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, 1998
_____ 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 748,187 shares outstanding at August 11, 1998. The
Registrant holds 51,813 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, 1998 and 1997 and December 31, 1997................ 3
Consolidated Statement of Income
Three and six months ended June 30, 1998 and 1997........... 4
Consolidated Statement of Cash Flows
Six months ended June 30, 1998 and 1997..................... 5
Consolidated Statement of Changes in Shareholders' Equity
Six months ended June 30, 1998 and 1997..................... 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) 1998 1997 1997
ASSETS:
Cash and due from banks 4,818 6,511 4,474
Federal funds sold 8,495 0 900
Total cash and cash equivalents 13,313 6,511 5,374
Interest bearing deposits in other banks 78 26 94
Investment securities, available for
sale (carried at market value) 28,773 46,643 38,621
Loans
Loans, net of unearned interest 142,836 129,565 140,604
Allowance for loan losses (1,518) (1,370) (1,402)
Net loans 141,318 128,195 139,202
Buildings and equipment 4,914 4,988 5,033
Other real estate 0 0 0
Interest receivable 1,222 1,441 1,319
Deferred income taxes 0 0 0
Other assets 1,023 811 761
Total Assets 190,641 188,615 190,404
LIABILITIES:
Deposits
Non-interest bearing demand 10,931 12,540 13,294
Interest bearing 158,389 155,960 152,578
Total Deposits 169,320 168,500 165,872
Federal Funds Purchased 0 490 0
Other Short Term Borrowings 0 0 4,000
Interest payable 809 796 824
Deferred income taxes 271 234 305
Other liabilities 683 640 688
Total Liabilities 171,083 170,660 171,689
SHAREHOLDERS' EQUITY:
Common stock 200 200 200
Capital surplus 6,124 6,094 6,094
Retained earnings 13,974 12,618 13,274
Net unrealized gain (loss) on
investment securities 37 (144) (40)
Treasury stock at cost (51,513 shares ) (777) (813) (813)
Total Shareholders' Equity 19,558 17,955 18,715
Total Liabilities and
Shareholders' Equity 190,641 188,615 190,404
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) 1998 1997 1998 1997
________________________________________________________________________
INTEREST INCOME:
Loans and fees on loans 3,132 2,801 6,233 5,475
Investment securities:
Taxable 358 626 811 1,274
Non-taxable 97 103 192 208
Federal funds sold and
securities purchased under
agreements to resell 51 48 74 107
Deposits with banks 0 0 0 0
Total Interest Income 3,638 3,578 7,310 7,064
INTEREST EXPENSE:
Deposits 1,825 1,906 3,692 3,703
Other Short term Funds Borrowed 1 3 15 38
Total interest expense 1,826 1,909 3,707 3,741
Net interest income 1,812 1,669 3,603 3,323
Provision for loan losses 120 90 240 180
Net interest income after
provision for loan losses 1,692 1,579 3,363 3,143
NON-INTEREST INCOME:
Trust fees 187 165 376 330
Service charges on
deposit accounts 137 112 269 224
Insurance and claims processing 45 46 93 96
Securities gains (losses), net 0 0 0 3
Other Income 65 25 111 87
Total Non-interest Income 434 348 849 740
NON-INTEREST EXPENSE:
Salaries and employee benefits 851 827 1,655 1,628
Premise and equipment expense 169 250 488 562
Other real estate expense 0 1 0 12
FDIC Deposit expense 5 6 10 10
Telephone expense 27 33 60 65
Postage expense 27 27 60 56
Other expenses 323 233 526 446
Total non-interest expense 1,402 1,377 2,799 2,779
Income before income taxes 724 550 1,413 1,104
Provision for income tax 245 144 490 288
Net Income 479 406 923 816
NET INCOME PER COMMON SHARE:
Primary .64 .54 1.23 1.09
Weighted average common shares
outstanding 748,187 748,187 748,187 748,187
DIVIDENDS DECLARED:
Cash dividends .15 0.12 0.30 0.24
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30,
(unaudited) 1998 1997
___________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 923 816
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED FROM OPERATING ACTIVITIES:
Directors Stock Option Compensation 5 0
Depreciation 190 214
Net premium amortization (discount
accretion) of investment securities 8 0
Provision of loan losses 240 180
Decrease(increase) in interest receivable 97 (84)
(Increase) decrease in other assets (262) 81
Increase (decrease) in accrued expenses and
other liabilities 54 109
Net cash flows provided by operating
activities 1,255 1,316
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase of interest bearing deposits
in other banks 16 (26)
Purchase of investment securities available
for sale (6,071) 0
Proceeds from maturities and paydowns of
investment securities available for sale 16,052 3,853
Net (increase) decrease in loans (2,526) (6,845)
Purchase of premises and equipment (71) (162)
Net cash flows used in investing
activities 7,400 (3,180)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits and
short-term borrowings
Non-interest bearing demand (2,362) 435
Total interest-bearing deposits 5,810 16,920
Federal Funds Purchased 0 (8,830)
Other Short-Term Burrowings (4,000) (5,000)
Cash dividends paid (224) (179)
Treasury Stock Sold 61 0
Net cash flows provided by (used in)
financing activities (716) 3,346
Net increase in cash equivalents 7,939 1,482
Cash and cash equivalents at beginning of
period 5,374 5,029
Cash and cash equivalents at end of period 13,313 6,511
Total interest paid 3,707 3,696
Total taxes paid 517 305
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) 1998 1997
______________________________________________________________________________
Balance, beginning of period 18,716 17,329
Net income 923 816
Cash dividends (224) (179)
Net unrealized gain (loss) on investment
securities 77 (11)
Sale of Treasury Stock 66 0
Balance, end of period 19,558 17,955
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, 1998 is not necessarily indicative of those
expected for the remainder of the year. The holding company had a 2 for 1
stock split for shareholders as of August 1, 1997. The shares were issued on
August 11, 1997. All per share information has been restated based on this
stock split.
