.56

 %

 901,909

 4,020

 0.45

 %

 Demand deposits

 237,976

 252,899

 255,908

 Other liabilities

 21,047

 19,466

 20,213

 Total liabilities

 1,216,329

 1,191,818

 1,178,030

 Shareholders' equity

 118,315

 126,963

 144,223

 Total liabilities and shareholders' equity

 $

 1,334,644

 $

 1,318,781

 $

 1,322,253

 Net interest income (tax equivalent basis)

 $

 39,273

 $

 $

 37,884

 Net interest income as a percent of average interest-earning assets - GAAP measure

 3.15

 %

 3.21

 %

 3.05

 %

 Net interest income as a percent of average interest-earning assets - Non-GAAP measure 2

 3.16

 %

 3.22

 %

 3.06

 %

 -- Computed on a fully tax equivalent basis (FTE)

 Nonaccruing loans and loans held for sale are included in
the average balances.

 Interest on tax exempt securities and loans is computed on
a tax equivalent basis using a 21 percent statutory tax rate, and added to the net interest income. The tax equivalent adjustment was
$0.14, $0.11 and $0.15 million in 2023, 2022 and 2021, respectively.

 The following tables set forth the effect of
volume and rate changes on interest income and expense for the periods indicated. For purposes of these tables, changes in interest due
to volume and rate were determined as follows:

 Volume
variance - change in volume multiplied by the previous year's rate.

 Rate
variance - change in rate multiplied by the previous year's volume.

 Rate/volume
variance - change in volume multiplied by the change in rate. This variance allocates the volume variance and rate variance in proportion
to the relationship of the absolute dollar amount of the change in each.

 Total

 Variance

 Variance Attributable To

 2023/2022

 Volume

 Rate

 Interest income

 Taxable securities

 $

 $
 (1,340
)

 $
 1,634

 Non-taxable securities 1

 (28
)

 (23
)

 (5
)

 Loans, net of unearned income and deferred fees 1

 13,317

 4,217

 9,100

 Total interest income

 13,583

 2,853

 10,730

 Savings and interest-bearing demand deposits

 5,341

 (239
)

 5,580

 5,890

 5,299

 Repurchase agreements & other

 (9
)

 Advances from FHLB

 2,088

 1,211

 -

 Subordinated debt

 -

 -

 -

 Total interest expense

 13,709

 1,554

 12,155

 $
 (126
)

 $
 1,299

 $
 (1,425
)

 Interest on non-taxable securities and loans has been adjusted
to fully tax equivalent

 The maturity distribution and weighted-average
interest rates of debt securities available-for-sale at December 31, 2023, are set forth in the table below. The weighted-average interest
rates are based on coupon rates for securities purchased at par value and on effective interest rates considering amortization or accretion
if the securities were purchased at a premium or discount:

 Maturing

 ($
 in thousands)

 Within

 1 Year

 Yield

 1-5
 Years

 Yield

 5-10
 Years

 Yield

 After

 10 Years

 Yield

 Total

 Yield

 Available-for-sale:

 U.S.
 Treasury and Government agencies

 $

 3.79
 %

 $
 1,559

 3.33
 %

 $
 4,419

 1.46
 %

 $
 6,517

 1.84
 %

 Mortgage-backed
 securities

 -

 18,028

 1.48
 %

 10,411

 2.01
 %

 160,428

 1.90
 %

 1.87
 %

 State
 and political subdivisions

 2.92
 %

 2.61
 %

 1,987

 3.89
 %

 7,370

 2.57
 %

 9,898

 2.83
 %

 Other
 corporate securities

 -

 -

 3.69
 %

 -

 3.69
 %

 Total
 securities by maturity

 $

 3.51
 %

 $
 19,867

 1.64
 %

 $
 31,243

 2.83
 %

 $
 167,798

 1.93
 %

 $

 2.03
 %

 2023

 2022

 Commercial business & agriculture

 $
 191,932

 $
 192,478

 -0.3
 %

 Commercial real estate

 424,041

 412,635

 2.8
 %

 291,512

 9.1
 %

 Consumer & other

 65,673

 65,005

 1.0
 %

 999,769

 961,630

 4.0
 %

 Net deferred costs (fees)

 -0.4
 %

 Total loans, net deferred costs (fees)

 4.0
 %

 $
 2,525

 $
 2,073

 21.8
 %

 2023

 2022

 Noninterest bearing demand

 $
 228,713

 $
 256,799

 -10.9
 %

 Interest-bearing demand

 166,413

 191,719

 -13.2
 %

 Savings & money market

 419,570

 447,267

 -6.2
 %

 255,509

 190,880

 33.9
 %

 -1.5
 %

 Total shareholders' equity

 $

 $

 5.0
 %

 Loans held for investment
("HFI") increased $38.1 million, or 4.0 percent, to $1.0 billion at December 31, 2023, which was due to an increase in
residential and commercial real estate lending during 2023. The Company booked a much higher portion of residential real estate
production on the balance sheet as increases in rates moved customers to variable rate mortgage products.

 Concentrations of Credit Risk: The Company
makes commercial, real estate and installment loans to customers located mainly in the Tri-State region of Ohio, Indiana and Michigan.
Commercial loans include loans collateralized by commercial real estate, business assets and, in the case of agricultural loans, crops
and farm equipment and the loans are expected to be repaid from cash flow from operations of businesses. As of December 31, 2023, commercial
business and agricultural loans made up approximately 19.2 percent of the HFI loan portfolio
while commercial real estate loans accounted for approximately 42.4 percent of the HFI loan portfolio. As of December 31, 2023, residential
first mortgage loans, which are secured by first mortgages on residential real estate, made up approximately 31.8 percent of the HFI
portfolio, while consumer loans to individuals, which are primarily secured by consumer assets, made up approximately 6.6 percent of
the HFI loan portfolio.

 Maturities and Sensitivities of Loans to Changes
in Interest Rates: The following table shows the maturity distribution of loans outstanding as of December 31, 2023. The amounts
have been categorized between loans with a fixed or floating interest rate (floating rate loans have an adjustable interest rate that
changes in accordance to a rate index).

 Maturities and Sensitivities of Loans to Changes
in Interest Rates

 As of December 31, 2023

 Within

one year

 After one, but

within

five years

 After five,

but within

 fifteen years

 After

 fifteen years

 Total

 Loans with fixed interest rates:

 $
 1,255

 $
 30,703

 $
 18,994

 $

 $
 50,970

 1,532

 5,370

 7,838

 14,839

 4,508

 25,358

 12,929

 42,919

 4,367

 8,556

 2,232

 15,372

 16,430

 29,500

 46,910

 HELOC

 -

 -

 -

 -

 -

 3,615

 9,271

 1,393

 -

 14,279

 Total

 $
 11,128

 $
 76,048

 $
 66,140

 $
 31,973

 $
 185,289

 Loans with floating interest rates:

 $
 30,311

 $
 11,101

 $
 33,638

 $

 $
 75,746

 2,498

 10,904

 43,427

 55,049

 111,878

 7,035

 37,860

 87,968

 121,541

 254,404

 4,410

 20,140

 24,964

 50,287

 3,757

 12,206

 254,833

 271,213

 HELOC

 33,859

 13,694

 2,833

 -

 -

 3,550

 Total

 $
 45,123

 $
 67,785

 $
 231,238

 $
 470,777

 $
 814,923

 Total loans:

 $
 31,566

 $
 41,804

 $
 52,632

 $

 $
 126,716

 4,030

 16,274

 51,265

 55,148

 11,543

 63,218

 100,897

 121,665

 297,323

 8,777

 28,696

 27,196

 3,758

 1,396

 28,636

 284,333

 HELOC

 33,859

 13,694

 4,332

 12,104

 1,393

 -

 17,829

 $
 56,251

 $
 143,833

 $
 297,378

 $
 502,750

 $

 Deposits decreased $16.5 million, or 1.5 percent,
to $1.07 billion at December 31, 2023. Increased inflation and interest rates resulted in clients seeking higher returns on their deposit
accounts. As a result, during 2023, we experienced a shift in the mix of our deposit balances as more of our clients moved balances to
long-term time deposit accounts. Specifically, during 2023, time deposits increased $64.6 million, or 34 percent, while other deposits
decreased $81.1 million, or 6 percent.

 The average amount of deposits and weighted-average
rates paid are summarized as follows for the years ended December 31:

 2023

 2022

 2021

 Rate

 Rate

 Rate

 Savings and interest bearing demand deposits

 $
 619,906

 1.23
 %

 $
 693,271

 0.33
 %

 $
 672,296

 0.27
 %

 236,665

 3.00
 %

 159,401

 0.76
 %

 177,918

 0.74
 %

 Non interest bearing demand deposits

 237,976

 -

 252,899

 -

 255,908

 -

 $
 1,094,547

 1.35
 %

 $
 1,105,571

 0.31
 %

 $
 1,106,122

 0.28
 %

 Time deposits that exceeded
the FDIC insurance limit of $250,000 are summarized as follows:

 2023

 2022

 Three months or less

 $
 6,637

 $
 6,992

 Over three months through six months

 1,599

 Over six months and through twelve months

 5,209

 1,330

 Over twelve months

 8,935

 6,949

 Total

 $
 22,380

 $
 15,373

 Shareholders' equity at December 31, 2023,
was $124.3 million, or 9.3 percent of total assets compared to $118.4 million or 8.9 percent of total assets at December 31, 2022. Retained
earnings increased during the year due to earnings of $12.1 million less dividends paid to common shareholders of $3.6 million and repurchases
of Company common shares of $3.5 million. The fair market value of the bond portfolio improved slightly during 2023 due to the valuation
adjustment on the portfolio, which resulted in accumulated other comprehensive income ("AOCI") falling to $29.8 million from
$32.1 million.

 The Company continued to repurchase its own common
shares during the year under the Company's repurchase program authorized by the Board of Directors on December 21, 2022. Specifically,
the Company repurchased 244,325 shares during 2023 at an average price of $13.98 per share. As of December 31, 2023, the Company had
255,675 shares remaining of the 500,000 shares authorized for repurchase under the Company's existing share repurchase program,
which expires December 31, 2024.

 Asset Quality

 2023

 2022

 Nonaccruing loans

 $
 2,818

 $
 3,682

 -23.5
 %

 Foreclosed assets and other assets held for sale, net

 -34.2
 %

 Nonperforming assets

 3,329

 4,459

 -25.3
 %

 Net charge-offs/(recoveries)

 (13
)

 -807.7
 %

 Provision for credit losses

 -

 N/M

 14.2
 %

 Nonaccruing loans/total loans

 0.28
 %

 0.38
 %

 -26.4
 %

 Allowance/nonaccruing loans

 560.18
 %

 375.29
 %

 49.3
 %

 Nonperforming assets/total assets

 0.25
 %

 0.33
 %

 -25.7
 %

 Net charge offs/average loans

 0.01
 %

 0.00
 %

 -1100.0
 %

 Allowance/loans

 1.58
 %

 1.44
 %

 9.9
 %

 Allowance/nonperforming loans

 560.18
 %

 375.29
 %

 49.3
 %

 Nonperforming assets totaled $3.3 million, or 0.25 percent of total assets at December 31, 2023, a decrease of
$1.1 million, or 25.3 percent from 2022. The Company had total net charge-offs on loans of $92,000 in 2023, as compared to net recoveries
of $13,000 in 2022. The Company's ACL at December 31, 2023, now covers nonperforming loans at 560 percent,
up from 319 percent at December 31, 2022.

 The following schedule presents an analysis of the ACL, average loan data and related ratios at December 31 for the years indicated:

 Provision for Credit Losses

 Net (Chargeoffs) Recoveries

 Average Loans

 Ratio of annualized net (chargeoffs) recoveries to average loans

 $

 $
 -

 $
 124,435

 0.00
 %

 -

 118,583

 0.00
 %

 -

 301,072

 0.00
 %

 -

 59,720

 0.00
 %

 (52
)

 313,034

 -0.02
 %

 HELOC

 -

 46,576

 0.00
 %

 (40
)

 15,470

 -0.26
 %

 Total

 $

 $
 (92
)

 $
 978,890

 -0.01
 %

 $
 (227
)

 $
 -

 $
 126,496

 0.00
 %

 (868
)

 -

 122,031

 0.00
 %

 -

 276,805

 0.00
 %

 -

 58,745

 0.00
 %

 -

 239,162

 0.00
 %

 HELOC

 (45
)

 43,210

 0.03
 %

 (162
)

 -

 14,039

 0.00
 %

 Total

 $
 -

 $

 $
 880,488

 0.00
 %

 December 31, 2021

 $
 (1,411
)

 $

 $
 160,267

 0.14
 %

 -

 118,713

 0.00
 %

 -

 264,980

 0.00
 %

 -

 53,122

 0.00
 %

 195,277

 0.00
 %

 HELOC

 (16
)

 -

 43,488

 0.00
 %

 (52
)

 11,546

 -0.45
 %

 Total

 $
 1,050

 $

 $
 847,393

 0.02
 %

 The ACL balance and the
provision for credit losses are determined by management based upon periodic reviews of the loan portfolio. In addition, management considers
the level of charge offs on loans, as well as the fluctuations of charge offs and recoveries on loans, in the factors which caused these
changes. Estimating the risk of loss and the amount of loss is necessarily subjective. Accordingly, the allowance is maintained by management
at a level considered adequate to cover losses that are currently anticipated based on past loss experience, economic conditions, information
about specific borrower situations, including their financial position and collateral values, and other factors and estimates which are
subject to change over time.

 The Company has substantially increased its reserve
level over the last several years. Specifically, the Company's ACL balance has increased from $8.8 million
at December 31, 2019 to $15.8 million at December 31, 2023, which reflects an increase of $7.0 million, or 80 percent. This increase was
the result of $6.7 million in provision expense during the period and minimal charge-offs, which were just $0.8 million over the four-year
period. The reserve increased during 2023 due to the one-time CECL adjustment of $1.4 million taken in January of 2023 upon the Company's
adoption of the CECL methodology.

 The following schedule provides a breakdown of the
ACL allocated by type of loan and related ratios at December 31 for the years indicated:

 Allowance Amount

 Percentage of Loans In Each Category to Total Loans

 Allowance Amount

 Percentage of Loans In Each Category to Total Loans

 Allowance Amount

 Percentage of Loans In Each Category to Total Loans

 2023

 2022

 2021

 $
 2,003

 12.7
 %

 $
 1,663

 12.0
 %

 $
 1,890

 14.9
 %

 1,952

 12.4
 %

 1,696

 12.3
 %

 2,564

 14.5
 %

 5,718

 36.2
 %

 4,584

 33.2
 %

 4,217

 31.9
 %

 2.8
 %

 4.4
 %

 7.0
 %

 4,936

 31.3
 %

 4,438

 32.1
 %

 3,515

 25.1
 %

 HELOC

 3.2
 %

 4.0
 %

 5.1
 %

 1.4
 %

 2.0
 %

 1.6
 %

 $

 100.0
 %

 $

 100.0
 %

 $
 13,805

 100.0
 %

 As further detailed in ITEM 1A. RISK FACTORS,
the CARES Act provided for significant consumer and small business relief due to the impact of the COVID-19 pandemic. The Company provided
payment relief to a number of consumer and small business customers throughout 2020 and 2021, which we believe was successful and enabled
our clients to weather the pandemic effectively. All such COVID-related payment deferrals had expired or been removed by December 31,
2021 and all clients were back to contractual terms at such date.

 Regulatory capital reporting is required for State
Bank only, as the Company is currently exempt from quarterly regulatory capital level measurement pursuant to the Small Bank Holding Company
Policy Statement. As of December 31, 2023, State Bank met all regulatory capital levels required to be considered well-capitalized (see
Note 16 to the Consolidated Financial Statements).

 On May 27, 2021, the Company issued and sold $20.0
million in aggregate principal amount of its 3.65% Fixed to Floating Rate Subordinated Notes due 2031 in a private placement exempt from
the registration requirements under the Securities Act. The Subordinated Notes 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 Subordinated 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 Subordinated Notes have a maturity of 10 years.

 Earnings Summary – 2023 vs. 2022

 Net income for 2023 was $12.1 million, or $1.75
per diluted share, compared with net income of $12.5 million, or $1.77 per diluted share, for 2022. State Bank reported net income for
2023 of $13.3 million, which was down slightly from the $13.4 million of net income in 2022. SBFG Title reported net income for 2023 of
$0.24 million, which was down from net income of $0.39 million for 2022.

 Positive results for 2023 included loan growth
of $38.1 million, while deposits were slightly lower by $16.5 million. The Company completed the final forgiveness in January of 2023
from the nearly 1,200 PPP loans processed during 2020 and 2021. The mortgage banking business line was impacted by the rapidly rising
rates, which contributed to the reduction in both balance growth and gains on sale. For the full year of 2023, residential real estate
loan production was $215.5 million, with $3.6 million of revenue from gains on sale. The level of mortgage origination was down from the
$313.0 million in 2022. The Company's loans serviced for others ended the year at $1.367 billion, up slightly from $1.352 billion
at December 31, 2022.

 Operating revenue decreased just slightly by $0.6
million, or 1.1 percent, from $57.6 million in 2022 to $57.0 million in 2023 due to decreased originated mortgage servicing rights ("OMSR")
recapture, significantly lower mortgage gain revenue offset by a $1.4 million gain on the sale of equity securities. SBFG Title revenue
decreased by $0.6 million to $1.6 million for 2023.

 Operating expense decreased by $0.35 million,
or 0.8 percent, from $42.3 million in 2022 to $42.0 million in 2023, due to lower incentive and commission levels, which were partially
offset by higher medical costs and increased spending on technology.

 Results of Operations

 2023

 2022

 $
 1,343,249

 $
 1,335,633

 0.6
 %

 Total investments

 238,780

 -8.0
 %

 2,525

 2,073

 21.8
 %

 Loans, net of unearned income

 4.0
 %

 14.2
 %

 -1.5
 %

 Total operating revenue 1

 $
 56,994

 $
 57,630

 -1.1
 %

 39,273

 -0.3
 %

 Loan loss provision

 -

 N/M

 Noninterest income

 17,721

 18,231

 -2.8
 %

 Noninterest expense

 41,962

 42,314

 -0.8
 %

 -3.4
 %

 Diluted earnings per share

 1.75

 1.77

 -1.1
 %

 Operating revenue equals net interest income plus noninterest
income.

