SVB&T Corporation, Parent Company of Springs Valley Bank & Trust Company, Reports 2019 Year to Date and Third Quarter Earnings

JASPER, IN / ACCESSWIRE / October 29, 2019 / SVB&T Corporation (OTCQX:SVBT), parent company of Springs Valley Bank & Trust Company, announced today unaudited net income for the nine months ended September 30, 2019 of $3.0 Million or $5.30 earnings per share (EPS), a 5.02% decrease over the same period 2018 EPS. This also compares unfavorably in total dollars to $3.1 Million of net income over the same period in 2018. These year to date (YTD) September 30, 2019 results translate to a return on average assets (ROAA) of 0.92%, compared to the same period 2018 of 1.06%.

Book value has risen from $72.70 per share at December 31, 2018 to $80.79 at September 30, 2019 or an 11.13% increase. The SVB&T Corporation stock closed at $79.51 per share on the OTCQX exchange on October 28, 2019.

Total assets increased $52.6 Million to $453.6 Million at September 30, 2019 compared to December 31, 2018 assets of $401.0 Million. Total Loans before allowances increased $36.5 Million to $346.4 Million at September 30, 2019 from $309.9 Million at December 31, 2018. The considerable loan growth experienced in the first two quarters of 2019 slowed to some degree in the third quarter. The year to date loan growth was primarily generated in commercial real estate and commercial lines of credit with agriculture real estate and lines of credit being the largest contributors. This has been a strategic focus of Springs Valley Bank & Trust Company throughout 2019 as we continue to leverage the expertise of our agriculture lending and underwriting staff while focusing on borrowers with significant equity positions and the wherewithal to prosper even in an environment of low crop yields and pricing. Additionally, as part of our effort to fund this substantial loan growth, during September, the investment subsidiary of Springs Valley Bank & Trust Company, SVB&T Holdings Inc., sold $8.6 million of investments, primarily municipal bonds, generating a $406,000 gain and subsequently paid a $6.0 million dividend to Springs Valley Bank & Trust Company from the sale proceeds. Springs Valley Bank & Trust Company will use the funds to reduce high cost funding, primarily Brokered CD's and Federal Home Loan Bank Advances, and/or fund future loan growth, dependent upon loan demand throughout the remainder of 2019, in an effort to bolster net interest margin by generating higher yielding assets while reducing cost of funds. On the liability side of the balance sheet, total deposits increased $23.0 Million to $354.9 Million at September 30, 2019 from $331.9 Million at December 31, 2018. The deposit growth has been generated primarily in higher rate products such as the money market savings, as well as an increase in brokered time deposits, as local competition for deposits continues, resulting in increased pricing on rate sensitive products.

Net interest income before provision expense for the nine months ended September 30, 2019 was $10.2 Million compared to $9.6 Million for the same period 2018, an increase of $627,000. This increase was primarily a result of growth in earnings assets during the first nine months of the year as well as higher yields on earning assets which generated an increase in interest income of $1.9 Million over the same prior year period. However, cost of funds increased by $1.3 Million due to higher deposit balances, rate increases resulting from local competition for deposits, and increased borrowings to fund the gap between our loan and deposit growth, which negated some of the positive impact to net interest income. Total non-interest income increased $428,000 to $4.4 Million YTD September 2019 from $4.0 Million YTD for the same period 2018. This increase was primarily a result of the rebalancing opportunity from sold bonds in the investment portfolio, providing a pretax gain of $406,000 in the third quarter.

Non-interest expense increased $1.3 Million to $10.5 Million YTD September 2019 from $9.2 Million YTD for the same period 2018. As noted in the prior quarter's earnings release, this expense increase was primarily driven by various overhead components that have been necessary to build out the infrastructure to support the future growth of Springs Valley Bank & Trust Company. Some of the largest components of this expense have been increased staffing, additional premises and equipment, and additional information technology initiatives, including further developing our digital service offering, implementing an integrated teller machine (ITM) network, and data processing support.

