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, 2001
_____ 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 747,100 shares outstanding at November 2, 2001. The
Registrant holds 52,900 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, 2001 and 2000 and December 31, 2000........... 3
Consolidated Statement of Income
Three and nine months ended September 30, 2001 and 2000..... 4
Consolidated Statement of Cash Flows
Nine months ended September 30, 2001 and 2000............... 5
Consolidated Statement of Changes in Shareholders' Equity
Nine months ended September 30, 2001 and 2000............... 6
Notes to Consolidated Financial Statements................... 7-8
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) 2001 2000 2000
ASSETS:
Cash and due from banks 4,127 5,931 5,824
Federal funds sold 2,500 630 0
Total cash and cash equivalents 6,627 6,561 5,824
Interest bearing deposits in other banks 225 34 49
Investment securities, available for
sale (carried at market value) 20,032 26,771 28,592
Loans
Loans, net of unearned interest 210,735 197,953 204,672
Allowance for loan losses (1,698) (1,722) (1,671)
Net loans 209,037 196,231 203,001
Buildings and equipment 4,412 4,544 4,607
Other real estate 302 133 0
Interest receivable 1,666 2,085 1,886
Deferred income taxes 0 65
0
Other assets 3,080 3,286 3,268
Total Assets 245,381 239,710 247,227
LIABILITIES:
Deposits
Non-interest bearing demand 12,329 16,827 13,800
Interest bearing 178,043 165,890 172,560
Total Deposits 190,372 182,717 186,360
Federal Funds Purchased 0 0 2,765
Other Short Term Borrowings 0 2,500 2,500
Interest payable 1,030 921 964
Long-Term Borrowings 29,100 31,100 31,100
Deferred income taxes 364 0 134
Other liabilities 804 733 935
Total Liabilities 221,670 217,971 224,758
SHAREHOLDERS' EQUITY:
Common stock 200 200 200
Capital surplus 6,263 6,211 6,211
Retained earnings 17,900 16,695 17,048
Net unrealized gain (loss) on
investment securities 336 (392) (15)
Treasury stock at cost (53,553 shares) (988) (975) (975)
Total Shareholders' Equity 23,711 21,739 22,469
Total Liabilities and
Shareholders' Equity 245,381 239,710 247,227
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) 2001 2000 2001 2000
_____________________________________________________________________________
INTEREST INCOME:
Loans and fees on loans 4,270 4,302 13,243 12,330
Investment securities:
Taxable 145 304 411 867
Non-taxable 119 132 499 374
Federal funds sold and
securities purchased under
agreements to resell 23 46 76 69
Deposits with banks 6 0 9 2
Other Interest Income 32 0 104 0
Total Interest Income 4,595 4,784 14,342 13,642
INTEREST EXPENSE:
Deposits 1,964 2,095 6,366 5,887
Other Short term Funds Borrowed 0 70 8 316
Long-Term Borrowings 451 505 1,377 1,039
Total interest expense 2,415 2,670 7,751 7,242
Net interest income 2,180 2,114 6,591 6,400
Provision for loan losses 105 75 415 225
Net interest income after
provision for loan losses 2,075 2,039 6,176 6,175
NON-INTEREST INCOME:
Trust fees 98 173 393 518
Service charges on
deposit accounts 137 136 405 395
Securities gains (losses), net 11 (6) 11 (10)
Other Income 123 104 307 297
Total Non-interest Income 369 407 1,116 1,200
NON-INTEREST EXPENSE:
Salaries and employee benefits 1,013 977 3,010 2,864
Premise and equipment expense 258 265 789 788
FDIC Deposit expense 6 9 26 27
Other expenses 553 493 1,609 1,372
Total non-interest expense 1,830 1,744 5,434 5,051
Income before income taxes 614 702 1,858 2,324
Provision for income tax 196 224 602 773
Net Income 418 478 1,256 1,551
NET INCOME PER COMMON SHARE:
Basic $.56 $.64 $1.68 $2.08
Diluted $.56 $.64 $1.67 $2.08
Weighted average common shares
outstanding
Basic 747,100 745,028 747,100 745,028
Diluted 750,036 747,403 750,036 747,403
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended Sept 30,
(unaudited) 2001 2000
___________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income 1,256 1,551
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED FROM OPERATING ACTIVITIES:
Directors Stock Option Compensation 83 63
Depreciation 326 308
Net premium amortization (discount
accretion) of investment securities 15 23
Provision of loan losses 415 225
(Increase)decrease in interest receivable 220 (621)
(Increase) decrease in other assets (114) (599)
Increase (decrease) in accrued expenses and
other liabilities (65) 5
Net cash flows provided by operating
activities 2,136 955
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease of interest bearing
deposits in other banks (176) (16)
Purchase of investment securities available
for sale (3,257) (3,901)
Purchase of investment securities held to
maturity 0 (600)
Proceeds from maturities and paydowns of
investment securities available for sale 12,382 2,257
Net (increase) decrease in loans (6,451) (23,097)
Purchase of premises and equipment (131) (328)
Net cash flows used in investing
activities 2,367 (25,685)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits,
Federal Funds and short-term borrowings
Non-interest bearing demand (1,471) (5,275)
Total interest-bearing deposits 5,483 6,716
Federal Funds Purchased (2,765) 0
Other Short-Term Borrowings (2,500) (2,500)
Long-Term Borrowings (2,000) 22,000
Cash dividends paid (403) (402)
Treasury Stock Sold 0 5
Treasury Stock Purchased (44) 0
Net cash flows provided by (used in)
financing activities (3,700) 20,544
Net increase (decrease) in cash equivalents 803 (4,186)
Cash and cash equivalents at beginning of
period 5,824 10,747
Cash and cash equivalents at end of period 6,627 6,561
Total interest paid 7,685 7,105
Total taxes paid 901 783
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) 2001 2000
_______________________________________________________________________________
Balance, beginning of period 22,469 20,369
Net income 1,256 1,551
Net unrealized gain (loss) on investment
securities 350 153
Comprehensive Income 1,606 1,704
Cash Dividends (403) (402)
Sale of Treasury Stock 82 68
Purchase of Treasury Stock (43) 0
Balance, end of period 23,711 21,739
The accompanying notes are an integral part of this statement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
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, 2001 is not necessarily indicative of those expected for
the
remainder of the year.
