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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange
Act of 1934
For the Fiscal year ended December 31, 2000
Commission File Number 33-10149
SVB&T Corporation
(Exact name of registrant as specified in its charter)
Indiana
(State or other jurisdiction of incorporation or organization)
35-1539978
(Employer Identification (I.R.S.) No.)
College and Maple Streets, French Lick, Indiana 47432
(Address of principal executive offices, including Zip Code)
(812) 936-9961
(Registrant's Telephone Number, including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes_X_ No___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the
best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. _X_
The aggregate market value of the voting stock held by nonaffiliated
shareholders of the registrant computed by reference to the price at which the
stock was sold or the average bid and asked prices of such stock, as of March
15, 2001 was approximately $10,764,360.
The number of shares outstanding of each of the registrant's classes of common
stock as of March 17, 2001 was 747,100.
Portions of the 2000 Annual Report to Shareholders for the year ended December
31, 2000 are incorporated by reference into Part II.
SVB&T Corporation 2000 Annual Report on Form 10-K
Table of Contents
Part I
Item 1. Business 3
Item 2. Property 9
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Part II
Item 5. Market for Registrants Common Equity and Related Stockholder
Matters 9
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Item 8. Financial Statement and Supplementary Data 22
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 22
Part III
Item 10. Directors and Executive Officers of the Registrant 22
Item 11. Executive Compensation 24
Item 12. Security Ownership of Certain Beneficial Owners and Management 31
Item 13. Certain Relationships and Related Transactions 31
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 31
Signatures 32
Index to Exhibits 33
PART I
Item 1. Business
General. SVB&T Corporation (the "Company") is a registered bank holding
company under the Bank Holding Company Act with its principal office in French
Lick, Indiana. The Company has elected to be governed by the Indiana Business
Corporation Law (IBCL).
The Company's sole subsidiary is Springs Valley Bank & Trust Company (the
"Bank"), which operates two banking offices in Orange County, Indiana, three
offices in Dubois County, Indiana and a banking office in Clark County,
Indiana. The Company became a holding company for the Bank in early 1983. At
present, the business of the Company is the management of the operations of
the Bank. The Bank is engaged in the business of providing a wide range of
financial services which include:
(I) maintaining demand, savings, and time deposits of individuals,
partnerships, corporations, associations, and government entities;
(II) extension of credit through loans to individuals, and to small and
medium sized businesses;
(III) purchase of obligations of federal, state, county and municipal
authorities and agencies;
(IV) providing a wide range of fiduciary services for personal and
corporate trusts;
(V) providing collection and deposit services for businesses and
individuals as well as providing currency and change for check
cashing and business operations;
(VI) acting as an agent for, property and casualty insurance, and
health insurance; and owning a interest in a Reinsurance Company
For credit insurance products
(VII) acting as a broker for residential and commercial real estate.
(VIII) providing financial Services and access to products to meet the
clients needs.
The bank competes in the financial services industry in the counties of
Orange, Dubois, Clark and surrounding counties in Indiana. Competition
includes other financial institutions, credit unions, brokerage firms,
acceptance corporations and other organizations that offer banking related
services in our area.
The bank employees 111 full-time equivalents which are provided benefits and
with whom it enjoys excellent relations.
The bank serves as the local depository, and trust administrator for Kimball
International, Inc. ("Kimball") an interest of a majority of the Board of
Directors of the Company. The deposits of Kimball represent approximately 4%
of the certificates of deposit and money market deposits of the Bank. In
addition, the Bank has loans outstanding with individuals who are employees of
Kimball representing in excess of 14% of the Bank's total loans. Accordingly,
the cash flow of Kimball can have a significant impact on the deposit and loan
functions and earnings of the Bank.
At December 31, 2000, the company had total assets of $247 million, total
deposits of $186 million, and total equity capital of $22 million.
SUPERVISION AND REGULATION
Both the Company and the Bank operate in highly regulated environments and are
subject to supervision and regulation by several governmental regulatory
agencies, including the Federal Reserve Board, the FDIC, and the Indiana
Department of Financial Institutions. The laws and regulations established by
these agencies are generally intended to protect depositors, not shareholders.
Changes in applicable laws, regulations, governmental policies, income tax
laws and accounting principles may have a material effect on our business and
prospects. The following summary is qualified by reference to the statutory
and regulatory provisions discussed.
SVB&T Corporation
The Bank Holding Company Act. Because the Company owns all of the outstanding
capital stock of the Bank, it is registered as a bank holding company under
the federal Bank Holding Company Act of 1956 and is subject to periodic
examination by the Federal Reserve and required to file periodic reports of
its operations and any additional information that the Federal Reserve may
require.
Investments, Control, and Activities. With some limited exceptions, the Bank
Holding Company Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before acquiring another bank holding company
or acquiring more than 5% of the voting shares of a bank (unless it already
owns or controls the majority of such shares).
Bank holding companies are prohibited, with certain limited exceptions, from
engaging in activities other than those of banking or of managing or
controlling banks. They are also prohibited from acquiring or retaining direct
or indirect ownership or control of voting shares or assets of any company
which is not a bank or bank holding company, other than subsidiary companies
furnishing services to or performing services for their subsidiaries, and
other subsidiaries engaged in activities which the Federal Reserve Board
determines to be so closely related to banking or managing or controlling
banks as to be incidental to these operations. The Bank Holding Company Act
does not place territorial restrictions on the activities of such nonbanking-
related activities.
The Company does not currently plan to engage in any activity other than
owning the stock of the Bank.
Dividends. The Federal Reserve's policy is that a bank holding company
experiencing earnings weaknesses should not pay cash dividends exceeding its
net income or which could only be funded in ways that weakened the bank
holding company=s financial health, such as by borrowing. Additionally, the
Federal Reserve possesses enforcement powers over bank holding companies and
their non-bank subsidiaries to prevent or remedy actions that represent unsafe
or unsound practices or violations of applicable statutes and regulations.
Among these powers is the ability to proscribe the payment of dividends by
banks and bank holding companies.
Source of Strength. In accordance with Federal Reserve Board policy, the
Company is expected to act as a source of financial strength to the Bank and
to commit resources to support the Bank in circumstances in which the Company
might not otherwise do so.
Springs Valley Bank & Trust Company
General Regulatory Supervision. The Bank is an Indiana-chartered banking
corporation subject to examination by the Indiana Department of Financial
Institutions. The Indiana Department of Financial Institutions and the FDIC
regulate or monitor virtually all areas of the Bank=s operations. The Bank
must undergo regular on site examinations by the FDIC and DFI and must submit
annual reports to the FDIC and the DFI.
Lending Limits. Under Indiana law, the total loans and extensions of credit
by an Indiana-chartered bank to a borrower outstanding at one time and not
fully secured may not exceed 15% of the bank's capital and unimpaired surplus.
Deposit Insurance. Deposits in the Bank are insured by the FDIC up to a
maximum amount, which is generally $100,000 per depositor subject to
aggregation rules. The Bank is subject to deposit insurance assessment by the
FDIC pursuant to its regulations establishing a risk-related deposit insurance
assessment system, based upon the institution=s capital levels and risk
profile. The Bank is also subject to assessment for the Financial Corporation
(FICO) to service the interest on its bond obligations. The amount assessed
on individual institutions, including the Bank, by FICO is in addition to the
amount paid for deposit insurance according to the risk-related assessment
rate schedule. Increases in deposit insurance premiums or changes in risk
classification will increase the Bank's cost of funds, and we may not be able
to pass these costs on to our customers.
Transactions with Affiliates and Insiders. The Bank is subject to limitations
on the amount of loans or extensions of credit to, or investments in, or
certain other transactions with, affiliates and on the amount of advances to
third parties collateralized by the securities or obligations of affiliates.
Furthermore, within the foregoing limitations as to amount, each covered
transaction must meet specified collateral requirements. Compliance is also
required with certain provisions designed to avoid the taking of low quality
assets. The Bank is also prohibited from engaging in certain transactions
with certain affiliates unless the transactions are on terms substantially the
same, or at least as favorable to such institution or its subsidiaries, as
those prevailing at the time for comparable transactions with nonaffiliated
companies.
Extensions of credit by the Bank to its executive officers, directors, certain
principal shareholders, and their related interests must:
be made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable
transactions with third parties; and
not involve more than the normal risk of repayment or present other
unfavorable features.
Dividends. Under Indiana law, the Bank may pay dividends from its undivided
profits in an amount declared by its board of directors, subject to prior
approval of the Indiana Department of Financial Institutions if the proposed
dividend, when added to all prior dividends declared during the current
calendar year, would be greater than the current year's "net profits" and
retained "net profits" for the previous two calendar years. Federal law
generally prohibits the Bank from paying a dividend to its holding company if
the depository institution would thereafter be undercapitalized. The FDIC may
prevent an insured bank from paying dividends if the bank is in default of
payment of any assessment due to the FDIC. In addition, payment of dividends
by a bank may be prevented by the applicable federal regulatory authority if
such payment is determined, by reason of the financial condition of such bank,
to be an unsafe and unsound banking practice.
Branching and Acquisitions. Branching by the Bank requires the prior approval
of the FDIC and the DFI. Under current law, Indiana chartered banks may
establish branches throughout the state and in other states. Congress
authorized interstate branching, with certain limitations, beginning in 1997.
Indiana law authorizes an Indiana bank to establish one or more branches in
states other than Indiana through interstate merger transactions and to
establish one or more interstate branches through de novo branching or the
acquisition of a branch.
Community Reinvestment Act. The Community Reinvestment Act requires that the
FDIC evaluate the record of the Bank in meeting the credit needs of its local
community, including low and moderate income neighborhoods. These factors are
also considered in evaluating mergers, acquisitions, and applications to open
a branch or facility. Failure to adequately meet these criteria could result
in the imposition of additional requirements and limitations on the Bank.
Capital Regulations. The federal bank regulatory authorities have adopted
risk-based capital guidelines for banks and bank holding companies that are
designed to make regulatory capital requirements more sensitive to differences
in risk profiles among banks and bank holding companies and account for
off-balance sheet items. Risk-based capital ratios are determined by
allocating assets and specified off-balance sheet commitments to four risk
weighted categories of 0%, 20%, 50%, or 100%, with higher levels of capital
being required for the categories perceived as representing greater risk. The
guidelines are minimums, and the federal regulators have noted that banks and
bank holding companies contemplating significant expansion programs should not
allow expansion to diminish their capital ratios and should maintain ratios in
excess of the minimums. Neither the Company nor the Bank has received any
notice indicating that either is subject to higher capital requirements.
The federal bank regulatory authorities have also implemented a leverage ratio
to supplement to the risk-based guidelines. The principal objective of the
leverage ratio is to place a constraint on the maximum degree to which a bank
holding company may leverage its equity capital base.
The following are the Company's regulatory capital ratios as of December 31,
2000:
Tier 1 Capital: 12.40%
Total Capital: 13.30%
Leverage Ratio: 9.70%
The following are the Bank's regulatory capital ratios as of December 31,
2000:
Tier 1 Capital: 11.60%
Total Capital: 12.52%
Leverage Ratio: 9.10%
The Bank is also subject to the FDIC's "prompt corrective action" regulations,
which implement a capital-based regulatory scheme designed to promote early
intervention for troubled banks. This framework contains five categories of
compliance with regulatory capital requirements, including "well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized,"
and "critically undercapitalized." As of December 31, 2000, the Bank was
qualified as "well capitalized." It should be noted that a bank's capital
category is determined solely for the purpose of applying the FDIC's "prompt
corrective action" regulations and that the capital category may not
constitute an accurate representation of the bank's overall financial
condition or prospects. The degree of regulatory scrutiny of a financial
institution increases, and the permissible activities of the institution
decreases, as it moves downward through the capital categories. Bank holding
companies controlling financial institutions can be required to boost the
institutions' capital and to partially guarantee the institutions'
performance.
Other Regulations. Interest and other charges collected or contracted for by
the Bank are subject to state usury laws and federal laws concerning interest
rates. The Bank's loan operations are also subject to federal laws applicable
to credit transactions, such as the:
Truth-In-Lending Act, governing disclosures of credit
terms to consumer borrowers;
Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public
and public officials to determine whether a financial
institution is fulfilling its obligation to help meet the
housing needs of the community it serves;
Equal Credit Opportunity Act, prohibiting discrimination
on the basis of race, creed or other prohibited factors
in extending credit;
Fair Credit Reporting Act of 1978, governing the use and
provision of information to credit reporting agencies;
Fair Debt Collection Act, governing the manner in which
consumer debts may be collected by collection agencies; and
rules and regulations of the various federal agencies charged
with the responsibility of implementing such federal laws.
The deposit operations of the Bank also are subject to the:
Right to Financial Privacy Act, which imposes a duty to
maintain confidentiality of consumer financial records and
prescribes procedures for complying with administrative
subpoenas of financial records; and
Electronic Funds Transfer Act, and Regulation E issued by
the Federal Reserve Board to implement that Act, which
governs automatic deposits to and withdrawals from deposit
accounts and customers= rights and liabilities arising from
the use of automated teller machines and other electronic
banking service.
Enforcement Powers. Federal regulatory agencies may assess civil and criminal
penalties against depository institutions and certain "institution-affiliated
parties," including management, employees, and agents of a financial
institution, as well as independent contractors and consultants such as
attorneys and accountants and others who participate in the conduct of the
financial institution=s affairs. In addition, regulators may commence
enforcement actions against institutions and institution-affiliated parties.
Possible enforcement actions include the termination of deposit insurance.
Furthermore, regulators may issue cease-and-desist orders to, among other
things, require affirmative action to correct any harm resulting from a
violation or practice, including restitution, reimbursement, indemnifications
or guarantees against loss. A financial institution may also be ordered to
restrict its growth, dispose of certain assets, rescind agreements or
contracts, or take other actions as determined by the regulator to be
appropriate.