 Net interest income was $39.3 million for 2023
and decreased slightly from net income of $39.4 million for 2022. Average earning assets increased slightly to $1.25 billion in 2023,
compared to $1.23 billion in 2022, primarily due to the increase in our loan portfolio, partially offset by lower cash and securities.
The consolidated 2023 full year net interest margin on an fully-taxable equivalent ("FTE") basis decreased 6 basis points
to 3.16 percent compared to 3.22 percent for the full year of 2022.

 Provision for credit losses was taken in 2023
in the amount of $0.32 million compared to zero provision taken during 2022. For 2023, net charge-offs totaled $0.1 million or 0.01 percent
of average loans, compared to net recoveries of $0.01 million or (0.00) percent of average loans, for 2022.

 Noninterest Income

 2023

 2022

 Wealth management fees

 $
 3,532

 $
 3,728

 -5.3
 %

 Customer service fees

 3,403

 3,378

 0.7
 %

 Gains on sale of residential loans & OMSR's

 3,609

 4,298

 -16.0
 %

 Mortgage loan servicing fees, net

 2,101

 2,964

 29.1
 %

 Gain on sale of non-mortgage loans

 -24.2
 %

 Title insurance income

 1,635

 2,229

 -26.6
 %

 Other

 3,012

 1,068

 182.0
 %

 Total noninterest income

 $
 17,721

 $
 18,231

 -2.8
 %

 Total noninterest income was $17.7 million for
2023 compared to $18.2 million for 2022, representing a decrease of $0.5 million, or 2.8 percent, year-over-year. Gains on sale of residential
mortgage loans was down from 2022 by $0.7 million, or 16.0 percent. The Company sold $161.2 million of originated mortgages into the secondary
market in 2023, which due to being slightly more than the amortization on the serviced portfolio, increased the size of our serviced loan
portfolio to $1.367 billion at December 31, 2023 from $1.352 billion at December 31, 2022. Sales of non-mortgage loans (small business
and farm credits) in 2023 was the same as in 2022 at $4.2 million. The Company saw its wealth management assets under management decline
by $5.3 million to $501.8 million at December 31, 2023, with total wealth management fees declining $0.2 million to $3.5 million.

 Noninterest Expense

 2023

 2022

 Salaries & employee benefits

 $
 22,777

 $
 24,142

 -5.7
 %

 Net occupancy expense

 3,096

 2,993

 3.4
 %

 Equipment expense

 4,078

 3,616

 12.8
 %

 Data processing fees

 2,659

 2,510

 5.9
 %

 Professional fees

 3,024

 3,214

 -5.9
 %

 Marketing expense

 -14.2
 %

 Telephone and communications

 5.7
 %

 Postage and delivery expense

 2.4
 %

 State, local and other taxes

 1,082

 -12.3
 %

 Employee expense

 2.9
 %

 Other expense

 3,033

 2,337

 29.8
 %

 Total noninterest expense

 $
 41,962

 $
 42,314

 -0.8
 %

 Total noninterest expense was $42.0 million for
2023 compared to $42.3 million for 2022, representing a $0.3 million, or 0.8 percent, decrease year-over-year. Total full-time equivalent
employees ended 2023 at 251, which was down 17 from year end 2022.

 Earnings Summary – 2022 vs. 2021

 Net income for 2022 was $12.5 million, or $1.77
per diluted share, compared with net income of $18.3 million, or $2.56 per diluted share, for 2021. State Bank reported net income for
2022 of $13.4 million, which was down from the $18.6 million in net income in 2021. SBFG Title reported net income for 2022 of $0.4 million,
which was down from net income of $0.5 million in 2021.

 Positive results for 2022 included loan growth
of $135.9 million when excluding the impact of the PPP initiative, while total deposits declined in 2022 by $23.5 million. The mortgage
banking business line contributed gain on sale revenues of $4.3 million, with residential real estate loan production of $312.6 million
and sales of loans of $184.8 million for the year. The level of mortgage origination declined in 2022 to $313.0 million from the $600.0
million in 2021.

 Operating revenue decreased by $11.0 million,
or 16.0 percent, from $68.6 million in 2021 to $57.6 million in 2022 due to decreased PPP fees, OMSR recapture and lower mortgage gain
revenue. SBFG Title increased revenue by $0.2 million to $2.3 million for 2022.

 Operating expense decreased by $2.5 million, or
5.6 percent, from $44.8 million in 2021 to $42.3 million in 2022, due to compensation and fringe benefit cost decreases partially offset
by higher spend on technology/digital initiatives.

 Goodwill, Intangibles and Capital Purchases

 The Company completed its most recent annual goodwill
impairment review as of December 31, 2023. Due to declines in the Company's share price, a quantitative evaluation of goodwill was
completed as of September 30, 2023, which revealed that impairment was not warranted. No events have occurred since that assessment, which
would warrant impairment. At December 31, 2023, the Company concluded that it was more likely than not that the fair value of the reporting
unit exceeded its carrying value, resulting in no impairment. The Company's goodwill is further discussed in Note 6 to the Consolidated
Financial Statements.

 Management plans to continue from time to time
to purchase additional premises and equipment and improve current facilities to meet the current and future needs of the Company's
customers. These purchases will include buildings, leasehold improvements, furniture and equipment. Management expects that cash on hand
and cash generated from current operations will fund these capital expenditures and purchases.

 Liquidity

 Liquidity relates primarily to the Company's
ability to fund loan demand, meet deposit customers' withdrawal requirements and provide for operating expenses. Sources used to
satisfy these needs consist of cash and due from banks, interest-bearing deposits in other financial institutions, securities available-for-sale,
loans held for sale and borrowings from various sources. These assets, excluding the borrowings, are commonly referred to as liquid assets.
Liquid assets were $246.7 million at December 31, 2023, which included pledged available-for-sale securities of $102.3 million, compared
to liquid assets of $270.8 million at December 31, 2022.

 The Company does not have material cash requirements
for capital expenditures over the next year. Any cash needs for capital requirements would be funded by cash existing at the Company.
It is not anticipated that the Company will be required to initiate external borrowings in order to fund ongoing operations.

 The Company's commercial real estate, first
mortgage residential, agricultural and multi-family mortgage portfolio of $807.8 million at December 31, 2023, can and is readily used
to collateralize borrowings, which is an additional source of liquidity. Management believes the Company's current liquidity level,
without these borrowings, is sufficient to meet its current and anticipated liquidity needs. At December 31, 2023, all eligible commercial
real estate, residential first, multi-family mortgage and agricultural loans were pledged under a FHLB blanket lien.

 Significant additional off balance-sheet liquidity
is available in the form of FHLB advances, unused federal funds lines from correspondent banks and the national certificate of deposit
market. Management expects the risk of changes in off-balance-sheet arrangements to be immaterial to earnings. Based on the current collateralization
requirements of the FHLB, approximately $81.9 million of additional borrowing capacity existed at December 31, 2023.

 At December 31, 2023 and 2022, the Company had
$41.0 million and $56.0 million in federal funds lines available. The Company also had $105.5 million in unpledged securities at December
31, 2023 available for additional borrowings.

 The cash flow statements for the periods presented
provide an indication of the Company's sources and uses of cash as well as an indication of the ability of the Company to maintain
an adequate level of liquidity. A discussion of the cash flow statements for 2023 and 2022 follows:

 The Company experienced positive cash flows from
operating activities in 2023 and 2022. Net cash from operating activities was $14.0 million and $25.6 million for the years ended December
31, 2023 and 2022, respectively. Significant operating items for 2023 included gain on sale of loans of $4.0 million and net income of
$12.1 million. Cash provided by the sale of loans held for sale were $161.2 million. Cash used in the origination of loans held for sale
were $159.3 million.

 The Company experienced negative cash flows from
investing activities in 2023 and 2022. Net cash used in investing activities was $17.4 million and $165.7 million for the years ended
December 31, 2023 and 2022, respectively. A net increase in loans of $38.7 million was the primary change in 2023. The changes for 2022
include the purchase of available-for-sale securities of $50.6 million and net increase in loans of $139.7 million. The Company had proceeds
from repayments, maturities, sales and calls of securities of $22.2 million and $35.9 million in 2023 and 2022, respectively.

 The Company experienced negative cash flows from
financing activities in 2023 and positive cash flows in 2022. Net cash used in financing activities was $1.5 million and net cash provided
by financing activities was $18.4 million for the years ended December 31, 2023 and 2022, respectively. Negative cash flows of $16.5 million
and $26.4 million are attributable to the change in deposits for 2023 and 2022, respectively.

 The Company uses an Economic Value of
Equity ("EVE") analysis to measure risk in the balance sheet incorporating all cash flows over the estimated remaining life
of all balance sheet positions. The EVE analysis calculates the net present value of the Company's assets and liabilities in rate
shock environments that range from -400 basis points to +400 basis points. The results of this analysis are reflected in the following
table, which reflects the Company's neutral balance sheet that directionally is trending to a liability sensitive position:

 Economic Value of Equity

 Change in rates

 $ Amount

 $ Change

 +400 basis points

 $
 206,660

 $
 (9,716
)

 -4.49
 %

 +300 basis points

 211,240

 (5,136
)

 -2.37
 %

 +200 basis points

 211,639

 (4,737
)

 -2.19
 %

 +100 basis points

 213,900

 (2,476
)

 -1.14
 %

 Base Case

 216,376

 -

 -

 -100 basis points

 213,526

 (2,850
)

 -1.32
 %

 -200 basis points

 206,761

 (9,616
)

 -4.44
 %

 -300 basis points

 195,925

 (20,452
)

 -9.45
 %

 -400 basis points

 196,802

 (19,574
)

 -9.05
 %

 Economic Value of Equity

 Change in rates

 $ Amount

 $ Change

 +400 basis points

 $
 264,361

 $
 (61,360
)

 -18.84
 %

 +300 basis points

 284,602

 (41,120
)

 -12.62
 %

 +200 basis points

 303,265

 (22,457
)

 -6.89
 %

 +100 basis points

 319,473

 (6,249
)

 -1.92
 %

 Base Case

 325,722

 -

 -

 -100 basis points

 321,550

 (4,172
)

 -1.28
 %

 -200 basis points

 305,242

 (20,480
)

 -6.29
 %

 -300 basis points

 293,718

 (32,004
)

 -9.83
 %

 -400 basis points

 271,404

 (54,318
)

 -16.68
 %

 Item
7A. Quantitative and Qualitative Disclosures about Market Risk.

 Asset liability management involves developing,
executing and monitoring strategies to maintain appropriate liquidity, maximize net interest income and minimize the impact that significant
fluctuations in market interest rates would have on current and future earnings. The business of the Company and the composition of its
balance sheet consist of investments in interest-earning assets (primarily loans, mortgage-backed securities, and securities available-for-sale)
which are primarily funded by interest-bearing liabilities (deposits and borrowings). With the exception of specific loans which are originated
and held for sale, all of the financial instruments of the Company are for other than trading purposes. All of the Company's transactions
are denominated in U.S. dollars with no specific foreign exchange exposure. In addition, the Company has limited exposure to commodity
prices related to agricultural loans. The impact of changes in foreign exchange rates and commodity prices on interest rates are assumed
to be insignificant. The Company's financial instruments have varying levels of sensitivity to changes in market interest rates
resulting in market risk. Interest rate risk is the Company's primary market risk exposure; to a lesser extent, liquidity risk also
impacts market risk exposure.

 Interest rate risk is the exposure of a banking
institution's financial condition and results to adverse movements in interest rates. Accepting this risk can be an important source
of profitability and shareholder value; however, excessive levels of interest rate risk could pose a significant threat to the Company's
earnings and capital base. Accordingly, effective risk management that maintains interest rate risks at prudent levels is essential to
the Company's safety and soundness.

 Evaluating a financial institution's exposure
to changes in interest rates includes assessing both the adequacy of the management process used to control interest rate risk and the
organization's quantitative level of exposure. When assessing the interest rate risk management process, the Company seeks to ensure
that appropriate policies, procedures, management information systems and internal controls are in place to maintain interest rate risks
at prudent levels of consistency and continuity. Evaluating the quantitative level of interest rate risk exposure requires the Company
to assess the existing and potential future effects of changes in interest rates on its consolidated financial condition, including capital
adequacy, earnings, liquidity and asset quality (when appropriate).

 The FRB together with the OCC and the FDIC adopted
a Joint Agency Policy Statement on interest rate risk effective June 26, 1996. The policy statement provides guidance to examiners and
bankers on sound practices for managing interest rate risk, which will form the basis for ongoing evaluation of the adequacy of interest
rate risk management at supervised institutions. The policy statement also outlines fundamental elements of sound management that have
been identified in prior Federal Reserve guidance and discusses the importance of these elements in the context of managing interest rate
risk. Specifically, the guidance emphasizes the need for active board of director and senior management oversight and a comprehensive
risk management process that effectively identifies, measures and controls interest rate risk.

 Financial institutions derive their income primarily
from the excess of interest collected over interest paid. The rates of interest an institution earns on its assets and owes on its liabilities
generally are established contractually for a period of time. Since market interest rates change over time, an institution is exposed
to lower profit margins (or losses) if it cannot adapt to interest rate changes. For example, assume that an institution's assets
carry intermediate or long-term fixed rates and that those assets are funded with short-term liabilities. If market interest rates rise
by the time the short-term liabilities must be refinanced, the increase in the institution's interest expense on its liabilities
may not be sufficiently offset if assets continue to earn at the long-term fixed rates. Accordingly, an institution's profits could
decrease on existing assets because the institution will either have lower net interest income or possibly, net interest expense. Similar
risks exist when assets are subject to contractual interest rate ceilings, or rate-sensitive assets are funded by longer-term, fixed-rate
liabilities in a declining rate environment.

 There are several ways an institution can manage
interest rate risk including: 1) matching repricing periods for new assets and liabilities, for example, by shortening or lengthening
terms of new loans, investments, or liabilities; 2) selling existing assets or repaying certain liabilities; and 3) hedging existing assets,
liabilities, or anticipated transactions. An institution might also invest in more complex financial instruments intended to hedge or
otherwise change interest rate risk. Interest rate swaps, futures contracts, options on futures contracts, and other such derivative financial
instruments can be used for this purpose. Because these instruments are sensitive to interest rate changes, they require management's
expertise to be effective. The Company has not purchased derivative financial instruments in the past, but during 2023 and 2022 the Company
entered into interest rate swap agreements as an accommodation to certain loan customers (see Note 8 to the Consolidated Financial Statements).
The Company may purchase such instruments in the future if market conditions are favorable.

 The Company manages its interest rate risk by
the employment of strategies to assure that desired levels of both interest-earning assets and interest-bearing liabilities mature or
reprice with similar time frames. Such strategies include: 1) loans receivable which are renewed (and repriced) annually, 2) variable
rate loans, 3) certificates of deposit with terms from one month to six years, 4) securities available-for-sale which mature at various
times primarily from one through ten years, 5) federal funds borrowings with terms of one day to 90 days, and 6) FHLB borrowings with
terms of one day to ten years.

 Management believes the most significant impact
on financial results is the Company's ability to react to changes in interest rates. Management seeks to maintain an essentially
balanced position between interest sensitive assets and liabilities and actively manages loan, security, and liability maturities in order
to protect against the effects of wide interest rate fluctuations on net income and shareholders' equity.

 For additional quantitative and qualitative information
regarding the Company's interest rate risk, refer to the section captioned "Liquidity" under Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K, which is incorporated herein by reference.

 Item
8. Financial Statements and Supplementary Data.

 Our Consolidated Financial Statements and Notes thereto and other supplementary
data follow.

 Index to Consolidated Financial Statements

 Page

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Income for the Years ended December 31, 2023 and 2022

 Consolidated Statements of Comprehensive Income (Loss) for the Years ended December 31, 2023 and 2022

 Consolidated Statements of Shareholders' Equity for the Years ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows for the Years ended December 31, 2023 and 2022

 Notes to Consolidated Financial Statements

 Report of Independent Registered Public Accounting Firm (FORVIS, LLP) (PCAOB ID: 686)

 F- 1

 Consolidated Balance Sheets

 at December 31,

 2023

 2022

 Assets

 Cash and due from banks

 $

 $

 Interest bearing time deposits

 1,535

 2,131

 Available-for-sale securities

 238,780

 2,525

 2,073

 Loans, net of unearned income

 ( 15,786
)

 ( 13,818
)

 Premises and equipment, net

 21,378

 22,829

 Federal Reserve and Federal Home Loan Bank Stock, at cost

 7,279

 6,326

 Foreclosed assets and other assets held for sale, net

 Interest receivable

 4,657

 4,091

 Goodwill

 Cash value of life insurance

 29,121

 28,870

 13,906

 13,503

 11,999

 16,940

 $
 1,343,249

 $
 1,335,633

 Liabilities and shareholders' equity

 Liabilities

 Non interest bearing demand

 $
 228,713

 $
 256,799

 Interest bearing demand

 166,413

 191,719

 Savings

 216,965

 191,272

 Money market

 202,605

 255,995

 255,509

 190,880

 Repurchase agreements

 Federal Home Loan Bank advances

 83,600

 60,000

 Subordinated debt net of issuance costs

 19,642

 19,594

 Interest payable

 2,443

 Other liabilities

 19,320

 24,944

 Total liabilities

 1,218,907

 1,217,205

 Commitments & Contingent Liabilities

 Shareholders' Equity

 Preferred stock, no par value; authorized 200,000 shares; 2023 - 0 shares outstanding, 2022 - 0 shares outstanding

 -

 -

 Common stock, no par value; 2023 - 10,500,000 shares authorized, 8,525,375 shares issued; 2022 - 10,500,000 shares authorized, 8,525,375 shares issued

 Additional paid-in capital

 15,124

 15,087

 Retained earnings

 108,486

 101,966

 Accumulated other comprehensive loss

 ( 29,831
)

 ( 32,120
)

 Treasury stock, at cost; (2023 - 1,756,733 common shares; 2022 - 1,589,913 common shares)

 ( 30,756
)

 ( 27,824
)

 Total shareholders' equity

 Total liabilities and shareholders' equity

 $
 1,343,249

 $
 1,335,633

 F- 2

 Consolidated Statements of Income

 2023

 2022

 Interest Income

 Loans

 Taxable

 $
 51,407

 $
 38,238

 Tax exempt

 Securities

 Taxable

 5,245

 5,174

 Tax exempt

 Other interest income

 Total interest income

 58,152

 44,569

 Interest Expense

 14,708

 3,477

 Repurchase agreements & other

 Federal Home Loan Bank advance expense

 2,603

 Trust preferred securities expense

 Subordinated debt expense

 Total interest expense

 18,879

 5,170

 Net Interest Income

 39,273

 Provision for credit losses - loans

 -

 Provision for unfunded commitments

 ( 373
)

