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, 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 November 7, 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
September 30, 1997 and 1996 and December 31, 1996........... 3
Consolidated Statement of Income
Three and nine months ended September 30, 1997 and 1996..... 4
Consolidated Statement of Cash Flows
Nine months ended September 30, 1997 and 1996............... 5
Consolidated Statement of Changes in Shareholders' Equity
Nine months ended September 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
Sept. 30, Sept. 30, Dec. 31,
(unaudited) 1997 1996 1996
ASSETS:
Cash and due from banks 3,243,272 5,156,651 5,029,136
Federal funds sold 0 5,260,000 0
Total cash and cash equivalents 3,243,272 10,416,651 5,029,136
Interest bearing deposits in other banks 16,954 0 0
Investment securities, available for
sale (carried at market value) 44,082,181 55,586,930 50,512,660
Loans
Loans, net of unearned interest 136,577,300 118,271,941 122,859,789
Allowance for loan losses (1,323,237) (1,310,267) (1,329,295)
Net loans 135,254,063 116,961,674 121,530,494
Buildings and equipment 4,879,680 5,088,627 5,040,585
Other real estate 0 57,950 53,200
Interest receivable 1,228,257 1,361,263 1,357,380
Deferred income taxes 0 0 0
Other assets 1,147,034 1,363,855 838,639
Total Assets 189,851,441 190,836,950 184,362,094
LIABILITIES:
Deposits
Non-interest bearing demand 10,111,045 13,606,432 12,554,733
Interest bearing 149,824,386 158,874,640 139,040,316
Total Deposits 159,935,431 172,481,072 151,595,049
Federal Funds Purchased 4,700,000 0 8,870,000
Other Short Term Borrowings 5,000,000 0 5,000,000
Interest payable 780,946 796,376 750,028
Deferred income taxes 284,889 97,428 241,324
Other liabilities 702,699 632,400 576,177
Total Liabilities 171,403,965 174,007,276 167,032,578
SHAREHOLDERS' EQUITY:
Common stock 200,000 200,000 200,000
Capital surplus 6,094,233 6,094,233 6,094,233
Retained earnings 13,033,339 11,646,338 11,981,683
Net unrealized gain (loss) on
investment securities (67,096) (297,897) (133,400)
Treasury stock at cost (27,100 shares) (813,000) (813,000) (813,000)
Total Shareholders' Equity 18,447,476 16,829,674 17,329,516
Total Liabilities and
Shareholders' Equity 189,851,441 190,836,950 184,362,094
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) 1997 1996 1997 1996
_____________________________________________________________________________
INTEREST INCOME:
Loans and fees on loans 2,997,719 2,644,111 8,472,715 7,641,064
Investment securities:
Taxable 577,733 691,185 1,852,102 2,159,678
Non-taxable 100,900 186,761 308,838 455,636
Federal funds sold and
securities purchased under
agreements to resell 5,444 55,152 112,500 268,391
Deposits with banks 257 0 573 0
Total Interest Income 3,682,053 3,577,209 10,746,728 10,524,769
INTEREST EXPENSE:
Deposits 1,880,763 1,905,741 5,583,919 5,680,758
Other Short term Funds Borrowed 48,522 0 86,865 0
Total interest expense 1,929,285 1,905,741 5,670,784 5,680,758
Net interest income 1,752,768 1,671,468 5,075,944 4,844,011
Provision for loan losses 100,000 75,000 280,000 225,000
Net interest income after
provision for loan losses 1,652,768 1,596,468 4,795,944 4,619,011
NON-INTEREST INCOME:
Trust fees 217,000 184,242 547,025 491,443
Service charges on
deposit accounts 139,183 93,522 363,153 250,172
Insurance and claims processing 40,856 43,644 136,406 137,298
Securities gains (losses), net 2,257 1,366 5,375 1,528
Other Income 68,544 52,932 155,646 176,383
Total Non-interest Income 467,840 375,706 1,207,605 1,056,824
NON-INTEREST EXPENSE:
Salaries and employee benefits 828,147 814,238 2,455,688 2,357,373
Premise and equipment expense 298,261 293,113 860,762 859,682
Other real estate expense 0 8,850 11,794 14,425
FDIC Deposit expense 5,294 600 15,080 1,600
Telephone expense 34,000 34,239 98,951 100,690
Postage expense 26,724 22,176 83,095 81,412
Other expenses 215,902 208,965 662,214 628,034
Total non-interest expense 1,408,328 1,382,181 4,187,584 4,043,216
Income before income taxes 712,280 589,993 1,815,965 1,632,619
Provision for income tax 185,447 147,740 473,447 396,500
Net Income 526,833 442,253 1,342,518 1,236,119
NET INCOME PER COMMON SHARE:
Primary .71 .59 1.80 1.66
Weighted average common shares
outstanding 745,800 745,800 745,800 745,800
DIVIDENDS DECLARED:
Cash dividends 0.15 0.12 0.39 0.36
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended Sept 30,
(unaudited) 1997 1996
___________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income before sale of asset 1,342,518 0
Gain on Sale Asset (18,556) 0
Net Income 1,323,962 1,236,119
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED FROM OPERATING ACTIVITIES:
Depreciation 319,220 321,179
Net premium amortization (discount
accretion) of investment securities 2,608 41,801
Provision of loan losses 280,000 225,000
Decrease(increase) in interest receivable 129,123 176,107
(Increase) decrease in other assets (255,195) (93,406)
Increase (decrease) in accrued expenses and
other liabilities 157,440 123,143
Net cash flows provided by operating
activities 1,957,158 2,029,943
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase of interest bearing deposits
in other banks (16,954) 0
Purchase of investment securities available
for sale (2,729,994) (7,381,623)
Proceeds from maturities and paydowns of