Recent Legislative Developments. On November 12, 1999, the President of the
United States signed into law the Financial Services Modernization Act of
1999, which for the first time allow banks, securities firms and insurance
companies to affiliate in a new financial holding company structure. Neither
the Company nor the Bank can predict what impact the Financial Services
Modernization Act will have on financial institutions. One consequence may be
increased competition from large financial services companies that, under this
new law, will be permitted to provide many types of financial services to
customers.
Effect of Governmental Monetary Policies. Our earnings are affected by
domestic economic conditions and the monetary and fiscal policies of the
United States government and its agencies. The Federal Reserve Bank's monetary
policies have had, and are likely to continue to have, an important impact on
the operating results of commercial banks through its power to implement
national monetary policy in order, among other things, to curb inflation or
combat a recession. The monetary policies of the Federal Reserve Board have
major effects upon the levels of bank loans, investments and deposits through
its open market operations in United States government securities and through
its regulation of the discount rate on borrowings of member banks and the
reserve requirements against member bank deposits. It is not possible to
predict the nature or impact of future changes in monetary and fiscal
policies.
Item 2. Property
The Bank properties consist of the home office, located at 505 South Maple
Street in French Lick, Indiana, and branch offices located at Broadway Avenue
in West Baden Springs; 1500 Main Street in Jasper, Indiana; 865 3rd Avenue in
Jasper, Indiana; and 614 E Water Street in Borden, Indiana; and a leased
office at 241 US 231 South in Jasper, as well as eleven automated teller
machines, six in Jasper, one in West Baden, one in French Lick, one in Borden,
one in Salem and one in Santa Claus. All cities are located in Indiana. The
Company has no separate offices.
Item 3. Legal Proceedings
As a part of its ordinary course of business, the Bank is a party in law suits
involving claims to the ownership of funds in particular accounts and
involving the collection of delinquent accounts (such as garnishment
proceedings). All such litigation is incidental to the Bank's business.
Management believes that no litigation is threatened or pending in which the
Company or the Bank faces potential loss or exposure which will materially
affect the stockholders' equity or the Bank's financial position.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
PART II
Item 5. Market for Registrants Common Equity and Related Stockholder Matters
Shares of the common stock of the Company are not traded on any national or
regional exchange or in the over-the-counter market. Accordingly, there is no
established market for the common stock. These are occasional trades as a
result of private negotiations not involving a broker or a dealer.
According to the information available to the Company the following table
displays the high and low selling prices for each quarter for 1998 and 1999.
Other trades may have occurred at prices of which the Company was not aware.
Year Quarter High/Per Share Low/Per Share
2000 1 $40 $38
2 $40 $38
3 N/A N/A
4 $40 $39
1999 1 $38 $35
2 $35 $35
3 $35 $35
4 $38 $38
The company has 328 shareholders on record as of March 10, 2000.
The following table sets forth the cash dividends of the company for the two
most recent fiscal years:
Cash Dividends Per Share
1st 2nd 3rd 4th
Year Quarter Quarter Quarter Quarter
1999 $.15 $.18 $.18 $.18
2000 $.18 $.18 $.18 $.18
The holders of the Company's Common Stock are entitled to cash dividends when,
and if declared by its Board of Directors out of funds legally available
therefor. The Company intends to pay a reasonable dividend, while maintaining
capital adequacy. Funds for the payment of cash dividends by the Company are
obtained primarily from dividends paid to it by the Bank. The Bank is
restricted by Indiana law and regulations of the Department of Financial
Institutions, State of Indiana, and the Federal Deposit Insurance Corporation
as to the maximum amount of dividends it can pay without prior approval. At
December 31, 2000 approximately $3,129,000 of the Bank's retained earnings
were available for dividend payments to the Corporation. There is no
assurance as to future dividends since they are dependent upon earnings,
general economic conditions, financial condition, capital requirements,
regulatory limitations, and other factors as may be appropriate in determining
dividend policy.
PART II
Item 6. Selected Financial Data
(dollars in thousands except per share data)
Summary of Operations 2000 1999 1998 1997 1996
Interest and Fees on Loans $ 16,933 $ 13,341 $ 12,480 $ 11,599 $ 10,317
Interest on Investments 1,778 1,666 2,055 2,929 3,767
Total Interest Income 18,711 15,007 14,535 14,528 14,084
Interest on Deposits 8,135 6,781 7,161 7,475 7,468
Interest on Short-term
Borrowing 148 8 43 157 63
Interest on Long-term Debt 1,766 540 12 0 0
Total Interest Expense 10,049 7,329 7,216 7,632 7,531
Net Interest Income 8,662 7,678 7,319 6,896 6,553
Provision for Loan Losses 300 850 580 400 290
Net Interest Income after
Provision for Loan Loss 8,362 6,828 6,739 6,496 6,263
Service Charges on Deposit
Accounts 534 533 615 505 365
Other Income 1,209 1,172 1,260 1,254 1,241
Total Other Income 1,743 1,705 1,875 1,759 1,606
Salaries and Benefits 3,870 3,614 3,381 3,295 3,236
Other Expenses 3,108 2,811 2,361 2,343 2,322
Total Other Expenses 6,978 6,452 5,742 5,638 5,558
Income Before Income Tax 3,127 2,108 2,872 2,617 2,311
Income Tax Expense 1,088 703 1,043 922 650
Net Income 2,039 1,405 1,829 1,695 1,661
Year-end Balances
Total Assets 247,759 217,394 182,741 190,404 184,362
Total Loans, Net 203,001 173,492 142,563 139,202 121,530
Total Long-term Debt 31,100 9,100 1,000 0 0
Total Deposits 186,360 181,276 159,331 165,871 151,595
Total Shareholders' Equity 22,469 20,369 20,333 18,715 17,330
Per Share Data
Net Income 2.74 1.88 2.45 2.27 2.23
Cash Dividends .72 .69 .60 .54 .48
Shareholders' Equity,
End of Year 30.16 27.30 27.18 25.09 23.24
Other Data at Year-end
Number of Employees 111 106 104 107 115
Weighted Average Number
of Shares 745,017 745,994 745,806 745,800 745,800
Return on Assets .86% .70% .98% .90% .87%
Return on Shareholders' Equity 10.01% 6.90% 9.66% 10.43% 9.86%
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
THREE-YEAR AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS (Taxable
equivalent basis, dollars in thousands)
2000 1999 1998
Avg. Int. Yield/ Avg. Int. Yield/ Avg. Int. Yield/
ASSETS Bal. & Fees Rate Bal. & Fees Rate Bal. & Fees Rate
Earning Assets:
Interest-bearing
deposits in other
banks 69 3 4.35% 67 3 4.48% 82 4 4.88%
Federal funds sold 1,309 73 5.58% 3,323 167 5.03% 3,285 181 5.51%
Investment securities:
U.S. Treasury and
Gov't Agencies &
mortgage backed 14,828 927 6.25% 14,748 885 6.00% 22,772 1,371 6.02%
States and political
subdivisions 11,321 849 7.50% 9,887 723 7.31% 8,422 634 7.53%
Other securities 2,445 194 7.93% 1,774 115 6.48% 1,076 74 6.88%
TOTAL INVESTMENT
SECURITIES 28,594 1,970 6.89% 26,409 1,723 6.52% 32,270 2,079 6.44%
Loans: (1) (2)
Commercial 53,966 5,004 9.27% 39,196 3,451 8.80% 33,295 3,068 9.21%
Installment, net of
unearned income 48,437 4,612 9.52% 44,519 4,090 9.19% 46,602 4,292 9.21%
Real Estate 87,707 7,182 8.19% 74,459 5,662 7.60% 60,094 5,000 8.32%
Credit Card
and Other 1,059 13512.75% 1,033 13813.36% 837 11613.86%
TOTAL LOANS 191,169 16,933 8.86%159,207 13,341 8.38%140,828 12,476 8.86%
TOTAL EARNING
ASSETS 221,141 18,979 8.58%189,006 15,234 8.06%176,465 14,740 8.35%
Less: Allowance
for Losses (1,671) (1,394) (1,254)
Non-Earning Assets:
Cash and due
from banks 4,806 4,904 4,867
Other Assets 7,470 7,055 7,183
TOTAL ASSETS 231,746 199,571 187,261
LIABILITIES & SHAREHOLDERS EQUITY
Interest-bearing liabilities
Savings and daily interest
checking 40,167 959 2.38% 43,248 1,029 2.38% 43,159 1,192 2.76%
Money market
accounts 37,194 2,078 4.42% 32,266 1,426 4.42% 30,482 1,468 4.82%
Certificates of
deposit $100,000
and over 31,498 1,859 5.46% 26,864 1,467 5.46% 22,120 1,222 5.52%
Other time deposits55,621 3,239 5.39% 53,019 2,859 5.39% 57,502 3,279 5.70%
TOTAL INTEREST-
BEARING DEPOSITS 164,480 8,135 4.36%155,397 6,781 4.36%153,263 7,161 4.67%
Borrowing 30,815 1,914 5.66% 9,690 548 5.66% 1,017 55 5.41%
TOTAL INTEREST-BEARING
LIABILITIES 195,29510,049 4.44%165,087 7,329 4.44%154,280 7,216 4.68%
Non-interest bearing
liabilities:
Demand deposits 13,362 12,594 12,099
Other liabilities 1,670 1,540 1,946
Shareholder's
equity 21,419 20,350 18,936
TOTAL LIABILITIES
AND SHAREHOLDERS
EQUITY 231,746 199,571 187,261
INTEREST MARGIN RECAP:
Interest income/
earning assets 18,979 8.58% 15,234 8.06% 14,740 8.35%
Interest expense/
earning assets 10,049 4.54% 7,329 3.88% 7,216 4.09%
New yield on interest
earning assets 8,930 4.04% 7,905 4.18% 7,524 4.26%
(1) Includes principal balances of nonaccural loans. Interest income
relating to nonaccrual loans is not included.
(2) The amount of loan fees is not material in any of the years presented.
Introduction
SVB&T Corporation is a registered bank holding company under the Bank Holding
Company Act. The Corporations principal office is located in French Lick,
Indiana. The Corporation's sole subsidiary is Springs Valley Bank and Trust
Company, which operate offices in French Lick and West Baden, in Orange
County, three offices in Jasper, located in Dubois County, and one office in
Borden, Indiana located in Clark County. The subsidiary offers a wide range
of banking, financial, insurance and realty services to individuals and
businesses in Orange, Dubois, Clark and surrounding counties in Southern
Indiana. The following managements' discussion and analysis provides
information concerning SVB&T Corporation's financial condition and results of
operation. This discussion and analysis should be read in conjunction with
the holding company's financial statements and related footnotes which are
presented in this document.
Results of Operation
Net Income
Net income for 2000 was $2,039,000.
The table below is a comparison of the net income for the years 1998 thru
2000. This table also displays the percentage and dollar amount changes which
occurred during the last three years.
Increase/ %Increase/
Decrease from Decrease from
Year Net Income Prior Year Prior Year
2000 $2,039,000 $ 635,000 45.23%
1999 1,404,000 (425,000) (23.24%)
1998 1,829,000 134,000 7.88%
SVB&T Corporation's net income has increased during the last year. The main
contributing factors to this increase is an increase in Loan and Loan fees
income, and a decrease in provision loan loss expense.
Total net income before tax for 2000 increased $1,019,675 which results in a
48.38% increase.
Net Interest Income
Net interest income is the difference between interest and fees earned on
loans and investments, and interest paid on interest bearing liabilities.
This is the Bank's primary source of income. In this discussion, net interest
income is presented on a tax equivalent basis.
All tax-exempt income earned on securities of state and political subdivision
has been increased to an amount that would have been earned on a taxable
basis. This places taxable and non-taxable income on a more comparable basis
and makes the comparisons more meaningful.
In 2000, tax equivalent net interest income of $8,930,000 increased by
$1,025,000, which resulted in a 12.97% increase. The net interest income from
1999 was $7,905,000 which was a $381,000 over the 1998 net interest income of
7,524,000.
CHANGES IN NET INTEREST INCOME (Table 1) (Tax equivalent basis, dollars in
thousands)
Change from Prior Year
2000 1999 1998 2000 1999
Interest income on:
Loans 16,933 13,341 12,476 26.92% 6.93%
Investment securities 1,970 1,723 2,079 14.34% -17.12%
Federal funds sold 73 167 181 -56.29% -7.73%
Due from FHLB 3 3 4 0.00% -25.00%
Total interest income 18,979 15,234 14,740 24.58% -3.35%
Interest expense on:
Savings and daily
interest checking 959 1,029 1,192 -6.80% -13.67%
Money market deposits 2,078 1,426 1,468 45.72% -2.86%
Certificates of
deposit of $100,000
& over 1,859 1,467 1,222 26.72% 20.05%
Other time deposits 3,239 2,859 3,279 13.29% -12.81%
All other borrowing 1,914 548 55 249.27% 896.36%
Total interest expense 10,049 7,329 7,216 37.11% 1.57%
Net interest income 8,930 7,905 7,524 12.97% 5.06%
Net interest margin 4.04% 4.18% 4.26%
RATE VOLUME ANALYSIS OF CHANGES IN NET INTEREST INCOME (Table 2) (Taxable
equivalent basis, dollars in thousands)
1999 vs 1998 1998 vs 1997
Dollar Attributed to Dollar Attributed to
Change Volume Rate Change Volume
Rate
Interest income on:
Loans 3,592 2,755 837 865 1,584 (719)
Investment securities 247 147 100 (356) (380) 24
Federal funds sold (94) (107) 13 (14) 2 (16)
Due from FHLB 0 0 (0) (1) (1) (0)
Total interest income 3,745 2,795 950 494 1,205 (711)
Interest expense on:
Savings and daily interest
checking (70) (73) 3 (163) 2 (165)
Money market deposits 652 247 405 (42) 82 (124)
Certificates of deposit of
$100,000 and over 392 263 129 245 261 (16)
Other time deposits 380 146 234 (420) (249) (171)
All other borrowing 1,366 1,253 113 493 480 13
Total interest expense 2,720 1,836 884 113 576 (463)
Net interest income 1,025 959 66 381 629 (248)
The variance not due solely to rate or volume is allocated equally between the
rate and volume variances.