 -

 Total provision for credit losses

 -

 Net interest income after provision for loan losses

 38,958

 Noninterest Income

 Wealth management fees

 3,532

 3,728

 Customer service fees

 3,403

 3,378

 Gain on sale of mortgage loans & OMSR

 3,609

 4,298

 Mortgage loan servicing fees, net

 2,101

 2,964

 Gain on sale of non-mortgage loans

 Title insurance income

 1,635

 2,229

 Net gain on sale of securities

 1,453

 -

 Other income

 1,559

 1,068

 Total noninterest income

 17,721

 18,231

 Noninterest Expense

 Salaries and employee benefits

 22,777

 24,142

 Net occupancy expense

 3,096

 2,993

 Equipment expense

 4,078

 3,616

 Data processing fees

 2,659

 2,510

 Professional fees

 3,024

 3,214

 Marketing expense

 Telephone and communications

 Postage and delivery expense

 State, local and other taxes

 1,082

 Employee expense

 Other expense

 3,033

 2,337

 Total noninterest expense

 41,962

 42,314

 Income before income tax

 14,717

 15,316

 Provision for income taxes

 2,622

 2,795

 Net Income

 $

 $

 Basic earnings per common share

 $
 1.77

 $
 1.79

 Diluted earnings per common share

 $
 1.75

 $
 1.77

 F- 3

 Consolidated Statements of Comprehensive Income
(Loss)

 2023

 2022

 $

 $

 Other comprehensive income (loss)

 Available for sale investment securities:

 Gross unrealized holding gain (loss) arising in the period

 2,897

 ( 38,323
)

 Related tax benefit

 ( 608
)

 8,048

 Net effect on other comprehensive income (loss)

 2,289

 ( 30,275
)

 Total comprehensive income (loss)

 $
 14,384

 $
 ( 17,754
)

 F- 4

 Consolidated Statements of Shareholders'
Equity

 Common

 Additional

 Paid-in

 Retained

 Other

 Comprehensive

 Stock

 Capital

 Earnings

 Income (Loss)

 Stock

 Total

 January 1, 2023

 $

 $
 15,087

 $
 101,966

 $
 ( 32,120
)

 $
 ( 27,824
)

 $

 Other comprehensive income

 2,289

 2,289

 CECL initial adjustment

 ( 1,991
)

 ( 1,991
)

 Dividends on common, $ 0.52 per share

 ( 3,584
)

 ( 3,584
)

 Restricted stock vesting

 ( 539
)

 -

 Repurchased stock ( 244,325 shares)

 ( 3,471
)

 ( 3,471
)

 Stock based compensation expense

 $

 $
 15,124

 $
 108,486

 $
 ( 29,831
)

 $
 ( 30,756
)

 $

 Common

 Additional

Paid-in

 Retained

 Other

 Comprehensive

 Stock

 Capital

 Earnings

 Income (Loss)

 Stock

 Total

 January 1, 2022

 $
 54,463

 $
 14,944

 $
 99,716

 $
 ( 1,845
)

 $
 ( 22,349
)

 $
 144,929

 Other comprehensive loss

 ( 30,275
)

 ( 30,275
)

 Stock dividends on common ( 344,663 shares)

 6,856

 ( 6,864
)

 ( 8
)

 Dividends on common, $ 0.48 per share

 ( 3,407
)

 ( 3,407
)

 Restricted stock vesting

 ( 425
)

 -

 Repurchased stock ( 317,356 shares)

 ( 5,900
)

 ( 5,900
)

 Stock based compensation expense

 $

 $
 15,087

 $
 101,966

 $
 ( 32,120
)

 $
 ( 27,824
)

 $

 F- 5

 Consolidated Statements of Cash Flows

 2023

 2022

 Operating Activities

 Net Income

 $

 $

 Items not requiring (providing) cash

 Depreciation and amortization

 2,235

 2,196

 Provision for credit losses

 -

 Expense of share-based compensation plan

 Amortization of premiums and discounts on securities

 Amortization of intangible assets

 Amortization of originated mortgage servicing rights

 1,242

 1,749

 Impairment (recovery) of mortgage servicing rights

 ( 1,279
)

 Deferred income taxes

 1,878

 2,709

 Proceeds from sale of loans held for sale

 161,183

 189,515

 Originations of loans held for sale

 ( 159,292
)

 ( 181,192
)

 Gain from sale of loans

 ( 4,038
)

 ( 4,864
)

 Net gains on sales of securities

 ( 1,453
)

 -

 Changes in

 Interest receivable

 ( 566
)

 ( 1,171
)

 3,876

 ( 2,014
)

 Interest payable & other liabilities

 ( 4,724
)

 5,865

 Net cash provided by operating activities

 13,989

 25,569

 Investing Activities

 Purchases of available-for-sale securities

 ( 723
)

 ( 50,618
)

 Proceeds from maturities of interest bearing time deposits

 Proceeds from maturities of available-for-sale securities

 22,170

 35,878

 Net change in loans

 ( 38,736
)

 ( 139,670
)

 Purchase of premises, equipment

 ( 958
)

 ( 1,896
)

 Proceeds from bank owned life insurance

 -

 Purchase of bank owned life insurance

 -

 ( 10,500
)

 Purchase of Federal Reserve and Federal Home Loan Bank Stock

 ( 953
)

 ( 1,023
)

 Proceeds from sale of foreclosed assets

 1,646

 Net cash used in investing activities

 ( 17,390
)

 ( 165,671
)

 Financing Activities

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

 ( 81,089
)

 ( 60,756
)

 Net increase in time deposits

 64,629

 34,376

 Net decrease in securities sold under agreements to repurchase

 ( 1,536
)

 ( 397
)

 Proceeds from Federal Home Loan Bank advances

 810,500

 232,000

 Repayment of Federal Home Loan Bank advances

 ( 786,900
)

 ( 177,500
)

 Stock repurchase plan

 ( 3,471
)

 ( 5,900
)

 Dividends on common shares

 ( 3,584
)

 ( 3,415
)

 Net cash provided by (used in) financing activities

 ( 1,451
)

 18,408

 Increase in cash and cash equivalents

 ( 4,852
)

 ( 121,694
)

 Cash and cash equivalents, beginning of year

 149,511

 Cash and cash equivalents, end of year

 $

 $

 Supplemental cash flow information

 Interest paid

 $
 17,205

 $
 4,700

 Supplemental non-cash disclosure

 Transfer of loans to foreclosed assets

 $

 $

 Stock dividends declared and paid

 $
 -

 $
 6,856

 F- 6

 Notes to Consolidated Financial Statements

 Years Ended December 31, 2023 and 2022

 Note 1: Organization and Summary of
Significant Accounting Policies

 Organization and Nature of Operations

 SB Financial Group, Inc. ("SB Financial")
is a financial holding company whose principal activity is the ownership and management of its wholly-owned subsidiaries, The State Bank
and Trust Company ("State Bank"), SBFG Title, LLC dba Peak Title Agency ("SBFG Title"), SB Captive, Inc. ("SB
Captive"), RFCBC, Inc. ("RFCBC"), Rurbanc Data Services, Inc. dba RDSI Banking Systems ("RDSI"), Rurban
Statutory Trust II ("RST II"), and SBFG Mortgage, LLC. State Bank owns all the outstanding stock of Rurban Mortgage Company
("RMC") and State Bank Insurance, LLC ("SBI"). The "Company" refers to SB Financial and its consolidated
subsidiaries collectively, except where the context indicates the reference relates solely to the registrant, SB Financial.

 The Company is primarily engaged in providing
a full range of banking and wealth management services to individual and corporate customers primarily located in Ohio, Indiana, and Michigan.
The Company is subject to competition from other financial institutions in its market areas. The Company is regulated by certain federal
and state agencies and undergoes periodic examinations by those regulatory authorities.

 Principles of Consolidation

 The Consolidated Financial Statements include
the accounts of the Company, State Bank, SBFG Title, SB Captive, RFCBC, RDSI, RMC, RST II, SBFG Mortgage, LLC, and SBI. All significant
intercompany accounts and transactions were eliminated in consolidation.

 Use of Estimates

 The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant change relate to the determination of the ACL,
loan servicing rights, and fair value of financial instruments.

 Significant Accounting Policies

 Cash Equivalents

 The Company considers all liquid investments with
original maturities of three months or less to be cash equivalents. At December 31, 2023 and 2022, cash equivalents consisted primarily
of interest-bearing and noninterest bearing demand deposit balances held by correspondent banks.

 At December 31, 2023, the Company's correspondent
cash accounts exceeded federally insured limits by $.4 million. Additionally, the Company had approximately $ 5.9 million of cash held
by the Federal Reserve Bank ("FRB") and the Federal Home Loan Bank ("FHLB"), which is not federally insured.

 Securities

 Available-for-sale securities, which include any
debt security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Unrealized
gains and losses are recorded, net of related income tax effects, in other comprehensive income.

 F- 7

 Amortization of premiums and accretion of discounts
are recorded as interest income from securities. Realized gains and losses are recorded as net security gains (losses). Gains and losses
on sales of securities are determined on the specific-identification method.

 The Company has made a policy election to exclude
accrued interest from the amortized cost basis of securities and report accrued interest separately in other assets on the consolidated
balance sheets. A security is placed on nonaccrual status at the time any principal or interest payments become more than 90 days delinquent
or if full collection of interest or principal becomes uncertain. Accrued interest for a security placed on nonaccrual is reversed against
interest income. There was no accrued interest related to securities reversed against interest income for the years ended December 31,
2023 or 2022.

 Allowance for Credit Losses – Available-for-Sale
Securities

 For available-for-sale securities in an unrealized
loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the
security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's
amortized cost basis is written down to fair value through income as a provision for credit losses. For available-for-sale securities
that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses
or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes
to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If
this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared
to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost
basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount that the fair value
is less than the amortized cost basis.

 Changes in the ACL are
recorded as provision for (or reversal of) credit losses. Available-for-sale securities are charged-off against the allowance or, in the
absence of any allowance, written down through income when deemed uncollectible by management or when either of the aforementioned criteria
regarding intent or requirement to sell is met. At December 31, 2023, no ACL on available-for-sale securities
was recorded.

 Management has made the accounting policy election
to exclude accrued interest receivable on available-for-sale securities from the estimate of credit losses. Accrued interest receivable
on available-for-sale debt securities totaled $ 0.7 million at December 31, 2023. Should the decline in fair value be the result of credit
losses or other factors, the security would be moved into a nonaccrual status and all accrued interest be reversed.

 Mortgage Loans Held for Sale

 Mortgage loans originated and intended for sale
in the secondary market are carried at the lower of cost or fair value in the aggregate. Net unrealized losses, if any, are recognized
through a valuation allowance by charges to noninterest income. Gains and losses on loan sales are recorded in noninterest income. The
Company utilizes third-party hedges to minimize the impact of interest rate risk fluctuations, and their impact is realized through noninterest
income.

 Loans

 Loans that management has the intent and ability
to hold for the foreseeable future, or until maturity or payoffs, are reported at their outstanding principal balances adjusted for any
charge offs, the ACL, any deferred fees or costs on originated loans and unamortized premiums or discounts on
purchased loans. Interest income is reported on the interest method and includes amortization of net deferred loan fees and costs over
the loan term. Generally, loans are placed on nonaccrual status not later than 90 days past due. Past due status is based on the contractual
terms of the loan. All interest accrued, but not collected for loans that are placed on nonaccrual or charged off, is reversed against
interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to
accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future
payments are reasonably assured.

 F- 8

 Allowance for Credit Losses - Loans

 The ACL is a valuation account that is deducted
from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the
allowance when management believes that the uncollectability of a loan balance is confirmed. Expected recoveries do not exceed the aggregate
of amounts previously charged-off and expected to be charged-off.

 Management estimates the ACL using relevant available
information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.
Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information
are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency
level, or term as well as changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant
factors.

 The Company measures expected credit losses for
loans on a pooled basis when similar risk characteristics exist. The Company has identified the following portfolio segments:

 & Industrial - Commercial & industrial loans consist of loans or lines of credit
 to finance accounts receivable, inventory or other general business needs, and lease financing
 agreements for equipment, vehicles, or other assets. The primary risk associated with commercial
 & industrial loans and lease financing agreements is the ability of borrowers to achieve
 business results consistent with those projected at origination. Failure to achieve these
 projections presents risk the borrower will be unable to service the debt consistent with
 the contractual terms of the loan or lease.

 Real Estate - Owner Occupied - Owner occupied commercial real estate loans consist of
 loans to purchase or re-finance owner occupied nonresidential properties. This includes office
 buildings and other commercial facilities. Commercial mortgages secured by owner occupied
 properties are primarily dependent on the ability of borrowers to achieve business results
 consistent with those projected at loan origination. While these loans are collateralized
 by real property in an effort to mitigate risk, it is possible the liquidation of collateral
 will not fully satisfy the obligation as the commercial real estate collateral may be more
 adversely affected by conditions in the real estate markets or in the general economy.

 Real Estate – Nonowner Occupied - Nonowner occupied commercial real estate loans
 consist of loans to purchase, construct, or refinance investment nonresidential properties.
 This includes office buildings and other facilities rented or leased to unrelated parties,
 as well as multifamily properties. The primary risk associated with nonowner occupied commercial
 real estate loans is the ability of the income-producing property that collateralizes the
 loan to produce adequate cash flow to service the debt. While these loans are collateralized
 by real property in an effort to mitigate risk, it is possible the liquidation of collateral
 will not fully satisfy the obligation as the commercial real estate collateral may be more
 adversely affected by conditions in the real estate markets or in the general economy.

 - Agricultural loans consist of loans or lines of credit to finance farmland, equipment,
 and general business needs or other assets. The primary risk associated with agricultural
 loans is the ability of borrowers to achieve business results consistent with those projected
 at origination. Failure to achieve these projections presents risk the borrower will be unable
 to service the debt consistent with the contractual terms of the loan.

 Real Estate – Residential real estate mortgage loans consist of loans to purchase
 or refinance the borrower's primary dwelling, second residence or vacation home and
 are often secured by 1-4 family residential property. Significant and rapid declines in real
 estate values can result in borrowers having debt levels in excess of the current market
 value of the collateral.

 Home Equity
 Line of Credit (HELOCs) - Home equity loans consist of HELOCs and
 other lines of credit secured by first or second liens on the borrower's primary residence.
 These loans are secured by both senior and junior liens on the residential real estate and
 are particularly susceptible to declining collateral values. This risk is elevated for loans
 secured by junior liens as a substantial decline in value could render the junior lien position
 effectively unsecured.

 F- 9

 - Consumer loans consist of loans to finance unsecured home improvements, personal assets,
 such as automobiles or recreational vehicles, and revolving lines of credit that can be secured
 or unsecured. Repayment of these loans is primarily dependent on the personal income of the
 borrowers, which can be impacted by economic conditions in their market areas. The value
 of the underlying collateral within this class is at risk of potential rapid depreciation
 which could result in unpaid balances in excess of the collateral.

 The Company utilizes a Discounted Cash Flow ("DCF")
method to estimate the quantitative portion of the ACL for all loan pools evaluated on a collective pooled basis, with the exception of
the credit card portfolio, which was estimated using the Remaining Life Method. For each segment, a Loss Driver Analysis ("LDA")
was performed in order to identify appropriate loss drivers and create a regression model for use in forecasting cash flows. The LDA utilized
the Company's own Federal Financial Institutions Examination Council's ("FFIEC") Call Report data, as well as peer
institution data.

 In creating the DCF model, the Company has established
a one-year reasonable and supportable forecast period with a one-year straight line reversion to the long-term historical average. The
Company's own loan-level loss data contained within the model is being supplemented
with peer data in most loan pools as there was not sufficient loan-level detail from prior cycles reflecting similar economic conditions
as the forecasted loss drivers to result in a sound calculation.

 Key inputs into the DCF model include loan-level
detail, including the amortized cost basis of individual loans, payment structure, loss history, and forecasted loss drivers. The Company
utilizes data from Federal Reserve Economic Data ("FRED") to provide economic forecasts under various scenarios, which are
applied to loan pools to reflect credit risk in the current economic environment.

 Additional key assumptions in the DCF model include
the probability of default ("PD"), loss given default ("LGD"), and prepayment/curtailment rates. When possible,
the Company utilizes its own PDs for the reasonable and supportable forecast period. When it is not possible to use the Company's
own PDs, the LDA is utilized to determine PDs based on the forecasted economic factors. When possible, the Company utilizes its own LGDs
for the reasonable and supportable forecast period. When it is not possible to use the Company's own LGDs, the LGD is derived using
a method referred to as Frye Jacobs. The Frye Jacobs method is a mathematical formula that traces the relationship between LGD and PD
over time and projects the LGD based on the level of PD forecasted. In all cases, the Frye Jacobs method is utilized to calculate LGDs
during the reversion period and long-term historical average. Benchmark prepayment and curtailment rates were used in the ACL estimate.

 Management also considers further adjustments
to historical loss information for current conditions and reasonable and supportable forecasts that differ from the conditions that exist
for the period over which historical information is evaluated as well as other changes in qualitative factors not inherently considered
in the quantitative analyses. A number of factors are considered including economic forecast uncertainty, credit quality trends, valuation
trends, concentration risk, quality of loan review, changes in personnel, impact of rising interest rates, external factors and other
considerations. The resulting qualitative adjustments are applied to the relevant collectively evaluated loan pools. The qualitative analysis
increases or decreases the allowance allocation for each loan pool based on the assessment of factors described above. During each reporting
period, management also considers the need to adjust the baseline lifetime loss rates for factors that may cause expected losses to differ
from those experienced in the historical loss periods.

 Loans that do not share risk characteristics are
evaluated on an individual basis. When management determines that foreclosure is probable and the borrower is experiencing financial difficulty,
the expected credit losses are based on the fair value of collateral at the reporting dated adjusted for selling costs as appropriate.

 The Company is also required to consider expected
credit losses associated with loan commitments over the contractual period in which it is exposed to credit risk on the underlying commitments.
Any allowance for off-balance sheet credit exposures is reported in Other liabilities on the Company's consolidated balance sheet
and is increased or decreased through a provision for credit loss expense on the Company's consolidated statement of income. The
calculation includes consideration of the likelihood that funding will occur and forecasted credit losses on commitments expected to be
funded over their estimated lives. The allowance is calculated using the same methodology, inputs and assumptions as the funded portion
of loans at the segment level applied to the amount of commitments expected to be funded.

