SECURITIES & EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
COMMISSION FILE NUMBER 33-10149
SVB&T Corporation
1500 Main Street
Jasper, IN 47546
Telephone (812) 634-1010
State of Incorporation - Indiana
I.R.S. Employer Identification No. 35-1539978
NOT APPLICABLE
Former name,former address and fiscal year, if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to the
filing requirements for at least the past 90 days. Yes _X__ No ____
Indicate the number of shares outstanding of each of the issuer's classes of
Common stock. The Registrant has one class of common stock (no par value)
with approximately 602,505 shares outstanding at August 6, 2002. The
Registrant holds 197,495 shares in the form of Treasury Stock.
SVB&T CORPORATION
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page No.
Consolidated Balance Sheets
June 30, 2002 and 2001 and December 31, 2001................ 3
Consolidated Statements of Income
Three and six months ended June 30, 2002 and 2001........... 4
Consolidated Statements of Cash Flows
Six months ended June 30, 2002 and 2001..................... 5
Consolidated Statements of Changes in Shareholders' Equity
Six months ended June 30, 2002 and 2001..................... 6
Notes to Consolidated Financial Statements................... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 8-10
PART II. OTHER INFORMATION............................................ 11
SIGNATURES............................................................ 12
SVB&T CORPORATION CONSOLIDATED BALANCE SHEETS
June 30, June 30, December 31,
(unaudited) 2002 2001 2001
ASSETS:
Cash and due from banks 5,006 7,311 4,811
Federal funds sold 10,515 866 0
Interest bearing deposits in other banks 3,457 611 40
Total cash and cash equivalents 18,978 8,788 4,851
Investment securities, available for
sale (carried at market value) 27,133 20,554 20,072
Loans, held for resale 2,504 0 2,359
Loans
Loans, net of unearned interest 195,829 214,935 205,804
Allowance for loan losses (2,152) (1,729) (2,097)
Net loans 193,677 213,206 203,707
Buildings and equipment 4,199 4,531 4,282
Other real estate 336 302 397
Interest receivable 1,663 1,707 1,500
Deferred income taxes 0 0 279
Other assets 8,153 2,991 3,003
Total Assets 256,643 252,079 240,450
LIABILITIES:
Deposits
Non-interest bearing demand 12,100 15,596 10,969
Interest bearing 183,249 181,577 170,770
Total Deposits 195,349 197,173 181,739
Federal funds purchased 0 0 4,100
Interest payable 1,365 1,324 1,006
Deferred income taxes 247 267 0
Other liabilities 677 869 852
Long-term borrowings 40,400 29,100 29,100
Total Liabilities 238,038 228,733 216,797
SHAREHOLDERS' EQUITY:
Common stock 200 200 200
Capital surplus 6,309 6,263 6,253
Retained earnings 18,650 17,617 18,107
Net unrealized gain on
investment securities 385 210 123
Treasury stock at cost (53,867 shares ) (6,939) (944) (1,030)
Total Shareholders' Equity 18,605 23,346 23,653
Total Liabilities and
Shareholders' Equity 256,643 252,079 240,450
(Dollar amounts in thousands)
The accompanying notes are an integral part of these statements.
SVB&T CORPORATION CONSOLIDATED STATEMENTS OF INCOME
Three Months Six Months
Ended June 30, Ended June 30,
(unaudited) 2002 2001 2002 2001
________________________________________________________________________
INTEREST INCOME:
Loans and fees on loans 3,751 4,493 7,401 8,973
Investment securities:
Taxable 85 103 188 266
Non-taxable 220 197 425 380
Federal funds sold and
securities purchased under
agreements to resell 32 11 57 53
Deposits with banks 6 2 8 3
Other interest income 51 36 51 72
Total interest income 4,145 4,842 8,130 9,747
INTEREST EXPENSE:
Deposits 1,472 2,132 2,925 4,402
Other short term funds borrowed 0 6 0 8
Long-term borrowings 574 455 1,124 926
Total interest expense 2,046 2,593 4,049 5,336
NET INTEREST INCOME 2,099 2,249 4,081 4,411
Provision for loan losses 105 130 175 310
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,994 2,119 3,906 4,101
NON-INTEREST INCOME:
Trust fees 112 122 210 295
Service charges on
deposit accounts 142 140 267 268
Other income 77 121 268 184
Total Non-interest Income 331 383 745 747
NON-INTEREST EXPENSE:
Salaries and employee benefits 1,057 973 2,070 1,997
Premise and equipment expense 244 265 558 531
FDIC deposit insurance expense 6 15 17 20
Other expenses 486 541 889 1,056
Total non-interest expense 1,793 1,794 3,534 3,604
INCOME BEFORE INCOME TAXES 532 708 1,117 1,244
Provision for income tax 161 239 359 406
NET INCOME 371 469 758 838
NET INCOME PER COMMON SHARE:
Primary .62 .63 1.26 1.12
Weighted average common shares
outstanding 602,505 747,100 602,505 747,100
DIVIDENDS DECLARED:
Cash dividends 0.18 0.18 0.36 0.36
(Dollar amounts in thousands)
The accompanying notes are an integral part of these statements.