Provision for Loan Losses
The provision for loan losses was $300,000 in 2000; $850,000 in 1999; and
$580,000 in 1998. As of December 31, 2000, the provision was .82% of loans
outstanding. The allowance for loan losses increased $43,800 during 2000.
Management's analysis indicates the current allowance is adequate to fund
anticipated future needs.
Other Income
Total other income for 2000 was $1,742,788, which is a 2.21% increase from
1999's total other income of $1,705,123.00.
The primary source of other income is Trust Income. Trust Income for 2000 was
$760,159, which is a $34,736 increase over 1999.
Service Charges, Insurance Income, Other Operating Income, and Realized
Gains/Losses make up the remainder of Total Other Income category. As a total
these accounts resulted in $982,629 of income for 2000. This is a .30%
increase over 1999's total other income of 979,700.
Other Expenses
Total other expenses for 2000 were $6,977,488. This is an 8.59% increase over
the 1999 total of $6,425,547.
Salaries and Employee Benefits are the two largest expense categories.
Salaries and employee benefits were $3,869,000 for 2000. This is a 7.08%
increase over 1999's expense. The number of employees has remained consistent
over the past several years. Increase in salaries and employee benefits
expenses represent normal pay increases for the bank's employees.
Hospitalization and Disability expense decreased by 22.33% for 2000. The
bank is self-insured in regard to hospitalization insurance. Expense level
depends on claims filed.
Computer and Operating Supplies expenses both show an increase for 2000.
Computer expense increased by 40.30% and operating supplies increased by
31.12%. During 2000 upgrades were made to both the computer and communication
equipment areas. The bank went to statement imaging for our customers, and is
readying our communication equipment in preparations to make internet banking
available to our customers. The results of both these upgrades will be more
efficient and improved customer service and employee productivity. Along with
these upgrades came the need for the purchasing of several new and different
supplies such as the binders that were given to each customer for their
convenient recordkeeping of their new statements, and the special paper
required for imaging. This resulted in a significant increase in operating
supplies.
Income Tax
SVB&T Corporation records income tax expense based on the transactions
reported in its financial statements, consisting of taxes currently payable
and deferred tax. Deferred taxes result because of the recognition of certain
items of income and expense in different years for financial statement and
tax purposes. These differences relate primarily to the gain or loss on
available-for-sale investment securities, loan losses, depreciation, and loan
origination fees.
Differences between the effective tax rate on SVB&T Corporation's income
before income tax (as reported in the consolidated statement income) and the
federal statutory rate of 34% result from tax exempt interest income, state
income taxes, and alternative minimum taxes. Note 10 of the consolidated
financial statements contains additional information about SVB&T Corporation's
income taxes.
Income tax expense for 2000 was $1,088,000 compared to $703,000 in 1999 and
$1,042,800 in 1998. The effective tax rate was 34.80% in 2000, 33.46% in
1999, and 36.81% in 1998. The effective rate increased in 2000 compared to
1999 due to increased net interest income and decreased allowance for loan
losses. In 1999 compared to 1998, the effective rate was down due to
increased overhead expenses.
Financial Condition
As of December 31, 2000 total assets increased to $247,227,000, a 13.72%
increase from December 31, 1999 total of $217,394,000. Average total assets
in 2000 of $231,746,000 were $32,175,000 greater than the 1999 average of
$199,571,000.
Total deposits increased to $186,360,000 at December 31, 2000 from
$181,276,000 at December 31, 1999 an increase of $5,084,000 or 2.80%.
Net loans at year-end 2000 were $203,001,000 up $29,509,000 or 17.01% above
the 1999 year-end total of $159,207,000. Average loans outstanding of
$191,169,000 in 2000 increased by $31,962,000 or 20.08% over the 1999 average
loans outstanding of $159,207,000. Loan growth was funded primarily by
Federal Home Loan Bank Advances and the increase in deposits.
Total investment securities available for sale at year-end 2000 were
$28,592,000 and at year-end 1999 were $24,898,000. Investment securities have
been stated at market value since 1993, when the Bank adopted the FASB No. 115
accounting and classified all securities as available for sale.
Uses of Funds
Money Market Investments
Money market investments (federal funds sold and certificates of deposits with
other banks) are used by the Corporation to meet lending and liquidity
requirements. At December 31, 2000, money market investments were $0 a
decrease of $5,275,000 over December 31, 1999 balance of $5,275,000.
Investment Securities
The investment security portfolio is used as a means of investing funds over
and above those needed for lending and liquidity requirements. Investment
securities are purchased with the intent and ability to hold until maturity.
However, all securities are categorized as available for sale. Increases or
decreases in the market value of securities are charged directly to
stockholder equity.
During 2000, average investment securities increased by $3,694,000 or 14.84%
as compared to the $24,898,000 for 1999. This increase came from money market
instruments.
The following table presents an analysis of the investment securities
portfolio for 2000, 1999 and 1998.
Investment Securities Available for Sale
(Dollars in thousands) December 31
Investment securities available for sale: 2000 1999 1998
U.S. Treasury 0 0 0
U.S. Government agencies and corp. 15,052 14,087 15,208
Mortgage-backed pass-through securities 73 125 203
Collateralized mortgage obligations:
Agency 0 0 0
Corporate 0 0 0
State and Political subdivisions 12,619 10,705 8,803
Other Securities 873 882 1,537
Net unrealized gain (loss) (25) (901) 315
Total Carrying Value 28,592 24,898 26,066
Maturities and Average Yields of Investment Securities
Available for Sale at December 31, 1999
2000 1999
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
Securities Available for Sale
Due in 1 yr or less 2,489,936 2,465,658 2,879,693 2,837,746
Due after 1 yr but with in 5 yrs 13,383,583 13,330,572 12,680,155 12,317,083
Due after 5 yrs but within 10 yrs 8,640,040 8,659,174 7,431,806 7,143,173
Due after 10 yrs 4,030,085 4,061,211 2,683,163 2,468,392
Total Securities 28,543,644 28,516,615 25,674,817 24,766,394
Mortgage backed securities 72,644 75,114 124,837 131,827
Total 28,616,288 28,591,729 25,799,654 24,898,221
Loans
Loans outstanding at December 31, 2000 were $204,796,345. This is an increase
of $29,536,006 or 16.9% over December 31, 1999.
Real Estate loans continue to be the largest component of the loan portfolio
at $103,100,274. This an increase of $4,248,857 or 4.3%.
Individual loans for household and other personal purposes was the next
largest loan category at $41,318,635. This is a decrease of $4,975,905 or
10.7% from December 31, 1999. The bank continues to experience severe
competitive pressures in the retail loan sector. The bank does not desire to
make loans that are not profitable or do not meet its underwriting standards.
Commercial and industrial loans were $40,867,419 at December 31, 2000. This
is an $18,922,314 increase over December 31, 1999. This increase and the
$10,683,745
increase in construction loans are due primarily to loan participation
activity.
The bank uses loan participations with other banks and brokers to supplement
loan volume when local demand does not provide sufficient volume. On December
31, 2000 the bank had $53,713,390 in purchased loans. That represents a 39.0%
increase from December 31, 1999. The bank carefully monitors each
participation and reviews concentrations either by geographic area or industry
segment.
Agricultural lending and leasing activities continue to be minor parts of the
portfolio. The bank does not anticipate any significant growth in either of
these areas.
Following is a schedule showing the breakdown of loans by type of loan and the
maturity schedule of the loan portfolio.
Loan Portfolio
2000 1999 1998 1997 1996
Percent Percent Percent Percent Percent
Amt of Total Amt of Total Amt of Total Amt of Total Amt of Total
Commercial,
financial &
agricultural 42,618 20.81 23,261 10.20 18,722 13.3 16,228 13.2
Real estate -
construction 17,174 8.39 6,490 3.70 1,687 1.20 1,322 0.9 64 0.1
Real estate -
mortgage 103,100 50.34 98,851 56.4 80,803 56.7 79,491 56.4 67,859 55.1
Consumer
installment 41,319 20.18 46,295 26.42 46,470 32.6 40,859 29.0 38,452 31.2
Banker
Acceptances 0 0 0 0 0 0 0 0 0 0
Economic dev.
rev. bonds 0 0 0 0 0 0 0 0 24 0
Repurchase
Agreement 0 0 0 0 0 0 0 0 0 0
Lease Financing 585 .29 363 .21 336 .24 437 .31 538 .4
TOTAL 204,796 100 175,260 100143,873 100140,831 100 123,165 100
Less:
Unearned income 124 141 204 227 305
Allowance for
loan losses 1,671 1,627 1,106 1,402 1,329
Total loans 203,001 173,492 142,563 139,202 121,531
Selected Loan Maturity and Interest Rate Sensitivity
December 31, 1999 (dollars in thousands)
MATURITY Rate Structure For Loans
Maturing
Over One Over Predetermined Floating or
One Year Yr through Five Interest Adjustable
or Less Five Yrs Years TOTAL Rate Rate
Commercial,
financial and
agricultural 10,700 26,683 5,235 42,618 11,718 30,900
Real Estate
Construction 6,334 10,593 247 17,174 2,290 14,884
TOTALS 17,034 37,276 5,482 59,792 13,008 46,784
Capital Resources
Stockholders' equity at December 31, 2000 increased to $22,469,000 from
December 31, 1999 equity of $20,369,000. The increase of $2,100,000 was a
result of earnings increasing and the unrealized loss on securities decreasing
considerably. Capital ratios are used by Federal bank regulators to measure a
bank's strength. The Bank's ratios are well above Federal requirements.
Source of Funds
Deposits
The main source of funding for earning assets are deposits. During 2000, the
average deposits of $177,842,000 funded 80% of the average earning assets.
Average total deposits for 2000 increased by $9,851,000, or 5.86% as compared
to 1999 average deposit totals.
There has been a movement in average deposits over the past two years. Many
customers are seeking higher rates of return on investments and have moved
into alternative investments such as stocks and mutual funds. Management has
funded reductions of deposits with advances from the Federal Home Loan Bank
and Federal Funds purchased. Management will seek to increase deposits at a
time when deposits can be lent or invested at a profitable spread.
Maturities of Time Deposits December 31, 2000
(dollars in thousands) Certificates
of Deposit
Over $100,000
Three months or less 12,249
Over three months through one year 11,651
Over one year through three years 4,636
Over three years 635
TOTAL 29,171
Risk Management
Lending and Loan Administration
Loan administration for the Bank is the responsibility of the President and
the senior officers of the Bank. The board deems these officers have the
knowledge and experience necessary to satisfactorily manage the lending
activities of the Bank.
Lending authority is granted to individual officers as the board feels is
appropriate. For loans exceeding an individual officer's limit, a loan
committee structure is in place to allow the timely and prudent review of loan
requests. Loans above certain predetermined limits must be reviewed and
approved by two board members prior to approval of the loan.
A presentation is made at each board meeting regarding the operation of the
loan department. Topics discussed include current activities, watch list and
non-accrual loans, and any other loan-related issue that should be brought to
the board. Reports covering the activities of the loan department are
prepared for each board member.
A loan review committee reviews all loan review activities including the
calculation of the loan loss reserve necessary to accommodate loans that may
be charged off at some future time.
The loan loss reserve is calculated monthly. It is based on the historical
performance of the loan portfolio as well as current and projected conditions
for specific credits. The Bank's loan loss experience is summarized below:
Allowance for Loan Losses
(dollars in thousands)
2000 1999 1998 1997 1996
Balance as of January 1 1,627 1,106 1,403 1,330 1,349
Provision for Loan Losses 300 850 580 400 290
Recoveries of Prior Loan Losses 321 114 182 106 77
Loan Losses charged to the Allowance (577) (443) 1,059) (433) (386)
Balance as of December 31 1,671 1,627 1,106 1,403 1,330
Loans are placed on non-accrual status when a payment (principal and/or
interest) is more than 90 days past due. All income on these loans is then
recognized on a cash basis until the loan is paid off or management believes
that the quality of the loan has improved enough to warrant returning the loan
to accrual status.
Non-performing loans are loans on non-accrual and assets such as other real
estate and repossessions being held for sale. Following is a schedule of
those loan categories for the previous five years.
Non-performing Assets (dollars in thousands)
2000 1999 1998 1997 1996
Total Loans on non-accrual
(non-performing loans) 2,002 1,406 857 1,832 1,338
Other Real Estate 133 44 53 0 53
Total non-performing assets 2,135 1,450 910 1,832 1,391
Total non-performing loans as a
percentage of loans 1.04% .81% .60% 1.30% 1.09%
Total non-performing assets as
a percentage of loans and ORE 1.04% .81% .63% 1.30% 1.13%
Liquidity and Interest Rate Sensitivity
SVB&T Corporation considers management of liquidity and interest rate
sensitivity to be two of its most important responsibilities. Liquidity
requirements arise from loan demand and deposit withdrawals. The objective of
liquidity management is to match the availability of funds with anticipated
loan and withdrawal activity. Interest rate sensitivity management seeks to
match sufficient amounts of interest sensitive assets with interest sensitive
liabilities. A matching of the assets and liabilities results in more
consistent earnings and provides protection in case of sudden interest rate
changes.
Liquidity requirements are monitored on a daily basis. Main sources of short-
term liquidity are cash due from banks and federal funds sold. Longer term
liquidity planning includes funds available from normal maturities of
certificates of deposit with other bank maturities of investment securities,
loan principal payments income from operations, new deposits and alternative
funding sources. These sources of funds are sufficient to meet the company's
liquidity needs.
In the management of interest rate sensitivity, a cumulative sensitivity ratio
of less than 100% is normal in the one year or less repricing time period.
The Company realizes the potential for income reduction should interest rates
increase. At that time, restructuring of the investment portfolio would occur
to increase the sensitivity ratio to a manageable position.
The chart on this and the following page shows the Bank's interest rate
sensitivity position as of December 31, 1999.