 F- 10

 While the Company's policies and procedures
used to estimate the ACL, as well as the resultant provision for credit losses charged to income, are considered adequate by management
and are reviewed periodically by regulators, model validators and internal audit, they are necessarily approximate and imprecise. There
are factors beyond the Company's control, such as changes in projected economic conditions, real estate markets or particular industry
conditions, which may materially impact asset quality and the adequacy of the ACL and thus the resulting provision for credit losses.

 Premises and Equipment

 Depreciable assets are stated at cost less accumulated
depreciation. Depreciation is charged to expense using the straight-line method for buildings and equipment over the estimated useful
lives of the assets. Leasehold improvements are capitalized and depreciated using the straight-line method over the terms of the respective
leases.

 Long-lived Asset Impairment

 The Company evaluates the recoverability of the
carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable. If a long-lived
asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition
of the asset is less than the carrying amount of the asset, the asset's cost is adjusted to fair value and an impairment loss is
recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value.

 Federal Reserve Bank (FRB) and Federal Home
Loan Bank (FHLB) Stock

 FRB and FHLB stock are required investments for
institutions that are members of the FRB and FHLB systems. The required investment in the common stock is based on a predetermined formula,
carried at cost and evaluated for impairment.

 Foreclosed Assets and Other Assets Held for
Sale

 Assets acquired through, or in lieu of, loan foreclosure
are held for sale and are initially recorded at fair value less costs to sell at the date of foreclosure, establishing a new cost basis.
Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of the carrying
amount or the fair value less cost to sell. Revenue and expenses from operations related to foreclosed assets and changes in the valuation
allowance are included in net income or expense from foreclosed assets.

 Goodwill

 Goodwill is tested for impairment annually or
upon a triggering event. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and
goodwill is written down to its implied fair value.

 Core Deposits and Other Intangibles

 Intangible assets are being amortized on a straight-line
basis over weighted-average periods ranging from one to eight years. Such assets are periodically evaluated as to the recoverability of
their carrying value. Purchased software is being amortized using the straight-line method over periods ranging from one to three years.

 Derivatives

 The Company enters into forward contracts for
the future delivery of mortgage loans to third-party investors and enters into interest rate lock commitments ("IRLCs") with
potential borrowers to fund specific mortgage loans that will be sold into the secondary market. The forward contracts are entered into
in order to economically hedge the effect of changes in interest rates resulting from the Company's commitment to fund the loans.

 F- 11

 The IRLCs and forward contracts are not designated
as accounting hedges and are recorded at fair value with the changes in fair value reflected in noninterest income on the consolidated
statements of income. The fair value of derivative instruments with a positive fair value are reported in accrued income and other assets
in the consolidated balance sheets, while the derivative instruments with a negative fair value are reported in accrued expenses and other
liabilities in the consolidated balance sheets.

 For exchange-traded contracts, fair value is based
on quoted market prices. For non-exchange traded contracts, fair value is based on dealer quotes, pricing models, discounted cash flow
methodologies or similar techniques for which the determination of fair value may require significant management judgment or estimation.

 Mortgage Servicing Rights

 Mortgage servicing assets are recognized separately
when rights are acquired through purchase or through sale of financial assets. Under the servicing assets and liabilities accounting guidance
(Accounting Standards Codification "ASC" 806-50), servicing rights from the sale or securitization of loans originated by
the Company are initially measured at fair value at the date of transfer. The Company subsequently measures each class of servicing asset
using the amortization method. Under the amortization method, servicing rights are amortized in proportion to and over the period of estimated
net servicing income. The amortized assets are assessed for impairment based on fair value at each reporting date.

 Fair value is based on market prices for comparable
mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated
future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net
servicing income, such as the cost of service, the discount rate, the custodial earning rate, an inflation rate, ancillary income, prepayment
speeds and default rates and losses. These variables change from quarter to quarter as market conditions and projected interest rates
change, and may have an adverse impact on the value of the mortgage servicing right and may result in a reduction to noninterest income.

 Each class of separately recognized servicing
assets subsequently measured using the amortization method is evaluated and measured for impairment. Impairment is determined by stratifying
rights into tranches based on predominant characteristics, such as interest rate, loan type and investor type. Impairment is recognized
through a valuation allowance for an individual tranche, to the extent that fair value is less than the carrying amount of the servicing
assets for that tranche. The valuation allowance is adjusted to reflect changes in the measurement of impairment after the initial measurement
of impairment. Changes in valuation allowances are reported with "Mortgage loan servicing fees, net" in the income statement.
Fair value in excess of the carrying amount of servicing assets for that stratum is not recognized.

 Servicing fee income is recorded for fees earned
for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded
as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income.

 Share-Based Employee Compensation Plan

 At December 31, 2023 and 2022, the Company had
a share-based employee compensation plan (see Note 18 to the Consolidated Financial Statements).

 Transfers of Financial Assets

 Transfers
of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is
deemed to be surrendered when (1) the assets have been isolated from the Company – put presumptively beyond the reach of the transferor
and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it
from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control
over the transferred assets through an agreement to repurchase them before the maturity or the ability to unilaterally cause the holder
to return specific assets.

 F- 12

 Income Taxes

 The
Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740). The income tax accounting guidance results
in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the
current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company
determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability
is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates
and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and
liabilities between periods. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it
is more likely than not that some portion or all of a deferred tax asset will not be realized.

 Uncertain
tax positions are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained
upon examination. The term more likely than not means a likelihood of more than 50 percent; the term "upon examination" also
includes resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition
threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of
being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether
or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available
at the reporting date and is subject to management's judgment.

 The Company
recognizes interest and penalties on income taxes as a component of income tax expense.

 The
Company files consolidated income tax returns with its subsidiaries. With a few exceptions, the Company is no longer subject to U.S. Federal,
State and Local examinations by tax authorities for the years before 2020. As of December 31, 2023, the Company had no uncertain income
tax positions.

Shares

 Treasury stock is stated at cost. Cost is determined
by the weighted-average cost method.

 Earnings Per Share

 Earnings per share ("EPS") is
computed using the two-class method. Basic EPS represent income available to common shareholders divided by the
weighted-average number of common shares outstanding during each period. Diluted EPS reflect additional potential
common shares that may be issued by the Company related solely to outstanding stock options or awards which are determined using the
treasury stock method. Treasury stock shares are not deemed outstanding for EPS calculations.

 Comprehensive Income (Loss)

 Comprehensive income (loss) consists of net income
(loss) and other comprehensive income (loss), net of applicable income taxes. Other comprehensive income (loss) includes unrealized appreciation
(depreciation) on available-for-sale securities. AOCI consists solely of the cumulative unrealized gains and losses on available-for-sale
securities net of income tax.

 Subordinated Debt

 At December 31, 2023, the Company had subordinated
debt obligations of $ 20.0 million related to its 3.65 % Fixed to Floating Rate Subordinated Notes due 2031, which were issued and sold
by the Company on May 27, 2021. The Subordinated Notes were issued in order to provide additional funds for various corporate obligations
of the Company, including share buybacks, acquisition costs and organic asset growth (see Note 13 to the Consolidated Financial Statements).

 F- 13

 Revenue Recognition

 The Company recognizes revenues as they are earned
based on contractual terms, as transactions occur, or services are provided and collectability is reasonably assured. The Company's
principal source of revenue is interest income from loans and leases and investment securities. The Company also earns noninterest income
from various banking and financial services offered through State Bank.

 Interest income is the largest source of revenue
for the Company and is primarily recognized on an accrual basis.

 Noninterest income is earned through a variety
of financial and transaction services provided to corporate and consumer clients such as trust and wealth advisory, deposit account, debit
card, mortgage banking and title insurance.

 Adoption of New Accounting Standards:

 ASU No. 2016-13: Financial Instruments –
Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments

 On January 1, 2023, the Company adopted ASU 2016-13
- Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") ("ASC
326") as amended. The new accounting guidance in this ASU replaces the incurred loss methodology with an expected loss methodology,
which is referred to as the current expected credit loss ("CECL") methodology. The CECL methodology is applicable to the measurement
of credit losses on financial assets measured at amortized cost, including loan receivables and held-to-maturity ("HTM") debt
securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of
credit, financial guarantees, and other similar instruments that are noncancellable), and net investments in leases recognized by a lessor.
The CECL methodology requires an entity to estimate credit losses over the life of an asset or off-balance sheet credit exposure.

 In addition, CECL made changes to the accounting
for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down
on available-for-sale debt securities if management determines that the Company does not intend to sell and it is more likely than not,
that the Company will not be required to sell the securities.

 The Company adopted ASC 326 using the
modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results
for reporting periods beginning on or after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be
reported in accordance with previously applicable GAAP. The transition adjustment of the CECL adoption included an increase in the
ACL of $ 1.4 million and an increase of $ 1.1 million to establish a reserve for unfunded commitments, with a $ 2.0 million decrease to
retained earnings, and $ 0.5 million of deferred tax being recorded as part of the deferred tax asset in the
Company's consolidated balance sheet.

 F- 14

 The following table details the impact of the
adoption of ASC 326:

 January 1, 2023

 Pre-ASC 326 adoption

 Impact of

 ASC 326

 adoption

 As reported

 under

ASC 326

 Cummulative Effect on Retained Earnings

 Allowance for credit loss on loans

 $
 1,663

 $

 $
 1,893

 $

 1,696

 1,750

 4,584

 1,015

 5,599

 ( 194
)

 ( 153
)

 4,438

 4,798

 Home equity line of credit (HELOC)

 ( 76
)

 ( 60
)

 ( 17
)

 ( 13
)

 Total ACL on loans

 $

 $
 1,372

 $
 15,190

 $
 1,084

 ACL on off-balance sheet commitments

 $
 -

 $
 1,149

 $
 1,149

 $

 ASU No. 2022-02: Financial Instruments –
Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures

 On January 1, 2023, the Company adopted ASU 2022-02
Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures, which removed the existing measurement
and disclosure requirements for loans considered to be Troubled Debt Restructurings ("TDRs") and added additional disclosure
requirements related to modifications provided to borrowers experiencing financial difficulty. Prior to adoption of ASU 2022-02, a change
in contractual terms of a loan where a borrower was experiencing financial difficulty and received a concession not available through
other sources was required to be disclosed as a TDR, whereas now a borrower that is experiencing financial difficulty and receives a modification
in the form of principal forgiveness, interest rate reduction, an other-than-insignificant payment delay or a term extension in the current
period needs to be disclosed. The amendment was adopted prospectively and had no impact on the Company's consolidated financial
statements aside from additional and revised financial statement disclosures (See Note 4 to the Consolidated Financial Statements).

 ASU No. 2020-04: 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. The guidance is effective as of March 12, 2020 through December 31, 2022. However, a deferral of the implementation
of the Reference Rate Reform was issued in December of 2022, which extends the implementation to December 31, 2024. The Company has implemented
a replacement for the reference rate and has determined that the changes did not have a material impact on the Company's consolidated
financial statements.

 ASU No. 2023-02: Accounting for Investments in Tax Credit Structures
Using the Proportional Amortization Method (ASU 2023-02).

 This ASU permits reporting entities to elect to
account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the
proportional amortization if certain conditions are met. A reporting entity makes an accounting policy election to apply the proportional
amortization method on a tax-credit-by-tax-credit-program basis rather than electing to apply the proportional amortization method at
the reporting entity level or to individual investments. The Company adopted the standard using a modified retrospective transition approach
to the amendments related to our low income housing tax credit ("LIHTC") investments that are eligible to apply proportional
amortization. The adoption of this standard did not have a material effect on the Company's operating results or financial condition.

 Accounting Standards not yet adopted:

 ASU No. 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures

 In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." The amendments
in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures,
primarily related to effective tax rate reconciliation and information related to income taxes paid, among certain other amendments to
improve the effectiveness of such disclosures. The amendments of this ASU are effective for fiscal years beginning after December 15,
2024 and are to be applied on a prospective basis. Adoption of this ASU is not expected to have a material impact on the Company's
Consolidated Financial Statements.

 F- 15

 Note 2: Earnings Per Share

 EPS
is computed using the two-class method. Basic EPS is computed by dividing net income available to common shareholders
by the weighted-average number of common shares outstanding during the applicable period, excluding participating securities. Participating
securities include non-vested restricted stock awards. Non-vested restricted stock awards are considered participating securities to the
extent the holders of these securities receive non-forfeitable dividends at the same rate as holders of common shares. Diluted EPS is computed using the weighted-average number of shares determined for the basic EPS plus the dilutive
effect of stock compensation using the treasury stock method. EPS for the years ended December 31, 2023 and 2022 is computed as follows:

 Twelve Months Ended

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

 2023

 2022

 Distributed earnings allocated to common shares

 $
 3,584

 $
 3,412

 Undistributed earnings allocated to common shares

 8,482

 9,082

 Net earnings allocated to common shares

 12,066

 12,494

 Net earnings allocated to participating securities

 Net Income allocated to common shares and participating securities

 $

 $

 Weighted average shares outstanding for basic earnings per share

 6,829

 7,005

 Dilutive effect of stock compensation

 Weighted average shares outstanding for diluted earnings per share

 6,917

 7,078

 Basic earnings per common share

 $
 1.77

 $
 1.79

 Diluted earnings per common share

 $
 1.75

 $
 1.77

 There were no anti-dilutive shares in 2023 or
2022.

 On January 10, 2022, the Company announced that
its board of directors had declared a 5 percent common stock dividend payable on February 4, 2022, to shareholders of record as of January
21, 2022. Holders of the Company's common shares as of the record date received one additional common share for every twenty common
shares held on the record date. No fractional shares were issued, and shareholders received cash for such fractional interests based on
the closing price of $ 19.89 of the Company's common shares on the record date.

 F- 16

 Note 3: Available-for-Sale Securities

 The
amortized cost and appropriate fair values, together with gross unrealized gains and losses, of available-for-sale securities
are as follows:

 Gross

 Gross

 Amortized

 Unrealized

 Unrealized

 Cost

 Gains

 Losses

 U.S. Treasury and Government agencies

 $
 7,339

 $

 $
 ( 823
)

 $
 6,517

 221,717

 ( 32,853
)

 11,212

 ( 1,322
)

 9,898

 17,200

 -

 ( 2,774
)

 $
 257,468

 $

 $
 ( 37,772
)

 $

 Gross

 Gross

 Amortized

 Unrealized

 Unrealized

 Cost

 Gains

 Losses

 U.S. Treasury and Government agencies

 $
 7,636

 $
 -

 $
 ( 872
)

 $
 6,764

 241,741

 ( 35,910
)

 205,835

 12,862

 ( 1,769
)

 11,103

 17,200

 -

 ( 2,122
)

 15,078

 $
 279,439

 $

 $
 ( 40,673
)

 $
 238,780

 The amortized cost and fair value of securities
available-for-sale at December 31, 2023, by contractual maturity, are shown below. Expected maturities differ from contractual maturities
because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 Amortized

 Fair

 Cost

 Value

 Within one year

 $

 $

 Due after one year through five years

 1,903

 1,839

 Due after five years through ten years

 24,483

 20,824

 Due after ten years

 8,556

 7,378

 35,751

 30,841

 221,717

 $
 257,468

 $

 The fair value of securities pledged as collateral,
to secure public deposits and for other purposes, was $ 89.7 million at December 31, 2023, and $ 53.9 million at December 31, 2022. Securities
delivered for repurchase agreements (not included above) were $ 19.7 million at December 31, 2023 and $ 17.8 million at December 31, 2022.

 During the 4th quarter of 2023, the Company sold
all of the equity shares it owned in Visa Class "B" shares. As a result of this sale, the Company no longer owns any Visa
Class B shares. The carrying value of the Visa Class B shares on the Company's balance sheet was nominal as the Company had a historical
cost basis of $ 0.01 per share. After transaction costs, the Company realized a pre-tax gain on the sale of $ 1.45 million.

 F- 17

 Certain investments in debt securities are reported
in the financial statements at an amount less than their historical cost. There were 139 securities and 144 securities reported with amounts
less than their historical value at December 31, 2023 and 2022, respectively. Total fair value of these investments was $ 217.0 million
and $ 235.5 million at December 31, 2023 and 2022, respectively, which was approximately 99 percent and 99 percent, respectively, of the
Company's available-for-sale investment portfolio.

 The following tables present securities with unrealized
losses at December 31, 2023 and 2022:

 Less than 12 Months

 12 Months or Longer

 Total

 U.S. Treasury and Government agencies

 $
 -

 $
 -

 $
 6,022

 $
 ( 823
)

 $
 6,022

 $
 ( 823
)

 -

 -

 188,508

 ( 32,853
)

 188,508

 ( 32,853
)

 -

 -

 8,541

 ( 1,322
)

 8,541

 ( 1,322
)

 -

 -

 13,926

 ( 2,774
)

 13,926

 ( 2,774
)

 $
 -

 $
 -

 $
 216,997

 $
 ( 37,772
)

 $
 216,997

 $
 ( 37,772
)

 Less than 12 Months

 12 Months or Longer

 Total

 U.S. Treasury and Government agencies

 $
 3,788

 $
 ( 452
)

 $
 2,974

 $
 ( 420
)

 $
 6,762

 $
 ( 872
)

 52,351

 ( 5,234
)

 153,055

 ( 30,676
)

 205,406

 ( 35,910
)

 7,461

 ( 1,370
)

 1,268

 ( 399
)

 8,729

 ( 1,769
)

 12,015

 ( 1,736
)

 2,564

 ( 386
)

 14,579

 ( 2,122
)

 $
 75,615

 $
 ( 8,792
)

 $
 159,861

 $
 ( 31,881
)

 $
 235,476

 $
 ( 40,673
)

 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. Management reviews these securities on a quarterly basis and evaluates
if any security has a fair value less than its amortized cost. Once these securities are identified, management determines whether a decline
in fair value resulted from a credit loss or other factors. In making the assessment, the Company may consider various factors including
the extent to which fair value is less than amortized cost, performance on any underlying collateral, downgrades in the ratings of the
security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specifically
related to the security. If the assessment indicates that a credit loss exists, a provision is recorded to the ACL.

