SVB&T Corporation, Parent Company of Springs Valley Bank & Trust Company, Reports 2023 Third Quarter and Year to Date Earnings

JASPER, IN / ACCESSWIRE / November 13, 2023 / SVB&T Corporation (OTCQX:SVBT), parent company of Springs Valley Bank & Trust Company, today announced 2023 third quarter unaudited earnings of $1.62 million or $1.47 earnings per share (EPS), which equates to the same prior year period earnings on a per share basis. This third quarter 2023 performance translates to a return on average assets (ROAA) of 1.11%, compared to the same prior year period of 1.23%.

Net interest income before provision expense for the third quarter ended September 30, 2023 was $4.39 million compared to $4.87 million for the same period in 2022. Interest income increased $1.87 million compared to the prior year third quarter, primarily due to increased loan balances and increased interest rates on loans resulting from the rising rate environment. Interest expense increased $2.35 million compared to the same prior year quarter, again due to the rising interest rate environment and increased deposit balances, as well as the mix between interest- and noninterest-bearing deposits. Provision expense decreased by $75,000 over the prior year third quarter. Additionally, noninterest income increased approximately $349,000 to $2.38 million from $2.03 million. The higher income can largely be attributed to increased revenue over the prior year third quarter from sold mortgage loans, the Financial Advisory Group (including both trust and financial services), and electronic banking services. As it has been in the past, noninterest income generation continues to be a strategic focus of SVB&T's by growing the Financial Advisory Group, increasing sold loan income, expanding electronic banking services, and other avenues, to continue to reduce margin dependence. Noninterest expense decreased $46,000 to $4.71 million from $4.76 million, attributable to slight decreases in general operating expenses, the largest of which being decreased legal fees and core processing expenditures in the third quarter of 2023.

Quarter over trailing quarter earnings increased approximately $139,000 or 9.37%. The earnings increase was largely driven by higher Financial Advisory Group income, sold mortgage income, and servicing fees on sold loans. Additionally, although earnings from interest income increased quarter over quarter, the increase in interest expense eroded any positive net interest income contribution to the quarter over quarter change.

SVB&T Corporation book value (adjusted for the 2022 stock split) has increased from $48.09 per share as of September 30, 2022, to $51.99 as of September 30, 2023, an 8.11% increase. SVB&T Corporation stock closed at $39.50 per share on the OTCQX exchange on September 30, 2023. In February of 2021, the Corporation's Board of Directors authorized a share repurchase program through December 31, 2022. Under the program, the Corporation was authorized to repurchase, from time to time as the Corporation deemed appropriate, shares of SVB&T Corporation's common stock with an aggregate purchase price of up to $2.00 million. As of December 31, 2022, SVB&T had repurchased (adjusted for 2022 stock split) 24,400 shares, with an average purchase price of $40.59, under the program. As of May 16, 2023, the repurchase program has been renewed with an aggregate purchase price of up to $1.00 million. As of the end of the third quarter, no shares have been repurchased under the newly approved plan.

Total assets increased $22.72 million to $583.38 million on September 30, 2023, compared to December 31, 2022 assets of $560.66 million. Total loans before allowance increased $21.25 million to $474.29 million on September 30, 2023, from $453.04 million on December 31, 2022. The loan growth was primarily generated through commercial and agriculture real estate (including commercial real estate construction), consumer home equity lines of credit, and consumer real estate lending. Springs Valley has experienced healthy loan demand throughout 2023. However, the Bank is strategically managing loan growth in 2023 to alleviate some of the pressure on the funding side of the balance sheet as cost of funds continue to increase, as well as to help mitigate any potential credit concerns that could arise due to the high interest rate and economic environment. Allowance as a percent of total loans was 1.47% as of September 30, 2023, compared to 1.55% as of December 31, 2022. Total deposits increased $38.50 million to $507.72 million on September 30, 2023, from $469.22 million on December 31, 2022. Noninterest-bearing deposits decreased by approximately $4.29 million due largely to decreases in business accounts. Interest-bearing deposits have increased by approximately $42.79 million. These increases occurred primarily in Springs Valley's reciprocal deposit products (ICS and CDARS), public funds accounts, and retail CDs.

Year to date (YTD) unaudited earnings for the nine months ended September 30, 2023 was $4.56 million or $4.15 EPS, a 7.16% decrease over the same prior year period earnings on a per share basis. This YTD performance translates to a ROAA of 1.05%, compared to the same prior year period of 1.27%.