SVB&T CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
(unaudited) 2002 2001
___________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 758 838
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED FROM OPERATING ACTIVITIES:
Deferred income tax 0 (14)
Depreciation 207 218
Net premium amortization (discount
accretion) of investment securities 35 12
Provision for loan losses 175 310
(Increase) decrease in interest receivable (163) 179
(Increase) decrease in other assets (5,089) 277
Increase in accrued expenses and
other liabilities 539 294
Net cash flows provided by (used in)
operating activities (3,538) 2,114
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities available
for sale (7,000) (1,959)
Proceeds from maturities and pay downs of
investment securities available for sale 337 10,357
Proceeds from sale of loans 8,229 722
Net (increase) decrease in loans 1,481 (11,539)
Purchase of premises and equipment (124) (142)
Net cash flows provided by (used in)
investing activities 2,923 (2,561)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits and
short-term borrowings and fed funds purchased
Non-interest bearing demand 1,131 1,796
Total interest-bearing deposits 12,479 9,017
Other short-term borrowings and fed
funds purchased (4,100) (5,266)
Long-term borrowings 11,300 (2,000)
Cash dividends paid (216) (267)
Treasury stock sold 92 82
Treasury stock purchased (5,944) 0
Net cash flows provided by
financing activities 14,742 3,362
Net increase in cash equivalents 14,127 2,915
Cash and cash equivalents at beginning of
period 4,851 5,873
Cash and cash equivalents at end of period 18,978 8,788
Total interest paid 3,690 4,976
Total taxes paid 409 539
(Dollar amounts in thousands)
The accompanying notes are an integral part of these statements.
SVB&T CORPORATION CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS' EQUITY
Six Months Ended June 30,
(unaudited) 2002 2001
______________________________________________________________________________
Balance, beginning of period 23,653 22,469
Net income 758 838
Cash dividends (216) (267)
Net unrealized gain on investment
securities 262 224
Sale of treasury stock 92 82
Purchase of treasury stock (5,944) 0
Balance, end of period 18,605 23,346
(Dollar amounts in thousands)
The accompanying notes are an integral part of these statements.
SVB&T CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Principles of Consolidation - The consolidated financial statements include the
accounts of SVB&T Corporation and its wholly owned subsidiary, Springs Valley
Bank & Trust Company. All significant intercompany balances and transactions
have been eliminated.
All adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the periods reported, consisting only of normal
adjustments, have been included in the accompanying unaudited consolidated
condensed financial statements. The results of operations for the six-month
period ended June 30, 2002 are not necessarily indicative of those expected for
the remainder of the year.
June 30,2002 June 30, 2001 Dec. 31, 2001
______________________________________________________________________________
INVESTMENT SECURITIES:
U.S. treasury securities 0 0 0
U.S. Government corporations
& agencies 9,540 5,072 4,089
States and political subdivisions 17,524 14,535 15,912
Mortgage - backed securities 69 73 71
Other domestic securities 0 874 0
Total investment securities 27,133 20,554 20,072
June 30, 2002 June 30, 2001 Dec. 31, 2001
______________________________________________________________________________
LOANS:
Commercial and industrial loans 46,104 43,583 44,632
Real estate loans 104,009 111,970 107,283
Construction loans 13,105 17,220 14,727
Agricultural production financing
and other loans to farmers 2,098 2,559 2,580
Individual loans for household
and other personal expense 28,511 38,474 36,312
Economic development revenue bonds 0 258 0
Lease financing receivable 623 692 631
Other loans excluding consumer 3,956 282 2,083
Less: Unearned income on loans (73) (103) (85)
Total loans 198,333 214,935 208,163
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SUMMARY OF OPERATING RESULTS
EARNINGS ANALYSIS
Net income for the first six months of $758,000 represents a decrease of
$80,000 or 10% from the $838,000 reported for the same period last year. The
second quarter earnings of $371,000 represents a decrease of $98,000 from the
$469,000 reported for the second quarter of 2001. The reduced income in 2001 is
a direct result of an increase in the amount of non-accrual loans.
