SECURITIES & EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
_____ 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 33-10149
SVB&T Corporation
1500 Main Street
Jasper, IN 47546
Telephone (812) 634-1010
State of Incorporation - Indiana
I.R.S. Employer Identification No. 35-1539978
NOT APPLICABLE
Former name, former address and fiscal year, if changed since last report.
Indicate by check 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, and (2) has been subject to the
filing requirements for at least the past 90 days. Yes _X__ No ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock. The Registrant has one class of common stock (no par value)
with approximately 372,900 shares outstanding at June 30, 1996. The
Registrant holds 27,100 shares in the form of Treasury Stock.
SVB&T CORPORATION
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page No.
Consolidated Balance Sheet
June 30, 1996 and 1995 and December 31, 1995................ 3
Consolidated Statement of Income
Three and six months ended June 30, 1996 and 1995........... 4
Consolidated Statement of Cash Flows
Six months ended June 30, 1996 and 1995..................... 5
Consolidated Statement of Changes in Shareholders' Equity
Six months ended June 30, 1996 and 1995..................... 6
Notes to Consolidated Financial Statements................... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 8-10
PART II. OTHER INFORMATION............................................ 11
SIGNATURES............................................................ 12
SVB&T CORPORATION CONSOLIDATED BALANCE SHEET
June 30, June 30, December 31,
(unaudited) 1996 1995 1995
ASSETS:
Cash and due from banks 3,667,844 4,635,626 4,087,658
Federal funds sold 8,080,000 9,055,000 9,550,000
Total cash and cash equivalents 11,747,825 13,690,626 13,637,658
Interest bearing deposits in other banks 0 0 0
Investment securities, available for
sale (carried at market value) 59,059,570 57,136,622 56,908,873
Loans
Loans, net of unearned interest 117,617,972 109,910,593 112,498,492
Allowance for loan losses (1,383,233) (1,368,704) (1,348,927)
Net loans 116,234,739 108,541,889 111,149,565
Buildings and equipment 5,169,711 5,151,530 5,077,140
Other real estate 31,150 0 295,720
Interest receivable 1,526,009 1,452,173 1,537,370
Deferred income taxes 36,355 0 0
Other assets 1,279,566 1,997,991 1,270,449
Total Assets 195,084,944 187,970,831 189,876,775
LIABILITIES:
Deposits
Non-interest bearing demand 15,348,313 14,156,416 12,501,765
Interest bearing 162,090,703 156,470,930 159,262,811
Total Deposits 177,439,016 170,627,346 171,764,576
Long-term debt 0 0 0
Interest payable 763,978 1,033,429 865,352
Deferred income taxes 0 233,311 434,439
Other liabilities 609,002 446,035 440,281
Total Liabilities 178,811,996 172,340,121 173,504,648
SHAREHOLDERS' EQUITY:
Common stock 200,000 200,000 200,000
Capital surplus 6,094,233 6,094,233 6,094,233
Retained earnings 11,293,580 10,157,392 10,674,978
Net unrealized gain (loss) on
investment securities (501,865) (7,915) 215,916
Treasury stock at cost (27,100 shares) (813,000) (813,000) (813,000)
Total Shareholders' Equity 16,272,948 15,630,710 16,372,127
Total Liabilities and
Shareholders' Equity 195,084,944 187,970,831 189,876,775
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT OF INCOME
Three Months Six Months
Ended June 30, Ended June 30,
(unaudited) 1996 1995 1996 1995
________________________________________________________________________
INTEREST INCOME:
Loans and fees on loans 2,512,248 2,403,626 4,996,953 4,696,538
Investment securities:
Taxable 736,839 581,295 1,468,493 1,110,811
Non-taxable 133,106 238,468 268,875 498,875
Federal funds sold and
securities purchased under
agreements to resell 61,449 109,558 213,239 232,516
Deposits with banks 0 0 0 0
Total Interest Income 3,443,642 3,332,947 6,947,560 6,538,740
INTEREST EXPENSE:
Deposits 1,851,849 1,894,938 3,775,017 3,653,254
Long-term debt 0 0 0 0
Total interest expense 1,851,849 1,894,938 3,775,017 3,653,254
Net interest income 1,591,793 1,438,009 3,172,543 2,885,486
Provision for loan losses 75,000 60,000 150,000 140,000
Net interest income after
provision for loan losses 1,516,793 1,378,009 3,022,543 2,745,486
NON-INTEREST INCOME:
Trust fees 153,223 153,209 307,201 304,484
Service charges on
deposit accounts 83,227 79,001 156,650 150,722
Insurance and claims processing 51,253 116,856 93,654 237,936
Securities gains (losses), net 162 0 162 0
Other Income 68,944 34,647 123,451 48,909
Total Non-interest Income 356,809 383,713 681,118 742,051
NON-INTEREST EXPENSE:
Salaries and employee benefits 758,746 714,432 1,543,135 1,451,562
Premise and equipment expense 304,435 291,832 566,569 561,657
Other real estate expense 588 5,711 5,575 11,764
FDIC Deposit expense 500 93,765 1,000 187,530
Telephone expense 39,039 36,086 66,451 79,345
Postage expense 24,342 30,193 59,236 73,154
Other expenses 223,485 227,015 419,069 437,086
Total non-interest expense 1,351,135 1,399,034 2,661,035 2,802,098
Income before income taxes 522,467 362,688 1,042,626 685,439
