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 September 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 September 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
September 30, 1996 and 1995 and December 31, 1995........... 3
Consolidated Statement of Income
Three and nine months ended September 30, 1996 and 1995..... 4
Consolidated Statement of Cash Flows
Nine months ended September 30, 1996 and 1995............... 5
Consolidated Statement of Changes in Shareholders' Equity
Nine months ended September 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
Sept 30, Sept 30, December 31,
(unaudited) 1996 1995 1995
ASSETS:
Cash and due from banks 5,156,651 3,837,829 4,087,658
Federal funds sold 5,260,000 8,285,000 9,550,000
Total cash and cash equivalents 10,416,651 12,122,829 13,637,658
Interest bearing deposits in other banks 0 0 0
Investment securities, available for
sale (carried at market value) 55,586,930 56,385,971 56,908,873
Loans
Loans, net of unearned interest 118,271,941 111,260,143 112,498,492
Allowance for loan losses (1,310,267) (1,349,508) (1,348,927)
Net loans 116,961,674 109,910,635 111,149,565
Buildings and equipment 5,088,627 5,108,746 5,077,140
Other real estate 57,950 12,000 295,720
Interest receivable 1,361,263 1,423,162 1,537,370
Deferred income taxes 0 0 0
Other assets 1,363,855 1,671,526 1,270,449
Total Assets 190,836,950 186,634,869 189,876,775
LIABILITIES:
Deposits
Non-interest bearing demand 13,606,432 13,943,516 12,501,765
Interest bearing 158,874,640 155,285,117 159,262,811
Total Deposits 172,481,072 169,228,633 171,764,576
Long-term debt 0 0 0
Interest payable 796,376 819,299 865,352
Deferred income taxes 97,428 240,781 434,439
Other liabilities 632,400 501,321 440,281
Total Liabilities 174,007,276 170,790,034 173,504,648
SHAREHOLDERS' EQUITY:
Common stock 200,000 200,000 200,000
Capital surplus 6,094,233 6,094,233 6,094,233
Retained earnings 11,646,338 10,352,663 10,674,978
Net unrealized gain (loss) on
investment securities (297,897) 10,939 215,916
Treasury stock at cost (27,100 shares) (813,000) (813,000) (813,000)
Total Shareholders' Equity 16,829,674 15,844,835 16,372,127
Total Liabilities and
Shareholders' Equity 190,836,950 186,634,869 189,876,775
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT OF INCOME
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
(unaudited) 1996 1995 1996 1995
________________________________________________________________________
INTEREST INCOME:
Loans and fees on loans 2,644,111 2,452,686 7,641,064 7,149,224
Investment securities:
Taxable 691,185 597,116 2,159,678 1,707,927
Non-taxable 186,761 227,928 455,636 726,803
Federal funds sold and
securities purchased under
agreements to resell 55,152 216,268 268,391 448,784
Deposits with banks 0 0 0 0
Total Interest Income 3,577,209 3,493,998 10,524,769 10,032,738
INTEREST EXPENSE:
Deposits 1,905,741 2,033,646 5,680,758 5,686,900
Long-term debt 0 0 0 0
Total interest expense 1,905,741 2,033,646 5,680,758 5,686,900
Net interest income 1,671,468 1,460,352 4,844,011 4,345,838
Provision for loan losses 75,000 84,000 225,000 224,000
Net interest income after
provision for loan losses 1,596,468 1,376,352 4,619,011 4,121,838
NON-INTEREST INCOME:
Trust fees 184,242 153,147 491,443 457,631
Service charges on
deposit accounts 93,522 80,673 250,172 231,395
Insurance and claims processing 43,644 34,368 137,298 277,304
Securities gains (losses), net 1,366 9,599 1,528 9,599
Other Income 52,932 45,024 176,383 93,933
Total Non-interest Income 375,706 327,811 1,056,824 1,069,862
NON-INTEREST EXPENSE:
Salaries and employee benefits 814,238 765,245 2,357,373 2,216,807
Premise and equipment expense 293,113 274,220 859,682 835,877
Other real estate expense 8,850 12,366 14,425 24,130
FDIC Deposit expense 600 (9,749) 1,600 177,781
Telephone expense 34,239 33,565 100,690 112,910
Postage expense 22,176 24,378 81,412 97,532
Other expenses 208,965 217,630 628,034 654,716
Total non-interest expense 1,382,181 1,317,655 4,043,216 4,119,753
Income before income taxes 589,993 386,508 1,632,619 1,071,947
Provision for income tax 147,740 98,000 396,500 263,000
Net Income 442,253 288,508 1,236,119 808,947
NET INCOME PER COMMON SHARE:
Primary 1.18 0.77 3.31 2.17
Weighted average common shares
outstanding 372,900 372,900 372,900 372,900
DIVIDENDS DECLARED:
Cash dividends 0.24 0.22 0.71 0.69
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended Sept 30,
(unaudited) 1996 1995
___________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 1,236,119 808,947
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED FROM OPERATING ACTIVITIES:
Depreciation 321,179 348,671
Net premium amortization (discount
accretion) of investment securities 41,801 497,106
Provision of loan losses 225,000 224,000
Decrease(increase) in interest receivable 176,107 113,587
(Increase) decrease in other assets (93,406) (577,389)
Increase (decrease) in accrued expenses and
other liabilities 123,143 267,007
Net cash flows provided by operating
activities 2,029,943 1,681,929
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase of interest bearing deposits
in other banks 0 0
Purchase of investment securities available
for sale (7,381,623) (13,228,809)
Proceeds from maturities and paydowns of
investment securities available for sale 7,810,941 11,468,826
Net (increase) decrease in loans (5,799,339) (4,440,721)
Purchase of premises and equipment (332,666) (255,403)
Net cash flows used in investing