 F- 18

 Note 4: Loans and Allowance for Credit Losses

 The following tables
present the categories of loans at December 31, 2023 and 2022:

 2023

 2022

 $
 126,716

 $
 128,393

 110,929

 297,323

 301,880

 291,368

 Home equity line of credit (HELOC)

 45,056

 17,829

 19,944

 ( 15,786
)

 ( 13,818
)

 Loans, net

 $
 984,426

 $
 948,257

 The Company makes commercial, agri-business, consumer
and residential loans to customers throughout its defined market area. Commitments to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. Each customer's creditworthiness is evaluated on a case-by-case
basis. The amount of collateral obtained, if deemed necessary, is based on management's credit evaluation of the customer. Collateral
held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real
estate.

 Standby letters of credit are conditional commitments
issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public
and private borrowing arrangements, including commercial paper, bond financing and similar transactions. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending loans to customers.

 Listed below is a summary of loan commitments,
unused lines of credit, and standby letters of credit as of December 31, 2023 and 2022.

 2023

 2022

 Loan commitments and unused lines of credit

 $
 201,605

 $
 221,668

 Standby letters of credit

 1,184

 1,336

 $
 202,789

 $
 223,004

 The risk characteristics of each loan portfolio segment are as follows:

 Commercial & Industrial and Agricultural

 Commercial & industrial and agricultural loans
are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower.
The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial
loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may include a personal
guarantee. Short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of
funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

 F- 19

 Commercial Real Estate (Owner and Nonowner
Occupied)

 Commercial real estate loans are viewed primarily
as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal
amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business
conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate
markets or in the general economy. The characteristics of properties securing the Company's commercial real estate portfolio are
diverse, but with geographic location almost entirely in the Company's market area. Management monitors and evaluates commercial
real estate loans based on collateral, geography and risk grade criteria. In general, the Company avoids financing single purpose projects
unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial
real estate versus non-owner-occupied loans.

 Construction loans are underwritten utilizing
feasibility studies, independent appraisal reviews and financial analysis of the developers and property owners. Construction loans are
generally based on estimates of costs and value associated with the completed project. These estimates may be inaccurate. Construction
loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project.
Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed
property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site
inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest
rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

 Residential Real Estate, Home Equity Line of
Credit ("HELOC") and Consumer

 Residential and consumer loans consist of two
segments – residential mortgage loans and personal loans. Residential mortgage loans are secured by 1-4 family residences and are
generally owner-occupied, and the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance
if that ratio is exceeded. HELOCs are typically secured by a subordinate interest in 1-4 family residences, and consumer personal loans
are secured by consumer personal assets, such as automobiles or recreational vehicles. Some consumer personal loans are unsecured, such
as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the
borrowers, which can be impacted by economic conditions in their market areas, such as unemployment levels. Repayment can also be impacted
by changes in property values on residential properties. Risk is mitigated by the fact that these loans are of smaller individual amounts
and spread over a large number of borrowers.

 Allowance for Credit Losses (ACL)

 The ACL is an estimate of the expected credit
losses on financial assets measured at amortized cost, which is measured using relevant information about past events, including historical
credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts
that affect the collectability of the remaining cash flows over the contractual term of the financial assets. A provision for credit losses
is charged to operations based on management's periodic evaluation of these and other pertinent factors.

 F- 20

 As a result of the adoption of ASC 326, the Company
recorded a $ 1.4 million increase to the ACL as a cumulative-effect adjustment on January 1, 2023. The following table summarizes the activity
related to the ACL for the twelve months ended December 31, 2023 under the CECL methodology.

 For the twelve months ended

 Balance,

 beginning of

 period

 Impact of

 Adopting

 ASC 326

 Chargeoffs

 Recoveries

 Provision for

 Credit

 Losses

 Balance, end

 of period

 $
 1,663

 $

 $
 -

 $
 -

 $

 $
 2,003

 1,696

 -

 -

 1,952

 4,584

 1,015

 -

 -

 5,718

 ( 194
)

 -

 -

 4,438

 ( 53
)

 4,936

 HELOC

 ( 76
)

 -

 -

 ( 17
)

 ( 65
)

 Total

 $

 $
 1,372

 $
 ( 118
)

 $

 $

 $

 Prior to the adoption of ASC 326 on January 1,
2023, the Company calculated the ACL under the incurred loss methodology. The following table contains disclosures
related to the ACL for the year ended December 31, 2022 under this methodology.

 For the twelve months ended

 Balance,

 beginning of

 period

 Impact of

 Adopting ASC 326

 Chargeoffs

 Recoveries

 Provision for

 Credit

 Losses

 Balance, end

of period

 $
 1,890

 $
 -

 $
 -

 $
 -

 $
 ( 227
)

 $
 1,663

 2,564

 -

 -

 -

 ( 868
)

 1,696

 4,217

 -

 -

 -

 4,584

 -

 -

 -

 3,515

 -

 -

 -

 4,438

 HELOC

 -

 ( 34
)

 ( 45
)

 -

 -

 -

 ( 162
)

 Total

 $
 13,805

 $
 -

 $
 ( 34
)

 $

 $
 -

 $

 The following table presents gross chargeoffs
for the year ended December 31, 2023 by loan category and origination year.

 Term Loans by Year of Origination

 Revolving

 2023

 2022

 2021

 2020

 2019

 Prior

 Loans

 Total

 $
 -

 $
 -

 $
 -

 $
 -

 $
 -

 $
 -

 $
 -

 $
 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Home equity line of credit (HELOC)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 $
 -

 $

 $

 $

 $
 -

 $
 -

 $

 $

 Collateral dependent loans are loans for which
the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing
financial difficulty. The Company reviews individually evaluated loans for designation as collateral dependent loans, as well as other
loans that management of the Company designates as having higher risk. These loans do not share common risk characteristics and are not
included within the collectively evaluated loans for determining the ACL.

 F- 21

 The following table presents an analysis of collateral-dependent
loans of the Company as of December 31, 2023.

 Collateral Type

 Allocated

 Real Estate

 Other

 Total

 Allowance

 $

 $
 -

 $

 $

 -

 -

 -

 -

 -

 -

 -

 -

 -

 1,023

 -

 1,023

 HELOC

 -

 -

 -

 -

 -

 -

 -

 -

 Total

 $
 1,911

 $
 -

 $
 1,911

 $

 Under CECL, for collateral dependent loans, the
Company has adopted the practical expedient to measure the ACL based on the fair value of collateral. The ACL is calculated on an individual
loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts,
and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

 The following table disaggregates the allowance
for loan losses and recorded investment in loans by impairment methodology under the incurred loss methodology as of December 31, 2022.

 Commercial real estate

 Total

 Allowance for loan losses:

 Ending allowance attributable to loans:

 Individually evaluated for impairment

 $
 -

 $
 -

 $
 -

 $

 $

 $

 Collectively evaluated for impairment

 $
 1,663

 $
 6,280

 $

 $
 4,300

 $

 $
 13,678

 $
 1,663

 $
 6,280

 $

 $
 4,438

 $

 $

 Loans:

 Individually evaluated for impairment

 $

 $

 $
 -

 $
 2,863

 $

 $
 3,528

 Collectively evaluated for impairment

 $
 128,189

 $
 412,462

 $

 $
 288,505

 $
 64,886

 $
 958,547

 $
 128,393

 $
 412,809

 $

 $
 291,368

 $
 65,000

 $

 F- 22

 Credit Risk Profile

 The Company categorizes loans into risk categories
(loan grades) based on relevant information about the ability of borrowers to service their debt such as current financial information,
historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company
analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans with an outstanding balance greater
than $ 100,000 and non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on a quarterly
basis. The Company uses the following definitions for risk ratings:

 Pass (grades 1 – 4): Loans which
management has determined to be performing as expected and in agreement with the terms established at the time of loan origination.

 Special Mention (grade 5): Assets have
potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration
of the repayment prospects for the asset or in the Company's credit position at some future date. Special mention assets are not
adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Ordinarily, special mention credits
have characteristics which corrective management action would remedy.

 Substandard (grade 6): Loans are inadequately
protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must
have a well-defined weakness or weaknesses that jeopardized the liquidation of the debt. They are characterized by the distinct possibility
that the Company will sustain some loss if the deficiencies are not corrected.

 Doubtful (grade 7): Loans classified as
doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection
or liquidation in full, on the basis of current known facts, conditions and values, highly questionable and improbable.

 Loss (grade 8): Loans are considered uncollectable
and of such little value that continuing to carry them as assets on the Company's financial statement is not feasible. Loans will
be classified as loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless
asset, even though partial recovery may be possible at some time in the future.

 F- 23

 The Company evaluates the loan risk grading system
definitions and allowance for credit loss methodology on an ongoing basis. The following table presents loan balances by credit quality
indicators by year of origination as of December 31, 2023.

 ($
 in thousands)

 Term
 Loans by Year of Origination

 Revolving

 Revolving
 Loans Converted

 December
 31, 2023

 2023

 2022

 2021

 2020

 2019

 Prior

 Loans

 to Term

 Total

 & industrial

 Pass

 $
 17,239

 $
 18,076

 $
 19,143

 $
 10,573

 $
 7,449

 $
 5,965

 $
 45,831

 $

 $
 124,720

 -

 -

 -

 -

 1,136

 (6)

 -

 -

 -

 -

 (7)

 -

 -

 Loss
 (8)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total

 $
 17,434

 $
 18,848

 $
 19,369

 $
 10,637

 $
 7,475

 $
 6,342

 $
 46,082

 $

 $
 126,716

 real estate - owner occupied

 Pass

 $
 29,253

 $
 21,427

 $
 26,808

 $
 12,931

 $
 12,881

 $
 20,409

 $

 $

 $
 123,994

 -

 -

 -

 2,338

 -

 -

 -

 2,696

 (6)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 (7)

 -

 -

 -

 -

 -

 -

 Loss
 (8)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total

 $
 29,253

 $
 21,427

 $
 26,834

 $
 15,269

 $
 13,240

 $
 20,409

 $

 $

 $

 real estate - nonowner occupied

 Pass

 $
 52,915

 $
 67,285

 $
 47,658

 $
 46,364

 $
 30,561

 $
 47,895

 $
 2,377

 $
 -

 $
 295,055

 -

 -

 -

 -

 1,134

 -

 -

 1,972

 (6)

 -

 -

 -

 -

 -

 -

 (7)

 -

 -

 -

 -

 -

 -

 -

 Loss
 (8)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total

 $
 52,915

 $
 67,285

 $
 47,658

 $
 46,364

 $
 31,399

 $
 49,307

 $
 2,395

 $
 -

 $
 297,323

 Pass

 $
 9,496

 $
 16,131

 $
 12,940

 $
 3,029

 $
 1,859

 $
 9,801

 $
 12,403

 $
 -

 $

 -

 -

 -

 -

 -

 -

 -

 -

 -

 (6)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 (7)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Loss
 (8)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total

 $
 9,496

 $
 16,131

 $
 12,940

 $
 3,029

 $
 1,859

 $
 9,801

 $
 12,403

 $
 -

 $

 real estate

 Pass

 $
 53,013

 $
 110,531

 $
 85,075

 $
 31,558

 $
 10,425

 $
 22,564

 $
 1,816

 $
 1,300

 $
 316,282

 -

 -

 -

 -

 -

 -

 -

 -

 -

 (6)

 -

 -

 -

 -

 1,820

 (7)

 -

 -

 -

 -

 -

 -

 -

 Loss
 (8)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total

 $
 53,013

 $
 110,531

 $
 85,436

 $
 31,612

 $
 10,910

 $
 23,505

 $
 1,816

 $
 1,300

 $

 Home
 equity line of credit (HELOC)

 Pass

 $
 -

 $
 -

 $

 $

 $

 $

 $
 40,932

 $
 6,492

 $
 47,667

 -

 -

 -

 -

 -

 (6)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 (7)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Loss
 (8)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total

 $
 -

 $
 -

 $

 $

 $

 $

 $
 40,952

 $
 6,591

 $

 Pass

 $
 3,296

 $
 5,142

 $
 1,429

 $

 $

 $

 $
 6,863

 $
 -

 $
 17,819

 -

 -

 -

 -

 -

 -

 -

 (6)

 -

 -

 -

 -

 -

 -

 -

 (7)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Loss
 (8)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total

 $
 3,296

 $
 5,151

 $
 1,429

 $

 $

 $

 $
 6,863

 $
 -

 $
 17,829

 Total
 Loans

 Pass

 $
 165,212

 $
 238,592

 $
 193,099

 $
 105,213

 $
 63,481

 $
 106,856

 $
 110,334

 $
 8,409

 $
 991,196

 -

 -

 2,403

 1,196

 1,333

 5,983

 (6)

 -

 1,211

 2,284

 (7)

 -

 -

 Loss
 (8)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total
 Loans

 $
 165,407

 $
 239,373

 $
 193,712

 $
 107,670

 $
 65,189

 $
 109,645

 $
 110,623

 $
 8,593

 $

 F- 24

 The following table presents loan balances by
credit quality indicators and loan categories as of December 31, 2022.

& industrial

 real estate -

 owner

 occupied

 real estate -

 nonowner

 occupied

 real estate

 HELOC

 Total

 Pass (1 - 4)

 $
 127,727

 $
 107,999

 $
 296,611

 $

 $
 288,028

 $
 44,746

 $
 19,915

 $
 949,531

 Special Mention (5)

 2,930

 4,899

 -

 -

 -

 -

 8,223

 Substandard (6)

 -

 -

 3,316

 3,973

 Doubtful (7)

 -

 -

 -

 -

 Loss (8)

 -

 -

 -

 -

 -

 -

 -

 -

 $
 128,393

 $
 110,929

 $
 301,880

 $

 $
 291,368

 $
 45,056

 $
 19,944

 $

 The following tables present the Company's
loan portfolio aging analysis as of December 31, 2023 and 2022:

 30-59 Days

 60-89 Days

 Greater Than

90 Days

 Total

Past

 Due

 Current

 $

 $
 -

 $

 $

 $
 126,032

 $
 126,716

 -

 -

 -

 -

 -

 -

 297,294

 297,323

 -

 -

 -

 -

 -

 317,506

 HELOC

 -

 47,770

 17,707

 17,829

 $

 $

 $
 1,150

 $
 1,527

 $
 998,685

 $

 30-59 Days

 60-89 Days

 Greater Than

90 Days

 Total

Past

 Due

 Current

 $

 $

 $

 $

 $
 128,148

 $
 128,393

 -

 -

 -

 -

 110,929

 110,929

 -

 301,734

 301,880

 -

 -

 -

 -

 1,287

 1,796

 289,572

 291,368

 HELOC

 44,796

 45,056

 19,835

 19,944

 $

 $

 $
 1,593

 $
 2,556

 $
 959,519

 $

 All loans past due 90 days are systematically placed on nonaccrual
status.

 When a loan is moved to nonaccrual status, total
unpaid interest accrued to date is reversed from income. Subsequent payments are applied to the outstanding principal balance with the
interest portion of the payment recorded on the balance sheet as a contra-loan. Interest received on nonaccrual loans may be realized
once all contractual principal amounts are received or when a borrower establishes a history of six consecutive timely principal and interest
payments. It is at the discretion of management to determine when a loan is placed back on accrual status upon receipt of six consecutive
timely payments.

 F- 25

 The categories of nonaccrual loans as of December
31, 2023 and December 31, 2022 are presented in the following table.

 2023

 2022

 Nonaccrual loans with no allowance

 Nonaccrual loans with an allowance

 Total nonaccrual loans

 Total nonaccrual loans

 $

 $

 $

 $

 -

 -

 -

 -

 -

 -

 -

 1,694

 1,712

 3,020

 Home equity line of credit (HELOC)

 -

 -

 $
 2,703

 $

 $
 2,818

 $
 3,682

 Impaired Loans (Prior to the Adoption of ASC
326)

 Prior to the adoption of ASU 2016-13, a loan was
considered impaired when, based on current information and events, it was probable that the Company would be unable to collect the scheduled
payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management
in determining impairment included payment status, collateral value and the probability of collecting scheduled principal and interest
payments when due. Loans that experienced insignificant payment delays and payment shortfalls generally were not classified as impaired.
Management determined the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration each
of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's
prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment was measured on a loan-by-loan
basis for commercial, agricultural, and construction loans by either the present value of expected future cash flows discounted at the
loan's effective interest rate, the loan's obtainable market price or the fair value of the collateral if the loan is collateral
dependent.

 Large groups of smaller balance homogenous loans
were collectively evaluated for impairment. Accordingly, the Company did not separately identify individual consumer and residential loans
for impairment measurements, unless such loans were the subject of a restructuring agreement due to financial difficulties of the borrower.
Impaired loans less than $ 100,000 were included in groups of homogenous loans. These loans were evaluated based on delinquency status.
Interest payments on impaired loans were typically applied to principal unless collectability of the principal amount was reasonably assured,
in which case interest was recognized on a cash basis.

 F- 26

 The following table presents impaired loan activity
for the twelve months ended December 31, 2022:

 Recorded

 Unpaid Principal

 Related

 Average Recorded

 Interest Income

 Twelve Months Ended

 Investment

 Balance

 Allowance

 Investment

 Recognized

 With no related allowance recorded:

 $

 $

 $
 -

 $

 $

 -

 -

 -

 -

 -

 -

 1,350

 -

 -

 -

 -

 -

 1,491

 1,558

 -

 1,793

 HELOC

 -

 -

 -

 -

 -

 With a specific allowance recorded:

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 1,372

 1,372

 1,424

 HELOC

 -

 -

 -

 -

 -

 Totals:

 $

 $

 $
 -

 $

 $

 $
 -

 $
 -

 $
 -

 $
 -

 $
 -

 $

 $

 $
 -

 $
 1,350

 $

 $
 -

 $
 -

 $
 -

 $
 -

 $
 -

 $
 2,863

 $
 2,930

 $

 $
 3,217

 $

 HELOC

 $

 $

 $

 $

 $

 $
 -

 $
 -

 $
 -

 $
 -

 $
 -

 Modifications made to Borrowers Experiencing Financial Difficulty

 In the normal course of business, the Company
may execute loan modifications with borrowers. These modifications are analyzed to determine whether the modification is considered concessionary,
long term and made to a borrower experiencing financial difficulty. The Company's modifications generally include interest rate
adjustments, principal reductions, and amortization and maturity date extensions. These modifications provide the borrowers with short-term
cash relief to allow them to improve their financial condition. If a loan modification is determined to be made to a borrower experiencing
financial difficulty, the loan is considered collateral dependent and evaluated as part of the ACL as described above in the Allowance
for Credit Losses section of this Note.