Third quarter 2019 unaudited earnings of $1.3 Million or $2.30 EPS, was a 42.86% increase over the same period 2018 EPS. This also compares favorably in total dollars to $900,000 of unaudited earnings over the same period in 2018. This third quarter 2019 performance translates to a return on average assets (ROAA) of 1.15%, compared to the same prior year period of 0.89%. Following the year to date trend, third quarter net interest income experienced an uptick over the prior year third quarter with increased loan balances and higher average rates driving income higher, but this bump was muted to some degree as our cost of funding also increased. The bank did, along with an increase in non-interest income, more than offset the elevated non-interest expense leading to the increase in net income for the quarter as noted above. Factors driving higher non-interest income for the quarter, in addition to the bond sale from the investment portfolio, included fee income from both sold mortgages and sold SBA loans as these two sources of revenue significantly outpaced both the third quarter of 2018 by $91,000 and the trailing quarter by $198,000. This is an ongoing point of focus for the bank as we continue to strategically diversify revenue streams with specific emphasis on these sources of fee income to help mitigate reliance on margin via net interest income generation. Financial Advisory Group income (including both Trust and Brokerage services) has rebounded as well with third quarter 2019 income surpassing both the third quarter of 2018 by $59,000 and the trailing quarter by $63,000. The current third quarter over trailing quarter earnings increased approximately $297,000 or 29.96%. However, third quarter earnings, adjusted for the one-time, after tax gain on sale of bonds in 2019, were $967,000 or $24,000 lower than the trailing second quarter 2019 earnings, primarily resulting from higher non-interest expense, following the same theme as discussed in the year to date narrative above.

Other notable developments in the third of quarter of 2019 included the opening of our Washington Banking Center in Washington, IN. We are extremely excited to be a part of the Washington community and Daviess County with the addition of our branch to the area. We look forward to a prosperous partnership with Daviess County residents. As we continue to focus on this new banking center, we have also begun another venture; this one into the Gibson County area with a prospective branch opening in Princeton, IN by the beginning of 2020. We are equally excited about our entrance into Princeton and Gibson County as we continue to utilize resources to expand our community bank footprint into these high quality, community oriented areas in Southern Indiana.

"In the third quarter, Management rolled up our sleeves and went to work proactively to counter-balance some of the challenges incurred earlier in the year that had dampened the corporation's ability to deliver results at budget," stated President & CEO Jamie Shinabarger. "2019 has definitely proven to be one of the most challenging years since we began our winning streak (best seven consecutive years in the franchise history from 2012-2018). We have navigated around and managed through an inverted yield curve, an early-in-the-year volatile equities market, and the resources required to spin-up two new banking centers in entirely new markets," Mr. Shinabarger concluded.

As budgeting season shifts into high gear, Management's 2020 strategy is focused on taking a pause from the fast and furious pace of digital product implementation to digest and assimilate the myriad of electronic solutions the bank has invested in over the past 18 months. In addition, an intense concentration on lowering the cost of funding, strategically controlling the balance sheet make-up, and diversifying the bank's income statement are high on the list of key 2020 initiatives.

For more information contact: Darrell Blocker, Treasurer & CFO, SVB&T Corporation, at 812.634.4803 or dblocker@svbt.com. On the OTCQX trading platform, find us under ticker symbol SVBT at www.otcmarkets.com.

Information conveyed in this press release regarding SVB&T Corporation and its subsidiaries' anticipated future performance is forward-looking and therefore involves risks and uncertainties that could cause the results or developments to differ significantly from those indicated in these statements. These risks and uncertainties include, but are not limited to, risks and uncertainties inherent in general and local banking, as well as mortgage conditions, competitive factors specific to markets in which the corporation and its subsidiaries operate, future interest rate levels, changes in local real estate markets, legislative and regulatory decisions, capital market conditions, and other factors.