INTEREST RATE SENSITIVITY ANALYSIS (dollars in thousands)
0 to 3 4 to 6 7 to 12 1 to 5 Over 5
Months Months Months Years Years Total
Interest Earning Assets
Federal funds sold 0 0 0 0 0 0
Interest bearing deposits
in banks 0 0 0 0 0 0
Investment securities 157 0 157 6,723 21,555 28,592
Loans 59,180 20,713 38,445 38,293 46,370 203,001
Total Interest Earning
Assets 59,337 20,713 38,602 45,016 67,925 231,593
Interest Bearing Liabilities
Interest bearing NOW, savings,
and money market deposits 55,608 7,918 4,813 3,659 0 71,998
Time deposits under
$100,000 10,749 10,515 31,860 6,662 0 59,786
Time deposits over $100,000 12,249 4,230 7,421 5,271 0 29,171
Borrowed funds 17,265 5,000 0 7,500 4,100 33,865
Total Interest Bearing
Liabilities 95,871 27,663 44,094 23,092 4,100 194,820
Interest Sensitivity Gap
Current (36,534) (6,950) (5,492) 21,924 63,825
Interest Sensitivity Gap
Cumulative (36,534) (43,484) (48,976) (27,052) 36,773
Sensitivity Ratio
Cumulative 62% 65% 71% 86% 119%
Quarterly Results of Operations March 31 June 30 Sept 30 Dec 31
1999
Interest income 3,407 3,646 3,943 4,011
Interest expense 1,605 1,747 1,947 2,030
Net interest income 1,802 1,899 1,996 1,981
Provision for loan losses 135 565 75 75
Net securities gains 0 (3) 0 0
Non-interest income 383 389 425 508
Non-interest expense 1,458 1,724 1,641 1,603
Income before income taxes 592 (1) 705 811
Income taxes 195 (43) 235 316
Net income 397 42 470 495
Net income per share:
Primary net income per share .53 .06 .63 .66
2000
Interest income 4,336 4,522 4,784 5,069
Interest expense 2,174 2,398 2,670 2,807
Net interest income 2,162 2,124 2,114 2,262
Provision for loan losses 75 75 75 75
Net securities gains 0 0 0 0
Non-interest income 381 412 407 543
Non-interest expense 1,709 1,598 1,744 1,927
Income before income taxes 759 863 702 803
Income taxes 284 265 224 315
Net income 475 598 478 488
Net income per share:
Primary net income per share .64 .80 .64 .66
Item 8. Financial Statements and Supplementary Data
The Registrant's Annual Report to Shareholders for the year ended December 31,
1999 are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
The following table shows the earlier of the year the named individual became
a Director of the Corporation or the Bank. All Directors have been Directors
of the Corporation since its formation in 1982, except for Gary R. Critser,
Brian K. Habig, Hilbert Lindsey, Ronald G. Seals, Ronald J. Thyen and James C.
Tucker, who became Directors of the Corporation in the years indicated below.
Shares beneficially Owned
Name, Present Principal (Percentage of Outstanding Foot
Occupation and Age Year Common Shares) Note
Elected
Gary P. Critser 1999 959
Retired
Kimball International, Inc. (.13%)
64
Brian K. Habig 1987 7,913 1
Proposal Center Manager (1.06%)
Kimball Electronics Group
Kimball International, Inc.
44
Douglas A. Habig 1973 99,955 2
Chairman of the Board & CEO (13.42%)
Kimball International, Inc.
54
John B. Habig 1959 90,267 3
Chairman of the Board (12.12%)
Springs Valley Bank & Trust Company
68
Thomas L. Habig 1959 82,534 4
Vice Chairman of the Board (11.08%)
Kimball International, Inc.
Secretary, SVB&T Corporation
72
Hilbert Lindsey 1988 3,959
Vice President (.53%)
Lindsey Lumber & Builders Supply, Inc.
66
Ronald G. Seals 1989 546 5
President & CEO (.07%)
Springs Valley Bank & Trust Company
62
Ronald J. Sermersheim 1976 20,768 6
Vice President, Environment, (2.79%)
Health & Safety
Kimball International, Inc.
61
Ronald J. Thyen 1999 11,023 7
Senior Executive Vice President (1.48%)
Operations Officer, Furniture & Cabinets
Kimball International, Inc.
64
James C. Tucker 1989 15,147 8
Attorney-at-Law (2.03%)
Tucker & Tucker, P.C.
54
1 The above amount includes 526 shares held by Kimberly A. Habig, the
wife of Mr. Brian K. Habig and 2,601 shares held by Kyle Thomas Habig,
the son of Mr. Brian K. Habig.
2 The above amount includes 66,356 shares held in the Revocable Trust
Account of Arnold F. Habig, over which Mr. Douglas A. Habig has shared
voting authority with Mr. John B. Habig and Mr. Thomas L. Habig. Also
includes 14,056 share held by the Kimball Habig Foundation, over which
Mr. Douglas A. Habig exercises voting authority. The above amount
includes 2,008 shares held by Nancy L. Habig, the wife of Mr. Douglas A.
Habig.
3 The above amount includes 66,356 shares held in the Revocable Trust
Account of Arnold F. Habig, over which Mr. John B. Habig has shared
voting authority with Mr. Douglas A. Habig and Mr. Thomas L. Habig.
The above amount includes 3,124 shares held by Carma Jane Habig, the
wife of Mr. John B. Habig, 1,080 shares held by Baden-Baden for John B.
Habig FBO Hannah Zunk and 888 shares held by Baden-Baden for John B.
Habig FBO Andrew Zunk, who are the grandchildren of Mr. John B. Habig.
4 Mr. Thomas L. Habig is Secretary for SVB&T Corporation as well as
Springs Valley Bank & Trust Company. The above amount includes 66,356
shares held in the Revocable Trust Account of Arnold F. Habig, over
which Mr. Thomas L. Habig has shared voting authority with Mr. Douglas
A. Habig and Mr. John B. Habig. The above amount includes 2,088 shares
held in the Roberta Habig Revocable Trust, the wife of Mr. Thomas L.
Habig and 14,090 shares held in the Thomas L. Habig Revocable Trust.
5 Mr. Ronald G. Seals is President and CEO for Springs Valley Bank & Trust
Company as well as SVB&T Corporation. The above amount includes 200
shares held jointly by Mr. Ronald G. Seals and his wife, Nancy E. Seals.
6 Mr. Ronald J. Sermersheim serves as Vice President for SVB&T
Corporation.
7 The above shares include 8,864 shares held in the Herbert E. Thyen
Revocable Trust, over which Mr. Ronald J. Thyen has shared voting
authority with other Trustees, including Springs Valley Bank & Trust
Company.
8 The above shares include 14,176 shares held by the James M. Tucker
Trust, of which Mr. James C. Tucker is Trustee.
Board Committees and Meetings
The Board of Directors of the Corporation and the Bank hold regular bimonthly
meetings and other special meetings. The Board of Directors of the
Corporation held six (6) regular meetings, and the Board of Directors of the
Bank held six (6) regular meetings and one (1) special meeting during 2000.
In addition to meeting as a group, all members of each Board devote their time
and talents to certain of the following standing committees: Executive
Committee, Audit & Compliance Committee, Trust Committee, Executive
Compensation Committee, Nomination Committee, Executive Loan Committee and the
Retirement Profit Sharing Trust Advisory Committee.
The Audit Committee reviews significant audit and accounting principles,
policies, and practices, reviews the performance of the internal auditing
functions and reviews examination reports of the Federal and State regulatory
agencies. In carrying out its duties, the Committee meets with the
independent auditors, approves the services to be performed by the independent
auditors and reviews the degree of independence of the auditors. The members
of the Audit Committee are Messrs. Ronald J. Sermersheim (Chairman), Brian K.
Habig and James C. Tucker. The Audit Committee met six (6) times in 2000.
The Bank has an Executive Compensation Committee to review and recommend to
the directors salary and bonus programs for the Senior Bank Officers. The
members of the Executive Compensation Committee are Messrs. James C. Tucker
(Chairman), Randall Catt, Ronald J. Sermersheim and Gary P. Critser. The of
the Nomination Committee include Messrs. Thomas L. Habig (Chairman), John B.
Habig and Ronald J. Thyen. The Nomination Committee met one (1) time in 2000.
Director Compensation
Directors of the Bank receive compensation of $1,700 per meeting attended.
In addition, directors holding committee positions are compensated $200 per
meeting attended, if such committee meeting does not take place on a board
meeting date. No separate fees are paid for services as a director of the
Corporation.
Pursuant to the 1997 Directors Stock Compensation Plan, Directors of the
Corporation can elect to receive up to 100% of board fees for a calendar year
in common stock of the Corporation, determined by dividing the amount of fees
elected to be received in stock by the fair market value of a share of the
Common Stock of the Corporation as of the last day of such calendar year. The
Corporation has reserved 16,000 shares for issuance under this Plan. Two
thousand, seventy two (2,072) shares were issued for year 2000 in the
following amounts to the following Directors for fees which would have
otherwise been paid.
The 1997 Directors Stock Option Plan, designed to work in connection with the
Directors Stock Compensation Plan, provides for the granting of non-qualified
stock options to Directors for Common Stock of the Corporation. Under the
terms of this Plan, each Director is granted an option to purchase 50% of the
number of shares received by the Director pursuant to such Director's
elections under the 1997 Directors Stock Compensation Plan discussed above.
The exercise price of the options will be no less than the fair market value
of a share of common stock on the last day of the calendar year preceding the
date on which the options are granted. The options vest and become
exercisable on the second anniversary of the date of grant. The Corporation
has reserved 8,000 shares for issuance under this Plan. The Corporation has
granted options for, one thousand thirty five (1,035) shares for 2000 in the
following amounts to the following Directors:
DIRECTOR 1999 1999
STOCK OPTIONS
ISSUED GRANTED
Gary P. Critser 254 127
Brian K. Habig 258 129
Douglas A. Habig 0 0
John B. Habig 262 131
Thomas L. Habig 127 63
Hilbert Lindsey 262 131
Ronald G. Seals 131 65
Ronald J. Sermersheim 254 127
Ronald J. Thyen 262 131
James C. Tucker 262 131
TOTALS: 2,072 1,035
Item 11. Executive Compensation
Compensation Committee Report
Officers of the Corporation are not compensated for their services in such
capacity. All officers of the Corporation are also officers of the Bank and
are compensated in their capacity as Bank officers. Decisions on compensation
of the Bank s executives are made by the Board of Directors of the Bank, upon
the recommendation of the Executive Compensation Committee of the Board. Each
member of the Compensation Committee is a non-employee director. Set forth
below is a report submitted by Messrs. Randall Catt, Gary P. Critser, Ronald
J. Sermersheim and James C. Tucker (Chairman) in their capacity as the Board s
Executive Compensation Committee addressing the Bank s compensation policies
for 2000 as they affected all executive officers of the Bank and Mr. Ronald G.
Seals and Mr. R. Michael Ahern who, for 2000, were the Bank s most highly paid
executives whose total annual salary and bonus exceeded $100,000.
Compensation Policies Toward Executive Officers
The Executive Compensation Committee s executive compensation policies are
designed to provide competitive levels of compensation to the executive
officers and to reward officers for satisfactory performance of the
Corporation and the Bank as a whole. There are no established goals or
standards relating to performance of the Corporation or the Bank which have
been utilized in setting the base salary portion of an individual employee's
compensation.
Base Salary
Each executive officer is reviewed individually by the Executive Compensation
Committee. The Executive Compensation Committee also reviews various banking
salary surveys provided by other entities which provide information concerning
average salary information within the banking industry. The background data
for this information is typically generated from over 100 banks located in the
Midwest with approximately $200 million to $500 million in assets. The salary
portion of the executive officers' compensation is then typically established
at a level near the average salary compensation of officers included in the
survey with similar job responsibilities.
Annual Bonus Amounts
The Bank's Incentive Bonus Plan ("Bonus Plan") for 2000 was based upon the
banks Return on Assets (ROA) and the officers base salary. The Incentive
Bonus Plan provided cash bonuses for Executive Officers equal to twenty-five
percent (25%) of their base pay.
Other Compensation Plans
At various times in the past the Bank has adopted certain broad-based employee
benefit plans in which the senior executives are permitted to participate on
the same terms as non-executive employees who meet applicable eligibility
criteria, subject to any legal limitations on the amount that may be
contributed or the benefits that may be payable under the plans. Benefits
The Bank provides medical and pension benefits to the senior executives that
are generally available to other Bank employees. The amount of perquisites, as
determined in accordance with the rules of the Securities and Exchange
Commission relating to executive compensation, did not exceed 10% of salary
and bonus for fiscal 2000.
Mr. Ronald G. Seals' 2000 Compensation
Regulations of the Securities and Exchange Commission require that the
Compensation Committee disclose the Committee's basis for compensation
reported for the CEO. Mr. Ronald G. Seals' salary and bonus in 2000 were
determined in the same manner as discussed above for other senior executives.
The Board of Directors and the Executive Compensation Committee believes that
Mr. Seals has managed the Bank well.
Compensation Committee Insider Participation
During the past fiscal year, Mr. Ronald G. Seals, the Bank s Chief Executive
Officer, served on the Board of Directors, but did not serve on the Executive
Compensation Committee. Mr. Seals did not participate in any discussion or
vote with respect to his salary or bonus as an executive officer and excused
himself from the room during the discussion by the Board of Directors of his
compensation.
Summary Compensation Table
The following table sets forth for the fiscal years ending December 31, 2000,
1999, and 1998 the cash compensation paid by the Bank, as well as certain
other compensation paid or awarded during those years, to the Chief Executive
Officer and any other executive officer whose total annual salary and bonus
exceeded $100,000 during the fiscal year ended December 31, 2000.
Name and Principal Position Year Annual Compensation
Salary(1) Bonus (2)
Ronald G. Seals
President, CEO
and Director 2000 $132,000 $33,000
1999 $126,000 $13,300
1998 $121,000 $42,250 (3)
R. Michael Ahern 2000 $82,000 $20,500
1 While officers enjoy certain perquisites, such perquisites do not exceed
the lesser of $50,000 or 10% of such officer s salary and bonus and are not
required to be disclosed by applicable rules of the Securities and Exchange
Commission.