Net interest income before provision expense for the nine months ended September 30, 2023 was $13.38 million compared to $13.53 million for the same period in 2022, a decrease of $146,000. Interest income increased approximately $6.41 million as compared to the same prior year period, largely due to increased loan balances and increased interest rates on loans resulting from the rising rate environment. Additionally, interest expense increased by $6.56 million over the same period, again due to the rising interest rate environment and increased deposit balances, as well as the mix between interest- and noninterest-bearing deposits. YTD provision expense decreased by $130,000, compared to the same prior year period; as loan growth has strategically slowed and the Bank has had a sufficient coverage ratio to adequately cover risk in the loan portfolio, less provision has been needed during 2023. Total noninterest income decreased $406,000 to $6.28 million YTD September 2023 from $6.69 million for the same period in 2022. The largest contributing factors to the unfavorable variance were decreased Financial Services income from annuity sales; lower revenue from sold loans, primarily due to decreased mortgage volume, as one would expect, due to the rising interest rate environment and its effect on mortgage originations and refinancings; reduced income from servicing fees on the sold loan portfolio; and no gain on sale of other real estate owned (OREO) as was recognized in the first quarter of 2022. Growing noninterest income to reduce margin dependence continues to be a strategic focus of Springs Valley Bank & Trust. Noninterest expense increased $145,000 to $13.86 million YTD September 2023 from $13.71 million for the same period in 2022. This expense increase was largely driven by various overhead components that have been necessary to support the future growth and operations of the Bank and serve a growing customer base. The largest component of this expense has been increased salary expense and deposit insurance premium expense.

CEO Jamie Shinabarger had this to say: "The old proverb (some characterize it more correctly as a curse) goes, ‘May you live in interesting times' and 2023, nine months in, unequivocally qualifies as ‘interesting' given the global upheaval (wars in Ukraine and Middle East), a UAW strike, the behemoth FTX cryptocurrency collapse and subsequent trial, and an economy that just won't substantively slow down even in the face of interest rates up 225 basis points compared to just over a year ago. While the US and global economy, by the numbers, have shown resiliency, there are signs that consumer households are weakening under the weight of inflation, and several business segments are finding it challenging to maintain profit margins. Banks in particular are one of these industries," Shinabarger stated. He continued, "And it has not simply been the cumulative amount of increase in interest rates that is the primary culprit, but the unprecedented velocity. Bank liabilities are generally short-term in nature, and the short end of the curve is reflecting the immediacy of the marketplace (CD rates, public funds, and money markets have all been driven north of 5% by the bellwether T-bills), while fixed rate loans on a bank's balance sheet are lagging significantly and may make up only a portion of the loan portfolio. On top of that, rate caps per adjustment period on variable rate loans in this environment will artificially hold down rates on these loans that are set to reprice off of T-bills or prime."

"If there has been one good thing that has come out of the rapid increase in interest rates for banks, it is the challenge for management to monitor and manage our balance sheets more closely, be more disciplined on the pricing side of the equation, be more strategic in managing liquidity, and pay more attention to fixed costs," Shinabarger added. Through three quarters of operations, the Bank continues to perform well (from an ROA vantage point, SVB&T ranks in the top 38% of Indiana banks and in the top 60% for ROE) despite the steady and unrelenting increase in COF (cost of funds). Shinabarger concluded, "We are committed to keeping our head down and managing through the challenges as we wrap up 2023. That means providing the day-to-day relationship banking services to our communities that our brand has come to be associated with, while preparing to embark on 2024 with our eyes wide open, staying nimble for a change in business climate, and mitigating risk across our various operational areas."

For more information contact: Ryan Heim, Treasurer & CFO, SVB&T Corporation, at 812.634.4889 or rheim@svbt.bank.

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. Its subsidiary, Springs Valley Bank & Trust Company, has locations in Dubois, Daviess, Gibson, and Orange Counties, offering full-service bank and financial services. Springs Valley has products and services for all types of families and businesses, including checking and savings accounts, certificates of deposit, electronic services, online consumer and mortgage applications, and a variety of other loan options. Springs Valley Bank is a member of FDIC and is an Equal Housing Lender.

In addition, the company has a full-service financial advisory group 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. Trust and investment products are not deposits; not insured by the FDIC; not a deposit or other obligation of, or guaranteed by, the depository institution; not insured by any Federal Government Agency; and may lose value - subject to investment risks, including possible loss of the principal amount invested.

More information can be found online at www.svbt.bank. The Corporation's stock is traded on the OTCQX trading platform under ticker symbol SVBT (www.otcmarkets.com).

Information conveyed in this press release regarding SVB&T Corporation's 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 company and its subsidiaries operate, future interest rate levels, changes in local real estate markets, legislative and regulatory decisions, capital market conditions, and/or other factors.

