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, 2003
_____ 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 597,245 shares outstanding at July 31, 2003. The
Registrant holds 202,755 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, 2003 and 2002 and December 31, 2002................ 3
Consolidated Statements of Income
Three and six months ended June 30, 2003 and 2002........... 4
Consolidated Statements of Cash Flows
Six months ended June 30, 2003 and 2002..................... 5
Consolidated Statements of Changes in Shareholders' Equity
Six months ended June 30, 2003 and 2002..................... 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) 2003 2002 2002
ASSETS:
Cash and due from banks 5,760 5,006 6,728
Federal funds sold 11,439 10,515 4,607
Interest bearing deposits in other banks 1,298 3,457 1,615
Total cash and cash equivalents 18,497 18,978 12,950
Investment securities, available for
sale (carried at market value) 34,214 27,133 27,912
Loans, held for resale 2,277 2,504 2,588
Loans
Loans, net of unearned interest 173,947 195,829 185,537
Allowance for loan losses (2,286) (2,152) (2,176)
Net loans 171,661 193,677 183,361
Buildings and equipment 4,009 4,199 4,196
Other real estate 2,460 336 1,111
Interest receivable 1,368 1,663 1,383
Other assets 8,592 8,153 8,682
Total Assets 243,078 256,643 242,183
LIABILITIES:
Deposits
Non-interest bearing demand 14,195 12,100 12,371
Interest bearing 167,425 183,249 168,949
Total Deposits 181,620 195,349 181,320
Interest payable 1,107 1,365 1,189
Deferred income taxes 451 247 345
Other liabilities 531 677 519
Long-term borrowings 40,042 40,400 40,042
Total Liabilities 223,751 238,038 223,415
SHAREHOLDERS' EQUITY:
Common stock 200 200 200
Capital surplus 6,350 6,309 6,308
Retained earnings 19,195 18,650 18,793
Net unrealized gain on
investment securities 708 385 546
Treasury stock at cost (202,755 shares ) (7,126) (6,939) (7,079)
Total Shareholders' Equity 19,327 18,605 18,768
Total Liabilities and
Shareholders' Equity 243,078 256,643 242,183
(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) 2003 2002 2003 2002
________________________________________________________________________
INTEREST INCOME:
Loans and fees on loans 2,928 3,751 6,016 7,401
Investment securities:
Taxable 107 85 210 188
Non-taxable 185 220 387 425
Federal funds sold and
securities purchased under
agreements to resell 41 32 68 57
Deposits with banks 3 6 6 8
Other interest income 28 51 55 51
Total interest income 3,292 4,145 6,742 8,130
INTEREST EXPENSE:
Deposits 1,284 1,472 2,595 2,925
Long-term borrowings 565 574 1,123 1,124
Total interest expense 1,849 2,046 3,718 4,049
NET INTEREST INCOME 1,443 2,099 3,024 4,081
Provision for loan losses 105 105 210 175
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,338 1,994 2,814 3,906
NON-INTEREST INCOME:
Trust fees 137 112 250 210
Service charges on
deposit accounts 248 142 487 267
Insurance and claims processing 48 47 92 108
Securities gains (losses), net 36 0 104 0
Other income 331 30 613 160
Total Non-interest Income 800 331 1,546 745
NON-INTEREST EXPENSE:
Salaries and employee benefits 1,016 1,057 2,056 2,070
Premise and equipment expense 272 244 555 558
FDIC deposit insurance expense 8 6 17 17
Other expenses 455 486 909 889
Total non-interest expense 1,751 1,793 3,537 3,534
INCOME BEFORE INCOME TAXES 387 532 823 1,117
Provision for income tax 98 161 205 359
NET INCOME 289 371 618 758
NET INCOME PER COMMON SHARE:
Primary .48 .62 1.03 1.26
Weighted average common shares
outstanding 597,245 602,505 598,687 602,505
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) 2003 2002
___________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 618 758
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED FROM OPERATING ACTIVITIES:
Deferred income tax 0 0
Depreciation 216 207
Net premium amortization (discount
accretion) of investment securities 81 35
Provision for loan losses 210 175
(Increase) decrease in interest receivable 15 (163)
(Increase) decrease in other assets 90 (5,089)
Increase in accrued expenses and
other liabilities (70) 539
Net cash flows provided by (used in)
operating activities 1,160 (3,538)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities available
for sale (17,782) (7,000)
Proceeds from maturities and pay downs of
investment securities available for sale 11,667 337
Proceeds from sale of loans 10,453 8,229
Net (increase) decrease in loans (182) 1,481
Purchase of premises and equipment (29) (124)
Proceeds from sale of other Real Estate 181 0
Net cash flows provided by (used in)
investing activities 4,308 2,923
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits and
short-term borrowings and fed funds purchased
Non-interest bearing demand 1,824 1,131
Total interest-bearing deposits (1,524) 12,479
Other short-term borrowings and fed
funds purchased 0 (4,100)
Long-term borrowings 0 11,300
Cash dividends paid (215) (216)
Treasury stock sold 69 92
Treasury stock purchased (75) (5,944)
Net cash flows provided by
financing activities 79 14,742
Net increase in cash equivalents 5,547 14,127
Cash and cash equivalents at beginning of
period 12,950 4,851
Cash and cash equivalents at end of period 18,497 18,978
Total interest paid 3,800 3,690
Total taxes paid 50 409
(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) 2003 2002
______________________________________________________________________________
Balance, beginning of period 18,768 23,653
Net income 618 758
Cash dividends (215) (216)
Net unrealized gain on investment
securities 162 262
Sale of treasury stock 69 92
Purchase of treasury stock (75) (5,944)
Balance, end of period 19,327 18,605
(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, 2003 are not necessarily indicative of those expected for
the remainder of the year.