SVB&T Corporation is headquartered at 8482 West State Road 56, French Lick, Indiana 47432, with administrative offices at 1500 Main Street, Jasper, Indiana 47546. Springs Valley has two locations in both Dubois and Orange Counties and one location in Daviess County. Its subsidiary, Springs Valley Bank & Trust Company, offers full-service bank and trust services. Springs Valley has products and services for all types of individuals, families and businesses: checking and savings accounts, certificates of deposit, electronic services, online mortgage applications, and a variety of other loan options. In addition, Springs Valley Bank & Trust Company has a full-service trust department managed by experienced, talented professionals specializing in estate planning, tax planning, and wealth management. Investment Services are also offered by a licensed, professional Springs Valley representative. Springs Valley Bank & Trust Company's online address is www.svbt.bank and phone number is 800.843.4947.

Springs Valley Bank is a member of FDIC and is an Equal Housing Lender.

Selected Consolidated Financial Data of SVB&T Corporation
(In Thousands, Except Shares Outstanding and Per Share Data)

 
Unaudited
 
 
Audited
 

 
30-Sep
 
 
31-Dec
 

 
2019
 
 
2018
 
 
2018
 

Assets

Cash and Due From Banks

 
$
13,957
 
 
$
12,375
 
 
$
8,931
 

Interest Bearing Time Deposits

 
 
1,200
 
 
 
2,425
 
 
 
1,175
 

Fed Funds Sold

 
 
15,063
 
 
 
5,648
 
 
 
7,068
 

Available for Sale Securities

 
 
57,548
 
 
 
53,770
 
 
 
55,644
 

Other Investments

 
 
2,281
 
 
 
2,236
 
 
 
2,169
 

Loans held for sale

 
 
880
 
 
 
(32
)
 
 
150
 

Loans net of allowance for loan losses

 
 
341,041
 
 
 
302,852
 
 
 
305,879
 

Premises and Equipment

 
 
5,900
 
 
 
5,284
 
 
 
5,273
 

Bank-owned Life Insurance

 
 
8,179
 
 
 
8,008
 
 
 
8,052
 

Accrued Interest Receivable

 
 
2,309
 
 
 
2,035
 
 
 
1,824
 

Foreclosed Assets Held for Sale

 
 
49
 
 
 
65
 
 
 
58
 

Other Assets

 
 
5,213
 
 
 
4,952
 
 
 
4,730
 

Total Assets

 
 
453,620
 
 
 
399,618
 
 
 
400,953
 

Liabilities and Stockholders Equity

Non-interest bearing deposits

 
 
51,164
 
 
 
49,198
 
 
 
52,178
 

Interest bearing deposits

 
 
303,698
 
 
 
278,538
 
 
 
279,676
 

Borrowed Funds

 
 
43,876
 
 
 
23,821
 
 
 
19,710
 

Subordinated Debentures

 
 
5,000
 
 
 
5,000
 
 
 
5,000
 

Accrued interest payable and other liabilities

 
 
4,709
 
 
 
3,430
 
 
 
3,738
 

Total Liabilities

 
 
408,447
 
 
 
359,987
 
 
 
360,302
 

Stockholders' equity – substantially restricted

 
 
45,173
 
 
 
39,631
 
 
 
40,651
 

Total Liabilities and Shareholders' Equity

 
 
453,620
 
 
 
399,618
 
 
 
400,953
 

 
Three Months Ended
 
 
Nine Months Ended
 

 
30-Sep
 
 
30-Sep
 

 
2019
 
 
2018
 
 
2019
 
 
2018
 

Operating Data:

Interest & Dividend Income

 
$
4,926
 
 
$
4,271
 
 
$
14,315
 
 
$
12,354
 

Interest Expense

 
 
1,487
 
 
 
1,059
 
 
 
4,073
 
 
 
2,739
 

Net Interest Income

 
$
3,439
 
 
$
3,212
 
 
$
10,242
 
 
$
9,615
 

Provision for Loan Loss

 
 
235
 
 
 
232
 
 
 
728
 
 
 
669
 

Net Interest Income after Provision for Loan Losses

 
$
3,204
 
 
$
2,980
 
 
$
9,514
 
 
$
8,946
 

Fiduciary activitities

 
 
