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, 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 746,447 shares outstanding at November 11, 1999. The Registrant holds 53,553 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, 1999 and 1998 and December 31, 1998........... 3 Consolidated Statement of Income Three and nine months ended September 30, 1999 and 1998..... 4 Consolidated Statement of Cash Flows Nine months ended September 30, 1999 and 1998............... 5 Consolidated Statement of Changes in Shareholders' Equity Nine months ended September 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 Sept. 30, Sept. 30, Dec. 31, (unaudited) 1999 1998 1998 ASSETS: Cash and due from banks 5,382 4,635 4,195 Federal funds sold 0 725 2,860 Total cash and cash equivalents 5,382 5,360 7,055 Interest bearing deposits in other banks 53 87 79 Investment securities, available for sale (carried at market value) 27,842 33,714 26,065 Loans Loans, net of unearned interest 168,754 140,462 143,669 Allowance for loan losses (1,573) (1,057) (1,106) Net loans 167,181 139,405 142,563 Buildings and equipment 4,680 4,880 4,821 Other real estate 33 37 0 Interest receivable 1,524 1,306 1,196 Deferred income taxes 0 0 0 Other assets 974 1,127 962 Total Assets 207,669 185,916 182,741 LIABILITIES: Deposits Non-interest bearing demand 11,949 11,594 12,747 Interest bearing 158,114 148,609 146,584 Total Deposits 170,063 160,203 159,331 Federal Funds Purchased 1,525 0 0 Other Short Term Borrowings 5,000 3,500 0 Interest payable 734 781 713 Long-Term Borrowings 9,100 0 1,000 Deferred income taxes 295 238 550 Other liabilities 672 1,048 814 Total Liabilities 187,389 165,770 162,400 SHAREHOLDERS' EQUITY: Common stock 200 200 200 Capital surplus 6,170 6,124 6,124 Retained earnings 15,183 14,327 14,655 Net unrealized gain (loss) on investment securities (393) 272 190 Treasury stock at cost (53,553 shares) (880) (777) (836) Total Shareholders' Equity 20,280 20,146 20,333 Total Liabilities and Shareholders' Equity 207,669 185,916 182,741 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) 1999 1998 1999 1998 _____________________________________________________________________________ INTEREST INCOME: Loans and fees on loans 3,458 3,150 9,750 9,383 Investment securities: Taxable 298 372 783 1,183 Non-taxable 107 101 327 293 Federal funds sold and securities purchased under agreements to resell 79 67 134 141 Deposits with banks 1 3 2 3 Total Interest Income 3,943 3,693 10,996 11,003 INTEREST EXPENSE: Deposits 1,747 1,835 4,963 5,527 Other Short term Funds Borrowed 14 13 19 28 Long-Term Borrowings 786 0 317 0 Total interest expense 1,947 1,848 5,299 5,555 Net interest income 1,996 1,845 5,697 5,448 Provision for loan losses 75 145 775 385 Net interest income after provision for loan losses 1,921 1,700 4,922 5,063 NON-INTEREST INCOME: Trust fees 173 219 518 595 Service charges on deposit accounts 26 145 399 414 Insurance and claims processing 37 40 119 133 Securities gains (losses), net 0 0 (3) 0 Other Income 189 74 164 185 Total Non-interest Income 425 478 1,197 1,327 NON-INTEREST EXPENSE: Salaries and employee benefits 888 838 2,765 2,493 Premise and equipment expense 251 258 696 746 FDIC Deposit expense 3 5 13 15 Other expenses 499 312 1,349 838 Total non-interest expense 1,641 1,464 4,823 4,263 Income before income taxes 705 714 1,296 2,127 Provision for income tax 235 247 387 737 Net Income 470 467 909 1,390 NET INCOME PER COMMON SHARE: Primary $.63 $.63 $1.21 $1.86 Weighted average common shares outstanding 746,447 746,447 746,447 746,447 DIVIDENDS DECLARED: Cash dividends $.18 $.15 $.51 $.45 The accompanying notes are an integral part of this statement. SVB&T CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS Nine Months Ended Sept 30, (unaudited) 1999 1998 ___________________________________________________________________________ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income 909 1,390 ADJUSTMENTS TO RECONCILE NET INCOME TO CASH PROVIDED FROM OPERATING ACTIVITIES: Directors Stock Option Compensation 4 5 Depreciation 307 253 Net premium amortization (discount accretion) of investment securities 35 24 Provision of loan losses 775 360 Decrease(increase) in interest receivable (328) 19 (Increase) decrease in other assets (1,199) (409) Increase (decrease) in accrued expenses and other liabilities (376) 358 Net cash flows provided by operating activities 127 2,000 CASH FLOWS FROM INVESTING ACTIVITIES: Net increase of interest bearing deposits in other banks 26 25 Purchase of investment securities available for sale (7,796) (14,636) Proceeds from maturities and paydowns of investment securities available for sale 5,482 19,756 Net (increase) decrease in loans (25,085) (613) Purchase of premises and equipment (166) (100) Net cash flows used in investing activities (27,539) 4,432 CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in deposits and short-term borrowings Non-interest bearing demand (798) (1,699) Total interest-bearing deposits 11,530 (3,970) Federal