June 30, 1998 June 30, 1997 Dec. 31, 1997
______________________________________________________________________________
INVESTMENT SECURITIES:
U.S. treasury securities 0 0 0
U.S. Government corporations
& agencies 18,635 36,417 28,395
States and political subdivisions 8,983 8,791 8,836
Mortgage - backed securities 255 357 312
Other domestic securities 310 500 500
Equity Securities 590 578 578
Total Investment Securities 28,773 46,643 38,621
June 30, 1998 June 30, 1997 Dec. 31, 1997
______________________________________________________________________________
LOANS:
Commercial and industrial loans 14,848 16,301 17,636
Real estate loans 78,807 71,315 79,491
Construction loans 1,121 552 1,322
Agricultural production financing
and other loans to farmers 1,418 1,185 1,086
Individual loans for household
and other personal expense 45,947 39,888 40,859
Economic development revenue bonds 0 0 0
Lease Financing Receivable 382 483 437
Other Loans Excluding Consumer 465 0 0
Less: Unearned income on loans (152) (159) (227)
Total Loans 142,836 129,565 140,604
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 six months of $923,000 represents an increase of
$107,000 or 13% from the $816,000 reported for the same period last year. The
second quarter earnings of $479,000 represents an increase of $73,000 or 18%
from the $406,000 reported for the second quarter of 1997. The income
increase is a direct result of a increase net interest margin. The bank's
non-interest income has increased with income from trustee fees and service
charges on accounts. Non-interest Expenses have remained level with the total
expenses for 1997.
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 1998, net
interest income increased by $280,000 or 8% for the same period in 1997. The
second quarter net interest income for 1998 increased by $143,000 or 8%
compared to the second quarter of 1997. The improvement in the net interest
income is due to assets being deployed into higher yielding loans rather than
investments and a slight decline in the average yield on deposits.
OTHER INCOME
Other income of $849,000 for the first two quarters of 1998 is $109,000 or 15%
higher than the same period for 1997.The increase is due to increased trust
income and increased service charges on deposit accounts. Other non-interest
income is an important part of the profitability of the bank and all avenues
of additional income are reviewed. The second quarter increase of other income
for 1998 compared to 1997 is $86,000 or 25%.
NON-INTEREST EXPENSES
For the first six months of 1998, other expenses increased by $20,000 or 1%
compared to the same period of 1997. The three months ended June 30, 1998
total other expense increase was $25,000 or 2% increase over that same period
for 1997. This increase is principally the effect of increased salaries and
employee benefits.
ANALYSIS OF FINANCIAL CONDITION
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation's allowance for loan losses was $1,518,000 at June 30, 1998
compared to $1,370,000 at June 30, 1997 and $1,402,000 as of December 31,
1997.
At June 30, 1998 the allowance for possible loan losses was 1.06% of total
loans, net for unearned interest. This compares to an allowance of 1.05%
at June 30, 1997. Net charge offs for the first six months of 1998
were $124,000 compared to $139,000 for the same period last year. Management
reviews the loan portfolio and assess the risk and believes that the allowance
of $1,518,000 is more than 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, 1998 the rate-sensitive assets were 74% of rate-sensitive of
liabilities in the 1-180 day maturity category and 96% 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, 1998 was $19,558,000 compared to
$17,955,000 for the same period last year. The shareholder's equity has
increased by $1,603,000 or 9% from June 30, 1997 to June 30, 1998. This
increase is attributed to profits increasing and the market value of
investment securities increasing.
(ANALYSIS OF FINANCIAL CONDITIONS CONTINUED)
As of June 30, 1998 the bank's leverage capital ratio was 10.25% which
compared to 9.19% at June 30, 1997.
As of June 30, 1998 the bank's tier II risk-based capital ratio was 14.81%
compared to 15.72% at June 30, 1997.
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 19, 1998.
(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 1997 annual meeting of shareholders. A
total of 264,677 shares were voted in person and 393,146 shares
voted by proxy. This totals 657,823 shares voted in approval of
the 748,187 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 11, 1998
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