 For the twelve months ended December 31, 2023,
the Company did not modify any loans made to borrowers experiencing financial difficulty. The Company had no commitments to lend to borrowers
experiencing financial difficulty for which the Company had modified an existing loan as of December 31, 2023.

 Prior to the adoption of ASU 2022-02, the Company reported Troubled
Debt Restructured loans ("TDRs"). TDRs are modified loans where a concession was provided to a borrower experiencing financial
difficulties. Loan modifications are considered TDRs when the concessions provided are not available to the borrower through either normal
channels or other sources. There were no new TDRs during the period ended December 31, 2022.

 F- 27

 The Company monitors loan payments on an on-going
basis to determine if a loan is considered to have a payment default. Determination of payment default involves analyzing the economic
conditions that exist for each customer and its ability to generate positive cash flows during the loan term. For the twelve-month period
ended December 31, 2023, the Company had no loan modifications made to borrowers experiencing financial difficulty for which there was
a payment default within the 12 months following the modification date.

 Unfunded Loan Commitments

 The Company maintains an allowance for off-balance
sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, as well as both standby
and commercial letters of credit when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally
cancellable (i.e. commitment cannot be canceled at any time). The allowance for off-balance sheet credit exposures is adjusted as a provision
for credit loss expense. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical
funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its
estimated life, which are the same loss rates that are used in computing the ACL for loans. The ACL for unfunded loan commitments is classified
on the balance sheet within Other liabilities.

 The following table presents the balance and activity
in the ACL for unfunded loan commitments for the twelve months ended December 31, 2023 and 2022.

 2023

 2022

 Balance, beginning of period

 $
 -

 $
 -

 Adjustment for adoption of ASU 2016-13

 1,149

 -

 Provision for unfunded commitments

 ( 373
)

 -

 Balance, end of period

 $

 $
 -

 Related Party Loans

 Loans to directors and their related interests, including loans to
companies for which directors are principal owners and executive officers are presented in the following table at December 31:

 2023

 2022

 Balance at beginning of period

 $

 $

 Effect of change in compostioin of directors and executive officers

 -

 New Term Loans

 -

 -

 Repayment of term loans

 ( 144
)

 ( 53
)

 Changes in balances of revolving lines of credit

 ( 59
)

 Balance at end of period

 $

 $

 F- 28

 Note 5: Premises and Equipment

 Major classifications
of premises and equipment stated at cost were as follows at December 31:

 2023

 2022

 Land

 $
 3,563

 $
 3,563

 Buildings and improvements

 27,663

 27,699

 Equipment

 15,842

 14,315

 Construction in process

 47,235

 46,456

 Less accumulated depreciation

 ( 25,857
)

 ( 23,627
)

 Net premises and equipment

 $
 21,378

 $
 22,829

 Note 6: Goodwill and Intangibles

 The
balance of goodwill was $ 23.2 million for the twelve months ended December 31, 2023 and December 31, 2022.

 2023

 2022

 Carrying Amount

 Carrying Amount

 Beginning balance

 $

 $
 23,191

 Measurement period adjustments

 -

 Ending balance

 $

 $

 Impairment
exists when a reporting unit's carrying value of goodwill exceeds its fair value. Goodwill is tested on the last day of the last
quarter of each calendar year. The Company performed a quantitative analysis of goodwill as of September 30, 2023, and determined that
no impairment was required. At December 31, 2023, the Company determined that no events had occurred to change the assessment from the
quantitative analysis and it was more likely than not that the fair value of the reporting unit exceeded its carrying value, including
goodwill. The qualitative assessment indicated that it was more likely than not that the fair value of the reporting unit exceeded its
carrying value, resulting in no impairment.

 Carrying basis
and accumulated amortization of intangible assets were as follows at December 31:

 2023

 2022

 Gross Carrying

 Gross Carrying

 Amortization

 Amortization

 Core deposits intangible

 $

 $
 ( 236
)

 $

 $
 ( 170
)

 Customer relationship intangible

 ( 200
)

 ( 176
)

 Banking intangibles

 $

 $
 ( 436
)

 $

 $
 ( 346
)

 Amortization
expense for intangibles for the years ended December 31, 2023 and 2022 was $ 0.09 million and $ 0.07 million, respectively. Estimated amortization
expense for each of the following five years is immaterial.

 F- 29

 Note 7: Mortgage Banking
and Servicing Rights

 Mortgage
loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balance of mortgage loans
serviced for others approximated $ 1.4 billion at both December 31, 2023 and 2022. Contractually specified servicing fees of approximately
$ 3.4 million and $ 3.2 million were included in mortgage loan servicing fees in the consolidated income statement for the years ended December
31, 2023 and 2022, respectively.

 The
following table summarizes mortgage servicing rights capitalized and related amortization, along with activity in the related valuation
allowance at December 31:

 2023

 2022

 Carrying amount, beginning of year

 $
 13,503

 $
 12,034

 Mortgage servicing rights capitalized during the year

 1,695

 1,939

 Mortgage servicing rights amortization during the year

 ( 1,242
)

 ( 1,749
)

 Net change in valuation allowance

 ( 50
)

 1,279

 Carrying amount, end of year

 $
 13,906

 $
 13,503

 Valuation allowance:

 Beginning of year

 $

 $
 1,456

 Increase (reduction)

 ( 1,279
)

 End of year

 $

 $

 Fair value, beginning of period

 $
 15,754

 $
 12,629

 Fair value, end of period

 $
 17,125

 $
 15,754

 Note 8: Derivative Financial Instruments

 The
Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages its exposures
to a wide variety of business and operational risks primarily through management of its core business activities. The Company manages
economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its assets
and liabilities and through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments
to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts,
the value of which are determined by interest rates. The Company's derivative financial instruments are used to manage differences
in the amount, timing and duration of the Company's known or expected cash payments principally related to certain variable-rate
assets.

 The
Company does not use derivatives for trading or speculative purposes. Derivatives not designated as hedges are not speculative and result
from a service the Company provides to certain customers. The Company executes interest rate swaps with commercial banking customers to
facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate
swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions.
As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value
of both the customer swaps and the offsetting swaps are recognized directly in earnings.

 Additionally,
the Company enters into forward contracts for the future delivery of mortgage loans to third-party investors and enters into IRLCs with
potential borrowers to fund specific mortgage loans that will be sold into the secondary market. The forward contracts that are entered
into, economically hedge the effect of changes in interest rates resulting from the Company's commitment to fund the loans. The
IRLCs and forward contracts are not designated as accounting hedges and are recorded at fair value with changes in fair value reflected
in noninterest income on the consolidated statements of income. The fair value of derivative instruments with a positive fair value are
reported in accrued income and other assets in the consolidated balance sheets, while derivative instruments with a negative fair value
are reported in accrued expenses and other liabilities in the consolidated balance sheets.

 F- 30

 The
table below presents the notional amount and fair value of the Company's interest rate swaps, IRLCs and forward contracts utilized
at December 31:

 2023

 2022

 Notional

 Fair

 Notional

 Fair

 Value

 Value

 Asset Derivatives

 Derivatives not designated as hedging instruments

 Interest rate swaps associated with loans

 $
 68,381

 $
 3,638

 $
 66,477

 $
 5,538

 IRLCs

 7,466

 -

 -

 -

 -

 5,500

 Total contracts

 $
 75,847

 $
 3,683

 $
 71,977

 $
 5,564

 Liability Derivatives

 Derivatives not designated as hedging instruments

 Interest rate swaps associated with loans

 $
 68,381

 $
 ( 3,638
)

 $
 66,477

 $
 ( 5,538
)

 IRLCs

 -

 -

 3,268

 ( 20
)

 10,750

 ( 37
)

 -

 -

 Total contracts

 $
 79,131

 $
 ( 3,675
)

 $
 69,745

 $
 ( 5,558
)

 The
fair value of interest rate swaps were estimated using a discounted cash flow method that incorporates current market interest rates as
of the balance sheet date. Fair values of IRLCs and forward contracts were estimated using changes in mortgage interest rates from the
date the Company entered into the IRLC and the balance sheet date.

 The
following table presents the amounts included in the consolidated statements of income for non-hedging derivative financial instruments
for the twelve months ended December 31, 2023 and 2022.

 Amount of gain (loss)

 Statement of income classification

 2023

 2022

 Interest rate swap contracts

 Other income

 $

 $

 IRLCs

 Gain on sale of mortgage loans & OMSR

 ( 42
)

 Gain on sale of mortgage loans & OMSR

 ( 63
)

 The
following table shows the offsetting of financial assets and derivative assets at December 31, 2023 and 2022.

 Gross

amounts of

 Gross

 amounts

 offset

in the

 Net amounts

 of assets

presented

 in the

 Gross amounts not offset

 in the consolidated

 recognized

 assets

 consolidated

 consolidated

 Financial

 instruments

 Cash collateral

 received

 Net

amount

 Interest rate swaps

 $
 3,957

 $

 $
 3,638

 $
 -

 $
 2,900

 $

 Interest rate swaps

 $
 5,540

 $

 $
 5,538

 $
 -

 $
 4,480

 $
 1,058

 F- 31

 The
following table shows the offsetting of financial liabilities and derivative liabilities at December 31, 2023 and 2022.

 Gross

amounts of

 Gross

 amounts

 offset

in the

 Net amounts

 of liabilities

 presented

in the

 Gross amounts not offset

 in the consolidated

 recognized

 liabilities

 consolidated

 consolidated

 Financial

 instruments

 Cash collateral

 pledged

 Net

 amount

 Interest rate swaps

 $
 3,957

 $

 $
 3,638

 $
 -

 $
 -

 $
 3,638

 Interest rate swaps

 $
 5,540

 $

 $
 5,538

 $
 -

 $
 -

 $
 5,538

 Note 9: Interest-Bearing Deposits

 Interest-bearing
time deposits in denominations of $ 250,000 or more totaled $ 54.1 million on December 31, 2023 and $ 23.4 million on December 31, 2022.
There were no certificates of deposits from brokers as of December 31, 2023 and $ 7.0 million as of December 31, 2022.

 At December 31,
2023, the scheduled maturities of time deposits were as follows:

 2024

 $
 197,374

 2025

 41,190

 2026

 14,459

 2027

 1,958

 2028

 Thereafter

 -

 Total

 $
 255,509

 Included in time deposits at December 31, 2023
and 2022 were $ 56.5 million and $ 58.0 million, respectively, of deposits which were obtained through the Certificate of Deposit Account
Registry Service ("CDARS"). This service allows deposit customers to maintain fully insured balances in excess of the $ 250,000
FDIC limit without the inconvenience of having multi-banking relationships. Under the reciprocal program that the Company is currently
participating in, customers agree to allow their deposits to be placed with other participating banks in the CDARS program in insurable
amounts under $ 250,000. In exchange, other banks in the program agree to place their deposits with the Company also in insurable amounts
under $ 250,000.

 Deposits of directors and their associates, including
deposits of companies for which directors are principal owners and executive officers, totaled $ 5.2 million and $ 7.0 million at December
31, 2023 and 2022, respectively.

 Note 10: Short-Term Borrowings

 2023

 2022

 Securities Sold Under Repurchase Agreements

 $

 $

 The Company has retail repurchase agreements to
facilitate cash management transactions with commercial customers. These obligations were secured by agency securities of $ 4.5 million
and $ 5.4 million as of December 31, 2023 and 2022, respectively, and mortgage-backed securities of $ 15.2 million and $ 12.4 million for
2023 and 2022, respectively. The collateral is held at the FHLB and has maturities from 2025 through 2051. At December 31, 2023, these
repurchase agreements totaled $ 13.4 million. The maximum amount of outstanding agreements at any month end during 2023 and 2022 totaled
$ 24.6 million and $ 30.9 million, respectively, and the monthly average of such agreements totaled $ 15.8 million and $ 20.3 million during
2023 and 2022, respectively. The repurchase agreements mature within one month.

 F- 32

 The Company has borrowing capabilities at the
Federal Reserve Discount Window ("Discount Window") and the Bank Term Funding Program ("BTFP") by pledging either
securities or loans as collateral. As of December 31, 2023, there was $ 20.1 million of collateral pledged, but no borrowings drawn at
either borrowing facilities.

 At December 31, 2023 and 2022, the Company had
$ 41.0 million in federal funds lines, of which none were drawn.

 Note 11: Federal Home Loan Bank (FHLB) Advances

 The
FHLB advances were secured by $ 272.1 million in mortgage loans at December 31, 2023. Advances consisted of fixed and variable interest
rates from 3.75 to 5.47 percent. Fixed rate advances are subject to restrictions or penalties in the event of prepayment. Aggregate annual
maturities of FHLB advances at December 31, 2023, were:

 Debt

 2024

 61,100

 2026

 5,000

 2028

 17,500

 Total

 $
 83,600

 Note 12: Trust Preferred Securities

 On
September 15, 2005, RST II, a wholly-owned subsidiary of the Company, closed a pooled private offering of 10,000 Capital Securities with
a liquidation amount of $ 1,000 per security. The proceeds of the offering were loaned to the Company in exchange for junior subordinated
debentures with terms similar to the Capital Securities. Distributions on the Capital Securities are payable quarterly at a variable rate
that is currently based upon the 3-month CME Group Benchmark Administration ("CME") Term Secured Overnight Financing Rate
("SOFR") as adjusted by the relevant spread adjustment 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 December
31, 2023 and 2022 was $ 10.3 million, with a maturity date of September 15, 2035.

 Note 13: Subordinated Debt

 On
May 27, 2021, the Company entered into Subordinated Note Purchase Agreements with qualified institutional buyers and accredited investors
pursuant to which the Company issued and sold $ 20.0 million in aggregate principal amount of its 3.65 % Fixed to Floating Rate Subordinated
Notes due 2031 (the "Notes"). The Notes were sold by the Company in a private 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 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: Income Taxes

 The provision for income taxes includes these components:

 For The Year Ended

 2023

 2022

 Taxes currently payable

 $

 $

 Deferred provision

 1,878

 2,709

 Income tax expense

 $
 2,622

 $
 2,795

 F- 33

 A reconciliation of income tax expense at the statutory rate to the
Company's actual income tax expense is shown below:

 For The Year Ended

 2023

 2022

 Computed at the statutory rate ( 21 %)

 $
 3,091

 $
 3,216

 Increase (decrease) resulting from

 Tax exempt interest

 ( 117
)

 ( 111
)

 BOLI income

 ( 187
)

 ( 106
)

 Sec. 831(b) election

 ( 198
)

 ( 199
)

 Other

 ( 5
)

 Actual tax expense

 $
 2,622

 $
 2,795

 The tax effects of temporary differences related to deferred taxes
shown on the balance sheets are:

 For The Year Ended

 2023

 2022

 Deferred tax assets

 $
 3,315

 $
 2,902

 Unrealized losses on available-for-sale securities

 7,929

 8,538

 Capitalized research and development costs

 Accrued bonus

 Net operating loss

 2,758

 5,410

 Other

 15,035

 17,963

 Deferred tax liabilities

 Depreciation

 ( 983
)

 ( 1,117
)

 ( 2,920
)

 ( 2,836
)

 Purchase accounting adjustments

 ( 1,488
)

 ( 1,598
)

 Prepaids

 ( 475
)

 ( 527
)

 Net deferred loan costs

 ( 93
)

 ( 93
)

 Section 475 MTM

 ( 7,929
)

 ( 8,538
)

 FHLB stock dividends

 ( 122
)

 ( 271
)

 ( 14,010
)

 ( 14,980
)

 Net deferred tax asset

 $
 1,025

 $
 2,983

 As of December 31, 2023 the Company had $ 13.1 million in net operating losses. No valuation allowance is recorded as these are expected
to be fully utilized and have no expiration.

 Note 15: Accumulated Other Comprehensive Income
(Loss)

other comprehensive income (loss) represents reclassifications out of unrealized gains and losses on available-for-sale securities net
of income tax. There were no reclassifications for the years ending December 31, 2023 and 2022.

 Note 16: Regulatory Matters

 As of December 31, 2023, based on its call report
computations, State Bank was classified as well capitalized under the regulatory framework for prompt corrective action. To be categorized
as well capitalized, State Bank must maintain capital ratios as set forth in the table below. There are no conditions or events since
December 31, 2023 that management believes have changed State Bank's capital classification.

 F- 34

 State Bank's actual capital amounts and
ratios are presented in the following table. Capital levels are presented for State Bank only as the Company is exempt from quarterly
reporting at the holding company level:

 For Capital Adequacy

 To Be Well Capitalized Under Prompt Corrective

 Actual

 Purposes

 Action Procedures

 Ratio

 Ratio

 Ratio

 As of December 31, 2023

 Tier I Capital to average assets

 $
 148,049

 10.93
 %

 $
 54,185

 4.0
 %

 $
 67,732

 5.0
 %

 Tier I Common equity capital to risk-weighted assets

 $
 148,049

 13.42
 %

 $
 49,640

 4.5
 %

 $
 71,702

 6.5
 %

 Tier I Capital to risk-weighted assets

 $
 148,049

 13.42
 %

 $
 66,186

 6.0
 %

 $
 88,249

 8.0
 %

 Total Risk-based capital to risk-weighted assets

 $
 161,872

 14.67
 %

 $
 88,249

 8.0
 %

 $
 110,311

 10.0
 %

 As of December 31, 2022

 Tier I Capital to average assets

 $
 146,678

 11.06
 %

 $
 53,069

 4.0
 %

 $
 66,336

 5.0
 %

 Tier I Common equity capital to risk-weighted assets

 $
 146,678

 13.42
 %

 $
 49,200

 4.5
 %

 $
 71,067

 6.5
 %

 Tier I Capital to risk-weighted assets

 $
 146,678

 13.42
 %

 $
 65,600

 6.0
 %

 $
 87,466

 8.0
 %

 Total Risk-based capital to risk-weighted assets

 $
 160,346

 14.67
 %

 $
 87,466

 8.0
 %

 $
 109,333

 10.0
 %

 The
above minimum capital requirements exclude the capital conservation buffer required to avoid limitations on capital distributions, including
dividend payments and certain discretionary bonus payments to executive officers. The capital conservation buffer was 2.50 percent at
December 31, 2023 and the Company still would have met the minimum capital requirements when the capital buffer is considered. The net
unrealized gain or loss on available-for-sale securities is not included in computing regulatory capital. Management believes that State
Bank met all capital adequacy requirements to which State Bank was subject as of December 31, 2023.