2 The bonus amounts are payable pursuant to the Bank's Incentive Bonus Plan
of the Bank, as described in the "Compensation Committee Report."
3 Includes $5,950 from 1997 bonus which was paid in 1998.
Potential Realizable
Value at Assumed Annual
Rates of Stock Appreciation
For Option Term
Name Expiration 0% 5% 10%
Date ($) (%) (%)
Ronald G. Seals 1-18-10 $0.00 $37,740 $95,635
R. Michael Ahern 1-18-10 $0.00 $17,612 $44,625
1996 Key Employees' Stock Option and Stock Appreciation Rights Plan
The Corporation has adopted a stock option and stock appreciation rights
program (the "Plan") for officers and key employees of the Corporation and the
Bank. The Board of Directors of the Corporation believes these programs
provide an important incentive to those who will be instrumental to the
success of the Corporation and of the Bank. The Corporation has reserved
20,000 shares for issuance under the Plan. The Plan will expire on December
31, 2005.
The Plan provides for the grant of "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code, the grant of nonqualified
stock options, and the grant of stock appreciation rights ("SARs"). Options
and SARs may be granted under the Plan only to officers and other key
employees who are in positions to make significant contributions to the
success of the Corporation. The Executive Compensation Committee of the
Board of Directors of the Bank administers the Plan. No member of this
committee is eligible to receive options or SARs under the Plan at any time
such individual serves on this committee.
Options are exercisable upon such terms and conditions as may be determined by
the Executive Compensation Committee, but in no event will any stock options
be exercisable later than ten years after date of grant. Options granted
under the Plan will vest and become exercisable at the times determined by the
Executive Compensation Committee. The exercise price for all options granted
under the Plan will not be less than the fair market value of the shares on
the date of grant.
The Executive Compensation Committee may also grant SARs in conjunction with
all or part of any option granted under the Plan at the time of the grant of
the option. Each SAR will (1) expire when the underlying option expires, and
(2) become exercisable only when and to the extent that the underlying option
is eligible to be exercised. The "economic value" of a SAR may not exceed 100%
of the difference between the exercise price of the number of shares covered
by the underlying option and the fair market value of such shares. SARs may
be exercised by surrendering the underlying option, at which point the
underlying option shall no longer be exercisable (to the extent the options
are surrendered upon exercise of the related SAR). Upon exercise of a SAR,
the optionee is entitled to receive the economic value of such SAR, in cash,
in shares of common stock of the Corporation, or any combination thereof as
determined by the Executive Compensation Committee.
Option Grants In Last Fiscal Year
The following table provides details regarding stock options granted to Mr.
Ronald G. Seals and Mr. R. Michael Ahern in 2000. In addition, there are shown
the hypothetical gains or "option spreads" that would exist for respective
options. These gains are based on assumed rates of annual compound stock
price appreciation of five percent (5%) and ten percent (10%) from the date
the options were granted over the full option term. Gains are reported net of
the option exercise price, but before any effect of taxes. In assessing these
values, it should be kept in mind that no matter what value is placed on a
stock option on the date of grant, its ultimate value will be dependent on the
market value of the Corporation's stock at a future date, and that value
would depend on the efforts of such executive to foster the future success of
the Corporation for the benefit of all shareholders. The amounts reflected in
this table may not necessarily be achieved.
Individual Grants
Name Number of Shares Percent Exercise Market
Underlying Of Total or Base Price
Options Options Price On Date
Granted Granted ($/Sh) Of Grant
(#) In Fiscal ($/Sh)
Year
(%)
Ronald G. Seals 1,500 44% $38.00 $38.00
R. Michael Ahern 700 21% $38.00 $38.00
Fiscal Year-End Option Values Table
The following table shows the shares covered by the exercisable and non-
exercisable stock options by Mr. Ronald G. Seals and Mr. R. Michael Ahern as
of December 31, 2000. Also reported are the values for "in-the-money" options
which represent the positive spread between the exercise price of any such
existing stock options and the year-end price of the Corporation's Common
Stock at December 31, 2000. For purposes of the following table, the year-end
price of the stock was assumed to be $40.00. Because there is not an
established trading market for the Common Stock, the assumed price of $40.00
may not reflect the actual price which would be paid for shares of the Common
Stock in an active or established trading market and should not necessarily be
relied upon when determining the value of a shareholder's investment.
Name Number of Shares Value of Unexercised
Underling Unexercised In-the-Money Options
Options at Fiscal Year End At Fiscal Year End
(#) ($)
Exercisable Unexercisable Exercisable Unexercisable
Ronald G. Seals 3,050 2,725 $34,620 $13,930
R. Michael Ahern 1,080 2,470 $10,100 $6,100
Employee Benefit Plan
PROFIT SHARING RETIREMENT PLAN
The Bank sponsors a tax-qualified profit sharing retirement plan which
includes, effective as of January 1, 1996, a qualified cash or deferred (i.e.,
"401(k)") arrangement and a discretionary company contribution ("Profit
Sharing Plan"). The Profit Sharing Plan covers substantially all employees of
the Bank; an employee becomes a participant under the plan on the first
January 1st or July 1st which coincides with or next follows after twelve (12)
consecutive months during which the employee completed at least one thousand
(1,000) hours of employment for the Corporation or the Bank. The Bank makes
discretionary "profit sharing" contributions under the Profit Sharing Plan and
allows participants to make salary deferral and rollover contributions.
Participants' salary deferral contributions may be made, on pre-
income tax basis, in an amount ranging from 1% to 15% of the participant's
"compensation" (as defined). Participants' salary deferral and rollover
contributions are fully vested when made; discretionary profit sharing
contributions are subject to a vesting schedule pursuant to which participants
become vested on a graduated basis, at the rate of 10% per year for the first
four full years of service and at the rate of 20% per year thereafter so that
a participant will become fully vested in the Bank's profit sharing
contributions after completing seven full years of service. In addition, a
participant will become fully vested in the balance of his or her account
attributable to the Bank's discretionary profit sharing contributions on
death, "disability" (as defined), attaining age 65 and termination of the
plan. All amounts contributed to the Profit Sharing Plan are invested by the
Bank, as Trustee, for the benefit of all participants and their designated
beneficiaries.
Upon termination of employment with the Bank or Corporation for any reason, a
participant (or his or her designated beneficiary) will be entitled to receive
the vested balance of his accounts under the Profit Sharing Plan. Participants
may elect to receive the vested balance of their accounts in either a single
lump sum or in monthly, quarterly or annual installments over a fixed period
of time, not to exceed the life expectancy of the participant or the joint
life and last survivor expectancy of the participant and his or her designated
beneficiary. The Profit Sharing Plan also provides for the distribution of
the participant salary deferrals on account of "financial hardship" (as
defined) and authorizes the making of loans to participants from that portion
of their Profit Sharing Plan accounts attributable to salary deferral
contributions.
Item 12. Security Ownership of Certain Beneficial Owners and Management
PRINCIPAL SHAREHOLDERS
The following information is given as of April 13, 2001, for each person known
to the Corporation to be the beneficial owner of more than 5% of the Common
stock of the Corporation.
Amount and Nature Percent
Name and Address Beneficial Ownership of Class
Douglas A. Habig 99,955 13.42%*
Jasper, IN
John B. Habig 90,529 12.12%**
Jasper, IN
Thomas A. Habig 82,661 11.06%***
Jasper, IN
Springs Valley Bank & Trust Company 144,920 19.40%****
Trustee for Kimball International, Inc.
Retirement Trust
P.O. Box 830
Jasper, IN 47547-0830
* The above amount includes 66,356 shares held in the Revocable Trust
Account of Arnold F. Habig, over which Mr. Douglas A. Habig has shared
voting authority with Mr. John B. Habig and Mr. Thomas L. Habig. Also
includes 14,056 shares held by the Kimball Habig Foundation, over which
Mr. Douglas A. Habig exercises voting authority. The above amount
includes 2,008 shares held by Nancy L. Habig, the wife of Mr. Douglas A.
Habig.
** The above amount includes 66,356 shares held in the Revocable Trust
Account of Arnold F. Habig, over which Mr. John B. Habig has shared
voting authority with Mr. Douglas A. Habig and Mr. Thomas L. Habig. The
above amount includes 3,124 shares held by Carma Jane Habig, the wife of
Mr. John B. Habig, 1,080 shares held by Baden-Baden for John B. Habig
FBO Hannah Zunk and 888 shares held by Baden-Baden for John B. Habig FBO
Andrew Zunk, who are the grandchildren of Mr. John B. Habig.
*** Mr. Thomas L. Habig is Secretary for SVB&T Corporation as well as Springs
Valley Bank & Trust Company. The above amount includes 66,356 shares
held in the Revocable Trust Account of Arnold F. Habig, over which Mr.
Thomas L. Habig has shared voting authority with Mr. Douglas A. Habig and
Mr. John B. Habig. The above amount includes 2,088 shares held in the
Roberta Habig Revocable Trust, the wife of Mr. Thomas L. Habig and 14,090
shares held in the Thomas L. Habig Revocable Trust, over which Mr. Thomas
Habig has voting rights.
**** Shares owned by the Kimball International Retirement Plan are voted by
An independent third party.
Item 13. Certain Relationships and Related Transactions
Certain Transactions
During 2000, certain directors and officers of the Corporation and their
associates were customers of and had transactions in the ordinary course of
business with the Bank. Additional transactions may be expected to take place
in the future between such persons and the Bank. All transactions were made
and are expected to be made on substantially the same terms, including
interest rates and collateral on loans, as those prevailing at the time for
comparable transactions with other persons and did not involve and are not
expected to involve more than the normal risk of collectability or present
other unfavorable features.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements - (as referred to in Item 8)
(b) No reports on Form 8-K were filed with the Commission during the fourth
quarter of 1999.
(c) Exhibits - The following exhibits are filed herewith:
Exhibit 11 - Statement Re: Computation of Per Share Earnings
Exhibit 13 - Annual Report to Shareholders for the year ended December
31, 1999 (incorporated in part into this form 10-K by
reference)
Exhibit 21 - Subsidiaries of the Registrant
Exhibit 23 - Consent of Independent Public Auditors
(d) Financial Statement Schedules - This information is omitted since the
required information is not applicable to the Registrant.
Exhibit 27 - Financial data schedule
Signatures
Pursuant to the requirements of Section 13 or 15 (d) 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
By:
Ronald G. Seals,
President & C.E.O. 3/22/01
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
By: By:
John B. Habig David Rees
Chairman of the Board 3/22/01 Principal Financial and Accounting 3/22/01
Officer
By: By:
Douglas A. Habig, Director 3/22/01 Ronald G. Seals,
Principal Executive Officer and 3/22/01
Director
By: By:
Gary P. Critser, Director 3/22/01 Brian K. Habig, Director 3/22/01
By: By:
Thomas L. Habig, Director 3/22/01 James C. Tucker, Director 3/22/01
By: By:
Ronald J. Sermersheim, Director Hilbert Lindsey, Director 3/22/01
3/22/01
By:
Ronald J. Thyen, Director 3/22/01
Index to Exhibits
Sequential
Page # Exhibit # Exhibit
54 11 Statement Re: Computation of Per Share Earnings
35 13 Annual Report to Shareholders for the year ended
December 31, 1998
54 21 Subsidiaries of the Registrant
54 23 Consent of Independent Auditors
27 Financial Data Schedule
Exhibit 13
By any measure, 2000 was the most successful year in the 99 year history
of Springs Balley Bank and Trust Company. The year was highlighted by
extraordinary growth in loans, deposits and earnings. These outstanding
achievements are a direct result of the fact that our staff, management
and directors understand and follow the Mission Statement of our Corporation
Mission Statement:
Springs Valley Bank & Trust Company is a community oriented financial
institution whose purpose is to provide superior financial services and value
to the customers and communities it serves. Our goal is to operate in a
culture of honesty and trust, to consistently serve beyond customer
expectations, and to generate an excellent rate of return to our shareholders.
Our organization will provide a high quality of life for our employees an be
responsible citizens in the communities we serve.
Financial Highlights of the Year:
Net income; $2,039,032, up 45.2%
Income per share: $2.74, up from $1.88; 45.7%
Book Value per share: $30.15, up $2.74; 10.00%
Total assets: $247,000,000, up 16.9%
Deposits: $186,000,000, up 2.8%
Technology continues to play a critical role in the future success of any
financial institution. Modern delivery systems, although very costly in the
short term, are vital if we expect to grow and remain competitive in our
markets.
This past year we have successfully installed a new imaging system, added
new on-line ATM functions, upgraded our main frame computer system and
installed new loan accounting software. During the fist six months of 2001,
we will open our active Website on the internet to provide online banking for
our customers. You will find us at www.svbt.com.
In 1998, your bank established our Alternate Investment Department and allied
with Great American Advisers (GAR), a national full-service brokerage company
serving financial institutions. We are able to provide stocks, bonds,
annuities, mutual funds and financial counseling through this department. In
2000, we placed in excess of $5,ooo,ooo in investments for bank customers, and
provide financial counseling for numerous individuals.
In 1992, your bank started a stock repurchase program for the benefit of all
shareholders. This provided a market for those share owners who wished to
sell their bank shares. The shares purchased by the bank are placed in
treasury stock and used for option programs or are resold to new shareholders.
We have purchased over 61,000 shares and currently hold over 51,ooo shares as
treasury stock. SVB&T Corporation has an authorized total of 800,000 shares
and currently has 747,1000 shares outstanding. As repurchase program,
although not increasing earnings, does produce greater earnings per share.
This provides remaining shareholders with a greater income per share and
increased price per share.
It has always been the philosophy of Springs Valley Bank & Trust to manage
its balance sheet to safely maximize return to shareholders. About five years
ago we began to pursue selective loan participations to supplement local loan
demand. This has been a successful endeavor and the bank has experienced
significant asset growth. Some of that growth has been funded by deposits.
The $31,000,000 currently borrowed is as leveraged as management desires.