Provision for income tax 136,760 88,000 248,760 165,000
Net Income 385,707 274,688 793,866 520,439
NET INCOME PER COMMON SHARE:
Primary 1.04 0.74 2.13 1.40
Weighted average common shares
outstanding 372,900 372,900 372,900 372,900
DIVIDENDS DECLARED:
Cash dividends 0.24 0.23 0.47 0.46
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30,
(unaudited) 1996 1995
___________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 793,866 520,439
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED FROM OPERATING ACTIVITIES:
Depreciation 214,120 213,071
Net premium amortization (discount
accretion) of investment securities 27,629 393,399
Provision of loan losses 150,000 140,000
Decrease(increase) in interest receivable 11,361 84,576
(Increase) decrease in other assets (9,117) (903,854)
Increase (decrease) in accrued expenses and
other liabilities 67,347 425,851
Net cash flows provided by operating
activities 1,255,206 873,482
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase of interest bearing deposits
in other banks 0 0
Purchase of investment securities available
for sale (7,170,725) (4,930,781)
Proceeds from maturities and paydowns of
investment securities available for sale 3,803,804 2,505,000
Net (increase) decrease in loans (4,970,604) (2,975,975)
Purchase of premises and equipment (306,691) (162,587)
Net cash flows used in investing
activities (8,644,216) (5,564,343)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits and
short-term borrowings
Non-interest bearing demand 2,846,548 1,960,890
Total interest-bearing deposits 2,827,892 553,131
Principal payment on long-term debt 0 0
Cash dividends paid (175,263) (171,534)
Net cash flows provided by (used in)
financing activities 5,499,177 2,342,487
Net decrease in cash equivalents (1,889,833) (2,348,374)
Cash and cash equivalents at beginning of
period 13,637,658 16,039,000
Cash and cash equivalents at end of period 11,747,825 13,690,626
Total interest paid 3,876,399 1,595,396
Total taxes paid 224,689 187,685
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT
OF CHANGES IN SHAREHOLDERS' EQUITY
Six Months Ended June 30,
(unaudited) 1996 1995
_______________________________________________________________________________
Balance, beginning of period 16,372,127 14,034,021
Net income 793,866 520,439
Cash dividends (175,263) (171,534)
Net unrealized gain (loss) on investment
securities (717,782) 1,247,784
Balance, end of period 16,272,948 15,630,710
The accompanying notes are an integral part of this statement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Principles of Consolidation - The consolidated financial statements include the
accounts of SVB&T Corporation and its wholly owned subsidiary, Springs Valley
Bank & Trust Company. All significant intercompany balances and transactions
have been eliminated.
All adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the periods reported, consisting only of normal
adjustments, have been included in the accompanying unaudited consolidated
condensed financial statements. The results of operations for six month period
ended June 30, 1996 is not necessarily indicative of those expected for the
remainder of the year.
June 30, 1996 June 30, 1995 Dec. 31, 1995
________________________________________________________________________________
INVESTMENT SECURITIES:
U.S. treasury securities 0 0 0
U.S. Government corporations
& agencies 47,542,334 36,693,696 42,852,928
States and political subdivisions 10,076,634 19,928,215 13,635,404
Mortgage - backed securities 373,602 514,711 420,541
Other domestic securities 500,000 0 0
FHLB Stock 567,000 0 0
Total Investment Securities 59,059,570 57,136,622 56,908,873
June 30, 1996 June 30, 1995 Dec. 31, 1995
________________________________________________________________________________
LOANS:
Commercial and industrial loans 15,046,842 7,411,820 12,267,206
Real estate loans 65,055,382 67,954,450 64,584,906
Construction loans 68,652 349,717 131,197
Agricultural production financing
and other loans to farmers 1,179,543 762,955 476,747
Individual loans for household
and other personal expense 36,514,261 32,664,142 35,340,970
Economic development revenue bonds 0 0 40,551
Securities purchased under reverse
repurchase agreement on
a term basis 0 1,060,000 0
Less: Unearned income on loans (246,708) (292,491) (343,085)
Total Loans 117,617,972 109,910,593 112,498,492
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SUMMARY OF OPERATING RESULTS
EARNINGS ANALYSIS
Net income for the first three months of $793,866 represents an increase of
$273,427 or 53% from the $520,439 reported for the same period last year. The
second quarter earnings of $385,707 represents an increase of $111,019 or 40%
from the $274,688 reported for the second quarter of 1995. The income increase
is a direct result of a increase net interest margin. The bank is liability
sensitive, thus in a declining rate environment it anticipates widening interest
rate margins and increased earnings. Declining total non-interest expense have
decreased by 5% from 1995.
