10-Q 1 0001.txt 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, 2000 _____ 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 745,028 shares outstanding at August 14, 2000. The Registrant holds 54,972 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, 2000 and 1999 and December 31, 1999................ 3 Consolidated Statement of Income Three and six months ended June 30, 2000 and 1999........... 4 Consolidated Statement of Cash Flows Six months ended June 30, 2000 and 1999..................... 5 Consolidated Statement of Changes in Shareholders' Equity Six months ended June 30, 2000 and 1999..................... 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) 2000 1999 1999 ASSETS: Cash and due from banks 6,600 5,071 5,472 Federal funds sold 2,015 12,070 5,275 Total cash and cash equivalents 8,615 17,141 10,747 Interest bearing deposits in other banks 51 48 18 Investment securities, available for sale (carried at market value) 26,622 25,153 24,898 Investment securities, held to maturity, at cost 1,805 705 1,205 Loans Loans, net of unearned interest 191,181 159,634 175,119 Allowance for loan losses (1,636) (1,529) (1,627) Net loans 189,545 158,105 173,492 Buildings and equipment 4,540 4,638 4,523 Other real estate 40 0 0 Interest receivable 1,833 1,374 1,464 Deferred income taxes 190 0 165 Other assets 1,818 776 882 Total Assets 235,074 207,940 217,394 LIABILITIES: Deposits Non-interest bearing demand 12,229 12,257 22,102 Interest bearing 163,816 159,894 159,174 Total Deposits 176,045 172,151 181,276 Federal Funds Purchased 0 0 0 Other Short Term Borrowings 5,000 5,000 5,000 Long-Term Borrowings 31,100 9,100 9,100 Interest payable 814 775 784 Deferred income taxes 0 292 0 Other liabilities 911 596 865 Total Liabilities 213,870 187,914 197,025 SHAREHOLDERS' EQUITY: Common stock 200 200 200 Capital surplus 6,211 6,165 6,170 Retained earnings 16,350 14,847 15,545 Net unrealized gain (loss) on investment securities (582) (302) (544) Treasury stock at cost (53,867 shares ) (975) (884) (1,002) Total Shareholders' Equity 21,204 20,026 20,369 Total Liabilities and Shareholders' Equity 235,074 207,940 217,394 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) 2000 1999 2000 1999 ________________________________________________________________________ INTEREST INCOME: Loans and fees on loans 4,082 3,248 8,028 6,292 Investment securities: Taxable 292 243 563 485 Non-taxable 125 117 242 220 Federal funds sold and securities purchased under agreements to resell 21 37 23 55 Deposits with banks 2 1 2 1 Total Interest Income 4,522 3,646 8,858 7,053 INTEREST EXPENSE: Deposits 1,908 1,651 3,792 3,216 Other Short term Funds Borrowed 100 (22) 246 5 Long-term Borrowings 390 118 534 131 Total interest expense 2,398 1,747 4,572 3,352 Net interest income 2,124 1,899 4,286 3,701 Provision for loan losses 75 565 150 700 Net interest income after provision for loan losses 2,049 1,334 4,136 3,001 NON-INTEREST INCOME: Trust fees 172 172 345 345 Service charges on deposit accounts 136 250 259 373 Securities gains (losses), net (8) (3) (4) (3) Other Income 112 (71) 193 (25) Total Non-interest Income 412 389 793 772 NON-INTEREST EXPENSE: Salaries and employee benefits 962 990 1,887 1,877 Premise and equipment expense 175 228 523 445 FDIC Deposit expense 9 7 18 10 Other expenses 452 499 879 850 Total non-interest expense 1,598 1,724 3,307 3,182 Income before income taxes 863 (1) 1,622 591 Provision for income tax 265 (43) 549 152 Net Income 598 42 1,073 439 NET INCOME PER COMMON SHARE: Primary .80 .06 1.44 .59 Weighted average common shares outstanding 745,028 746,133 745,028 746,133 DIVIDENDS DECLARED: Cash dividends 0.15 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) 2000 1999 ___________________________________________________________________________ CASH FLOWS FROM OPERATING ACTIVITIES: Net income 1,073 439 ADJUSTMENTS TO RECONCILE NET INCOME TO CASH PROVIDED FROM OPERATING ACTIVITIES: Directors Stock Option Compensation 0 4 Depreciation 120 220 Net premium amortization (discount accretion) of investment securities 18 12 Provision of loan losses 150 700 Decrease(increase) in interest receivable (369) (178) (Increase) decrease in other assets (951) 186 Increase (decrease) in accrued expenses and other liabilities 76 (413) Net cash flows provided by operating activities 117 970 CASH FLOWS FROM INVESTING ACTIVITIES: Net increase of interest bearing deposits in other banks (33) (31) Purchase investment held to maturity (600) 0 Purchase of investment securities available for sale (3,367) (5,501) Proceeds from maturities and paydowns of investment securities available for sale 1,563 4,976 Net (increase) decrease in loans (16,243) (15,956) Purchase of premises and equipment (138) (37) Net cash flows used in investing activities (18,818) (16,549) CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in deposits and short-term borrowings Non-interest bearing demand (9,873) (491) Total