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, 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 746,133 shares outstanding at May 10, 1999. The
Registrant holds 53,867 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, 1999 and 1998 and December 31, 1998............... 3
Consolidated Statement of Income
Three months ended March 31, 1999 and 1998.................. 4
Consolidated Statement of Cash Flows
Three months ended March 31, 1999 and 1998................. 5
Consolidated Statement of Changes in Shareholders' Equity
Three months ended March 31, 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
March 31, March 31, December 31,
(unaudited) 1999 1998 1998
____________________________________________________________________________
ASSETS:
Cash and due from banks 4,141 4,446 4,195
Federal funds sold 1,060 4,055 2,860
Total cash and cash equivalents 5,201 8,501 7,055
Interest bearing deposits in other banks 54 78 79
Investment securities, available for
sale (carried at market value) 24,168 33,433 26,065
Loans
Loans, net of unearned interest 152,703 140,570 143,669
Allowance for loan losses (1,198) (1,463) (1,106)
Net loans 151,505 139,107 142,563
Buildings and equipment 4,743 4,979 4,821
Other real estate 0 0 0
Interest receivable 1,147 1,286 1,196
Deferred income taxes 0 0 0
Other assets 1,008 770 962
Total Assets 187,826 188,154 182,741
Liabilities:
Deposits
Non-interest bearing demand 11,753 10,529 12,748
Interest bearing 147,615 156,549 146,584
Total Deposits 159,368 167,141 159,332
Federal Funds Purchased 0 0 0
Other Short Term Borrowings 5,000 0 0
Interest payable 729 824 713
Deferred income taxes 527 342 550
Other liabilities 626 566 813
Long-Term Borrowings 1,000 0 1,000
Total Liabilities 167,250 168,873 162,408
SHAREHOLDERS' EQUITY:
Common stock 200 200 200
Capital surplus 6,165 6,124 6,124
Retained earnings 14,940 13,718 14,655
Net unrealized gain (loss) on
investment securities 155 16 190
Treasury stock at cost (51,813 shares) (884) (777) (836)
Total Shareholders' Equity 20,576 19,281 20,333
Total Liabilities and
Shareholders' Equity 187,826 188,154 182,741
(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) 1999 1998
____________________________________________________________________________
INTEREST INCOME:
Loans and fees on loans 3,044 3,101
Investment securities:
Taxable 242 453
Non-taxable 103 95
Federal funds sold and securities
purchased under agreements to resell 18 23
Deposits with banks 0 0
Total Interest Income 3,407 3,672
INTEREST EXPENSE:
Deposits 1,565 1,867
Other Short Term Funds Borrowed 27 14
Long-Term Borrowings 13 0
Total interest expense 1,605 1,881
Net interest income 1,802 1,791
Provision for loan losses 135 120
Net interest income after
provision for loan losses 1,667 1,671
NON-INTEREST INCOME:
Trust fees 173 189
Service charges on deposit accounts 123 132
Insurance and claims processing 41 48
Securities gains (losses), net 0 0
Other Income 46 46
Total Non-interest Income 383 415
NON-INTEREST EXPENSE:
Salaries and employee benefits 887 804
Premise and equipment expense 217 319
FDIC Deposit expense 3 5
Other expenses 351 269
Total non-interest expense 1,458 1,397
Income before income taxes 592 689
Provision for income tax 195 245
Net Income 397 444
NET INCOME PER COMMON SHARE:
Primary .53 .59
Weighted average common shares
outstanding 747,536 748,187
DIVIDENDS DECLARED:
Cash dividends 0.15 0.15
(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) 1999 1998
____________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 397 444
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED FROM OPERATING ACTIVITIES:
Directors Stock Option Compensation 4 5
Depreciation 97 95
Net premium amortization (discount accretion)
of investment securities 6 5
Provision of loan losses 135 120
Decrease(increase) in interest receivable 49 33
(Increase) decrease in other assets (46) (9)
Increase (decrease) in accrued expenses and
other liabilities (194) (122)
Net cash flows provided by operating
activities 448 571
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase of interest bearing deposits
in other banks 25 16
Purchase of investment securities available
for sale (997) (4,541)
Proceeds from maturities and paydowns of
investment securities available for sale 2,888 9,817
Net (increase) decrease in loans (9,340) (25)
Purchase of premises and equipment (19) (41)
Net cash flows used in investing
activities (7,443) 5,226
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits and
short-term borrowings
Non-interest bearing demand (995) (2,701)
Total interest-bearing deposits 1,031 3,970
Federal Funds Purchased 0 0
Other Short-Term Borrowings 5,000 (4,000)
Cash dividends paid 112 0
Treasury Stock Sold 41 61
Treasury Stock Purchased (48) 0
Net cash flows provided by (used in)
financing activities 5,141 (2,670)
Net increase (decrease) in cash equivalents (1,854) 3,127
Cash and cash equivalents at beginning of
period 7,055 5,374
Cash and cash equivalents at end of period 5,201 8,501
Total interest paid 1,589 1,881
Total taxes paid 266 152
(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) 1999 1998
__________________________________________________________________________
Balance, beginning of period 20,333 18,715
Net income 397 444
Cash dividends (12) 0
Net unrealized gain (loss) on investment
securities (35) 56
Sales of Treasury Stock 41 66
Purchase of Treasury Stock (48) 0
Balance, end of period 20,576 19,281
(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, 1999 is not necessarily indicative of
those expected for the remainder of the year.