With current totals, key ratios have been achieved. We are very close to our
self-imposed 110% loan-to-deposit ratio cap. We are also very close to our
85% loans-to-total assets cap. To achieve these ratios, the bank has taken
advantage of a market opportunity. We feel, however, that further expansion
of this opportunity would not be in the banks' best interest.
Your bank will remain a highly capitalized bank. Stress testing of our
balance sheet for interest rate changes shows a reasonable balanced position
with no significant asset or liability sensitivity.
During the last quarter of 2000, we opened our sixth banking office. Located
in the Jasper Southgate Shopping Center, this new facility allows us to
provide convenient banking offices for the entire Jasper community. Business
in this office started ona brisk note and continues to remain strong.
Springs Valley Bank & Trust Company has enjoyed a most outstanding year. The
year ahead will be challenging but we are dedicated to continuing our
reputation of being among the best independent community banks. With your
support and the continued hard work of our dedicated staff, we will meet our
goals for 2001. We are looking forward to 2002 to the celebration of the
Centennial of Springs Valley Bank & Trust a milestone very few financial
institutions reach. WE plan to make this a very special year for our bank
and for the communities we serve.
We again express our warm appreciation for the friendship and helpfulness of
our stockholders and other friends during the past year. They brought us
business and they referred business to us actions we view as special
compliments. We remain dedicated to the kind of effort needed to justify your
continued goodwill and support.
Cordially,
John B. Habig Ronald G. Seals
Chairman of the Board President & CEO
SVB & T CORPORATION AND SUBSIDIARY
FRENCH LICK, INDIANA
Consolidated Statements of Financial Condition
December 31,
2000 1999
ASSETS
Cash and cash equivalents
Cash and due from banks $5,824,159 $5,472,105
Interest-bearing deposits with banks 49,263 18,461
Federal funds sold 0 5,275,000
Total cash and cash equivalents 5,873,422 10,765,566
Investment securities, available for
sale, at market value 28,591,729 24,898,221
Investment securities, held to
maturity, at cost 1,855,000 1,205,000
Loans
Loans, net of unearned interest 204,672,215 175,119,328
Allowance for loan losses (1,670,912) (1,627,141)
Net loans 203,001,303 173,492,187
Buildings and equipment 4,607,584 4,522,625
Interest receivable 1,886,009 1,463,745
Deferred income taxes 0 165,121
Other assets 1,412,280 881,926
Total assets $247,227,327 $217,394,391
LIABILITIES
Deposits
Non-interest bearing $13,800,356 $22,101,790
Interest bearing 172,559,814 159,174,275
Total deposits 186,360,170 181,276,065
Federal funds purchased 2,765,000 0
Short-term borrowings 2,500,000 5,000,000
Interest payable 964,086 783,971
Deferred income taxes 133,931 0
Other liabilities 935,428 865,326
Long-term borrowings 31,100,000 9,100,000
Total liabilities 224,758,615 197,025,362
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY
Common stock (No par value: 800,000
shares authorized and issued) 200,000 200,000
Surplus 6,210,711 6,170,109
Retained earnings 17,047,543 15,544,930
Accumulated other comprehensive income:
Net unrealized gains (losses) on
investment securities
available for sale (14,832) (544,375)
Treasury stock at cost (54,972 shares
2000, 56,767 shares 1999) (974,710) (1,001,635)
Total shareholders' equity 22,468,712 20,369,029
Total liabilities and shareholders'
equity $247,227,327 $217,394,391
SVB & T CORPORATION AND SUBSIDIARY
FRENCH LICK, INDIANA
Consolidated Statements of Income
Year Ended December 31,
2000 1999 1998
INTEREST INCOME
Loans and fees on loans $16,932,878 $13,340,512 $12,479,514
Investment securities
Taxable 1,120,653 999,481 1,441,684
Tax exempt 581,318 500,291 432,465
Federal funds sold 76,564 166,728 180,856
Total interest income 18,711,413 15,007,012 14,534,519
INTEREST EXPENSE
Deposits 8,134,830 6,781,089 7,160,680
Short-term borrowings 148,231 7,834 42,804
Long-term borrowings 1,766,420 540,108 12,550
Total interest expense 10,049,481 7,329,031 7,216,034
NET INTEREST INCOME 8,661,932 7,677,981 7,318,485
Provision for loan losses 300,000 850,000 580,000
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 8,361,932 6,827,981 6,738,485
NON-INTEREST INCOME
Trust Department income 760,159 725,423 836,653
Service charges on deposit accounts 533,539 533,290 615,274
Insurance income 160,645 157,290 172,448
Other operating income 298,272 292,293 248,664
Realized security gains (losses) (9,827) (3,173) 2,055
Total non-interest income 1,742,788 1,705,123 1,875,094
NON-INTEREST EXPENSE
Salaries and employee benefits 3,869,650 3,613,674 3,381,270
Premises and equipment expense 1,392,219 1,135,080 1,167,626
Deposit insurance expense 35,597 18,970 19,921
Other operating expenses 1,680,022 1,657,823 1,172,780
Total non-interest expense 6,977,488 6,425,547 5,741,597
INCOME BEFORE INCOME TAXES 3,127,232 2,107,557 2,871,982
Income taxes 1,088,200 703,000 1,042,800
NET INCOME $2,039,032 $1,404,557 $1,829,182
EARNINGS PER SHARE
Basic $2.74 $1.88 $2.45
Diluted $2.73 $1.88 $2.44
AVERAGE SHARES OUTSTANDING
Basic 745,017 745,994 748,006
Diluted 746,429 747,949 750,458
SVB & T CORPORATION AND SUBSIDIARY
FRENCH LICK, INDIANA
Consolidated Statements of Cash Flows
Year Ended December 31,
2000 1999 1998
OPERATING ACTIVITIES:
Net income $2,039,033 $1,404,557 $1,829,182
Adjustments to reconcile
net income to net cash
provided by operating activities:
Provision for loan losses 300,000 850,000 580,000
Depreciation 511,215 461,119 468,307
Investment securities amortization 23,740 50,786 41,291
Investment securities (gains) lossses 24,263 3,173 (2,155)
Loss on sale of equipment 14,636 0 0
Loss on abandoned equipment 0 87,314 0
Gain on sale of other real estate (43,100) 0 0
Deferred income taxes (40,623) (233,370) 93,769
(Increase) decrease in interest
receivable and other assets (863,118) (228,296) (76,687)
Increase in interest payable and
other liabilities 242,561 123,236 13,676
NET CASH PROVIDED BY OPERATING
ACTIVITIES 2,208,607 2,518,519 2,947,383
INVESTING ACTIVITIES;
Proceeds from sales and maturities
of investment securities available
for sale 2,386,071 7,220,309 30,330,259
Purchases of investment available
for sale (5,250,709) (7,913,802) (17,420,427)
Purchases of investment securities
held to maturity (650,000) (614,300) (12,400)
Proceeds from the sale of equipment 33,030 0 0
Proceeds - sale of loans 0 84,000 4,236,717
Proceeds - sale of other real estate 126,500 40,000 0
Net increase in loans (29,982,016) (31,863,265) (8,177,819)
Additions to buildings and equipment (643,839) (250,408) (255,734)
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES (33,980,963) (33,297,466) 8,700,596
FINANCING ACTIVITIES;
Net increase (decrease) in deposits 5,084,105 21,944,573 (6,539,911)
Net increase in federal funds purchased2,765,000 0 0
Net increase (decrease) in short-term
borrowings (5,000,000) 5,000,000 (4,000,000)
Increase in long-term borrowings 24,500,000 8,100,000 1,000,000
Sale of treasury stock 67,527 78,259 65,642
Purchase of treasury stock 0 (198,132) (58,528)
Cash dividends (536,420) (514,667) (448,629)
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES 26,880,212 34,410,033 (9,981,426)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (4,892,144) 3,631,086 1,666,553
Cash and cash equivalents beginning
of year 10,765,566 7,134,480 5,467,927
CASH AND CASH EQUIVALENTS AT END
OF YEAR $5,873,422 $10,765,566 $7,134,480
SUPPLEMENTAL DISCLOSURES;
Cash paid during the year for:
Income taxes $1,172,783 $876,673 $822,317
Interest $9,869,366 $7,257,711 $7,327,681
SVB & T CORPORATION AND SUBSIDIARY
FRENCH LICK, INDIANA
Consolidated Statements of Changes in Shareholders' Equity
Accumulated
Other Total
Common Capital Retained Comprehensive Treasury Shareholders'
Stock Surplus Earnings Income Stock Equity
BALANCE,
JANUARY 1,1998$200,000$6,094,233$13,274,487$(40,259) $(813,000) $18,715,461
COMPREHENSIVE INCOME 1998
Net income 1,829,182 1,829,182
Change in unrealized gain
(loss) on securities available
for sale, net of deferred
income tax of $151,098 232,521 232,521
Less reclassifications for
gain included in net
income (2,155) (2,155)
TOTAL COMPREHENSIVE
INCOME 2,059,548
Cash dividends (448,629) (448,629)
Sold 2,387 shares of treasury
stock 29,837 35,805 65,642
Purchased 1,888 shares of
treasury stock (58,528) (58,528)
BALANCE,
DECEMBER 31, 1998200,0006,124,07014,655,040 190,107 (835,723) 20,333,494
COMPREHENSIVE INCOME 1999
Net income 1,404,557 1,404,557
Change in unrealized gain
(loss) on securities available
for sale, net of deferred
income tax of $481,757 (737,655) (737,655)
Less reclassifications for
losses included in net
income 3,173 3,173
TOTAL COMPREHENSIVE
INCOME 670,075
Cash dividends (514,667) (514,667)
Sold 2,148 shares of treasury
stock 46,039 32,220 78,259
Purchased 5,214 shares of
treasury stock (198,132) (198,132)
BALANCE,
DECEMBER 31, 1999200,0006,170,109 15,544,930(544,375)(1,001,635) 20,369,029
COMPREHENSIVE INCOME 2000
Net income 2,039,033 2,039,033
Change in unrealized gain
(loss) on securities available
for sale, net of deferred
income tax of $347,329 505,280 505,280
Plus reclassifications for
losses included in net
income 24,263 24,263
TOTAL COMPREHENSIVE
INCOME 2,568,576
Cash dividends (536,420) (536,420)
Sold 1,795 shares of treasury
stock 40,602 26,925 67,527
BALANCE,
DECEMBER 31, 2000$200,000$6,210,711$17,047,543 $(14,832) $(974,710)$22,468,712
Notes to Consolidated Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The accounting and reporting policies of SVB & T
Corporation and Subsidiary (the Bank) are in accordance with generally
accepted accounting principles and conform to general practices within the
banking industry. The more significant of the principles used in preparing
the financial statements are briefly described below.
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.
Nature of Operations - SVB & T Corporation operates under a charter from the
State of Indiana and provides full banking services, including trust services.
As a state bank, Springs Valley Bank & Trust Company is subject to regulation
by the Department of Financial Institutions of the State of Indiana and the
Federal Deposit Insurance Corporation. The area served by the Bank is
primarily Orange, Dubois and the surrounding counties in Southern Indiana.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents - Cash and cash equivalents include cash, due from
banks, interest-bearing deposits with banks and federal funds sold. Generally,
federal funds are sold for one-day periods.
Investment Securities Available for Sale - The Bank buys investment debt
securities with the intent and ability to hold these securities to maturity.
However, management has determined that all debt securities would be available
for sale in response to certain situations, such as changes in interest rates
and prepayment risk, need for liquidity, changes in availability and yield on
alternative investments, and changes in funding sources and terms. At
December 31, 2000 and 1999, debt securities are reported at estimated market
values in the statement of financial condition. Unrealized holding gains and
losses are excluded from earnings and are reported net of tax as a separate
component of shareholders' equity of comprehensive income. Accreted discounts
and amortized premiums are included in earnings using the straight-line
method. Gains or losses on dispositions are computed using the specific
identification method.
Investment Securities Held to Maturity - The Bank owns stock in the Federal
Home Loan Bank of Indianapolis. This stock is classified as held to maturity
and is carried at cost.
Notes to Consolidated Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loans - Loans that management has both the intent and ability to hold for the
foreseeable future or until maturity or pay off are reported at their
outstanding unpaid principal balances, adjusted for charge-offs, the allowance
for loan losses and any deferred fees or costs on originated loans. Interest
income on commercial loans, simple interest installment loans and real estate
mortgage loans is recognized based on the outstanding principal balances at
the stated rates. Real estate mortgage loan origination fees and costs are
amortized over the life of the loan. Accrual of interest income on loans and
impaired loans is discontinued when payments have become delinquent for 90
days. Upon non-accrual status, all accrued interest receivable on a loan is
written off. Any subsequent payments are applied to interest until all
interest due is totally paid. Any remaining amounts are applied to principal.
As part of its interest rate risk management, the Bank sells some fixed rate
mortgage loans into the secondary market. At December 31, 2000, there were no
mortgage loans available for sale.
Allowance for Loan Losses - The allowance for loan losses is an amount that
management believes will be adequate to absorb possible losses on existing
loans that may become uncollectible, based on evaluations of collectibility
and prior loan loss experience. The evaluations take into consideration such
factors as changes in the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans, and current economic
conditions and trends that may affect the borrowers' ability to pay. The
allowance is established by a provision for loan losses charged to expense.
Loans are written off against the allowance when management believes that the
collectibility of the principal is unlikely.
Buildings and Equipment - Buildings and equipment are stated at cost less
accumulated depreciation. Buildings are depreciated on the straight-line
method using lives ranging from 10 to 40 years. Equipment is depreciated on
the straight-line method using lives ranging from 5 to 10 years.
Other Real Estate - Real estate acquired in foreclosures is carried at the
lower of the outstanding loan balance plus accrued interest or fair value of
the property. Amounts necessary to write loans down to fair value are charged
to the allowance for loan losses.
Income Tax - Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to differences between the basis of
available-for-sale investment securities, allowance for loan losses,
accumulated depreciation and loan origination fees. The deferred tax asset or
liability represents the future tax return consequences of those differences.