 Note 17: Employee Benefits

 The Company has a share-based incentive compensation
plan that permits the grant of stock options, restricted stock and other share-based awards to employees, directors and advisory board
members of the Company and its subsidiaries. In addition, the Company has instituted a long-term incentive program, with the objective
of rewarding senior management through grants of restricted common shares of the Company (see Note 18 to the Consolidated Financial Statements).

 The Company has a retirement savings 401(k) plan
covering substantially all employees. The Company provides a safe harbor matching contribution equal to 100 % of an employees' salary
deferral amounts up to 4 % of the employees' eligible compensation. Employees are immediately vested in their voluntary contributions
and in any Company safe harbor matching contributions. Any discretionary contribution made by the Company is fully vested after three
years of credited service. Employer contributions charged to expense for 2023 and 2022 were $ 0.6 million and $ 0.7 million, respectively.

 Also, the Company has Supplemental Executive Retirement
Plan ("SERP") Agreements with certain active and retired officers. The agreements provide monthly payments for up to 15 years
that equal 15 percent to 25 percent of average compensation prior to retirement or death. The charges to expense for the current agreements
were $ 0.2 million and $ 0.2 million for 2023 and 2022, respectively.

 F- 35

 Additional life insurance is provided to certain
officers through bank-owned life insurance ("BOLI") policies. By way of a separate split-dollar agreement, each policy's
interests are divided between the Company and the insured's beneficiary. The Company owns the policy's cash value and a portion
of the policy net death benefit, over and above the cash value assigned to the insured's beneficiary. In May 2022, an additional
$ 10.5 million in BOLI policies were purchased. The cash surrender value of all life insurance policies totaled $ 29.1 million and $ 28.9
million at December 31, 2023 and 2022, respectively.

 The Company has a noncontributory employee stock
ownership plan ("ESOP") covering substantially all employees of the Company and its subsidiaries. Voluntary contributions
are made by the Company to the plan. Each eligible employee is vested based upon years of service, including prior years of service. The
Company's contributions to the account of each employee become fully vested after three years of service. Benefit expense for the
value of the stock purchased is recorded equal to the fair market value of the stock when contributions, which are determined annually
by the Board of Directors of the Company, are made to the ESOP. Allocated shares in the ESOP at December 31, 2023 and 2022, were 328,187
and 370,876, respectively.

 Dividends on allocated shares in the ESOP are
recorded as dividends and charged to retained earnings. Compensation expense is recorded equal to the fair market value of the stock when
contributions, which are determined annually by the Board of Directors of the Company, are made to the ESOP. ESOP expense for the years
ended December 31, 2023 and 2022 was $ 0.1 million and $ 0.0 million, respectively.

 Note 18: Share-Based Compensation Plan

 In April 2017, the shareholders approved a new
share-based incentive compensation plan, the SB Financial Group, Inc. 2017 Stock Incentive Plan (the "2017 Plan"). This plan
permits the grant or award of incentive stock options, nonqualified stock options, stock appreciation rights ("SAR's"),
restricted stock, and restricted stock units ("RSU's") for up to 500,000 common shares of the Company.

 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
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 common shares at the date of grant and those option awards vest based on five 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. There were no options granted in 2023 or 2022. There were no stock options outstanding, and no compensation
expense charged against income with respect to option awards under the Plan, as of December 31, 2023 or 2022.

 As of December 31, 2023, there was no unrecognized
compensation cost related to incentive option share-based compensation arrangements granted under the 2017 Plan.

 Pursuant to the Long Term Incentive ("LTI")
Plan, the Company awards restricted common shares of the Company to certain key executives under the 2017 Plan. These restricted stock
awards vest over a four-year period and are intended to assist the Company in retention of key executives. During 2023 and 2022, the Company
met certain performance targets and restricted stock awards were approved by the Board. The compensation cost charged against income for
the LTI Plan was $ 0.6 million and $ 0.6 million for 2023 and 2022, respectively. The total income tax benefit recognized in the income
statement for share-based compensation arrangements was $ 0.1 million and $ 0.1 million for 2023 and 2022, respectively.

 F- 36

 A summary of restricted stock activity under the
Company's LTI Plan as of December 31, 2023 and changes during the year ended is presented below:

 Shares

 Weighted-

Average Value

 per Share

 Nonvested, January 1, 2023

 52,919

 $
 19.23

 Granted

 28,664

 16.53

 Vested

 ( 31,810
)

 17.96

 Forfeited

 ( 807
)

 18.27

 Nonvested, December 31, 2023

 48,966

 $
 18.49

 As of December 31, 2023, there was $ 0.6 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 1.62 years.

 Note 19: Disclosures About Fair Value of Assets
and Liabilities

 Pursuant to ASC 820, fair value is defined as
the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. A three level hierarchy exists in ASC 820 for fair value measurements based upon the inputs to the valuation
of an asset or liability:

 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 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
and inputs used for assets measured at fair value on a recurring basis, recognized in the accompanying balance sheets, as well as the
general classification of such assets pursuant to the valuation hierarchy.

 Available-for-sale securities

 The fair value of available-for-sale securities
are determined by various valuation methodologies. Level 2 securities include obligations of U.S. government agencies, mortgage-backed
securities, obligations of political and state subdivisions, and corporate securities. Level 2 inputs do not include quoted prices for
individual securities in active markets; however, they do include inputs that are either directly or indirectly observable for the individual
security being valued. Such observable inputs include interest rates and yield curves at commonly quoted intervals, volatilities, prepayment
speeds, credit risks and default rates. Also included are inputs derived principally from or corroborated by observable market data by
correlation or other means.

 Interest rate contracts

 The fair values of interest rate contracts are
based upon the estimated amount the Company would receive or pay to terminate the contracts or agreements, taking into account underlying
interest rates, creditworthiness of underlying customers for credit derivatives and, when appropriate, the creditworthiness of the counterparties.

 F- 37

 The fair values of forward contracts on to-be-announced
securities are determined using quoted prices in active markets, or benchmarked thereto (Level 1).

 Interest Rate Lock Commitments (IRLCs)

 The fair value of IRLCs are determined using the
projected sale price of individual loans based on changes in the market interest rates, projected pull-through rates (the probability
that an IRLC will ultimately result in an originated loan), the reduction in the value of the applicant's option due to the passage
of time, and the remaining origination costs to be incurred based on management's estimate of market costs (Level 3).

 The following table presents the fair value measurements
of securities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements
fell at December 31, 2023 and 2022:

 U.S. Treasury and Government Agencies

 $
 6,517

 $
 -

 $
 6,517

 $
 -

 -

 -

 9,898

 -

 9,898

 -

 -

 -

 Interest rate contracts - assets

 3,638

 -

 3,638

 -

 Interest rate contracts - liabilities

 ( 3,638
)

 -

 ( 3,638
)

 -

 ( 37
)

 ( 37
)

 -

 -

 IRLCs

 -

 -

 U.S. Treasury and Government Agencies

 $
 6,764

 $
 -

 $
 6,764

 $
 -

 205,835

 -

 205,835

 -

 11,103

 -

 11,103

 -

 15,078

 -

 15,078

 -

 Interest rate contracts - assets

 5,538

 -

 5,538

 -

 Interest rate contracts - liabilities

 ( 5,538
)

 -

 ( 5,538
)

 -

 -

 -

 IRLCs

 ( 20
)

 -

 -

 ( 20
)

 Level 1 - quoted prices in active markets for identical assets

 Level 2 - significant other observable inputs

 Level 3 - significant
unobservable inputs

 The following table reconciles the beginning and
ending balances of recurring fair value measurements recognized in the accompanying consolidated balance sheets using significant unobservable
(Level 3) inputs for the years ended December 31, 2023 and 2022.

 for the Twelve Months Ended

 2023

 2022

 Interest rate lock commitments

 Balance at beginning of period

 $
 ( 20
)

 $

 Change in fair value

 ( 42
)

 Balance at end of period

 $

 $
 ( 20
)

 F- 38

 The following is a description of the valuation
methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheets,
as well as the general classification of such assets pursuant to the valuation hierarchy.

 Collateral-dependent Individually Evaluated Loans, Net of ACL

 Loans for which it is probable the Company will
not collect all principal and interest due according to contractual terms are measured for collateral dependency. The estimated fair value of collateral-dependent loans is based on the appraised value of the collateral, less estimated cost to sell. Collateral-dependent loans are
classified within Level 3 of the fair value hierarchy. This method requires obtaining independent appraisals of the collateral from a
list of preapproved appraisers, which are reviewed for accuracy and consistency by the Company. The appraised values are reduced by applying
a discount factor to the value based on the Company's loan review policy. All individually evaluated loans held by the Company were collateral
dependent at December 31, 2023 and 2022.

 Mortgage Servicing Rights

 Mortgage servicing rights do not trade in an active,
open market with readily observable prices. Accordingly, fair value is estimated using discounted cash flow models associated with the
servicing rights and discounting the cash flows using discount market rates, prepayment speeds and default rates. The servicing portfolio
has been valued using all relevant positive and negative cash flows including servicing fees, miscellaneous income and float; marginal
costs of servicing; the cost of carry of advances; and foreclosure losses; and applying certain prevailing assumptions used in the marketplace.
Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the hierarchy. These mortgage servicing
rights are tested for impairment on a quarterly basis.

 The following table presents the fair value measurements
of assets measured at fair value on a non-recurring basis and the level within the fair value hierarchy in which the fair value measurements
fell at December 31, 2023 and 2022:

2023

 Collateral-dependent Individually evaluated loans

 $

 $
 -

 $
 -

 $

 1,896

 -

 -

 1,896

 2022

 Collateral-dependent impaired loans

 $
 1,028

 $
 -

 $
 -

 $
 1,028

 1,448

 -

 -

 1,448

 Level 1 - quoted prices in active markets for identical assets

 Level 2 - significant other observable inputs

 Level 3 - significant unobservable inputs

 F- 39

 Unobservable (Level 3) Inputs

 The following tables present quantitative information
about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements at December 31, 2023 and 2022:

2023

 Valuation

 technique

 Unobservable inputs

 Range

 (weighted-

average)

 Collateral-dependent
 individually evaluated loans

 $

 Market comparable properties

 Comparability adjustments (%)

- 100% (25
 %)

 1,896

 Discounted cash flow

 Discount rate

 11.01
 %

 Constant prepayment rate

 7.16
 %

 P&I earnings credit

 5.33
 %

 T&I earnings credit

 5.13
 %

 Inflation for cost of servicing

 3.50
 %

 IRLCs

 Discounted cash flow

 Loan closing rates

 27 %
- 91
 %

 2022

 Valuation

 technique

 Unobservable inputs

 Range

 (weighted-

average)

 Collateral-dependent impaired
 loans

 $
 1,028

 Market comparable properties

 Comparability adjustments (%)

- 21% (12
 %)

 1,448

 Discounted cash flow

 Discount rate

 11.39
 %

 Constant prepayment rate

 7.52
 %

 P&I earnings credit

 4.35
 %

 T&I earnings credit

 4.58
 %

 Inflation for cost of servicing

 3.50
 %

 IRLCs

 ( 20
)

 Discounted cash flow

 Loan closing rates

 41 %
- 99
 %

 The mortgage servicing rights portfolio is measured
for fair value by an independent third party. The valuation of the portfolio hinges on a number of quantitative factors. These factors
include, but are not limited to, a discount rate applied to the cash flows, and an assumption of future principal prepayments. The prepayment
assumptions are based upon the historical performance of the Company's portfolio as well as market metrics. The servicing rights
have had a decrease in prepayments and the 3.42 percent decrease in the constant prepayment rate reflects the change in market rates.
In addition, the earnings credit rate decreased and the discount rate increased.

 The following methods were used to estimate the
fair value of all other financial instruments recognized in the accompanying balance sheets at amounts other than fair value.

 Cash and Due From Banks, Interest Bearing Time
Deposits, FRB and FHLB Stock and Interest Receivable and Payable

 Fair value is determined to be the carrying amount
for these items (which include cash on hand, due from banks, and federal funds sold) because they represent cash or mature in 90 days
or less, and do not represent unanticipated credit concerns.

 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.

 F- 40

 Loans

 The estimated fair value of loans 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, Repurchase Agreements & FHLB
Advances

 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 the Company could pay on similar instruments with similar terms and maturities
at December 31, 2023 and 2022.

 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 December 31, 2023 and 2022 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 an appropriate discount rate.

 The following table presents estimated fair values
of the Company's financial instruments. The fair values of certain 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 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.

 Carrying

 Fair

 Fair value measurements using

 December 31,2023

 amount

 value

 Financial assets

 Cash and due from banks

 $

 $

 $

 $
 -

 $
 -

 Interest bearing time deposits

 1,535

 1,535

 -

 1,535

 -

 2,525

 2,565

 -

 2,565

 -

 Loans, net of allowance for credit losses

 984,426

 964,216

 -

 -

 964,216

 Federal Reserve and FHLB Bank stock, at cost

 7,279

 7,279

 -

 7,279

 -

 Interest receivable

 4,657

 4,657

 -

 4,657

 -

 Financial liabilities

 $

 $
 1,078,028

 $
 814,696

 $
 263,332

 $
 -

 Short-term borrowings

 -

 -

 FHLB advances

 83,600

 83,368

 -

 83,368

 -

 9,759

 -

 9,759

 -

 Subordinated debt, net of issuance costs

 19,642

 19,435

 -

 19,435

 -

 Interest payable

 2,443

 2,443

 -

 2,443

 -

 F- 41

 Carrying

 Fair

 Fair value measurements using

 amount

 value

 Financial assets

 Cash and due from banks

 $

 $

 $

 $
 -

 $
 -

 Interest bearing time deposits

 2,131

 2,131

 -

 2,131

 -

 2,073

 2,100

 -

 2,100

 -

 Loans, net of allowance for loan losses

 948,257

 945,699

 -

 -

 945,699

 Federal Reserve and FHLB Bank stock, at cost

 6,326

 6,326

 -

 6,326

 -

 Interest receivable

 4,091

 4,091

 -

 4,091

 -

 Financial liabilities

 $

 $
 1,090,718

 $
 895,785

 $
 194,933

 $
 -

 Short-term borrowings

 -

 -

 FHLB advances

 60,000

 59,886

 -

 59,886

 -

 9,674

 -

 9,674

 -

 Subordinated debt, net of issuance costs

 19,594

 18,959

 -

 18,959

 -

 Interest payable

 -

 -

 Note
20: Parent Company Financial Information

 Presented
below is condensed financial information of the parent company only:

 Condensed
Balance Sheets

 2023

 2022

 Assets

 Cash & cash equivalents

 $
 6,468

 $
 4,655

 Investment in banking subsidiaries

 139,502

 135,923

 Investment in nonbanking subsidiaries

 6,279

 6,587

 2,726

 2,076

 $
 154,975

 $
 149,241

 Liabilities

 $
 10,000

 $
 10,000

 Sub debt net of issuance cost

 19,642

 19,594

 Borrowings from nonbanking subsidiaries

 Other liabilities & accrued interest payable

 Total liabilities

 30,633

 30,813

 Shareholders' equity

 Total liabilities and shareholders' equity

 $
 154,975

 $
 149,241

 F- 42

 Condensed
Statements of Income

 2023

 2022

 Dividends from subsidiaries:

 Banking subsidiaries

 $
 10,000

 $
 -

 Nonbanking subsidiaries

 Total income

 10,700

 Expenses

 1,494

 1,139

 Other expense

 1,616

 1,747

 Total expenses

 3,110

 2,886

 Income before income tax

 7,590

 ( 2,136
)

 Income tax benefit

 ( 652
)

 ( 613
)

 Income (loss) before equity in undistributed income of subsidiaries

 8,242

 ( 1,523
)

 Equity in undistributed income of subsidiaries

 Banking subsidiaries

 3,290

 13,426

 Nonbanking subsidiaries

 Total

 3,853

 14,044

 $

 $

 Condensed
Statements of Comprehensive Income (Loss)

 2023

 2022

 $

 $

 Other comprehensive income (loss):

 Available-for-sale investment securities:

 Gross unrealized holding gain (loss) arising in the period

 2,897

 ( 38,323
)

 Related tax (expense) benefit

 ( 608
)

 8,048

 Net effect on other comprehensive income (loss)

 2,289

 ( 30,275
)

 Total comprehensive income (loss)

 $
 14,384

 $
 ( 17,754
)

 F- 43

 Condensed
Statements of Cash Flows

 2023

 2022

 Operating activities

 $

 $

 Items not requiring (providing) cash

 Equity in undistributed net income of subsidiaries

 ( 3,853
)

 ( 14,044
)

 Stock compensation expense

 Other liabilities

 ( 228
)

 ( 502
)

 Net cash provided by (used in) operating activities

 8,820

 ( 484
)

 Financing activities

 Dividends on common shares

 ( 3,584
)

 ( 3,407
)

 Stock dividends on common shares

 -

 ( 8
)

 Repurchase of common shares

 ( 3,471
)

 ( 5,900
)

 Other financing activities

 Net cash used in financing activities

 ( 7,007
)

 ( 9,267
)

 Net change in cash and cash equivalents

 1,813

 ( 9,751
)

 Cash and cash equivalents at beginning of year

 4,655

 14,406

 Cash and cash equivalents at end of year

 $
 6,468

 $
 4,655

 Note 21: Quarterly Financial Information (unaudited)

 Quarterly Financial Information (unaudited)

 Years ended December 31,

 2023

 December

 September

 June

 March

 Interest income

 $
 15,126

 $
 14,796

 $
 14,406

 $
 13,824

 5,542

 5,260

 4,577

 3,500

 9,584

 9,536

 9,829

 10,324

 Provision for loan losses

 ( 74
)

 ( 6
)

 Noninterest income

 5,531

 4,163

 4,361

 3,666

 Noninterest expense

 10,369

 10,481

 10,339

 10,773

 Income tax expense

 $
 3,883

 $
 2,687

 $
 3,075

 $
 2,450

 Basic earnings per common share

 $
 0.58

 $
 0.39

 $
 0.45

 $
 0.35

 Diluted earnings per common share

 $
 0.56

 $
 0.39

 $
 0.45

 $
 0.35

 Dividends per share

 $
 0.135

 $
 0.130

 $
 0.130

 $
 0.125

 2022

 December

 September

 June

 March

 Interest income

 $
 12,936

 $
 11,764

 $
 10,474

 $
 9,395

 2,037

 1,334

 10,899

 10,430

 9,593

 8,477

 Provision for loan losses

 -

 -

 -

 -

 Noninterest income

 3,713

 4,043

 4,673

 5,802

 Noninterest expense

 10,268

 10,385

 10,802

 10,859

 Income tax expense

 $
 3,532

 $
 3,342

 $
 2,834

 $
 2,813

 Basic earnings per common share

 $
 0.51

 $
 0.48

 $
 0.40

 $
 0.40

 Diluted earnings per common share

 $
 0.50

 $
 0.47

 $
 0.40

 $
 0.40

 Dividends per share

 $
 0.125

 $
 0.120

 $
 0.120

 $
 0.115

 F- 44

 Report
of Independent Registered Public Accounting Firm

 To the Shareholders, Board of Directors, and Audit Committee

 SB Financial Group,
Inc.

