SVB&T Corporation, Parent Company of Springs Valley Bank & Trust Company, Reports 2022 Second Quarter and Year to Date Earnings and Declares Quarterly Dividend

JASPER, IN / ACCESSWIRE / August 12, 2022 / SVB&T Corporation (OTCQX:SVBT), parent company of Springs Valley Bank & Trust Company, today announced 2022 second quarter unaudited earnings of $1.52 million or $1.38 earnings per share (EPS), a 24.59% decrease over the same prior year period earnings on a per share basis. This second quarter 2022 performance translates to a return on average assets (ROAA) of 1.16%, compared to the same prior year period of 1.61%. Although earnings are down relative to the second quarter of 2021, the Corporation is still performing at a high level relative to peer metrics. The decrease in earnings is primarily attributable to changes in the external environment, including the end of the SBA's Paycheck Protection Program (PPP) and a rising interest rate environment that negatively impacts mortgage lending and, subsequently, sold mortgage volume. SVB&T Corporation also announced that its Board of Directors declared a quarterly dividend of $0.16 per share of the Corporation's common stock. The quarterly dividend is payable on or about October 14, 2022, to shareholders of record as of the close of business on September 15, 2022.The dividend declared is an 18.52% annualized increase (adjusted for the stock split that occurred in March 2022) over the total dividend declared for the 2021 fiscal year.

Net interest income before provision expense for the second quarter ended June 30, 2022 was $4.23 million compared to $4.70 million for the same period in 2021. Interest income decreased compared to the prior year second quarter, primarily due to a reduction in PPP loan origination income and the reversal of interest income due to the classification of a large USDA guaranteed loan to nonaccrual status. The loan that was moved to nonaccrual is 70% guaranteed by the USDA and well reserved against, so there is minimal risk of future loss to the Bank, and 70% of the reversed interest income will come back to the Bank after the loan's final disposition. Interest expense increased slightly as compared to the same prior year quarter, primarily due to the rising interest rate environment and increased deposit balances. Provision expense decreased $150,000 from the prior year second quarter as the Bank had a sufficient coverage ratio to adequately cover risk in the loan portfolio, and therefore, less provision was needed during the second quarter of 2022. Additionally, compared to the prior year second quarter, noninterest income decreased approximately $37,000 to $2.27 million from $2.30 million. The reduced income can primarily be attributed to lower revenue from sold mortgages because mortgage volume has decreased, as one would expect, due to the rising interest rate environment and its effect primarily on mortgage refinancing as compared to 2021 volume. That said, 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 increased $269,000 to $4.59 million from $4.32 million, attributable to increases in general operating expenses, the largest of which being increased salary and employee benefits expenses (including health insurance claims) and core data processing expenditures. These expenses have been necessary to support the growth of Springs Valley Bank & Trust Company.

Quarter over trailing quarter earnings decreased approximately $272,000 or 15.22%. The earnings reduction was driven by lower interest income, primarily due to the movement to nonaccrual status of the large USDA guaranteed commercial real estate loan discussed above and the subsequent reversal of accrued interest income from the aforementioned loan. Other material contributors to the negative variance were reduced noninterest income attributable to decreased annuity sales as the first quarter of 2022 saw substantial income from annuity sales prior to the increasing rate cycle, and elevated noninterest expense generally attributable to higher salary and employee benefits expenses.

SVB&T Corporation book value (adjusted for the 2022 stock split) has decreased from $49.40 per share as of June 30, 2021, to $47.84 as of June 30, 2022, a 3.16% decrease. The book value decrease can be attributed to the unrealized loss position on the securities portfolio, resulting from the increasing rate environment, which is not a material issue for the Corporation as the securities portfolio is maintained to provide diversification and liquidity rather than generating gains on sale of securities. SVB&T Corporation stock closed at $48.35 per share on the OTCQX exchange on June 30, 2022. In February of 2021, the Corporation's Board of Directors authorized a share repurchase program through December 31, 2022. Under the program, the Corporation is authorized to repurchase, from time to time as the Corporation deems appropriate, shares of SVB&T Corporation's common stock with an aggregate purchase price of up to $2.00 million. As of June 30, 2022, SVB&T has repurchased (adjusted for 2022 stock split) 21,400 shares, with an average purchase price of $39.66, under the program.