Funds Purchased 1,525 0 Other Short-Term Borrowings 5,000 (500) Long-Term Borrowings 8,100 0 Cash dividends paid 380 (338) Treasury Stock Sold 46 61 Treasury Stock Purchased (44) 0 Net cash flows provided by (used in) financing activities 25,739 (6,446) Net increase (decrease) in cash equivalents (1,673) (14) Cash and cash equivalents at beginning of period 7,055 5,374 Cash and cash equivalents at end of period 5,382 5,360 Total interest paid 4,984 5,570 Total taxes paid 441 665 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) 1999 1998 _______________________________________________________________________________ Balance, beginning of period 20,333 18,716 Net income 909 1,390 Cash dividends (380) (337) Net unrealized gain (loss) on investment securities (583) 311 Sale of Treasury Stock 49 66 Purchase of Treasury Stock (48) 0 Balance, end of period 20,280 20,146 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, 1999 is not necessarily indicative of those expected for the remainder of the year. Sept. 30, 1999 Sept. 30, 1998 Dec. 31, 1998 ________________________________________________________________________________ INVESTMENT SECURITIES: U.S. treasury securities 0 0 0 U.S. Government corporations & agencies 15,705 23,910 15,236 States and political subdivisions 9,931 8,782 8,999 Mortgage - backed securities 161 234 211 Other domestic securities 840 197 939 Equity Securities 1,205 591 590 Total Investment Securities 27,842 33,714 26,065 Sept. 30, 1999 Sept. 30, 1998 Dec. 31, 1998 ________________________________________________________________________________ LOANS: Commercial and industrial loans 17,901 12,829 13,289 Real estate loans 96,983 78,868 80,803 Construction loans 1,777 1,037 1,687 Agricultural production financing and other loans to farmers 1,690 1,799 1,288 Individual loans for household and other personal expense 49,492 45,120 46,470 Economic development revenue bonds 0 0 0 Lease Financing Receivable 381 364 336 Other Loans Excluding Consumer 676 605 0 Less: Unearned income on loans (146) (160) (204) Total Loans 168,754 140,462 143,669 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 nine months of $909,000 represents a decrease of $481,000 or 35% from the $1,390,000 reported for the same period last year. The third quarter earnings of $470,000 represents an increase of $30,000 or 1% from the $467,000 reported for the third quarter of 1998. The income decrease is a direct result of a reserve for bad debts allocation to cover current charge-offs and future considerations. This occurred during the second quarter. The third quarter profit for 1999 is slightly higher than the third quarter for 1998. NET INTEREST INCOME Springs Valley Bank & Trust Company is a slightly liability sensitive bank. Interest bearing deposits reprise 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 nine months of 1999, net interest income increased by $249,000 or 5% for the same period in 1998. The third quarter net interest income for 1999 increased by $151,000 or 8% compared to the third quarter of 1998. The improvement in the net interest income is due to assets being deployed into higher yielding loans rather than investments and decreasing interest expense on deposits. OTHER INCOME Other income of $1,197,000 for the first three quarters of 1999 is $130,000 or 10% 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 nine months of 1999, other expenses increased by $560,000 or 13% compared to the same period of 1998. The three months ended September 30, 1999 total other expense increase was $177,000 or 12% increase over that same period for 1998. The 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 $1,573,000 at September 30, 1999 compared to $1,057,000 at September 30, 1998 and $1,106,000 as of December 31, 1998. At September 30, 1999 the allowance for possible loan losses was .93% of total loans, net for unearned interest. This compares to an allowance of .75% at September 30, 1998. Net charge offs for the first nine months of 1999 were $308,000 compared to $730,000 for the same period last year. Management reviews the loan portfolio and assess the risk and believes that the allowance of $1,573,000 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 September 30, 1999 the rate-sensitive assets were 60% of rate-sensitive liabilities in the 1-180 day maturity category and 81% 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, 1999 was $20,280,000 compared to $20,146,000 for the same period last year. The shareholder's equity has increased by $134,000 or 1% from September 30, 1998 to September 30, 1999. This increase is attributed to the unrealized loss on investment securities and profits increasing. (ANALYSIS OF FINANCIAL CONDITIONS CONTINUED) As of September 30, 1999 the bank's leverage capital ratio was 9.58% which compared to 10.8% at September 30, 1998. As of September 30, 1999 the bank's total risk-based capital ratio was 12.51% compared to 14.14% at September 30, 1998. 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 11, 1999