June 30, 2003 June 30, 2002 Dec. 31, 2002
______________________________________________________________________________
INVESTMENT SECURITIES:
U.S. treasury securities 0 0 0
U.S. Government corporations
& agencies 18,968 9,540 11,029
States and political subdivisions 15,184 17,524 16,818
Mortgage - backed securities 62 69 65
Total investment securities 34,214 27,133 27,912
June 30, 2003 June 30, 2002 Dec. 31, 2002
______________________________________________________________________________
LOANS:
Commercial and industrial loans 52,039 46,104 49,977
Real estate loans 87,732 104,009 97,183
Construction loans 11,846 13,105 10,350
Agricultural production financing
and other loans to farmers 1,349 2,098 2,186
Individual loans for household
and other personal expense 18,364 28,511 24,496
Lease financing receivable 286 623 397
Other loans excluding consumer 4,703 3,956 3,650
Less: Unearned income on loans (95) (73) (114)
Total loans 176,224 198,333 188,125
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 $618,000 represents a decrease of
$140,000 or 18% from the $758,000 reported for the same period last year. The
second quarter earnings of $289,000 represents a decrease of $82,000 from the
$371,000 reported for the second quarter of 2002. The reduced income in 2003
is a direct result of an increase in the amount of non-accrual loans and a
decrease in loan volume.
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 2003, net interest income of $3,024,000, decreased $1,057,000
compared to the same period in 2002. 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, the
increase in non-accruals loans and the decrease of the total loans outstanding
have also reduced the net interest income..
OTHER INCOME
Other income of $1,546,000 for the first two quarters of 2003 is $801,000 or
107% greater than the same period for 2002. The increase is due to the
servicing of fixed rate mortgages and gains on the sale of these mortgage.
Also, several Tax-free securities were sold with capital gains. 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 2003 other expenses remained nearly the same
compared to the same period of 2002. The three months ended June 30, 2003
total other expense decrease was $42,000 or 2% over that same period for 2002
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 $2,286,000 at June 30, 2003
compared to $2,152,000 at June 30, 2002 and $2,176,000 as of December 31,
2002.
At June 30, 2003 the allowance for possible loan losses was 1.30% of total
loans, net of unearned interest. This compares to an allowance of 1.06%
at June 30, 2002. Net charge offs for the first six months of 2003 were
$99,000 compared to $133,000 for the same period last year. Management
reviews the loan portfolio, assesses the risk and believes that the allowance
of $2,286,000 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, 2003 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, 2003 was $19,327,000 compared to
$18,605,000 for the same period last year. The shareholder's equity has
increased by $722,000 or 4% from June 30, 2002 to June 30, 2003. This
increase is attributed to the increase in the valuation of the securities
portfolio and income from the bank. The Bank and Holding Company remain
highly capitalized.
As of June 30, 2003 the company's leverage capital ratio was 7.64% which
compared to 7.31% at June 30, 2002.
As of June 30, 2003 the company's total risk-based capital ratio was 11.81%
compared to 11.06% at June 30, 2002.
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, 2003.
(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 2002 annual meeting of shareholders. A
total of 180,387 shares were voted in person and 322,080 shares
voted by proxy. This totals 502,467 shares voted in approval of
the 599,820 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, 2003
CERTIFICATIONS
I, David Rees, certify that:
1. I have reviewed this quarterly report on Form 10-Q of SVB&T Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: August 8, 2003
David Rees, Principal Financial Officer
I, Ronald G. Seals, certify that:
1. I have reviewed this quarterly report on Form 10-Q of SVB&T Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: August 8, 2003
Ronald G. Seals, President and Chief Executive Officer