investment securities available for sale 9,267,734 7,810,941
Net (increase) decrease in loans (13,985,013) (5,799,339)
Purchase of premises and equipment (208,363) (332,666)
Purchase of Sale of Asset 50,048
Net cash flows used in investing
activities (7,622,542) (3,672,744)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits and
short-term borrowings
Non-interest bearing demand (2,443,688) 1,104,667
Total interest-bearing deposits 10,784,070 (388,171)
Federal Funds Purchased (4,170,000) 0
Other Short-Term Borrowings 0 0
Cash dividends paid (290,862) (264,759)
Net cash flows provided by (used in)
financing activities 3,879,520 451,737
Net decrease in cash equivalents (1,785,864) (3,221,007)
Cash and cash equivalents at beginning of
period 5,029,136 13,637,658
Cash and cash equivalents at end of period 3,243,272 10,416,651
Total interest paid 5,639,839 5,749,734
Total taxes paid 615,164 370,349
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) 1997 1996
_______________________________________________________________________________
Balance, beginning of period 17,329,516 16,372,127
Net income 1,342,518 1,236,119
Cash dividends (290,862) (264,759)
Net unrealized gain (loss) on investment
securities 66,304 (513,813)
Balance, end of period 18,447,476 16,829,674
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, 1997 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.
Sept. 30, 1997 Sept. 30, 1996 Dec. 31, 1996
________________________________________________________________________________
INVESTMENT SECURITIES:
U.S. treasury securities 0 0 0
U.S. Government corporations
& agencies 34,353,396 45,540,100 39,468,326
States and political subdivisions 8,320,021 9,099,397 9,610,273
Mortgage - backed securities 330,464 380,033 366,661
Other domestic securities 500,000 0 500,000
Equity Securities 578,300 567,400 567,400
Total Investment Securities 44,082,181 55,586,930 50,512,660
Sept. 30, 1997 Sept. 30, 1996 Dec. 31, 1996
________________________________________________________________________________
LOANS:
Commercial and industrial loans 16,413,882 14,657,537 15,133,405
Real estate loans 77,568,950 66,524,475 67,859,219
Construction loans 995,900 27,673 64,737
Agricultural production financing
and other loans to farmers 1,310,373 1,387,408 1,094,039
Individual loans for household
and other personal expense 39,978,476 35,879,979 38,451,555
Economic development revenue bonds 0 0 23,909
Lease Financing Receivable 464,577 0 538,007
Other Loans Excluding Consumer 0 0 0
Less: Unearned income on loans (154,858) (205,131) 305,082
Total Loans 136,577,300 118,271,941 122,859,789
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 nine months of $1,342,518 represents an increase of
$106,399 or 9% from the $1,236,119 reported for the same period last year. The
third quarter earnings of $526,833 represents an increase of $84,580 or 19%
from the $442,253 reported for the third 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 nine months of 1997, net
interest income increased by $176,933 or 4% for the same period in 1996. The
third quarter net interest income for 1997 increased by $81,300 or 5%
compared to the third 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 $1,207,605 for the first three quarters of 1997 is $150,781 or
14% 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 third quarter increase of other income,
1997 compared to 1996 is $92,134 or 25%.
NON-INTEREST EXPENSES
For the first nine months of 1997, other expenses increased by $144,368 or 4%
compared to the same period of 1996. The three months ended September 30, 1997
total other expense increase was $26,142 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 $1,323,237 at September 30, 1997
compared to $1,310,267 at September 30, 1996 and $1,329,295 as of December 31,
1996.
At September 30, 1997 the allowance for possible loan losses was .97% of total
loans, net for unearned interest. This compares to an allowance of 1.11%
at September 30, 1996. Net charge offs for the first nine months of 1997
were $356,116 compared to $297,187 for the same period last year. Management
reviews the loan portfolio and assess the risk and believes that the allowance
of $1,323,237 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, 1997 the rate-sensitive assets were 67% of rate-sensitive
liabilities in the 1-180 day maturity category and 82% 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, 1997 was $18,447,476 compared to
$16,829,674 for the same period last year. The shareholder's equity has
increased by $1,617,802 or 10% from September 30, 1996 to September 30, 1997.
This increase is attributed to the unrealized loss on investment securities
remaining relatively stable and profits increasing.
The holding company enacted a 2 for 1 stock split on August 11, 1997. The
total shares increased to 800,000 with 745,800 shares outstanding. This
stock split's goal is to create a larger market for SVB&T Corporations stock
at a reasonable cost.
(ANALYSIS OF FINANCIAL CONDITIONS CONTINUED)
As of September 30, 1997 the bank's leverage capital ratio was 9.35% which
compared to 8.82% at September 30, 1996.
As of September 30, 1997 the bank's total risk-based capital ratio was 15.28%
compared to 15.75% at September 30, 1996.
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, 1997