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 March 31, 2003
_____ 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 599,820 shares outstanding at May 12, 2003. The
Registrant holds 200,180 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
March 31, 2003 and 2002 and December 31, 2002............... 3
Consolidated Statement of Income
Three months ended March 31, 2003 and 2002.................. 4
Consolidated Statement of Cash Flows
Three months ended March 31, 2003 and 2002................. 5
Consolidated Statement of Changes in Shareholders' Equity
Three months ended March 31, 2003 and 2002.................. 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
March 31, March 31, December 31,
(unaudited) 2003 2002 2002
____________________________________________________________________________
ASSETS:
Cash and due from banks 6,336 3,059 6,728
Federal funds sold 10,473 6,145 4,607
Interest bearing deposits in other banks 2,256 1,152 1,615
Total cash and cash equivalents 19,065 10,356 12,950
Investment securities, available for
sale (carried at market value) 27,629 26,268 27,912
Loans, held for resale 3,498 3,095 2,588
Loans, net of unearned interest 181,098 197,691 185,537
Allowance for loan losses (2,204) (2,123) (2,176)
Net loans 178,894 195,568 183,361
Buildings and equipment 4,105 4,264 4,196
Other real estate 1,079 659 1,111
Interest receivable 1,318 1,396 1,383
Deferred income taxes 0 258 0
Other assets 8,635 3,256 8,682
Total Assets 244,223 245,120 242,183
Liabilities:
Deposits
Non-interest bearing demand 12,299 10,793 12,371
Interest bearing 170,983 173,571 168,949
Total Deposits 183,282 184,364 181,320
Federal Funds Purchased 0 0 0
Interest payable 1,069 1,209 1,189
Deferred income taxes 412 0 345
Other liabilities 297 1,031 519
Long-Term Borrowings 40,042 40,400 40,042
Total Liabilities 225,102 227,004 223,415
SHAREHOLDERS' EQUITY:
Common stock 200 200 200
Capital surplus 6,350 6,309 6,308
Retained earnings 19,014 18,386 18,793
Net unrealized gain (loss) on
investment securities 648 156 546
Treasury stock at cost (197,495 shares) (7,091) (6,935) (7,079)
Total Shareholders' Equity 19,121 18,116 18,768
Total Liabilities and
Shareholders' Equity 244,223 245,120 242,183
(Dollar amounts in thousands)
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT OF INCOME
Three Months Ended March 31,
(unaudited) 2003 2002
____________________________________________________________________________
INTEREST INCOME:
Loans and fees on loans 3,088 3,650
Investment securities:
Taxable 103 103
Non-taxable 202 205
Federal funds sold and securities
purchased under agreements to resell 27 25
Deposits with banks 3 2
Other Interest Income 27 0
Total Interest Income 3,450 3,985
INTEREST EXPENSE:
Deposits 1,311 1,453
Other Short Term Funds Borrowed 0 0
Long-Term Borrowings 558 550
Total interest expense 1,869 2,003
Net interest income 1,581 1,982
Provision for loan losses 105 70
Net interest income after
provision for loan losses 1,476 1,912
NON-INTEREST INCOME:
Trust fees 113 98
Service charges on deposit accounts 239 125
Insurance and claims processing 44 47
Securities gains (losses), net 68 0
Other Income 282 144
Total Non-interest Income 746 414
NON-INTEREST EXPENSE:
Salaries and employee benefits 1,040 1,013
Premise and equipment expense 283 314
FDIC Deposit expense 9 11
Other expenses 454 403
Total non-interest expense 1,786 1,741
Income before income taxes 436 585
Provision for income tax 107 198
Net Income 329 387
NET INCOME PER COMMON SHARE:
Primary .55 .64
Weighted average common shares
outstanding 599,408 602,505
DIVIDENDS DECLARED:
Cash dividends 0.18 0.18
(Dollars amounts in thousands)
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31,
(unaudited) 2002 2002
____________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 329 387
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED FROM OPERATING ACTIVITIES:
Depreciation 100 105
Net premium amortization (discount accretion)
of investment securities 40 11
Provision of loan losses 105 70
Proceeds from sale of loans 4,402 4,465
Decrease(increase) in interest receivable 65 104
(Increase) decrease in other assets 79 (515)
Increase (decrease) in accrued expenses and
other liabilities (342) 382
Net cash flows provided by operating
activities 4,778 5,009
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities available
for sale (4,206) (6,489)
Proceeds from maturities and paydowns of
investment securities available for sale 4,618 337
Net (increase) decrease in loans (950) 2,868
Purchase of premises and equipment (9) (87)
Net cash flows used in investing
activities (547) (3,371)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits
Non-interest bearing demand (72) 2,801
Interest-bearing deposits 2,034 (176)
Federal Funds Purchased 0 (4,100)
Long-Term Borrowings 0 11,300
Cash dividends paid (107) (108)
Treasury Stock Sold 69 92
Treasury Stock Purchased (40) (5,942)
Net cash flows provided by (used in)
financing activities 1,884 3,867
Net increase (decrease) in cash equivalents 6,115 5,505
Cash and cash equivalents at beginning of
period 12,950 4,851
Cash and cash equivalents at end of period 19,065 10,356
Total interest paid 1,989 1,800
Total taxes paid 0 112
(Dollars amounts in thousands)
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT
OF CHANGES IN SHAREHOLDERS' EQUITY
Three Months Ended March 31,
(unaudited) 2003 2002
__________________________________________________________________________
Balance, beginning of period 18,768 23,653
Net income 329 387
Cash dividends (107) (108)
Net unrealized gain (loss) on investment
securities 102 34
Sales of Treasury Stock 69 92
Purchase of Treasury Stock (40) (5,942)
Balance, end of period 19,121 18,116
(Dollar amounts in thousands)
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
three month period ended March 31, 2003 is not necessarily indicative of those
expected for the remainder of the year.