Total assets increased $29.02 million to $519.12 million on June 30, 2022, compared to December 31, 2021 assets of $490.10 million. Total loans before allowance increased $27.60 million to $414.82 million on June 30, 2022, from $387.22 million on December 31, 2021. The loan growth was primarily generated through commercial and agriculture real estate lending, as well as growth in commercial and agriculture lines of credit. Springs Valley saw an uptick in loan demand in the first and second quarters of 2022 and has a healthy pipeline heading into the third quarter of 2022. Additionally, Springs Valley was an active participant in small business lending via the SBA's Paycheck Protection Program. Springs Valley Bank & Trust Company made 445 PPP loans during Round 2 in 2021 for approximately $12.94 million. PPP lending was a benefit to local, small businesses and therefore was a primary focus for Springs Valley while funds were available through the SBA's Paycheck Protection Program. As of the end of June 2022, Springs Valley had 1 PPP loan for approximately $11,000 still on the balance sheet. Therefore, essentially 100% of the 2020 Round 1 and 2021 Round 2 PPP loans have been forgiven as of the end of June. Allowance as a percent of total loans was 1.60% as of June 30, 2022, compared to 1.88% as of December 31, 2021. Springs Valley conservatively provided to the allowance for loan losses during 2020 and 2021 out of an abundance of caution for potential future credit concerns that could result from the economic impact of the ongoing Covid-19 pandemic. Total deposits increased $43.43 million to $430.34 million on June 30, 2022, from $386.91 million on December 31, 2021. Noninterest-bearing deposits decreased by approximately $4.37 million due to decreases in both business and consumer accounts. Interest-bearing deposits have increased by approximately $47.81 million. The increase was driven by the utilization of wholesale funding in the form of brokered deposits and short-term public fund CDs in order to fund the impressive loan growth Springs Valley originated in the first half of 2022.

Year to date (YTD) unaudited earnings for the six months ended June 30, 2022 was $3.30 million or $3.00 EPS, a 21.88% decrease over the same prior year period earnings on a per share basis. This YTD performance translates to a ROAA of 1.29%, compared to the same prior year period of 1.70%.

Net interest income before provision expense for the six months ended June 30, 2022 was $8.66 million compared to $9.27 million for the same period in 2021, a decrease of $618,000. Interest income decreased approximately $684,000 as compared to the same prior year period, largely due to the reduction in PPP loan origination fee income and the reversal of interest income due to moving a large USDA guaranteed loan to nonaccrual status, as discussed above. Additionally, interest expense decreased by $66,000 over the same period due to deposit mix (fewer time deposits) and less reliance on borrowed funds. YTD provision expense decreased by $175,000, compared to the same prior year period, as the Bank had a sufficient coverage ratio to adequately cover risk in the loan portfolio, and therefore, less provision was needed during the second quarter of 2022. Total noninterest income increased $183,000 to $4.65 million YTD June 2022 from $4.47 million for the same period in 2021. The largest contributing factors to the positive variance were increased Financial Advisory Group income, Financial Services income from annuity sales in the first quarter of 2022, and a gain on sale of other real estate owned (OREO) 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 $884,000 to $8.95 million YTD June 2022 from $8.07 million for the same period in 2021. This expense increase was largely driven by various overhead components that have been necessary to build out the infrastructure to support the future growth of the Bank and serve a growing customer base. The largest components of this expense have been increased salary and employee benefits expenses (including health insurance claims) and additional data processing expenses.

"While YTD earnings at $3.30 million is less than the same period earnings last year, they are considerably higher than Management's 2022 budget, projecting approximately $2.45 million in earnings at the half-way mark, and significantly stronger than peer," asserted President and CEO, Jamie Shinabarger. "It was inevitable that rising rates would begin to slow sold mortgage volume while at the same time begin to raise the Bank's cost of funds. Through the first six-months of 2022, asset quality has remained remarkably stable as has commercial loan demand," he added. Springs Valley continues to outpace most community bank peers in non-interest income with the Financial Advisory Group leading the way, coupled with sold mortgage income, sold government loan guarantees, and electronic banking revenue. "Despite growing headwinds, we remain very confident for a strong finish to 2022," Shinabarger concluded.

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For more information contact: Ryan Heim, Treasurer & CFO, SVB&T Corporation, at 812.634.4889 or [e-mail].