interest-bearing deposits 4,642 13,310 Other Short-Term Borrowings 0 5,000 Long-Term Borrowings 22,000 8,100 Cash dividends paid (268) (247) Treasury Stock Sold 138 41 Treasure Stock Purchased (70) (48) Net cash flows provided by (used in) financing activities 16,569 25,665 Net increase in cash equivalents (2,132) 10,086 Cash and cash equivalents at beginning of period 10,747 7,055 Cash and cash equivalents at end of period 8,615 17,141 Total interest paid 4,542 3,290 Total taxes paid 850 266 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) 2000 1999 ______________________________________________________________________________ Balance, beginning of period 20,369 20,333 Net income 1,073 439 Cash dividends (268) (247) Net unrealized gain (loss) on investment securities (38) (492) Sale of Treasury Stock 138 41 Purchase of Treasury stock (70) (48) Balance, end of period 21,204 20,026 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 30,2000 June 30, 1999 Dec. 31, 1999 ______________________________________________________________________________ INVESTMENT SECURITIES: U.S. treasury securities 0 0 0 U.S. Government corporations & agencies 14,460 13,743 13,256 States and political subdivisions 11,251 10,378 10,405 Mortgage - backed securities 79 186 132 Other domestic securities 832 846 835 Equity Securities 1,805 705 1,205 Total Investment Securities 28,427 25,858 26,103 June 30, 2000 June 30, 1999 Dec. 31, 1999 ______________________________________________________________________________ LOANS: Commercial and industrial loans 37,367 14,571 21,945 Real estate loans 94,803 93,484 98,851 Construction loans 15,990 1,781 6,490 Agricultural production financing and other loans to farmers 2,220 1,644 1,316 Individual loans for household and other personal expense 40,209 48,242 46,295 Economic development revenue bonds 0 0 0 Lease Financing Receivable 334 390 336 Other Loans Excluding Consumer 397 0 0 Less: Unearned income on loans (139) (148) (141) Total Loans 191,181 159,964 175,119 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 $1,073,000 represents an increase of $634,000 or 52% from the $439,000 reported for the same period last year. The second quarter earnings of $598,000 represents an increase of $556,000 from the $42,000 reported for the second quarter of 1999. The reduced income in 1999 is a direct result of Reserve for Bad Debts allocations to covered 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 2000, net interest income increased by $585,000 or 16% for the same period in 1999. The second quarter net interest income for 2000 increased by $225,000 or 12% compared to the second quarter of 1999. 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 $849,000 for the first two quarters of 2000 is $21,000 or 3% higher than the same period for 1999. The increase is due to an increase in Alternative investments Income and adjustments made in 1999 that reduced other income. 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 2000, other expenses increased by $125,000 or 4% compared to the same period of 1999. The three months ended June 30, 2000 total other expense decrease was $126,000 or 7% over that same period for 1999. This decrease is principally the effect of adjustment for credit card rebates in 1999. ANALYSIS OF FINANCIAL CONDITION ALLOWANCE FOR POSSIBLE LOAN LOSSES The Corporation's allowance for loan losses was $1,636,000 at June 30, 2000 compared to $1,529,000 at June 30, 1999 and $1,627,000 as of December 31, 1999. At June 30, 2000 the allowance for possible loan losses was .88% of total loans, net for unearned interest. This compares to an allowance of .96% at June 30, 1999. Net charge offs for the first six months of 2000 were $142,000 compared to $277,000 for the same period last year. Management reviews the loan portfolio and assess the risk and believes that the allowance of $1,636,000 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 June 30, 2000 the rate-sensitive assets were 72% of rate-sensitive of liabilities in the 1-180 day maturity category and 80% 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, 2000 was $21,204,000 compared to $20,026,000 for the same period last year. The shareholder's equity has increased by $1,178,000 or 6% from June 30, 1999 to June 30, 2000. This increase is attributed to profits. (ANALYSIS OF FINANCIAL CONDITIONS CONTINUED) As of June 30, 2000 the bank's leverage capital ratio was 8.37% which compared to 10.09% at June 30, 1999. As of June 30, 2000 the bank's total risk-based capital ratio was 12.01% compared to 12.27% at June 30, 1999. 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 18, 2000. (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 1999 annual meeting of shareholders. A total of 380,346 shares were voted in person and 246,120 shares voted by proxy. This totals 626,466 shares voted in approval of the 745,028 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 10, 2000