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, 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 August 11, 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
June 30, 1999 and 1998 and December 31, 1998................ 3
Consolidated Statement of Income
Three and six months ended June 30, 1999 and 1998........... 4
Consolidated Statement of Cash Flows
Six months ended June 30, 1999 and 1998..................... 5
Consolidated Statement of Changes in Shareholders' Equity
Six months ended June 30, 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
June 30, June 30, December 31,
(unaudited) 1999 1998 1998
ASSETS:
Cash and due from banks 5,071 4,818 4,195
Federal funds sold 12,070 8,495 2,860
Total cash and cash equivalents 17,141 13,313 7,055
Interest bearing deposits in other banks 48 78 79
Investment securities, available for
sale (carried at market value) 25,858 28,773 26,065
Loans
Loans, net of unearned interest 159,634 142,836 143,669
Allowance for loan losses (1,529) (1,518) (1,106)
Net loans 158,105 141,318 142,563
Buildings and equipment 4,638 4,914 4,821
Other real estate 0 0 0
Interest receivable 1,374 1,222 1,196
Deferred income taxes 0 0 0
Other assets 776 1,023 962
Total Assets 207,940 190,641 182,741
LIABILITIES:
Deposits
Non-interest bearing demand 12,257 10,931 12,747
Interest bearing 159,894 158,389 146,584
Total Deposits 172,151 169,320 159,331
Federal Funds Purchased 0 0 0
Other Short Term Borrowings 5,000 0 0
Long-Term Borrowings 9,100 0 1,000
Interest payable 775 809 713
Deferred income taxes 292 271 550
Other liabilities 596 683 814
Total Liabilities 187,914 171,083 162,408
SHAREHOLDERS' EQUITY:
Common stock 200 200 200
Capital surplus 6,165 6,124 6,124
Retained earnings 14,847 13,974 14,655
Net unrealized gain (loss) on
investment securities (302) 37 190
Treasury stock at cost (53,867 shares ) (884) (777) (836)
Total Shareholders' Equity 20,026 19,558 20,333
Total Liabilities and
Shareholders' Equity 207,940 190,641 182,741
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) 1999 1998 1999 1998
________________________________________________________________________
INTEREST INCOME:
Loans and fees on loans 3,248 3,132 6,292 6,233
Investment securities:
Taxable 243 358 485 811
Non-taxable 117 97 220 192
Federal funds sold and
securities purchased under
agreements to resell 37 51 55 74
Deposits with banks 1 0 1 0
Total Interest Income 3,646 3,638 7,053 7,310
INTEREST EXPENSE:
Deposits 1,651 1,825 3,216 3,692
Other Short term Funds Borrowed (22) 1 5 15
Long-term Borrowings 118 0 131 0
Total interest expense 1,747 1,826 3,352 3,707
Net interest income 1,899 1,812 3,701 3,603
Provision for loan losses 565 120 700 240
Net interest income after
provision for loan losses 1,334 1,692 3,001 3,363
NON-INTEREST INCOME:
Trust fees 172 187 345 376
Service charges on
deposit accounts 250 137 373 269
Insurance and claims processing 41 45 82 93
Securities gains (losses), net (3) 0 (3) 0
Other Income (71) 65 (25) 111
Total Non-interest Income 389 434 772 849
NON-INTEREST EXPENSE:
Salaries and employee benefits 990 851 1,877 1,655
Premise and equipment expense 228 169 445 488
FDIC Deposit expense 7 5 10 10
Other expenses 499 323 850 526
Total non-interest expense 1,724 1,402 3,182 2,799
Income before income taxes (1) 724 591 1,413
Provision for income tax (43) 245 152 490
Net Income 42 479 439 923
NET INCOME PER COMMON SHARE:
Primary .06 .64 .59 1.23
Weighted average common shares
outstanding 746,133 748,187 746,133 748,187
DIVIDENDS DECLARED:
Cash dividends .15 0.15 0.30 0.30
The accompanying notes are an integral part of this statement.
SVB&T CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30,
(unaudited) 1999 1998
___________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 439 923
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED FROM OPERATING ACTIVITIES:
Directors Stock Option Compensation 4 5
Depreciation 220 190
Net premium amortization (discount
accretion)
of investment securities 12 8
Provision of loan losses 700 240
Decrease(increase) in interest receivable (178) 97
(Increase) decrease in other assets 186 (262)
Increase (decrease) in accrued expenses and
other liabilities (413) 54
Net cash flows provided by operating
activities 970 1,255
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase of interest bearing deposits
in other banks (31) 16
Purchase of investment securities available
for sale (5,501) (6,071)
Proceeds from maturities and paydowns of
investment securities available for sale 4,976 16,052
Net (increase) decrease in loans (16,450) (2,562)
Purchase of premises and equipment (37) (71)
Net cash flows used in investing
activities (17,043) 7,400
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits and
short-term borrowings
Non-interest bearing demand (491) (2,362)
Total interest-bearing deposits 13,310 5,810
Federal Funds Purchased 0 0
Other Short-Term Borrowings 5,000 (4,000)
Long-Term Borrowings 8,100 0
Cash dividends paid 247 (224)
Treasury Stock Sold 41 61
Treasure Stock Purchased (48) 0
Net cash flows provided by (used in)
financing activities 26,159 (716)
Net increase in cash equivalents 10,086 7,939
Cash and cash equivalents at beginning of
period 7,055 5,374
Cash and cash equivalents at end of period 17,141 13,313
Total interest paid 3,290 3,707
Total taxes paid 266 517
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) 1999 1998
______________________________________________________________________________
Balance, beginning of period 20,333 18,716
Net income 439 923
Cash dividends (247) (224)
Net unrealized gain (loss) on investment
securities (492) 77
Sale of Treasury Stock 41 66
Purchase of Treasury stock (48) 0
Balance, end of period 20,026 19,558
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, 1999 is not necessarily indicative of those
expected for the remainder of the year.