activities (3,672,744) (6,456,107)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits and
short-term borrowings
Non-interest bearing demand 1,104,667 1,747,990
Total interest-bearing deposits (388,171) (632,682)
Principal payment on long-term debt 0 0
Cash dividends paid (264,759) (257,301)
Net cash flows provided by (used in)
financing activities 451,737 858,007
Net decrease in cash equivalents (3,221,007) (3,916,171)
Cash and cash equivalents at beginning of
period 13,637,658 16,039,000
Cash and cash equivalents at end of period 10,416,651 12,122,829
Total interest paid 5,749,734 5,601,488
Total taxes paid 370,349 286,863
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT
OF CHANGES IN SHAREHOLDERS' EQUITY
Nine Months Ended Sept 30,
(unaudited) 1996 1995
_______________________________________________________________________________
Balance, beginning of period 16,372,127 14,034,021
Net income 1,236,119 808,947
Cash dividends (264,759) (257,301)
Change in net unrealized gain (loss)
on investment securities (513,813) 1,259,168
Balance, end of period 16,829,674 15,844,835
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 nine month period
ended Sept 30, 1996 is not necessarily indicative of those expected for the
remainder of the year.
Sept 30, 1996 Sept 30, 1995 Dec. 31, 1995
________________________________________________________________________________
INVESTMENT SECURITIES:
U.S. treasury securities 0 0 0
U.S. Government corporations
& agencies 45,540,100 41,697,947 42,852,928
States and political subdivisions 9,099,397 14,251,034 13,635,404
Mortgage - backed securities 380,033 436,990 420,541
Other domestic securities 567,400 0 0
FHLB Stock 0 0 0
Total Investment Securities 55,586,930 56,385,971 56,908,873
Sept 30, 1996 Sept 30, 1995 Dec. 31, 1995
________________________________________________________________________________
LOANS:
Commercial and industrial loans 14,657,537 9,215,614 12,267,206
Real estate loans 66,524,475 65,105,087 64,584,906
Construction loans 27,673 284,884 131,197
Agricultural production financing
and other loans to farmers 1,387,408 824,360 476,747
Individual loans for household
and other personal expense 35,879,979 35,106,869 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 (205,131) (336,671) (343,085)
Total Loans 118,271,941 111,260,143 112,498,492
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 nine months ending September 30, 1996 of $1,236,119
represents an increase of $427,172 or 53% from the $808,947 reported for the
same period last year. The third quarter earnings of $442,253 represents an
increase of $153,745 or 53% from the $288,508 reported for the third 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 or stable rate environment
it anticipates widening interest rate margins and increased earnings.
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 or stable 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 nine months of 1996, net
interest income increased by $498,173 or 11% for the same period in 1995. The
third quarter net interest income for 1996 increased by $211,116 or 14%
compared to the third 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 $1,056,824 for the first three quarters of 1996 is $13,038 or
1% less than the same period for 1995. The third quarter increase of other
income, 1996 compared to 1995 is $47,895. Increased Trust fees are the main
reason for the enhanced other income for the third quarter of 1996.
NON-INTEREST EXPENSES
For the first nine months of 1996, other expenses decreased by $76,537 or 2%
compared to the same period of 1995. This decrease is principally the effect
of decreased FDIC deposit expense. The three months ended September 30, 1996,
total other expense was $64,526 or 5% increase over the same period for 1995.
This increase is the effect of increased salaries and employee benefits and
premise expenses.
ANALYSIS OF FINANCIAL CONDITION
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation's allowance for loan losses was $1,310,267 at September 30, 1996
compared to $1,349,508 at September 30, 1995 and $1,348,927 as of December 31,
1995.
At September 30, 1996 the allowance for possible loan losses was 1.11% of total
loans, net of unearned interest. This compares to an allowance of 1.21%
at September 30, 1995. Net charge offs for the first nine months of 1996
were $263,660 compared to $196,000 for the same period last year. Based on
management's review of the portfolio, management believes the allowance of
$1,310,267 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 September 30, 1996 the rate-sensitive assets were 72% of rate-sensitive
liabilities in the 1-180 day maturity category and 84% 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 September 30, 1996 was $16,829,674 compared to
$15,844,835 for the same period last year. The shareholders' equity has
increased by $457,547 or 3% from December 31, 1995 to September 30, 1996. This
increase primarily is attributed to the increased profitability of the bank.
(ANALYSIS OF FINANCIAL CONDITIONS CONTINUED)
As of September 30, 1996 the bank's leverage capital ratio was 8.82% which
compared to 8.51% at September 30, 1995.
As of September 30, 1996 the bank's tier II risk-based capital ratio was 15.75%
compared to 15.55% at September 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
None
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: November 7, 1996
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