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, 1997
_____ 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 745,800 shares outstanding at August 11, 1997. The
Registrant holds 54,200 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, 1997 and 1996 and December 31, 1996................ 3
Consolidated Statement of Income
Three and six months ended June 30, 1997 and 1996........... 4
Consolidated Statement of Cash Flows
Six months ended June 30, 1997 and 1996..................... 5
Consolidated Statement of Changes in Shareholders' Equity
Six months ended June 30, 1997 and 1996..................... 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) 1997 1996 1996
ASSETS:
Cash and due from banks 6,510,902 3,667,844 5,029,136
Federal funds sold 0 8,080,000 0
Total cash and cash equivalents 6,510,902 11,747,825 5,029,136
Interest bearing deposits in other banks 26,024 0 0
Investment securities, available for
sale (carried at market value) 46,643,372 59,059,570 50,512,660
Loans
Loans, net of unearned interest 129,565,578 117,617,972 122,859,789
Allowance for loan losses (1,370,408) (1,383,233) (1,329,295)
Net loans 128,195,170 116,234,739 121,530,494
Buildings and equipment 4,988,291 5,169,711 5,040,585
Other real estate 0 31,150 53,200
Interest receivable 1,440,914 1,526,009 1,357,380
Deferred income taxes 0 36,355 0
Other assets 810,914 1,279,566 838,639
Total Assets 188,615,587 195,084,944 184,362,094
LIABILITIES:
Deposits
Non-interest bearing demand 12,539,751 15,348,313 12,554,733
Interest bearing 155,960,019 162,090,703 139,040,316
Total Deposits 168,499,470 177,439,016 151,595,049
Federal Funds Purchased 490,000 0 8,870,000
Other Short Term Borrowings 0 0 5,000,000
Interest payable 795,755 763,978 750,028
Deferred income taxes 234,520 0 241,324
Other liabilities 639,822 609,002 576,177
Total Liabilities 170,659,867 178,811,996 167,032,578
SHAREHOLDERS' EQUITY:
Common stock 200,000 200,000 200,000
Capital surplus 6,094,233 6,094,233 6,094,233
Retained earnings 12,618,376 11,293,580 11,981,683
Net unrealized gain (loss) on
investment securities (143,889) (501,865) (133,400)
Treasury stock at cost (27,100 shares ) (813,000) (813,000) (813,000)
Total Shareholders' Equity 17,955,720 16,272,948 17,329,516
Total Liabilities and
Shareholders' Equity 188,615,587 195,084,944 184,362,094
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) 1997 1996 1997 1996
________________________________________________________________________
INTEREST INCOME:
Loans and fees on loans 2,800,608 2,512,248 5,474,996 4,996,953
Investment securities:
Taxable 626,094 736,839 1,274,369 1,468,493
Non-taxable 103,127 133,106 207,938 268,875
Federal funds sold and
securities purchased under
agreements to resell 47,552 61,449 107,056 213,239
Deposits with banks 316 0 316 0
Total Interest Income 3,577,697 3,443,642 7,064,675 6,947,560
INTEREST EXPENSE:
Deposits 1,906,036 1,851,849 3,703,156 3,755,017
Other Short term Funds Borrowed 2,926 0 38,343 0
Long-term debt 0 0 0 0
Total interest expense 1,908,962 1,851,849 3,741,499 3,775,017
Net interest income 1,668,735 1,591,793 3,323,176 3,172,543
Provision for loan losses 90,000 75,000 180,000 150,000
Net interest income after
provision for loan losses 1,578,735 1,516,793 3,143,176 3,022,543
NON-INTEREST INCOME:
Trust fees 165,025 153,223 330,025 307,201
Service charges on
deposit accounts 111,864 83,227 223,970 156,650
Insurance and claims processing 45,639 51,253 95,550 93,654
Securities gains (losses), net 0 162 3,118 162
Other Income 25,403 68,944 87,102 123,451
Total Non-interest Income 347,931 356,809 739,765 681,118
NON-INTEREST EXPENSE:
Salaries and employee benefits 827,159 758,746 1,627,541 1,543,135
Premise and equipment expense 249,971 304,435 562,501 566,569
Other real estate expense 1,149 588 11,794 5,575
FDIC Deposit expense 6,093 500 9,786 1,000
Telephone expense 32,822 39,039 64,951 66,451
Postage expense 26,719 24,342 56,371 59,236
Other expenses 232,538 223,485 446,312 419,069
Total non-interest expense 1,376,451 1,351,135 2,779,256 2,661,035
Income before income taxes 550,216 522,467 1,103,685 1,042,626
Provision for income tax 144,000 136,760 288,000 248,760
Net Income 406,216 385,707 815,685 793,866
NET INCOME PER COMMON SHARE:
Primary 1.10 1.04 2.19 2.13
Weighted average common shares
outstanding 372,900 372,900 372,900 372,900
DIVIDENDS DECLARED:
Cash dividends 0.24 0.24 0.48 0.47
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30,
(unaudited) 1997 1996
___________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 815,685 793,866
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED FROM OPERATING ACTIVITIES:
Depreciation 214,216 214,120
Net premium amortization (discount
accretion) of investment securities (730) 27,629
Provision of loan losses 180,000 150,000
Decrease(increase) in interest receivable (83,534) 11,361
(Increase) decrease in other assets 80,925 (9,117)
Increase (decrease) in accrued expenses and
other liabilities 109,372 67,347
Net cash flows provided by operating
activities 1,315,934 1,255,206
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase of interest bearing deposits
in other banks (26,024) 0
Purchase of investment securities available
for sale 0 (7,170,725)
Proceeds from maturities and paydowns of
investment securities available for sale 3,852,725 3,803,804
Net (increase) decrease in loans (6,844,676) (4,970,604)
Purchase of premises and equipment (161,922) (306,691)
Net cash flows used in investing
activities (3,179,897) (8,644,216)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits and
short-term borrowings
Non-interest bearing demand (14,982) 2,846,548
Total interest-bearing deposits 16,919,703 2,827,892
Federal Funds Purchased (8,830,000) 0
Other Short-Term Burrowings (5,000,000) 0
Cash dividends paid (178,992) (175,263)
Net cash flows provided by (used in)
financing activities 3,345,799 5,499,177
Net decrease in cash equivalents 1,481,766 (1,889,833)
Cash and cash equivalents at beginning of
period 5,029,136 13,637,658
Cash and cash equivalents at end of period 6,510,902 11,747,825
Total interest paid 3,695,772 3,876,399
Total taxes paid 305,260 224,689
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) 1997 1996
_______________________________________________________________________________
Balance, beginning of period 17,329,516 16,372,127
Net income 815,685 793,866
Cash dividends (178,990) (175,263)
Net unrealized gain (loss) on investment
securities (10,491) (717,782)
Balance, end of period 17,955,720 16,272,948
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, 1997 is not necessarily indicative of those expected for the
remainder of the year.