Note 2
Sept. 30, 2001 Sept. 30, 2000 Dec. 31, 2000
________________________________________________________________________________
INVESTMENT SECURITIES (at Market Value):
U.S. treasury securities 0 0 0
U.S. Government corporations
& agencies 4,112 14,578 14,923
States and political subdivisions 15,847 11,277 12,742
Mortgage - backed securities 73 78 75
Other domestic securities 0 838 852
Total Investment Securities 20,032 26,771 28,592
Note 3
Sept. 30, 2001 Sept. 30, 2000 Dec. 31, 2000
________________________________________________________________________________
LOANS:
Commercial and industrial loans 44,120 39,443 40,868
Real estate loans 108,662 98,827 103,100
Construction loans 16,904 16,196 17,173
Agricultural production financing
and other loans to farmers 2,774 2,434 1,751
Individual loans for household
and other personal expense 36,488 40,125 41,319
Economic development revenue bonds 258 0 0
Lease Financing Receivable 659 609 585
Other Loans Excluding Consumer 963 451 0
Less: Unearned income on loans (93) (132) (124)
Total Loans 210,735 197,953 204,672
The accompanying notes are an integral part of this statement.
Note 4
Commitments
The corporation has agreed to purchase approximately 19% of it's outstanding
common stock from a related party shareholder at $40 per share (total price
approximately $5,960,000). A notice of proposed exemption from the Department
of Labor was published in the Federal Register on October 23, 2001. Assuming
no objections, the department will issue final approval after 45 days and the
purchase will be completed in late December 2001. The purchase of this stock
will not result in capital ratio's which are less than well capitalized.
Note 5
Subsequent Events
As a result of an examination by the Federal Deposit Insurance Corporation,
the Corporation has been directed to add $600,000 to it's allowance for loan
losses. This addition will be booked in the 4th quarter of 2001. The
expected effect of this addition, after tax, is to reduce net income by
$390,000.
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 $1,256,000 represents an decrease of
$295,000 or 19% from the $1,551,000 reported for the same period last year.
The
third quarter earnings of $418,000 represents an decrease of $60,000 or 13%
from the $478,000 reported for the third quarter of 2000. The decreases
are a direct result of an increase in reserve for bad debts allocation for
2001 to cover charge-offs and future considerations.
NET INTEREST INCOME
Springs Valley Bank & Trust Company is asset sensitive as rates have
decreased very quickly this year. Interest earning assets reprice faster than
interest bearing deposits. In a decreasing rate environment, the bank's income
decreased because of a smaller interest spread even though loan totals have
increased.
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 2001, net
interest income increased by $1,000 or 0% compared to the same period in
2000. The third quarter net interest income for 2001 increased by $36,000 or
2%
compared to the third quarter of 2000. Loans are repricing downward so quickly
that interest income is decreasing much faster than interest expenses.
OTHER INCOME
Other income of $1,116,000 for the first three quarters of 2001 is $84,000 or
7% less than the same period for 2000. Other non-interest income is an
important part of the profitability of the bank and all avenues of additional
income are reviewed. Trust income has decreased by $125,000 due to a large
trust moving their account to a larger institution.
NON-INTEREST EXPENSES
For the first nine months of 2001, other expenses increased by $383,000 or 8%
compared to the same period of 2000. The three months ended September 30,
2001 total other expense increase was $86,000 or 5% increase over that same
period for 2000. The increase is principally the effect of increased salaries
and employee benefits, and enhancements made in data operations, such as
imaging and communications.
ANALYSIS OF FINANCIAL CONDITION
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation's allowance for loan losses was $1,698,000 at September 30,
2001
compared to $1,772,000 at September 30, 2000 and $1,671,000 as of December 31,
2000.
At September 30, 2001 the allowance for possible loan losses was .81% of total
loans, net for unearned interest. This compares to an allowance of .87%
at September 30, 2000. Net charge offs for the first nine months of 2001
were $388,000 compared to $130,000 for the same period last year. Management
reviews the loan portfolio and assess the risk and believes that the allowance
of $1,698,000 is not adequate. An additional allocation of $600,000 will be
placed into the allowance for loan losses in the 4th quarter of 2001, which
will place the allowance at 1.03% of total loans.
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, 2001 the rate-sensitive assets were 68% of rate-sensitive
liabilities in the 1-180 day maturity category and 76% 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, 2001 was $23,711,000 compared
to
$21,739,000 for the same period last year. The shareholder's equity has
increased by $1,972,000 or 9% from September 30, 2000 to September 30, 2001.
This increase is attributed to the unrealized loss on investment securities
and profits.
(ANALYSIS OF FINANCIAL CONDITIONS CONTINUED)
As of September 30, 2001 the leverage capital ratio was 9.49% which compared
to 9.05% at September 30, 2000.
As of September 30, 2001 the total risk-based capital ratio was 13.60%
compared to 11.46% at September 30, 2000.
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 7, 2000