SVB & T Corporation and Springs Valley Bank & Trust file consolidated income
tax returns. Income tax expense is allocated to each according to actual
earnings prior to consolidation.
Stock Option Plans - The Bank grants stock options to certain employees and
directors. The options are granted at the market price on the grant date. No
compensation expense is recorded in the financial statements for the options.
Pro forma disclosures as required by FASB Statement No. 123 "Accounting for
Stock-Based Compensation" are included in Note 16.
Notes to Consolidated Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net Income Per Share - Basic net income per share is computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the period. Diluted net income per share is computed as above and
assumes the dilative effect of additional common shares issuable under stock
option plans. The following table reconciles the amounts reported in the
financial statements:
2000 1999 1998
BASIC EARNINGS PER SHARE:
Net income $2,039,032 $1,404,557 $1,829,182
Average shares outstanding 745,017 745,994 748,006
Basic earnings per share $ 2.74 $ 1.88 $ 2.45
DILUTED EARNINGS PER SHARE:
Net income $ 2,039,032 $1,404,557 $ 1,829,182
Average shares outstanding 745,017 745,994 748,006
Stock options, net 1,363 1,912 2,386
Diluted average shares outstanding
746,380 747,906 750,392
Diluted earnings per share $ 2.73 $1.88 $ 2.44
NOTE 2 EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES
Effective in 2000, the Company adopted FASB Statement No. 140 "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities". The adoption of this statement had no effect on the results
of operations or financial position of the Company because it does not retain
servicing rights when transferring financial assets.
NOTE 3 RESTRICTION ON CASH AND DUE FROM BANKS
The Bank is required to maintain average funds in cash and on deposit with the
Federal Reserve Bank. The average balance required at December 31, 2000 was
$916,000.
Notes to Consolidated Financial Statements
NOTE 4 INVESTMENT SECURITIES
The amortized costs and estimated market values of investment securities at
December 31, 2000 and 1999 were as follows:
December 31, 2000
Unrealized Unrealized Estimated
Amortized Holding Holding Market
Securities Available Cost Gains Losses Value
For Sale U.S. Government
corporations and
agencies $15,051,788 $633 $(130,255) $14,922,166
States and political
subdivisions 12,619,004 240,958 (117,945) 12,742,017
Mortgage-backed securities 72,644 2,470 0 75,114
Other securities 872,852 0 (20,420) 852,432
Total $28,616,288 $244,061 $(268,620) $28,591,729
Unrealized Unrealized Estimated
Amortized Holding Holding Market
Cost Gains Losses Value
Securities Held to Maturity
Equity securities $ 1,855,000 $ 0 $ 0 $ 1,855,000
December 31, 1999
Unrealized Unrealized Estimated
Amortized Holding Holding Market
Cost Gains Losses Value
Securities Available
for Sale U.S. Government
corporations and
agencies $14,087,359 $1,286 $(562,264) $13,526,381
States and political
subdivisions 10,705,421 40,691 (340,799) 10,405,313
Mortgage-backed securities 124,837 6,990 0 131,827
Other securities 882,037 0 (47,337) 834,700
Total $25,799,654 $ 48,967 $(950,400) $24,898,221
Unrealized Unrealized Estimated
Amortized Holding Holding Market
Cost Gains Losses Value
Securities Held to Maturity
Equity securities $1,205,000 $0 $0 $1,205,000
Notes to Consolidated Financial Statements
NOTE 4 INVESTMENT SECURITIES (Continued)
The amortized cost and estimated market values of securities available for
sale at December 31, 2000 and 1999, by contractual maturity follows. Expected
maturities may differ from contractual maturities because some borrowers have
the right to call or prepay certain obligations with or without call or
prepayment penalties.
2000 1999
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
Securities Available for Sale
Due in one year or less $2,489,936 $2,465,658 $2,879,693 $ 2,837,746
Due after one year but within
five years 13,383,583 13,330,572 12,680,155 12,317,083
Due after five years but within
ten years 8,640,040 8,659,174 7,431,806 7,143,173
Due after ten years 4,030,085 4,061,211 2,683,163 2,468,392
28,543,644 28,516,615 25,674,817 24,766,394
Mortgage backed securities 72,644 75,114 124,837 131,827
Total $28,616,288 $28,591,729 $25,799,654 $24,898,221
Securities available for sale with amortized cost of $15,051,788 at December
31, 2000 and $14,087,359 at December 31, 1999 were pledged as collateral on
debt of the Bank.
Proceeds from sales of securities available for sale during 2000, 1999 and
1998 were $1,153,842, $2,000,888 and $1,500,000. In 2000, gains of $-0- and
losses of $9,826 were realized. In 1999, gains of $-0- and losses of $3,173
were realized. In 1998, gains of $2,055 and losses of $-0- were realized.
NOTE 5 LOANS
Loans at December 31, 2000 and 1999 are comprised of the following:
2000 1999
Commercial and industrial loans $40,867,419 $21,945,285
Real estate loans (including $2,137,752
and $1,702,613 secured by farm land) 103,100,274 98,851,417
Construction loans 17,173,625 6,489,880
Agricultural production financing and
other loans to farmers 1,751,194 1,316,334
Individuals' loans for household and
other personal expenditures 41,318,635 46,294,540
Lease financing 585,198 362,883
204,796,345 175,260,339
Less: Unearned income on loans 124,130 141,011
Total loans $204,672,215 $175,119,328
Notes to Consolidated Financial Statements
NOTE 5 LOANS (Continued)
Information concerning impaired loans at December 31, 2000 and 1999 is as
follows:
2000 1999
Impaired loans with a related allowance for loss $1,098,513 $1,301,967
Impaired loans without a related allowance for loss 981,884 939,940
Total impaired loans 2,080,397 2,241,907
Average balance of impaired loans 2,259,799 1,274,676
Allocated allowance for loan losses on impaired
losses 525,043 532,151
Cash receipts applied to principal 322,952 66,234
Cash receipts applied as interest income 203,664 102,885
Total cash received $ 526,616 $ 169,119
All 1 to 4 family residential, first mortgage loans have been pledged as
collateral for debt with the Federal Home Loan Bank of Indianapolis. The
amounts pledged at December 31, 2000 and 1999 are as follows:
2000 1999
Loans pledged as collateral $78,129,312 $73,252,093
NOTE 6 ALLOWANCE FOR LOAN LOSSES
The changes in the allowance for loan losses for the year 2000, 1999 and 1998
are as follows:
2000 1999 1998
Balance, January 1 $1,627,141 $1,106,077 $1,402,500
Loans charged-off (576,981) (442,969) (1,059,108)
Recoveries 320,752 114,033 182,685
Net charged-off (256,229) (328,936) (876,423)
Provision for loan losses 300,000 850,000 580,000
Balance, December 31 $1,670,912 $1,627,141 $1,106,077
NOTE 7 BUILDINGS AND EQUIPMENT
Balances in the buildings, equipment, and related accumulated depreciation
accounts at December 31, 2000 and 1999 are as follows:
2000 1999
Land and bank buildings $4,996,301 $4,957,677
Equipment, furniture and fixtures 4,558,533 4,022,806
Totals 9,554,834 8,980,483
Less accumulated depreciation 4,947,250 4,457,858
Net $4,607,584 $4,522,625
Depreciation expense was $511,215 for 2000, $461,119 for 1999 and $468,307 for
1998.
Notes to Consolidated Financial Statements
NOTE 8 DEPOSITS
Deposits at December 31, 2000 and 1999 are as follows:
2000 1999
Demand, non-interest bearing $ 18,752,398 $ 22,101,790
Demand, interest-bearing 12,028,056 18,974,856
Savings 66,622,544 60,200,400
Time deposits, $100,000 and over 29,170,918 28,300,000
Other time deposits 59,786,254 51,699,019
$186,360,170 $181,276,065
As of December 31, 2000 the scheduled maturities of time deposits are as
follows:
2001 $59,020,415
2002 11,616,917
2003 3,994,158
2004 3,645,484
2005 and thereafter 10,680,198
$88,957,172
NOTE 9 OTHER SHORT-TERM BORROWINGS
Other short-term borrowings at December 31, 2000 and 1999 are as follows:
2000 1999
Federal Funds purchased from Bank One,
Indiana, 6.875%, unsecured, due January 2, 2001 $2,765,000 $ 0
Federal Home Loan Bank Indianapolis advance,
due January 23, 2001, 6.3% adjustable,
collateralized by a blanket collateral
agreement on qualified mortgage loans
and securities $2,500,000 $5,000,000
Notes to Consolidated Financial Statements
NOTE 10 LONG-TERM BORROWINGS
Long-term borrowings at December 31, 2000 and 1999 are as follows:
Federal Home Loan Bank Indianapolis advances, payable monthly, collateralized
by a blanket collateral agreement
on qualified mortgage loans and securities:
Maturity Date Fixed Rate 2000 1999
February 24, 2004 5.19 $ 5,000,000 $ 5,000,000
March 15, 2005 6.32 7,000,000 0
October 15, 2005 5.02 1,000,000 1,000,000
July 17, 2006 6.69 3,100,000 3,100,000
April 19, 2010 6.18 10,000,000 0
June 7, 2010 6.53 5,000,000 0
Total long-term borrowings $31,100,000 $ 9,100,000
As of December 31, 2000 long-term borrowings are scheduled to mature as
follows:
2001 $ 0
2002 0
2003 0
2004 5,000,000
2005 8,000,000
Thereafter 18,100,000
$ 31,100,000
At December 31, 2000, the Bank has the following lines of credit available:
Bank One Indianapolis $ 8,500,000
Federal Reserve Bank of St. Louis $ 3,500,000
NOTE 11 EMPLOYEE BENEFIT PLANS
The Bank has a trusteed, defined contribution, profit-sharing plan, which
covers substantially all employees. Contributions to the plan are based on a
percentage of eligible employees' yearly compensation and are subject to the
discretion of the Board of Directors. The Bank's expense for the plan for the
years ended December 31, 2000, 1999 and 1998 was $183,691, $154,203 and
$142,483.
The Bank also has an employee benefit plan, which includes a self-insured
medical plan, a wholly insured term-life insurance plan and a long-term
disability plan, which covers most employees. The self-insured medical plan
carries an insurance override to protect the Bank against major increases in
claims. The Bank's contributions to the plan for the years ended December 31,
2000, 1999 and 1998 were $296,159, $347,940 and $278,876.
Notes to Consolidated Financial Statements
NOTE 12 INCOME TAXES
The components of the provision for income taxes are:
2000 1999 1998
Federal income taxes currently payable $ 843,703 $ 695,375 $ 708,424
Deferred Federal income taxes (31,703) (183,375) 73,776
Provision for Federal income taxes for
the year $ 812,000 $ 512,000 $ 782,200
State income taxes currently payable $ 285,120 $ 240,995 $ 240,607
Deferred state income taxes (8,920) (49,995) 19,993
Provision for state income taxes for
the year $ 276,200 $ 191,000 $ 260,600
Deferred income taxes in the statement of financial condition are carried as a
net amount. The deferred tax assets and deferred tax liabilities that are
combined to arrive at the net carrying amounts at December 31, 2000 and 1999
are as follows:
2000 1999
Deferred Tax Assets:
Allowance for loan losses $ 511,220 $ 505,352
Unrealized losses on securities available
for sale 9,728 357,058
Loan fees 56,343 63,659
Other 16,541 32,143
Total asset 593,832 958,212
Deferred Tax Liabilities:
Depreciation (727,763) (793,091)
Net deferred tax (liability) asset $(133,931) $ 165,121
The difference between the Federal income tax rate and the Bank's effective
tax rate is as follows:
2000 1999
Income tax at Federal tax rate of 34% $1,063,259 $ 714,385
Tax effect of:
Tax exempt interest (156,386) (140,656)
Other (1,852) 3,211
State income taxes, net of Federal effect 183,179 126,060
Total income taxes $1,088,200 $ 703,000
Effective tax rate 34.80% 33.46%
Notes to Consolidated Financial Statements
NOTE 13 RELATED PARTY TRANSACTIONS
Officers and directors of Kimball International, Inc. of Jasper, Indiana and
Kimball International, Inc. Retirement Trust own in excess of 50% of the
outstanding capital stock of SVB & T Corporation. The Bank is the local
depository for Kimball International, Inc. and is also the trustee for the
Kimball International Retirement Trust.
Amounts on deposit with the Bank by Kimball International, Kimball
International Retirement Plan and Employee Benefit Plan were $9,209,359 at
December 31, 2000 and $4,119,644 at December 31, 1999.
The Bank serves as Trustee for Kimball International's retirement and employee
benefit plans and rents office space to Kimball. Fees paid to the Bank for
these services by Kimball International in 2000, 1999 and 1998 were $426,574,
$446,207 and $547,704. Amounts receivable from Kimball International for
these services were $124,500 at December 31, 2000, $75,000 at December 31,
1999 and $-0- at December 31, 1998. Kimball International, Inc. has notified
the Bank that it will change retirement plan trustees in April 2001. The Bank
expects that fees from the Kimball Retirement Plan will decrease by $150,000
in 2001 and $300,000 thereafter.
In the ordinary course of business, the Bank makes loans to executive
officers, directors, principal shareholders, their related companies and
family members. These loans are made on substantially the same terms as those
with unrelated parties and do not involve unusual risks of collectability.
Total loans to executive officers, directors and principal shareholders for
2000 were as follows:
Balance, January 1, 2000 $ 5,789,615
New loans 475,272
Repayments (1,121,033)
Changes in persons included 0
Balance, December 31, 2000 $ 5,143,854
NOTE 14 - LEASE COMMITMENTS
Minimum lease payments at December 31, 2000, under operating lease
commitments, total $-0-. Operating expenses include rental expense of $22,935
in 2000, $21,260 in 1999 and $600 in 1998.
NOTE 15-COMMITMENTS AND CONTINGENT LIABILITIES
The Bank is party to financial transactions involving off-balance-sheet risk
in the normal course of business. These financial transactions include
commitments to extend credit and standby letters of credit. These
transactions involve to varying degrees, elements of credit risk in excess of
the amounts recognized in the statement of condition. The contract amounts of
these transactions reflect the extent of involvement the Corporation has in
the particular financial instruments.