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

		Unaudited								Audited
		30-Sep								31-Dec
		2023				2022				2022
Assets
Cash and due from banks		$	9,932			$	9,644			$	11,834
Interest-bearing time deposits			491				750				992
Fed funds sold			11,174				3,131				10,790
Available for sale securities			58,627				56,831				58,090
Other investments			2,517				2,517				2,517
Loans held for sale			426				0				44
Loans net of allowance for loan losses			466,888				418,524				445,959
Premises and equipment			6,505				6,634				6,676
Bank-owned life insurance			10,462				9,295				9,335
Accrued interest receivable			3,755				2,893				2,981
Foreclosed assets held for sale			49				49				49
Mortgage servicing rights			2,140				1,953				2,049
Lender risk account (FHLBI)			1,617				1,573				1,590
Other assets			8,799				8,348				7,750
Total assets		$	583,382			$	522,142			$	560,656
Liabilities and Stockholders' Equity
Noninterest-bearing deposits			92,117				94,081				96,412
Interest-bearing deposits			415,598				356,483				372,812
Borrowed funds			5,000				7,000				24,000
Subordinated debentures			5,000				5,000				5,000
Accrued interest payable and other liabilities			8,537				6,674				7,235
Total liabilities		$	526,252			$	469,238			$	505,459
Stockholders' equity			57,130				52,904				55,197
Total liabilities and stockholders' equity		$	583,382			$	522,142			$	560,656

		Three Months Ended								Nine Months Ended
		30-Sep								30-Sep
		2023				2022				2023				2022
Operating Data:
Interest and dividend income		$	7,551			$	5,679			$	21,709			$	15,299
Interest expense			3,160				810				8,330				1,774
Net interest income		$	4,391			$	4,869			$	13,379			$	13,525
Provision for loan losses			137				212				481				611
Net interest income after provision for loan losses		$	4,254			$	4,657			$	12,898			$	12,914
Fiduciary activities			1,147				986				3,324				3,091
Customer service fees			219				220				641				606
Increase in cash surrender value of life insurance			45				40				126				122
Net gain/(loss) on loan sales			352				254				697				960
Realized gain/(loss) on securities			0				0				0				0
Other income			620				534				1,494				1,909
Total noninterest income		$	2,383			$	2,034			$	6,282			$	6,688
Salary and employee benefits			2,851				2,833				8,290				8,207
Premises and equipment			531				551				1,665				1,585
Data processing			497				484				1,300				1,457
Deposit insurance premium			66				35				197				100
Professional fees			215				254				623				658
Other expenses			554				603				1,784				1,707
Total noninterest expense		$	4,714			$	4,760			$	13,859			$	13,714
Income before taxes			1,923				1,931				5,321				5,888
Income tax expense			303				311				764				966
Net income		$	1,620			$	1,620			$	4,557			$	4,922
Shares outstanding (adjusted for stock split)			1,098,836				1,100,144				1,098,836				1,100,144
Average shares - basic (adjusted for stock split)			1,098,836				1,100,144				1,098,631				1,099,974
Average shares - diluted (adjusted for stock split)			1,098,836				1,100,144				1,098,631				1,099,974
Basic earnings per share (adjusted for stock split)		$	1.47			$	1.47			$	4.15			$	4.47
Diluted earnings per share (adjusted for stock split)		$	1.47			$	1.47			$	4.15			$	4.47
Other Data:
Yield on average assets			5.17	%			4.31	%			5.00	%			3.94	%
Cost on average assets			2.16	%			0.61	%			1.92	%			0.46	%
Interest rate spread			3.01	%			3.70	%			3.08	%			3.48	%
Net interest margin			3.10	%			3.84	%			3.20	%			3.68	%
Number of full service banking centers			6				6				6				6
Return on average assets			1.11	%			1.23	%			1.05	%			1.27	%
Average assets		$	584,757			$	527,011			$	578,682			$	517,775
Return on average equity			11.23	%			12.19	%			10.73	%			12.09	%
Average equity		$	57,687			$	53,167			$	56,614			$	54,293
Equity to assets ratio (EOP)			9.79	%			10.13	%			9.79	%			10.13	%
Average total deposits		$	507,884			$	445,448			$	497,840			$	423,757
Loans past due 30 to 89 days (still accruing)		$	638			$	455			$	638			$	455
Loans past due 90 days or more (still accruing)		$	834			$	231			$	834			$	231
Nonaccrual loans		$	3,017			$	6,902			$	3,017			$	6,902
Book value per share (adjusted for stock split)		$	51.99			$	48.09			$	51.99			$	48.09
Market value per share - end of period close (adjusted for stock split)		$	39.50			$	46.60			$	39.50			$	46.60

SOURCE: SVB&T Corporation

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