March 31, 2003 March 31, 2002 Dec. 31, 2002
_____________________________________________________________________________
INVESTMENT SECURITIES:
U.S. treasury securities 0 0 0
U.S. Government corporations
& agencies 11,953 9,005 11,029
States and political subdivisions 15,613 17,193 16,042
Mortgage - backed securities 63 70 65
Other domestic securities 0 0 776
Equity Securities 0 0 0
Total Investment Securities 27,629 26,268 27,912
March 31, 2003 March 31, 2002 Dec. 31, 2002
_____________________________________________________________________________
LOANS:
Commercial and industrial loans 49,384 44,349 49,977
Real estate loans 91,126 102,868 94,595
Construction loans 11,438 13,704 10,350
Agricultural production financing
and other loans to farmers 1,802 2,549 2,186
Individual loans for household
and other personal expense 22,336 29,852 24,496
Economic development revenue bonds 0 0 0
Lease Financing Receivable 370 488 397
Other Loans Excluding Consumer 4,744 3,962 3,650
Less: Unearned income on loans 102 81 114
Total Loans 181,098 197,691 185,537
(Dollars amounts in thousands)
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 $329,000 represents a decrease of
$58,000 or 15% from the $387,000 reported for the same period last year.
This decrease resulted from a decrease in the loan interest income due to the
loans that are not accruing interest
NET INTEREST INCOME
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 and other sources of funds. In the first
three months of 2003, net interest income of 1,581,000, decreased $401,000
compared to first quarter in 2002. The decreasing interest rates have shrunk
the interest margins due to earning assets repricing more frequently than
interest-bearing deposits. Additional borrowings by the Holding Company have
increased interest expense. Total non-accrual loans have increased also.
OTHER INCOME
Other income of $746,000 for the first quarter of 2003 is $332,000 or 80% more
than the same period for 2002. Several fixed rate mortgage loans have been sold
for a gain and servicing rights have been retained. The overdraft priviledge
program has increased income by $109,000 for the first quarter compared to last
year.
OTHER EXPENSES
For the first three months of 2003, other expenses increased by $45,000 or 2%
to $1,786,000 compared to $1,741,000 for the same period of 2002. This is due
to an increase in employee benefits and an overall expense reduction effort by
all departments within the Bank.
ANALYSIS OF FINANCIAL CONDITION
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation's allowance for loan losses is $2,204,000 at March 31, 2003
compared to $2,123,000 at March 31, 2002.
At March 31, 2003 the allowance for possible loan losses was 1.19% of total
loans, net for unearned interest. This compares to an allowance of 1.06%
at March 31, 2002. Net charge offs for the first three months of 2003 were
$77,000, compared to $44,000 for the same period last year. Based on
management's review of the portfolio, management believes the allowance of
$2,204,000 is adequate.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
The Corporation's objective in liquidity management is to meet the needs of
borrowers while allowing for the possibility of deposit withdrawals; 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 March 31, 2003 the rate-sensitive assets were 105% of rate-sensitive
liabilities in the 1-180 day maturity category and 109% 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 March 31, 2003 was $19,121,000 compared to
$18,116,000 for the same period last year. This increase is attributed to the
net income of the bank and the increase in the value of securities held in the
banks portfolio.
(ANALYSIS OF FINANCIAL CONDITIONS CONTINUED)
As of March 31, 2003 the corporation's leverage capital ratio was 7.58% which
compared to 7.33% at March 31, 2002.
As of March 31, 2003 the corporation's total risk-based capital ratio was
11.84% compared to 11.28% at March 31, 2002.
These ratios are in excess of regulatory requirements of 4% 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: May 12, 2003
CERTIFICATIONS
I, David Rees, certify that:
1. I have reviewed this quarterly report on Form 10-Q of SVB&T Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 15, 2002
David Rees, Principal Financial Officer
I, Ronald G. Seals, certify that:
1. I have reviewed this quarterly report on Form 10-Q of SVB&T Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 15, 2002
Ronald G. Seals, President and Chief Executive Officer