NET INTEREST INCOME
SVB& T Corporation's primary source of earnings is net interest income, which
is the difference between interest earned on loans and other investments and
the interest incurred for deposits and other sources of funds. In the first
six months of 2002, net interest income of $3,925,000, decreased $486,000
compared to the same period in 2001. The decreasing interest rates have
shrunk the interest margins due to interest earning assets repricing more
frequently than interest interest-bearing deposits. Additional borrowings by
the Holding Company have increased interest expense. As noted before, non-
accruals loans have also reduced the net interest income.
OTHER INCOME
Other income of $901,000 for the first two quarters of 2002 is $154,000 or
21% greater than the same period for 2001. The increase is due to the servicing
of fixed rate mortgages and gains on the sale of these mortgage.
Other non-interest income is an important part of the profitability of the bank
and all avenues of additional income are reviewed.
NON-INTEREST EXPENSES
For the first six months of 2002 other expenses decreased by $70,000 or 2%
compared to the same period of 2001. The three months ended June 30, 2002
total other expense decrease was $11,000 or 12% over that same period for 2001.
All aspects of overhead expenses have been reduced or maintained at last years
levels.
ANALYSIS OF FINANCIAL CONDITION
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation's allowance for loan losses was $2,152,000 at June 30, 2002
compared to $1,729,000 at June 30, 2001 and $2,097,000 as of December 31,
2001.
At June 30, 2002 the allowance for possible loan losses was 1.06% of total
loans, net for unearned interest. This compares to an allowance of .81%
at June 30, 2001. Net charge offs for the first six months of 2002
were $133,000 compared to $252,000 for the same period last year. Management
reviews the loan portfolio and assess the risk and believes that the allowance
of $2,152,000 is adequate.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
The Corporation's objective in liquidity management is to manage the assets and
liabilities to meet the needs of borrowers while allowing for the
possibility of deposit withdrawals. The primary purpose of asset/liability
management is to minimize the effect on net income of changes in interest
rates and to maintain a prudent match within specified time periods of
rate-sensitive assets and rate-sensitive liabilities.
As of June 30, 2001 the rate-sensitive assets were 82% of rate-sensitive of
liabilities in the 1-180 day maturity category and 103% in the 181-365 day
range. These positions are within acceptable ranges as determined by funds
management policy. The Corporation's Funds Management Committee meets weekly
to monitor and effect changes necessary in the liquidity and rate-sensitivity
positions.
CAPITAL
Total shareholders' equity as of June 30, 2002 was $18,605,000 compared to
$23,346,000 for the same period last year. The shareholder's equity has
decreased by $4,741,000 or 20% from June 30, 2001 to June 30, 2002. This
decrease is attributed to the purchase of 144,920 shares of Holding Company
Stock which is being held as Treasury Stock. The Bank and Holding Company
remain highly capitalized.
(ANALYSIS OF FINANCIAL CONDITIONS CONTINUED)
As of June 30, 2002 the company's leverage capital ratio was 7.31% which
compared to 9.31% at June 30, 2001.
As of June 30, 2002 the company's total risk-based capital ratio was 11.06%
compared to 13.17% at June 30, 2001.
These ratios are in excess of regulatory requirements of 3% for leverage
capital and 8% for total risk-based capital.
PART II
OTHER INFORMATION
Item 1 - LEGAL PROCEEDINGS
None
Item 2 - CHANGES IN SECURITIES
None
Item 3 - DEFAULTS UPON SENIOR SECURITIES
None
Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of shareholders of the corporation was held on
May 21, 2002.
(b) The following were elected directors of the corporation for a
term of one year and until their successors are elected and
qualified: Brian K. Habig, Douglas A. Habig, John B. Habig
Hilbert Lindsey, Ronald G. Seals, R.J. Sermersheim, Ronald J.
Thyen, James C. Tucker, and Gary P. Critser.
(c) The shareholders unanimously approved the action of the directors
and officers since the 2001 annual meeting of shareholders. A
total of 133,828 shares were voted in person and 384,308 shares
voted by proxy. This totals 518,136 shares voted in approval of
the 602,455 shares outstanding.
Item 5 - OTHER INFORMATION
None
Item 6 - EXHIBITS AND REPORTS OF FORM 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SVB&T Corporation
(Registrant)
By: Ronald G. Seals
President and Chief Executive Officer
By: David Rees
Principal Financial Officer
Date: August 8, 2002