March 31, 1999 March 31, 1998 Dec. 31, 1998
_____________________________________________________________________________
INVESTMENT SECURITIES:
U.S. treasury securities 0 0 0
U.S. Government corporations
& agencies 13,249 23,604 15,236
States and political subdivisions 9,279 8,553 8,999
Mortgage - backed securities 174 306 211
Other domestic securities 875 392 939
Equity Securities 591 578 590
Total Investment Securities 24,168 33,433 26,065
March 31, 1999 March 31, 1998 Dec. 31, 1998
_____________________________________________________________________________
LOANS:
Commercial and industrial loans 12,906 16,598 13,289
Real estate loans 89,240 79,136 80,803
Construction loans 2,209 1,450 1,687
Agricultural production financing
and other loans to farmers 1,324 1,212 1,288
Individual loans for household
and other personal expense 46,074 41,450 46,470
Economic development revenue bonds 0 0 0
Lease Financing Receivable 451 410 336
Other Loans Excluding Consumer 650 457 0
Less: Unearned income on loans 151 143 204
Total Loans 152,703 140,570 143,669
(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 $397,000 represents an decrease of
$47,000 or 11% from the $444,000 reported for the same period last year.
This resulted from increase in the non-interest expense and a reduction of
non-interest income.
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 1999, net interest income increased by $11,000 or 1% for the
same period in 1998. The net interest margin increase compared to the same
period last year was primarily a result of average interest cost leveling
off. Rates of return on loans and investments have increased. The loan
volume has increased $12,398,000 comparing 1999 to 1998. Loan yields are
higher than investment yields which increase the net interest income.
However, the adjustable rate mortgages are repricing at lesser yields during
the last twelve months which have decreased the net interest income.
OTHER INCOME
Other income of $383,000 for the first quarter of 1999 is $32,000 or 8% less
than the same period for 1998. This difference is due to the decrease in the
service changes on deposit accounts, Trust Fee Income, and Insurance Income.
OTHER EXPENSES
For the first three months of 1999, other expenses increased by $61,000 to
$1,458,000 compared to $1,397,000 for the same period of 1998. This is due
to a substantial increase in hospitalization cost and additional computer
expenses.
ANALYSIS OF FINANCIAL CONDITION
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation's allowance for loan losses was $1,198,000 at March 31, 1999
compared to $1,463,000 at March 31, 1998.
At March 31, 1999 the allowance for possible loan losses was .78% of total
loans, net for unearned interest. This compares to an allowance of 1.04%
at March 31, 1998. Net charge offs for the first three months of 1999 were
$43,000, compared to $60,000 for the same period last year. Based on
management's review of the portfolio, management believes the allowance of
$1,198,000 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 March 31, 1999 the rate-sensitive assets were 73% of rate-sensitive
liabilities in the 1-180 day maturity category and 90% 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, 1999 was $20,576,000 compared to
$19,281,000 for the same period last year. This increase is attributed to
the increase in Net Income for 1998 and the increase of the net unrealized
loss on investment securities.
(ANALYSIS OF FINANCIAL CONDITIONS CONTINUED)
As of March 31, 1999 the corporation's leverage capital ratio was 10.95%
which compared to 9.70% at March 31, 1998.
As of March 31, 1999 the corporation's total risk-based capital ratio was
15.17% compared to 14.56% at March 31, 1998.
These ratios are in excess of regulatory requirements of 3% for leverage
capital and 8% for tier II risk-based capital.
YEAR 2000
The bank is working diligently to minimize the impact of any Year 2000
related problems that might occur either within the bank or outside the bank
and affect the safe and sound operation of the bank.
A Year 2000 committee and several sub-committees are working to complete all
Y2K related activities according to the guidelines and recommendations of
FFIEC. All recommended deadlines have been met to this point.
The bank expects to spend a total of about $250,000 on Y2K related
activities. Approximately one-half of that expense will be for hardware and
software that can be capitalize and amortized over a period of time. The
remainder is primarily labor costs that will be taken as an operating
expense. Management does not expect this to have a substantial adverse effect
on the bank's income.
The bank is working on both a remediation contingency plan and a business
resumption contingency plan. Management expects those to be completed no
later than the FFIEC recommended guidelines date.
It is impossible to assess the effect of Y2K related problems on the
operation and profitability of the bank. Management plans to be able to
offer limited essential banking services to its customers under even the most
adverse conditions. The severity and length of any Y2K problems will
determine the degree to which the contingency plans must be utilized and how
much the operation and profitability of the bank are impacted.
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 14, 1999