The Bank's exposure to credit loss in the event of nonperformance by the other
party for commitments to extend credit and standby letters of credit is
represented by the contractual amount of those instruments. The Bank uses the
same credit policies when entering into these off-balance-sheet transactions
as it does for on-balance-sheet transactions.
Financial transactions with off-balance-sheet credit risk at December 31, 2000
and 1999 were as follows:
2000 1999
Commitments to extend credit $12,960,000 $25,006,059
Standby letters of credit $ 360,355 $ 471,300
Notes to Consolidated Financial Statements
NOTE 15-COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of conditions established in the contract. Commitments
generally have fixed expiration dates or other termination clauses. Since
many of the commitments are expected to expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash
requirements. The Bank evaluates each customer's creditworthiness on a case-
by-case basis. The amount of collateral obtained, if deemed necessary by the
Bank upon extension of credit, is based on management's credit evaluation of
the counterparty. Collateral held varies but may include accounts receivable,
inventory, property and equipment, and income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Letters of credit
are primarily issued to support private borrowing arrangements. The credit
risk involved in issuing letters of credit is essentially the same as that
involved in extending loans to customers.
The Bank is subject to claims and lawsuits which arise in the ordinary course
of business. Based on information presently available and advice received
from legal counsel representing the Bank in connection with such claims
and lawsuits, it is the opinion of management that the disposition or ultimate
determination of such claims and lawsuits will not have a material adverse
effect on the consolidated financial position of the Company.
NOTE 16 - STOCK OPTION PLANS
SVB & T Corporation maintains two stock option plans for certain employees and
directors. 28,000 shares of stock were reserved for these plans and 12,765
remain available. Options are granted annually with an exercise price
equal to the fair market value on the date the options are granted. The
options vary in length from 5 to 10 years.
Options granted and exercised are as follows:
Number Average Exercise Price
Balance, January 1, 1998 2,800 $24.46
Granted 4,392 $27.50
Exercised 0 $ .00
Balance, December 31, 1998 7,192 $26.32
Granted 3,814 $38.00
Exercised (463) $29.90
Balance, December 31, 1999 10,543 $30.96
Granted 4,229 $38.00
Exercised (134) $38.00
Balance, December 31, 2000 14,638 $32.46
Pro forma information required of companies not adopting FASB No. 123 is as
follows:
2000 1999 1998
Pro forma net income $ 2,024,214 $1,393,481 $ 1,820,038
Pro forma basic earning per share $ 2.72 $ 1.87 $ 2.43
Pro forma diluted $ 2.71 $ 1.86 $ 2.42
Notes to Consolidated Financial Statements
NOTE 17-STOCKHOLDERS' EQUITY
The Company is currently considering the purchase of approximately 19% of its
outstanding common stock from a related party shareholder. The ultimate
decision to purchase this stock is contingent on the price and approval
of various regulatory agencies. However, the Company will not purchase the
stock if it results in capital ratios which are less than well capitalized.
NOTE 18-RESTRICTIONS ON RETAINED EARNINGS
SVB & T Corporation's principal source of funds for dividends is Springs Valley
Bank & Trust Company, its wholly owned subsidiary. The amount of dividends that
the Bank may pay SVB & T Corporation without regulatory approval is limited by
state law to defined net income for 2000, 1999 and 1998 less any dividends
paid in those years. In addition, Federal regulations require the Bank
to maintain certain capital levels based on risk-weighted assets. At
December 31, 2000, approximately $3,129,000 of the Bank's retained earnings
were available for dividend payments to the SVB & T Corporation.
NOTE 19-REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered by
federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and
the regulatory framework for prompt corrective action, the Bank must
meet specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The Bank's capital amounts
and classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of Total Capital and Tier 1 Capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier 1 Capital (as defined) to average
assets (as defined). Management believes, as of December 31, 2000, that the
Bank meets all capital adequacy requirements to which it is subject.
As of December 31, 2000, the Bank was categorized by the FDIC as well
capitalized under the regulatory framework for prompt corrective action.
To remain categorized as well capitalized the Bank must maintain minimum
total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth
in the table below. There are no conditions or events since the notification
that management believes have changed the institution's category.
Notes to Consolidated Financial Statements
NOTE 19-REGULATORY MATTERS (Continued)
The Bank's consolidated actual capital amounts and ratios are presented in the
table below.
Consolidated Required for Required to be
Amounts and Regulatory Well
Ratio Purposes Capitalized
As of December 31, 2000
Tier 1 Capital to Risk-
Weighted Assets $ 22,469,344 $ 7,278,142 $ 10,917,213
12.4% 4.0% 6.0%
Total Capital to Risk-
Weighted Assets $ 24,140,256 $14,556,284 $ 18,195,355
13.3% 8.0% 10.0%
Tier 1 Capital to Average
Assets $ 22,469,344 $ 9,251,506 $ 11,564,382
9.7% 4.0% 5.0%
As of December 31, 1999
Tier 1 Capital to Risk-
Weighted Assets $ 20,898,004 $ 6,528,360 $ 9,792,540
12.8% 4.0% 6.0%
Total Capital to Risk-
Weighted Assets $ 22,525,145 $13,056,720 $ 16,320,900
13.8% 8.0% 10%
Tier 1 Capital to Average
Assets $ 20,898,004 $ 7,992,828 $ 9,991,035
10.5% 4.0% 5%
NOTE 20-CONCENTRATIONS OF CREDIT
At December 31, 2000, the total amount of due from banks included $2,460,903
with Bank One Kentucky and $315,944 with German American Bank, which is in
excess of the Federal Deposit Insurance Corporation's insured limit of $100,000
per institution.
The majority of investments in state and municipal securities involve
governmental entities in the State of Indiana.
Approximately 72% of the Bank's loans, commitments and letters of credit have
been granted to customers in the Bank's market area of Orange, Dubois and
surrounding counties in Southern Indiana. The remaining 28% of the Bank's
loans have been made to a diversified mix of customers in central Indiana, in
participation with financial institutions in that area. These loans account for
a majority of the Bank's commercial and commercial real estate lending
activities The concentrations of credit by type of loan are set forth in
Note 5. Although the Bank has a diversified loan portfolio, a
substantial portion of its customers' ability to honor their loan contracts
is dependent on the strength of the manufacturing economic sector in the
Southern Indiana area.
Notes to Consolidated Financial Statements
NOTE 21-FAIR VALUES OF FINANCIAL INSTRUMENTS
Carrying amounts and estimated fair values of financial instruments at December
31, 2000 and 1999 are as follows:
2000 1999
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
ASSETS
Cash and cash equivalents $ 5,873,422 $5,873,422 $5,472,105 $ 5,472,105
Investment securities 30,446,729 30,446,729 26,103,221 26,103,221
Loans 203,001,303 204,816,648 173,492,187 172,525,979
Interest receivable 1,886,009 1,886,009 1,463,745 1,463,745
LIABILITIES
Deposits $186,360,170 $186,365,074 $181,276,065 $182,123,787
Short-term borrowings 5,265,000 5,265,000 5,000,000 5,000,000
Long-term borrowings 31,100,000 31,100,000 9,100,000 8,605,269
Interest payable 964,086 964,086 783,971 783,971
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments.
Cash and Cash Equivalents - The carrying amounts reported in the consolidated
statements of financial condition for cash and federal funds sold is a
reasonable estimate of their fair value.
Investment Securities - Fair values for investment securities are based on
quoted market prices.
Loans - For variable rate loans and short-term fixed rate loans that adjust
rates frequently, fair values are based on the carrying value of those
loans. For long-term fixed rate loans, the fair values are estimated
by discounting future cash flows using current interest rates at which
similar loans would be made to borrowers of similar credit quality. For
other financial instruments classified as loans (bankers acceptances,
economic development revenue bonds, and securities purchased under
reverse repurchase agreements), fair values are based on the carrying value
of those instruments. Anticipated future loan losses have been deducted.
Interest Receivable - The carrying amount of accrued interest receivable is a
reasonable estimate of its fair value.
Deposit Liabilities - The carrying value of demand deposit, NOW, savings and
money market savings accounts are equal to the amount payable on demand at the
reporting date and as such are the fair value. For variable rate time deposits
(IRA deposits) which reprice quarterly, fair values are based on the carrying
value of the accounts. The fair value of fixed rate certificates of deposit is
estimated by discounting the future cash flows using the current rates offered
for deposits of similar remaining maturities.
Short-term Borrowings - The carrying amounts short-term borrowings are
reasonable estimates of their fair values.
Notes to Consolidated Financial Statements
NOTE 21 -FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
Interest Payable - The carrying amount of accrued interest payable is a
reasonable estimate of its fair value.
Long-term Borrowings - The fair value of fixed rate, long-term borrowings is
estimated by discounting the future cash flows using current rates for
borrowings of similar maturities.
NOTE 22 - PARENT COMPANY ONLY FINANCIAL STATEMENTS
Presented below are the condensed, parent company only, financial statements of
SVB & T Corporation:
December 31,
Condensed Balance Sheet 2000 1999
ASSETS
Cash in bank with subsidiary $ 176,277 $ 14,736
Investment in subsidiary 20,908,553 19,176,938
Buildings and equipment 1,746,975 1,770,277
Other assets 199,100 156,200
Total assets $23,030,905 $21,118,151
LIABILITIES
Accrued expenses $ 92,596 $ 86,182
Dividends payable 134,105 133,781
Long-term debt with subsidiary 0 216,471
Deferred income taxes 335,492 312,688
Total liabilities 562,193 749,122
SHAREHOLDERS' EQUITY
Common stock 200,000 200,000
Surplus 6,210,711 6,170,109
Retained earnings 17,047,543 15,544,930
Accumulated other comprehensive
income (14,832) (544,375)
Treasury stock (974,710) (1,001,635)
Total shareholders' equity 22,468,712 20,369,029
Total liabilities and
shareholders' equity $23,030,905 $21,118,151
2000 1999
Long-term debt with subsidiary consisted of:
Mortgage payable to Springs Valley Bank & Trust
Company, Jasper, Indiana (the wholly owned
subsidiary of SVB & T Corporation), variable
interest rate, 8.50% at December 31, 1999,
secured by branch bank building in Jasper,
Indiana, paid off in 2000 $ 0 $ 16,471
Notes to Consolidated Financial Statements
NOTE 22 - PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)
Years Ended December 31,
Condensed Statement of Income 2000 1999 1998
INCOME
Dividend income $ 11,000 $ 0 $ 0
Dividends from subsidiary 783,840 687,280 475,700
Rent from subsidiary 300,000 300,000 300,000
Total income 1,094,840 987,280 775,700
EXPENSE
Depreciation 66,103 64,335 65,584
Interest on long-term debt 9,618 26,120 46,947
Other expenses 120,958 79,885 76,198
Total expense 196,679 170,340 188,729
Income before income taxes and equity in
undistributed earnings of subsidiary 898,161 816,940 586,971
Income tax expense 61,200 51,400 45,900
Income before equity in undistributed
earnings of subsidiary 836,961 765,540 541,071
Equity in undistributed earnings of
subsidiary 1,202,071 639,017 1,288,111
Net income $ 2,039,032 1,404,557 $ 1,829,182
Notes to Consolidated Financial Statements
NOTE 22 - PARENT COMPANY ONLY FINANCIAL STATEMENTS
Years Ended December 31,
Condensed Statement of Cash Flows 2000 1999 1998
Operating Activities:
Net income $ 2,039,032 $ 1,404,557 $1,829,182
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 66,103 64,335 65,584
Undistributed net income of
subsidiary (1,202,071) (639,017) (1,288,111)
Deferred income taxes 22,804 20,625 20,901
(Increase) decrease in other
assets (42,900) (14,200) (35,500)
Increase (decrease) in accrued
expenses, dividends payable and
payable to subsidiary 6,738 33,020 (2,559)
Net cash provided by operating
activities 889,706 869,320 589,497
Investing Activities:
Additions to buildings and
equipment (42,801) (22,217) (4,069)
Net cash used by investing
activities (42,801) (22,217) (4,069)
Financing Activities:
Net treasury stock activity 67,527 (119,873) 7,114
Dividends paid (536,420) (514,667) (448,629)
Principal payment on long-term
debt (216,471) (219,368) (216,228)
Net cash used by financing
activities (685,364) (853,908) (657,743)
Increase (decrease) in cash
and cash equivalents 161,541 (6,805) (72,315)
Cash and cash equivalents at
beginning of year 14,736 21,541 93,856
Cash and cash equivalents end
of year $ 176,277 $ 14,736 $ 21,541
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors
SVB & T Corporation and Subsidiary
French Lick, Indiana
We have audited the accompanying consolidated statements of financial condition
of SVB & T Corporation and Subsidiary as of December 31, 2000 and 1999, and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for each of the three years in the period ended December 31, 2000.
These financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of SVB & T Corporation and Subsidiary at December 31, 2000 and 1999, and the
consolidated results of their operations and cash flows for each of the three
years in the period ended December 31, 2000, in conformity with generally
accepted accounting principles.
Nonte & Company LLC
Certified Public Accountants
Jasper, Indiana
January 22, 2001
Exhibit 11 - Statement Re: Computation of Per Share Earnings
Year Ended December 31,
2000 1999 1998
Primary
Weighted average shares
outstanding $ 745,017 $ 745,994 $ 745,006
Net Income 2,039,032 1,404,557 1,829,182
Net income per common share $ 2.74 $ 1.88 $ 2.45
SVB&T Corporation has no common stock equivalents
Exhibit 21 - Subsidiaries of the Registrant
State of
Subsidiary Incorporation
Springs Valley Bank & Trust Company Indiana
Exhibit 23 - Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of SVB&T Corporation of our report dated January 22, 2001, included in the 2000
Annual Report to Shareholders of SVB&T Corporation.
NONTE & COMPANY LLC
Certified Public Accountant
Jasper, Indiana
March 22, 2001