NET INTEREST INCOME
Springs Valley Bank & Trust Company is a very liability sensitive bank.
Interest bearing deposits reprice much faster than interest bearing loans and
investments. In a declining environment, the bank's income increased because
of a widening interest spread. Thus, our interest spreads have become larger
and income has returned to a more acceptable position. The interest spread is
improving. This subject is reviewed in greater detail in the following
management comments.
SVB&T Corporation's primary source of earnings is net interest income, which
is the difference between interest earned on loans and other investments
and the interest incurred for deposits. In the first six months of 1996, net
interest income increased by $287,057 or 10% for the same period in 1995. The
second quarter net interest income for 1995 increased by $153,784 or 11%
compared to the second quarter of 1995. The improvement in the net interest
income is due to deposits repricing at lower rates faster than our assets.
OTHER INCOME
Other income of $681,118 for the first two quarters of 1996 is $60,933 or 8%
less than the same period for 1995. Insurance commission income was overstated
by $74,000 in 1994. The error was discovered in the first quarter of 1995.
Income was lowered in January 1995 to correct the 1994 overstated income. The
second quarter decrease of other income, 1996 compared to 1995 is $26,904. The
bank discontinued its insurance claims processing department. The elimination
of the claims processing department accounts for the second quarter other income
decrease.
NON-INTEREST EXPENSES
For the first six months of 1996, other expenses decreased by $141,063 or 5%
compared to the same period of 1995. The three months ended June 30, 1996 total
other expense was $47,899 or 3% decrease over the same period for 1995. This
decrease is principally the effect of decreased FDIC deposit expense.
ANALYSIS OF FINANCIAL CONDITION
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation's allowance for loan losses was $1,383,233 at June 30, 1996
compared to $1,368,704 at June 30, 1995 and $1,348,927 as of December 31, 1995.
At June 30, 1996 the allowance for possible loan losses was 1.18% of total
loans, net for unearned interest. This compares to an allowance of 1.25%
at June 30, 1995. Net charge offs for the first six months of 1996
were $115,694 compared to $111,694 for the same period last year. Based on
management's review of the portfolio, management believes the allowance of
$1,383,233 is adequate.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
The Corporation's objective in liquidity management is to manage the assets and
liabilities to meet the needs of borrowers while allowing for the possibility
of deposit withdrawals. The primary purpose of asset/liability management is
to minimize the effect on net income of changes in interest rates and to
maintain a prudent match within specified time periods of rate-sensitive
assets and rate-sensitive liabilities.
As of June 30, 1996 the rate-sensitive assets were 78% of rate-sensitive
liabilities in the 1-180 day maturity category and 88% in the 181-365
day range. These positions are within acceptable ranges as determined
by funds management policy. The Corporation's Funds Management Committee
meets weekly to monitor and effect changes necessary in the liquidity and
rate-sensitivity positions.
CAPITAL
Total shareholders' equity as of June 30, 1996 was $16,272,948 compared to
$15,630,710 for the same period last year. The shareholder's equity has
decreased by $99,179 or 1% from December 31, 1995 to June 30, 1996. This
decrease primarily is attributed to a change in net unrealized loss on
investment securities, which was a $215,916 gain at December 31, 1995 to a net
loss of $501,865 at June 30, 1996.
(ANALYSIS OF FINANCIAL CONDITIONS CONTINUED)
As of June 30, 1996 the bank's leverage capital ratio was 8.89% which compared
to 8.32% at June 30, 1995.
As of June 30, 1996 the bank's tier II risk-based capital ratio was 15.51%
compared to 15.12% at June 30, 1995.
These ratios are in excess of regulatory requirements of 3% for leverage capital
and 8% for tier II risk-based capital.
PART II
OTHER INFORMATION
Item 1 - LEGAL PROCEEDINGS
None
Item 2 - CHANGES IN SECURITIES
None
Item 3 - DEFAULTS UPON SENIOR SECURITIES
None
Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of shareholders of the corporation was held on
May 14, 1996.
(b) The following were elected directors of the corporation for a term
of one year and until their successors are elected and qualified:
Arnold F. Habig, Brian K. Habig, Douglas A. Habig, John B. Habig,
Thomas L. Habig, Maurice R. Kuper, Hilbert Lindsey, Ronald G.
Seals, R.J. Sermersheim, H.E. Thyen, and James C. Tucker.
(c) The shareholders unanimously approved the action of the directors
and officers since the 1995 annual meeting of shareholders. A
total of 130,037 shares were voted in person and 203,942 shares
voted by proxy. This totals 333,979 shares voted in approval of
the 372,900 shares outstanding.
Item 5 - OTHER INFORMATION
None
Item 6 - EXHIBITS AND REPORTS OF FORM 8-K
None
SIGNATURES
Pursuant to the requirements 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.
SVB&T Corporation
(Registrant)
By: Ronald G. Seals
President and Chief Executive Officer
By: David Rees
Principal Financial Officer
Date: August 9, 1996
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