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, 1999
_____ 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 746,447 shares outstanding at November 11, 1999. The
Registrant holds 53,553 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, 1999 and 1998 and December 31, 1998........... 3
Consolidated Statement of Income
Three and nine months ended September 30, 1999 and 1998..... 4
Consolidated Statement of Cash Flows
Nine months ended September 30, 1999 and 1998............... 5
Consolidated Statement of Changes in Shareholders' Equity
Nine months ended September 30, 1999 and 1998............... 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, Dec. 31,
(unaudited) 1999 1998 1998
ASSETS:
Cash and due from banks 5,382 4,635 4,195
Federal funds sold 0 725 2,860
Total cash and cash equivalents 5,382 5,360 7,055
Interest bearing deposits in other banks 53 87 79
Investment securities, available for
sale (carried at market value) 27,842 33,714 26,065
Loans
Loans, net of unearned interest 168,754 140,462 143,669
Allowance for loan losses (1,573) (1,057) (1,106)
Net loans 167,181 139,405 142,563
Buildings and equipment 4,680 4,880 4,821
Other real estate 33 37 0
Interest receivable 1,524 1,306 1,196
Deferred income taxes 0 0 0
Other assets 974 1,127 962
Total Assets 207,669 185,916 182,741
LIABILITIES:
Deposits
Non-interest bearing demand 11,949 11,594 12,747
Interest bearing 158,114 148,609 146,584
Total Deposits 170,063 160,203 159,331
Federal Funds Purchased 1,525 0 0
Other Short Term Borrowings 5,000 3,500 0
Interest payable 734 781 713
Long-Term Borrowings 9,100 0 1,000
Deferred income taxes 295 238 550
Other liabilities 672 1,048 814
Total Liabilities 187,389 165,770 162,400
SHAREHOLDERS' EQUITY:
Common stock 200 200 200
Capital surplus 6,170 6,124 6,124
Retained earnings 15,183 14,327 14,655
Net unrealized gain (loss) on
investment securities (393) 272 190
Treasury stock at cost (53,553 shares) (880) (777) (836)
Total Shareholders' Equity 20,280 20,146 20,333
Total Liabilities and
Shareholders' Equity 207,669 185,916 182,741
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) 1999 1998 1999 1998
_____________________________________________________________________________
INTEREST INCOME:
Loans and fees on loans 3,458 3,150 9,750 9,383
Investment securities:
Taxable 298 372 783 1,183
Non-taxable 107 101 327 293
Federal funds sold and
securities purchased under
agreements to resell 79 67 134 141
Deposits with banks 1 3 2 3
Total Interest Income 3,943 3,693 10,996 11,003
INTEREST EXPENSE:
Deposits 1,747 1,835 4,963 5,527
Other Short term Funds Borrowed 14 13 19 28
Long-Term Borrowings 786 0 317 0
Total interest expense 1,947 1,848 5,299 5,555
Net interest income 1,996 1,845 5,697 5,448
Provision for loan losses 75 145 775 385
Net interest income after
provision for loan losses 1,921 1,700 4,922 5,063
NON-INTEREST INCOME:
Trust fees 173 219 518 595
Service charges on
deposit accounts 26 145 399 414
Insurance and claims processing 37 40 119 133
Securities gains (losses), net 0 0 (3) 0
Other Income 189 74 164 185
Total Non-interest Income 425 478 1,197 1,327
NON-INTEREST EXPENSE:
Salaries and employee benefits 888 838 2,765 2,493
Premise and equipment expense 251 258 696 746
FDIC Deposit expense 3 5 13 15
Other expenses 499 312 1,349 838
Total non-interest expense 1,641 1,464 4,823 4,263
Income before income taxes 705 714 1,296 2,127
Provision for income tax 235 247 387 737
Net Income 470 467 909 1,390
NET INCOME PER COMMON SHARE:
Primary $.63 $.63 $1.21 $1.86
Weighted average common shares
outstanding 746,447 746,447 746,447 746,447
DIVIDENDS DECLARED:
Cash dividends $.18 $.15 $.51 $.45
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended Sept 30,
(unaudited) 1999 1998
___________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income 909 1,390
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED FROM OPERATING ACTIVITIES:
Directors Stock Option Compensation 4 5
Depreciation 307 253
Net premium amortization (discount
accretion) of investment securities 35 24
Provision of loan losses 775 360
Decrease(increase) in interest receivable (328) 19
(Increase) decrease in other assets (1,199) (409)
Increase (decrease) in accrued expenses and
other liabilities (376) 358
Net cash flows provided by operating
activities 127 2,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase of interest bearing deposits
in other banks 26 25
Purchase of investment securities available
for sale (7,796) (14,636)
Proceeds from maturities and paydowns of
investment securities available for sale 5,482 19,756
Net (increase) decrease in loans (25,085) (613)
Purchase of premises and equipment (166) (100)
Net cash flows used in investing
activities (27,539) 4,432
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits and
short-term borrowings
Non-interest bearing demand (798) (1,699)
Total interest-bearing deposits 11,530 (3,970)
Federal Funds Purchased 1,525 0
Other Short-Term Borrowings 5,000 (500)
Long-Term Borrowings 8,100 0
Cash dividends paid 380 (338)
Treasury Stock Sold 46 61
Treasury Stock Purchased (44) 0
Net cash flows provided by (used in)
financing activities 25,739 (6,446)
Net increase (decrease) in cash equivalents (1,673) (14)
Cash and cash equivalents at beginning of
period 7,055 5,374
Cash and cash equivalents at end of period 5,382 5,360
Total interest paid 4,984 5,570
Total taxes paid 441 665
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) 1999 1998
_______________________________________________________________________________
Balance, beginning of period 20,333 18,716
Net income 909 1,390
Cash dividends (380) (337)
Net unrealized gain (loss) on investment
securities (583) 311
Sale of Treasury Stock 49 66
Purchase of Treasury Stock (48) 0
Balance, end of period 20,280 20,146
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 September 30, 1999 is not necessarily indicative of those expected for the
remainder of the year.