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-Jun								31-Dec
		2022				2021				2021
Assets
Cash and due from banks		$	11,369			$	16,283			$	10,026
Interest-bearing time deposits			1,244				1,014				1,252
Fed funds sold			7,277				8,834				1,597
Available for sale securities			58,273				64,497				66,448
Other investments			2,517				2,738				2,738
Loans held for sale			140				1,890				1,377
Loans net of allowance for loan losses			408,032				377,157				378,572
Premises and equipment			6,709				6,110				6,668
Bank-owned life insurance			9,254				9,088				9,173
Accrued interest receivable			2,776				2,817				2,861
Foreclosed assets held for sale			49				612				49
Mortgage servicing rights			1,806				1,239				1,426
Lender risk account (FHLBI)			1,567				1,319				1,476
Other assets			8,108				4,491				6,434
Total assets		$	519,121			$	498,089			$	490,097
Liabilities and Stockholders' Equity
Noninterest-bearing deposits			88,346				84,203				92,718
Interest-bearing deposits			341,996				314,608				294,191
Borrowed funds			25,000				35,500				34,500
Subordinated debentures			5,000				5,000				5,000
Accrued interest payable and other liabilities			6,145				4,437				7,066
Total liabilities		$	466,487			$	443,748			$	433,475
Stockholders' equity - substantially restricted			52,634				54,341				56,622
Total liabilities and stockholders' equity		$	519,121			$	498,089			$	490,097

		Three Months Ended								Six Months Ended
		30-Jun								30-Jun
		2022				2021				2022				2021
Operating Data:
Interest and dividend income		$	4,756			$	5,191			$	9,620			$	10,304
Interest expense			529				496				964				1,030
Net interest income		$	4,227			$	4,695			$	8,656			$	9,274
Provision for loan losses			112				262				399				574
Net interest income after provision for loan losses		$	4,115			$	4,433			$	8,257			$	8,700
Fiduciary activities			1,029				1,012				2,105				1,939
Customer service fees			193				147				386				266
Increase in cash surrender value of life insurance			40				43				82				87
Net gain on loan sales			338				652				706				1,462
Realized gain/(loss) on securities			0				0				0				9
Other income			666				449				1,375				708
Total noninterest income		$	2,266			$	2,303			$	4,654			$	4,471
Salary and employee benefits			2,765				2,613				5,374				4,719
Premises and equipment			511				485				1,034				1,042
Data processing			504				464				973				868
Deposit insurance premium			33				32				66				62
Professional fees			207				184				405				374
Other expenses			569				542				1,102				1,005
Total noninterest expense		$	4,589			$	4,320			$	8,954			$	8,070
Income before taxes			1,792				2,416				3,957				5,101
Income tax expense			277				398				655				855
Net income		$	1,515			$	2,018			$	3,302			$	4,246
Shares outstanding (adjusted for stock split)			1,100,144				1,100,092				1,100,144				1,100,092
Average shares - basic (adjusted for stock split)			1,100,144				1,100,092				1,099,887				1,106,259
Average shares - diluted (adjusted for stock split)			1,100,144				1,100,092				1,099,887				1,106,259
Basic earnings per share (adjusted for stock split)		$	1.38			$	1.83			$	3.00			$	3.84
Diluted earnings per share (adjusted for stock split)		$	1.38			$	1.83			$	3.00			$	3.84
Other Data:
Yield on average assets			3.65	%			4.15	%			3.75	%			4.13	%
Cost on average assets			0.41	%			0.40	%			0.38	%			0.41	%
Interest rate spread			3.24	%			3.75	%			3.37	%			3.72	%
Net interest margin			3.42	%			4.00	%			3.59	%			3.97	%
Number of full service banking centers			6				6				6				6
Return on average assets			1.16	%			1.61	%			1.29	%			1.70	%
Average assets		$	521,661			$	500,291			$	513,080			$	498,476
Return on average equity			11.30	%			15.37	%			12.04	%			16.33	%
Average equity		$	53,643			$	52,509			$	54,865			$	52,011
Equity to assets ratio (EOP)			10.14	%			10.91	%			10.14	%			10.91	%
Average total deposits		$	424,028			$	401,729			$	412,732			$	399,740
Loans past due 30 to 89 days (still accruing)		$	313			$	180			$	313			$	180
Loans past due 90 days or more (still accruing)		$	489			$	382			$	489			$	382
Nonaccrual loans		$	6,950			$	2,050			$	6,950			$	2,050
Book value per share (adjusted for stock split)		$	47.84			$	49.40			$	47.84			$	49.40
Market value per share - end of period close (adjusted for stock split)		$	48.35			$	45.70			$	48.35			$	45.70

SOURCE: SVB&T Corporation

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