June 30, 1999 June 30, 1998 Dec. 31, 1998
______________________________________________________________________________
INVESTMENT SECURITIES:
U.S. treasury securities 0 0 0
U.S. Government corporations
& agencies 13,743 18,635 15,236
States and political subdivisions 10,378 8,983 8,999
Mortgage - backed securities 186 255 211
Other domestic securities 846 310 939
Equity Securities 705 590 590
Total Investment Securities 25,858 28,773 26,065
June 30, 1999 June 30, 1998 Dec. 31, 1998
______________________________________________________________________________
LOANS:
Commercial and industrial loans 14,571 14,848 13,289
Real estate loans 93,484 78,807 80,803
Construction loans 1,781 1,121 1,687
Agricultural production financing
and other loans to farmers 1,644 1,418 1,288
Individual loans for household
and other personal expense 48,242 45,947 46,470
Economic development revenue bonds 0 0 0
Lease Financing Receivable 390 382 336
Other Loans Excluding Consumer 0 465 0
Less: Unearned income on loans (148) (152) (204)
Total Loans 159,964 142,836 143,669
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 $439,000 represents a decrease of
$484,000 or 52% from the $923,000 reported for the same period last year. The
second quarter earnings of $42,000 represents an decrease of $437,000 or 91%
from the $479,000 reported for the second quarter of 1998. The income
increase is a direct result of Reserve for Bad Debts allocations to covered
current charge-offs and future considerations.
NET INTEREST INCOME
Springs Valley Bank & Trust Company is a slightly liability sensitive bank.
Interest bearing deposits reprice faster than interest bearing loans and
investments. In a rising 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 1999, net
interest income increased by $98,000 or 3% for the same period in 1998. The
second quarter net interest income for 1999 increased by $87,000 or 5%
compared to the second quarter of 1998. The improvement in the net interest
income is due to assets being deployed into higher yielding loans rather than
investments and a slight decline in the average yield on deposits.
OTHER INCOME
Other income of $849,000 for the first two quarters of 1999 is $77,000 or 9%
lower than the same period for 1998. The decrease is due to decreased trust
income and losses on some fixed assets taken out of service. Other
non-interest income is an important part of the profitability of the bank and
all avenues of additional income are reviewed.
NON-INTEREST EXPENSES
For the first six months of 1999, other expenses increased by $383,000 or 14%
compared to the same period of 1998. The three months ended June 30, 1999
total other expense increase was $322,000 or 23% increase over that same
period for 1998. This increase is principally the effect of increased
salaries and employee benefits, year 2000 expenses and the adjustment for
credit card rebates.
ANALYSIS OF FINANCIAL CONDITION
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation's allowance for loan losses was $1,529,000 at June 30, 1999
compared to $1,518,000 at June 30, 1998 and $1,106,000 as of December 31,
1998.
At June 30, 1999 the allowance for possible loan losses was .96% of total
loans, net for unearned interest. This compares to an allowance of 1.06%
at June 30, 1998. Net charge offs for the first six months of 1999
were $277,000 compared to $124,000 for the same period last year. Management
reviews the loan portfolio and assess the risk and believes that the allowance
of $1,529,000 is more than 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, 1999 the rate-sensitive assets were 77% of rate-sensitive of
liabilities in the 1-180 day maturity category and 89% 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, 1999 was $20,026,000 compared to
$19,558,000 for the same period last year. The shareholder's equity has
increased by $468,000 or 2% from June 30, 1998 to June 30, 1999. This
increase is attributed to profits.
(ANALYSIS OF FINANCIAL CONDITIONS CONTINUED)
As of June 30, 1999 the bank's leverage capital ratio was 10.09% which
compared to 10.25% at June 30, 1998.
As of June 30, 1999 the bank's tier II risk-based capital ratio was 12.27%
compared to 14.81% at June 30, 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 recommend 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
The Indiana Supreme court ruled that SVB&T Company must pay Hesston
Credit Corporation $199,000 in settlement of a cast that began in
1991.
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 18, 1999.
(b) The following were elected directors of the corporation for a
term of one year and until their successors are elected and
qualified: Brian K. Habig, Douglas A. Habig, John B. Habig,
Thomas L. Habig, Hilbert Lindsey, Ronald G. Seals, R.J.
Sermersheim, Ronald J. Thyen, James C. Tucker, and Gary P.
Critser.
(c) The shareholders unanimously approved the action of the directors
and officers since the 1998 annual meeting of shareholders. A
total of 374,479 shares were voted in person and 268,346 shares
voted by proxy. This totals 642,825 shares voted in approval of
the 746,133 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 11, 1999