Sept. 30, 1999 Sept. 30, 1998 Dec. 31, 1998
________________________________________________________________________________
INVESTMENT SECURITIES:
U.S. treasury securities 0 0 0
U.S. Government corporations
& agencies 15,705 23,910 15,236
States and political subdivisions 9,931 8,782 8,999
Mortgage - backed securities 161 234 211
Other domestic securities 840 197 939
Equity Securities 1,205 591 590
Total Investment Securities 27,842 33,714 26,065
Sept. 30, 1999 Sept. 30, 1998 Dec. 31, 1998
________________________________________________________________________________
LOANS:
Commercial and industrial loans 17,901 12,829 13,289
Real estate loans 96,983 78,868 80,803
Construction loans 1,777 1,037 1,687
Agricultural production financing
and other loans to farmers 1,690 1,799 1,288
Individual loans for household
and other personal expense 49,492 45,120 46,470
Economic development revenue bonds 0 0 0
Lease Financing Receivable 381 364 336
Other Loans Excluding Consumer 676 605 0
Less: Unearned income on loans (146) (160) (204)
Total Loans 168,754 140,462 143,669
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 nine months of $909,000 represents a decrease of
$481,000 or 35% from the $1,390,000 reported for the same period last year. The
third quarter earnings of $470,000 represents an increase of $30,000 or 1%
from the $467,000 reported for the third quarter of 1998. The income decrease
is a direct result of a reserve for bad debts allocation to cover current
charge-offs and future considerations. This occurred during the second quarter.
The third quarter profit for 1999 is slightly higher than the third quarter for
1998.
NET INTEREST INCOME
Springs Valley Bank & Trust Company is a slightly liability sensitive bank.
Interest bearing deposits reprise faster than interest bearing loans and
investments. In a rising 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 1999, net
interest income increased by $249,000 or 5% for the same period in 1998. The
third quarter net interest income for 1999 increased by $151,000 or 8%
compared to the third quarter of 1998. The improvement in the net interest
income is due to assets being deployed into higher yielding loans rather than
investments and decreasing interest expense on deposits.
OTHER INCOME
Other income of $1,197,000 for the first three quarters of 1999 is $130,000 or
10% lower than the same period for 1998.The decrease is due to decreased trust
income and losses on some fixed assets taken out of service. Other non-interest
income is an important part of the profitability of the bank and all avenues of
additional income are reviewed.
NON-INTEREST EXPENSES
For the first nine months of 1999, other expenses increased by $560,000 or 13%
compared to the same period of 1998. The three months ended September 30, 1999
total other expense increase was $177,000 or 12% increase over that same period
for 1998. The increase is principally the effect of increased salaries and
employee benefits, year 2000 expenses and the adjustment for credit card
rebates.
ANALYSIS OF FINANCIAL CONDITION
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation's allowance for loan losses was $1,573,000 at September 30, 1999
compared to $1,057,000 at September 30, 1998 and $1,106,000 as of December 31,
1998.
At September 30, 1999 the allowance for possible loan losses was .93% of total
loans, net for unearned interest. This compares to an allowance of .75%
at September 30, 1998. Net charge offs for the first nine months of 1999
were $308,000 compared to $730,000 for the same period last year. Management
reviews the loan portfolio and assess the risk and believes that the allowance
of $1,573,000 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, 1999 the rate-sensitive assets were 60% of rate-sensitive
liabilities in the 1-180 day maturity category and 81% 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, 1999 was $20,280,000 compared to
$20,146,000 for the same period last year. The shareholder's equity has
increased by $134,000 or 1% from September 30, 1998 to September 30, 1999. This
increase is attributed to the unrealized loss on investment securities and
profits increasing.
(ANALYSIS OF FINANCIAL CONDITIONS CONTINUED)
As of September 30, 1999 the bank's leverage capital ratio was 9.58% which
compared to 10.8% at September 30, 1998.
As of September 30, 1999 the bank's total risk-based capital ratio was 12.51%
compared to 14.14% at September 30, 1998.
These ratios are in excess of regulatory requirements of 3% for leverage capital
and 8% for total 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 11, 1999
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