 Defiance, Ohio

 Opinion on the Consolidated Financial Statements

 We have audited the accompanying consolidated balance sheets of SB
Financial Group, Inc. (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive
income (loss), shareholders' equity, and cash flows for each of the years ended December 31, 2023 and 2022, and the related notes
(collectively referred to as the "financial statements"). In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results
of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in
the United States of America.

 Change in Accounting Principle

 As discussed in Note 1 to the financial statements, the Company changed its method of accounting
for credit losses effective January 1, 2023 due to the adoption of Accounting Standards Topic 326: Financial Instruments – Credit
Losses. The adoption of the new credit loss standard and its subsequent application is also communicated as a critical audit matter.

 Basis for Opinion

 These financial statements are the responsibility of the Company's management. Our responsibility
is to express an opinion on the Company's financial statements based on our audits.

 We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to
the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for
the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly,
we express no such opinion.

 Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.

 F- 45

 Critical Audit Matter

 The critical audit matter communicated below is a matter arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures
that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication
of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.

 Allowances for Credit Losses

 As discussed in Note 1 to the consolidated financial statements, the Company changed its method
of accounting for credit losses effective January 1, 2023, due to the adoption of Accounting Standards Topic 326: Financial Instruments
– Credit Losses. The Company's loan portfolio totaled $1.0 billion as of December 31, 2023, and the associated allowance
for credit losses ("ACL") on loans was $15.8 million. As discussed in Notes 1 and 4 to the consolidated financial statements,
the Company measures expected credit losses for loans on a pooled basis when similar risk characteristics exist using relevant available
information, from internal and external sources, relating to past events, current conditions, reasonable and supportable forecasts. Historical
credit loss experience provides the basis for the estimation of expected credit losses. Management also considers further adjustments
to historical loss information for current conditions and reasonable and supportable forecasts that differ from the conditions that exist
for the period over which historical information is evaluated as well as other changes in qualitative factors not inherently considered
in the quantitative analyses. The resulting qualitative adjustments are applied to the relevant collectively evaluated loan pools.

 We
have identified the ACL, and more specifically the qualitative adjustments applied in the ACL, as a critical audit matter. The principal
consideration for our determination is the high degree of judgment and subjectivity in auditing the assumptions utilized by management
in calculating the qualitative reserve component. This required a high degree of judgement due to the nature and extent of audit evidence
and effort required to address this matter.

 The primary procedures we performed related to this critical audit matter included:

 Obtained an understanding of the Company's process
and internal controls for establishing the ACL, including the selection, application and related adjustments of the qualitative factor
components of the ACL.

 Evaluated the relevancy and reliability of the underlying
data used to derive the qualitative factors, including comparison to internal, external and/or peer data to ensure movement in a directionally
consistent manner.

 Assessed the appropriateness and reasonableness of
the qualitative factor adjustments, including evaluating management's judgments as to which factors and relevant assessed risks
impacted the qualitative adjustments for each loan pool.

 Evaluated the reasonableness of the assumptions utilized
by management in calculating the qualitative reserve component.

 Tested the accuracy of the mathematical application of the
qualitative factors to adjust the historical loss experience.

 /s/ FORVIS, LLP

 We have served as the Company's auditor since 2002.

 Indianapolis, Indiana

 F- 46

 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

 Not Applicable.

 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 this 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, 2023, 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, 2023, the Company's internal control over financial
reporting is effective.

 This Annual Report does not include an attestation
report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's
report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the SEC that permit
the Company to provide only management's report in this Annual Report on Form 10-K.

 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, 2023, that have materially affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

 Item 9B. Other Information.

 (a)
 None.

 (b)
 During the quarter ended December 31, 2023, no director or
16 officer (as defined under Rule 16a-1 of the Exchange Act) adopted or terminated any Rule 10b5-1 trading arrangements
or any non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).

 Item 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections.

 Not Applicable.

 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 19, 2024 (the "2024 Annual Meeting"), is incorporated herein by reference from the disclosure included
in the Company's definitive Proxy Statement relating to the 2024 Annual Meeting (the "2024 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 2024 Proxy Statement under the caption "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 and Risk Management 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
Overview" and then "Governance Documents". 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 by first clicking "Corporate Overview" and then "Governance Documents". Interested
persons may also obtain copies of the Code of Conduct and Ethics, the Audit and Risk Management 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.

 Audit and Risk Management 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 2024 Proxy Statement.

 Nominating Committee

 The procedures by which shareholders of the
Company may recommend nominees to the Company's Board of Directors are described under the caption "CORPORATE GOVERNANCE –
Nominations of Directors" in the Company's 2024 Proxy Statement. The procedures by which shareholders of the Company many
recommend nominees to the Company's Board of Directors have not materially changed from those described in the Company's definitive
Proxy Statement for the 2023 Annual Meeting of Shareholders held on April 20, 2023.

 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 2024 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 2024 Proxy Statement under the caption "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT".

 Equity Compensation Plan Information

 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,
2023, 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

 2017 Plan

 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)

 343,179

 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 2024 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 2024 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 2024 Proxy Statement under the caption
"AUDIT & RISK MANAGEMENT COMMITTEE DISCLOSURE".

 Item 15. Exhibits and Financial Statement
Schedules.

 (a)(1) Financial Statements

 The following consolidated financial statements are incorporated
by reference from Item 8 hereof:

Balance Sheets as of December 31, 2023 and 2022

Statements of Income for the Years ended December 31, 2023 and 2022

Statements of Comprehensive Income (Loss) for the Years ended December 31, 2023 and 2022

Statements of Shareholders' Equity for the Years ended December 31, 2023 and 2022

Statements of Cash Flows for Years ended December 31, 2023 and 2022

 Notes
to Consolidated Financial Statements

 Report
of Independent Registered Public Accounting Firm (FORVIS, LLP)

 (a)(2) Financial Statement
Schedules

 All schedules for which provision is
made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and, therefore,
have been omitted.

 (a)(3) Exhibits

 The documents listed in the Index to
Exhibits that immediately precedes the signature page of this Form 10-K are filed/furnished with this Form 10-K as exhibits or incorporated
into this Form 10-K by reference as noted. Each management contract or compensatory plan or arrangement required to be filed as an exhibit
to this Form 10-K is identified as such in the Index to Exhibits.

 (b) Exhibits

 The documents listed in the Index to
Exhibits that immediately precedes the signature page of this Form 10-K are filed/furnished with this Form 10-K as exhibits or incorporated
into this Form 10-K by reference as noted.

 (c) Financial
Statement Schedules

 None.

 Item 16. Form 10-K Summary.

 Not Applicable.

 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, 2022 (File No. 31-36785).

 3.2

 Certificate of Amendment to the Amended Articles of the Company as filed with the Ohio Secretary of State on April 27, 1993

 Incorporated 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

 Certificate of Amendment to the Amended Articles of the Company as filed with the Ohio Secretary of State on January 25, 2022

 Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed January 27, 2022 (File No. 0-13507).

 3.8

 Amended Articles of the Company, as amended (reflecting amendments through January 25, 2022) [for SEC reporting compliance purposes only – not filed with the Ohio Secretary of State]

 Incorporated herein by reference to Exhibit 3.8 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (File No. 31-36785).

 3.9

 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).

 3.10

 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).

 4.1

 Form of 3.65% Fixed-to-Floating Rate Subordinated Note due 2031

 Incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed May 28, 2021 (File No. 0-13507).

 Exhibit No.

 Description

 Location

 4.2

 Form of Subordinated Note Purchase Agreement by and between the Company and the several Purchasers

 Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed May 28, 2021 (File No. 0-13507).

 4.3

 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).

 4.4

 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).

 4.5

 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).

 4.6

 Agreement to furnish instruments and agreements defining rights of holders of long-term debt

 4.7

 Description of Common Shares of the Company

 Incorporated herein by reference to Exhibit 4.7 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (File No. 31-36785).

 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*

 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).

 10.3*

 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).

 10.4*

 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).

 10.5*

 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).

 Exhibit No.

 Description

 Location

 10.6*

 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).

 10.7*

 Amended and Restated Change of Control Agreement, dated January 22, 2018, between the Company and David A. Homoelle

 Incorporated herein by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (File No. 31-36785).

 10.8*

 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).

 10.9*

 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).

 10.10*

 Supplemental Executive Retirement Plan Agreement, dated as of January 22, 2018 by and between the Company and David A. Homoelle

 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, 2021 (File No. 31-36785).

 10.11*

 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).

 10.12*

 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).

 10.13*

 2017 Split Dollar Agreement and Endorsement, dated as of January 22, 2018, between and The State Bank and Trust Company and David A. Homoelle

 Incorporated herein by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (File No. 31-36785).

 10.14*

 Non-Qualified Deferred Compensation Plan of the Company effective as of January 1, 2007

 Incorporated herein by reference to Exhibit 10.20
 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 0-13507).

 10.15*

 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).

 10.16*

 SB Financial Group 2017 Stock Incentive Plan

 Incorporated herein by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (File No. 31-36785).

 Exhibit No.

 Description

 Location

 10.17*

 Form of Restricted Stock Award Agreement (For Employees) under the Company's 2017 Stock Incentive Plan

 2023 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.

 Subsidiaries of Registrant

 Consent of FORVIS, LLP

 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

 31.2

 Rule 13a-14(a)/15d-14(a) Certification – Principal Financial Officer

 32.1

 Section 1350 Certification – Principal Executive Officer and Principal Financial Officer

 Clawback Policy

 *
 Management contract or compensatory plan or arrangement.

 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.

 By:

 /s/ Anthony V. Cosentino

 Date: March 8, 2024

 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, 2023, 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

 Chairman, President and Chief Executive Officer

 Mark A. Klein

 /s/ Anthony V. Cosentino

 Executive Vice President and Chief Financial Officer

 Anthony V. Cosentino

 /s/ George W. Carter

 George W. Carter

 /s/ Gaylyn J. Finn

 Gaylyn J. Finn

 /s/ Richard
 L. Hardgrove

 Richard L. Hardgrove

 /s/ Tom R.
 Helberg

 Tom R. Helberg

 /s/ Rita A. Kissner

 Rita A. Kissner

 /s/ Mark A. Klein

 Mark A. Klein

 /s/ William G. Martin

 William G. Martin

 /s/ Timothy J. Stolly

 Timothy J. Stolly

 /s/ Timothy L. Claxton

 Timothy L. Claxton

 Date: March 8, 2024

 Officers
 List

 SB
 Financial Group, Inc.

 NICHOLE
 T. WICHMAN

 STEFAN
 R. HARTMAN

 MARK
 A. KLEIN

 Chief
 Marketing Officer

 Fort
 Wayne Market Executive

 Chairman,
 President and

 Chief
 Executive Officer

 MICHAEL
 R. DULLE

 TYSON
 R. MOSS

 Vice

 ANTHONY
 V. COSENTINO

 Corporate
 HR Strategic Manager

 Fulton/Williams
 County

 Market

 Chief
 Financial Officer

 RONDA
 M. HERKO

 Vice

 CHRISTOPHER
 A. WEBB

 KEETA
 J. DILLER

 Human
 Resources Manager

 Findlay
 Market Executive

 Corporate
 Secretary

 RONALD
 E. SPANGLER

 Vice

 The
 State Bank and Trust Company

 Loan
 Review Officer

 PAUL
 C. ERWIN

 Administration

 BLAKE
 A. WILLIAMS

 Vice

 Services Officer III

 MARK
 A. KLEIN

 Corporate
 Sales Champion

 Chairman,
 President and

 TIMOTHY
 P. MOSER

 Chief
 Executive Officer

 THERESA
 M. GINEMAN

 Ag
 Lending Manager

 ANTHONY
 V. COSENTINO

 Loan
 Review Officer

 ROLLAND
 C. (COREY) DEMING

 Chief
 Financial Officer

 SEAN
 M. GORMAN

 Vice

 Services Officer III

 KEETA
 J. DILLER

 Asset
 Liability Manager

 ROBERT
 D. EGGLETON

 Chief
 Operations Officer

 DAWN
 M. HUTCHESON

 Vice

 Services Officer III

 ERNESTO
 GAYTAN

 Accountant
 III

 ANDREW
 J. KIESS

 Chief
 Technology Innovation Officer

 CODI
 L. KING

 Vice

 Services Officer I

 STEVEN
 A. WALZ

 Risk
 Management Specialist, BSA Officer

 SHAUN
 N. MACK

 Chief
 Lending Officer

 CATHERINE
 E. PERRY

 Vice

 Services Officer I

 CAROL
 M. ROBBINS

 Quality
 Control Manager

 STEPHANIE
 L. PARIS

 Controller

 SARAH
 S. MEKUS

 Vice

 Officer,
 Executive Assistant

 Services Officer I

 DAVID
 A. HOMOELLE

 Corporate
 Secretary

 JACOB
 M. SCHUMM

 Real Estate Executive

 Regional
 Executives

 Vice

 Services Officer III

 JENNIFER
 A. SWIECH

 MARK
 D. CASSIN

 Chief
 Risk Officer, Director of Legal

 Bowling
 Green & Toledo Market Executive

 ABAGALE
 M. WATERS

 ANDREW
 S. FARLEY

 of Human Resources

 Lima
 Market Executive

 Credit
 Administration

 AMANDA
 D. VOGELSONG

 ROBERT
 W. WARNER

 Vice

 MICHAEL
 D. EBBESKOTTE

 Process
 Engineer - Deposits

 Credit
 Administration Manager

 SUSAN
 A. LONG

 JACQUELON
 C. WILSON

 Officer

 Vice

 AMY
 M. HOFFMAN

 Quality
 Control Analyst - Deposits

 Community
 Development Mortgage

 Loan
 Originator

 Chief
 Credit Officer

 Mortgage
 Lending

 RHONDA
 S. CLARK

 ERICA
 R. BARE

 RICHARD
 A. SMITH

 Vice

 Credit Analyst

 Real Estate Sales

 Manager
 - Indianapolis Region

 PARKER
 H. EVANS

 ANDREW
 M. RICKENBERG

 Vice

 STEVEN
 J. WATSON

 Secondary
 Market Manager

 Collections
 and Resource Recovery

 Administrator

 Real Estate Sales

 ADRIANNE
 M. FLEEMAN

 Manager
 - Columbus, Defiance, Findlay

 RONALD
 J. SWISHER

 RRE Underwriter

 Officer

 DENISE
 S. DAVENPORT

 Credit Analyst

 Vice

 RYAN
 G. SIBLEY

 Information
 Technology and

 Operations

 KIMBERLY
 W. DONOVAN

 Vice

 TAMARA
 D. TRENKAMP

 MELINDA
 L. CLINE

 RRE Underwriter

 Community
 Development Mortgage

 of Lending Operations

 SUSAN
 A. ERHART

 Loan
 Originator

 Vice

 KATIE
 S. CLEMENS

 RRE Underwriter

 ZACHARY
 M. WILLIAMS

 Deposit
 Operations Manager

 JOYCE
 A. FERGUSON

 Community
 Development Officer

 Vice

 ANN
 M. FISHPAW

 Deposit
 Services Supervisor

 ANDREW
 C. PATTON

 Vice

 TADD
 J. BROOKET

 Construction Manager

 of IT Infrastructure

 JARED
 M. PEREZ

 Vice

 JEREMY
 M. DOTSON

 Vice

 Cybersecurity
 & IT Governance Leader

 SUZANNE
 M. REICHARD

 Vice

 GARY
 A. SAXMAN

 Vice

 Data
 Processing Engineer

 BRIAN
 E. SMITH

 Vice

 STEVEN
 E. STRUBLE

 Encompass
 Administrator

 Vice

 IT
 Leader, Fiserv Platform

 KAREN
 A. VARNER

 Vice

 JEFF
 A. EITZMAN

 Systems
 Administrator- Operations

 Private

 SBA/
 Small Business Lending

 KATIE
 N. CLEMENTZ

 Vice

 RACHEL
 R. COPELAND

 BRANDON
 S. GERKEN

 Trust
 Operations Services Manager

 Vice

 PCG
 Private Banker

 SBA/Small
 Business

 MARK
 G. FROELICH

 Lending
 Manager

 Vice

 KASEY
 A. SCHWARTZ

 Wealth
 Management Advisor

 Vice

 KYLE
 A. FRISCH

 of Private Banking

 CORINA
 KEMPE

 Small
 Business Lender

 Vice

 SUSAN
 F. WEST

 WM
 Advisor/Director of Brokerage Services

 Vice

 Management

 PCG
 Private Banker

 MAUREEN
 G. KILLION

 CLINTON
 B. BEASLEY

 Officer

 BRIANNE
 M. FROBOSE

 Vice

 Operations
 Manager, Brokerage

 Management Officer

 PCG
 Private Banker

 SBFG
 Title, LLC

 SEAN
 L. LAFONTAINE

 JASON
 S. MAY

 Vice

 DAWN
 E. VAN HORN

 of Treasury Management

 PCG
 Private Banker

 Regional
 Licensed Title Manager

 BROOKE
 C. FRAZEE

 Retail

 LORI
 L. LAPE

 Management Officer

 NANCY
 E. RANKIN

 Licensed
 Title Manager

 Vice

 Wealth
 Management

 Head
 of Retail Banking

 DAVID
 A. BELL

 JESSICA
 D. BABCOCK

 Retirement
 Services Manager

 Center Sales Manager II

 KELLY
 W. CLEVELAND

 ANDREA
 P. JELLISON

 Chief
 Investment Officer

 Community
 Sales & Lending Manager

 JENNIFER
 L. MASON

 JAMES
 R. STATES

 Chief
 Walth Management Officer

 Center Sales Manager

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