June 30, 1997 June 30, 1996 Dec. 31, 1996
________________________________________________________________________________
INVESTMENT SECURITIES:
U.S. treasury securities 0 0 0
U.S. Government corporations
& agencies 36,416,935 47,542,334 39,468,326
States and political subdivisions 8,791,310 10,076,634 9,610,273
Mortgage - backed securities 356,827 373,602 366,661
Other domestic securities 500,000 500,000 500,000
Equity Securities 578,300 567,000 567,400
Total Investment Securities 46,643,372 59,059,570 50,512,600
June 30, 1997 June 30, 1996 Dec. 31, 1996
________________________________________________________________________________
LOANS:
Commercial and industrial loans 16,301,366 15,046,842 15,133,405
Real estate loans 71,315,286 65,055,382 67,859,219
Construction loans 551,973 68,652 64,737
Agricultural production financing
and other loans to farmers 1,184,804 1,179,543 1,094,039
Individual loans for household
and other personal expense 40,371,252 36,514,261 38,451,555
Economic development revenue bonds 0 0 23,909
Lease Financing Receivable 0 0 538,007
Other Loans Excluding Consumer 0 0 0
Less: Unearned income on loans (159,103) (246,708) 305,082
Total Loans 129,565,578 117,617,972 122,859,789
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 $815,685 represents an increase of
$21,819 or 3% from the $793,866 reported for the same period last year. The
second quarter earnings of $406,216 represents an increase of $20,509 or 5%
from the $385,707 reported for the second quarter of 1996. 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 increased by an average rate of 4% over
the 1996 total expenses.
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 1997, net
interest income increased by $148,281 or 5% for the same period in 1996. The
second quarter net interest income for 1997 increased by $74,590 or 5%
compared to the second quarter of 1996. The improvement in the net interest
income is due to assets being deployed into higher yielding loans rather than
investments.
OTHER INCOME
Other income of $739,765 for the first two quarters of 1997 is $58,647 or 9%
higher than the same period for 1996.The increase is due to increased trust
income and increased service charges on deposit accounts. Other non-interest
is an important part of the profitability of the bank and all avenues of
additional income are reviewed. The second quarter decrease of other income,
1997 compared to 1996 is $26,904.
NON-INTEREST EXPENSES
For the first six months of 1997, other expenses increased by $118,221 or 4%
compared to the same period of 1996. The three months ended June 30, 1997 total
other expense increase was $25,316 or 2% increase over that same period for
1996. 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 $1,370,408 at June 30, 1997
compared to $1,383,233 at June 30, 1996 and $1,329,295 as of December 31, 1996.
At June 30, 1996 the allowance for possible loan losses was 1.06% of total
loans, net for unearned interest. This compares to an allowance of 1.18%
at June 30, 1996. Net charge offs for the first six months of 1997
were $139,000 compared to $116,000 for the same period last year. Management
reviews the loan portfolio and assess the risk and believes that the allowance
of $1,370,408 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 June 30, 1997 the rate-sensitive assets were 62% of rate-sensitive
liabilities in the 1-180 day maturity category and 85% 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, 1997 was $17,955,720 compared to
$16,272,948 for the same period last year. The shareholder's equity has
increased by $626,204 or 4% from December 31, 1996 to June 30, 1997. This
increase is attributed to the unrealized loss on investment securities remaining
relatively stable and profits increasing.
(ANALYSIS OF FINANCIAL CONDITIONS CONTINUED)
As of June 30, 1997 the bank's leverage capital ratio was 9.19% which compared
to 8.89% at June 30, 1996.
As of June 30, 1997 the bank's tier II risk-based capital ratio was 15.72%
compared to 15.51% at June 30, 1996.
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 13, 1997.
(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 1996 annual meeting of shareholders. A
total of 159,888 shares were voted in person and 161,344 shares
voted by proxy. This totals 321,232 shares voted in approval of
the 372,900 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 9, 1996