774
 
 
 
714
 
 
 
2,176
 
 
 
2,213
 

Customer service fees

 
 
319
 
 
 
337
 
 
 
959
 
 
 
950
 

Increase in cash surender value of life insurance

 
 
41
 
 
 
43
 
 
 
127
 
 
 
131
 

Other income

 
 
751
 
 
 
231
 
 
 
1,126
 
 
 
666
 

Total noninterest income

 
 
1,885
 
 
 
1,325
 
 
 
4,388
 
 
 
3,960
 

Salary & employee benefits

 
 
2,019
 
 
 
1,714
 
 
 
6,036
 
 
 
5,112
 

Occupancy

 
 
395
 
 
 
372
 
 
 
1,213
 
 
 
1,107
 

Data processing

 
 
360
 
 
 
312
 
 
 
1,041
 
 
 
926
 

Deposit insurance premium

 
 
(44
)
 
 
34
 
 
 
22
 
 
 
108
 

Professional fees

 
 
245
 
 
 
313
 
 
 
655
 
 
 
679
 

Other expenses

 
 
607
 
 
 
503
 
 
 
1,533
 
 
 
1,290
 

Total noninterest expense

 
 
3,582
 
 
 
3,248
 
 
 
10,500
 
 
 
9,222
 

Income before Income Taxes

 
 
1,507
 
 
 
1,057
 
 
 
3,402
 
 
 
3,684
 

Income Tax Expense

 
 
219
 
 
 
157
 
 
 
440
 
 
 
566
 

Net Income

 
$
1,288
 
 
$
900
 
 
$
2,962
 
 
$
3,118
 

Shares Outstanding

 
 
559,136
 
 
 
558,865
 
 
 
559,136
 
 
 
558,865
 

Average Shares – Basic

 
 
559,136
 
 
 
558,865
 
 
 
559,136
 
 
 
558,855
 

Average Shares – Diluted

 
 
559,136
 
 
 
559,136
 
 
 
559,136
 
 
 
559,136
 

Basic Earnings per Share

 
$
2.30
 
 
$
1.61
 
 
$
5.30
 
 
$
5.58
 

Diluted Earnings per Share

 
$
2.30
 
 
$
1.61
 
 
$
5.30
 
 
$
5.58
 

Other Data:

Yield on all Interest-earning Average Assets

 
 
4.61
%
 
 
4.47
%
 
 
4.70
%
 
 
4.42
%

Cost on all Interest-earning Average Assets

 
 
1.39
%
 
 
1.11
%
 
 
1.34
%
 
 
0.98
%

Interest Rate Spread

 
 
3.22
%
 
 
3.36
%
 
 
3.36
%
 
 
3.44
%

Net Interest Margin

 
 
3.22
%
 
 
3.36
%
 
 
3.36
%
 
 
3.44
%

Number of Full Service Banking Centers

 
 
5
 
 
 
4
 
 
 
5
 
 
 
4
 

Return on Average Assets (net income divided by average total assets)

 
 
1.15
%
 
 
0.89
%
 
 
0.92
%
 
 
1.06
%

Average Assets

 
$
448,987
 
 
$
403,606
 
 
$
427,953
 
 
$
393,784
 

Return on Average Equity (net income divided by average total equity)

 
 
11.65
%
 
 
9.15
%
 
 
9.30
%
 
 
10.85
%

Average Equity

 
$
44,209
 
 
$
39,326
 
 
$
42,468
 
 
$
38,328
 

Equity to Assets Ratio (EOP)

 
 
9.96
%
 
 
9.92
%
 
 
9.96
%
 
 
9.92
%

Book Value per Share

 
$
80.79
 
 
$
70.91
 
 
$
80.79
 
 
$
70.91
 

Market Value per Share – End of Period Close

 
$
79.51
 
 
$
81.66
 
 
$
79.51
 
 
$
81.66
 

SOURCE: SVB&T Corporation

ReleaseID: 564556