SVB&T Corporation, Parent Company of Springs Valley Bank & Trust Company, Reports 2020 Third Quarter and Year to Date Earnings

JASPER, IN / ACCESSWIRE / October 30, 2020 / SVB&T Corporation (OTCQX:SVBT), parent company of Springs Valley Bank & Trust Company, today announced near-record 2020 third quarter unaudited earnings of $1.3 million or $2.31 earnings per share (EPS), a 0.43% increase over the same prior year period earnings on a per share basis. This third quarter 2020 performance translates to a return on average assets (ROAA) of 1.04%, compared to the same prior year period of 1.15%.

Net interest income before provision expense for the third quarter ended September 30, 2020 was $4.2 million compared to $3.4 million for the same period in 2019, an increase of $810,000. This increase can primarily be attributed to growth in earning assets and reduced funding costs of both deposits and borrowings resulting from the reduced rate environment subsequent to the Fed's 150 basis point decrease in the federal funds rate in March. However, provision expense increased by $627,000 in order to adequately provide for the elevated economic uncertainty resulting from the Covid-19 pandemic and its impact on local borrowers, as well as to reserve for current losses primarily resulting from a legacy credit. Additionally, as compared to the prior year third quarter, non-interest income increased approximately $278,000 to $2.2 million from $1.9 million, primarily due to elevated sold mortgage income, which partially offset the increase in non-interest expense of $467,000 to $4.1 million from $3.6 million, resulting primarily from expanding Springs Valley's footprint into two new markets and the subsequent staffing and other overhead expenses necessary to support this growth. Quarter over trailing quarter earnings decreased approximately $85,000 or 6.16%. The biggest contributors to this variance were increased provision and employee expenses, partially offset by decreased interest expense and increased fiduciary income from the Financial Advisory Group.

SVB&T Corporation book value has risen from $82.03 per share as of December 31, 2019 to $89.45 as of September 30, 2020, a 9.05% increase. SVB&T Corporation stock closed at $64.00 per share on the OTCQX exchange on October 28, 2020.

Total assets increased $42.0 million to $494.9 million at September 30, 2020 compared to December 31, 2019 assets of $452.9 million. Total loans before allowances increased $38.9 million to $389.2 million at September 30, 2020 from $350.3 million at December 31, 2019. The loan growth was primarily generated through agriculture lending and small business lending resulting from the SBA's Paycheck Protection Program (PPP). Springs Valley Bank & Trust made 414 PPP loans for approximately $21.7 million. Allowances as a percent of total loans was 1.34% as of September 30, 2020 compared to 1.24% as of December 31, 2019. Total deposits increased $17.8 million to $379.0 million at September 30, 2020 from $361.2 million at December 31, 2019. The deposit growth has been generated in both interest-bearing and non-interest-bearing deposit accounts for both businesses and consumers, seemingly as a result of government stimulus initiatives and a generally elevated propensity for saving as a result of the overall level of economic uncertainty.

Year to date (YTD) unaudited earnings for the nine months ended September 30, 2020 was $3.5 million or $6.22 EPS, a 17.36% increase over the same prior year period earnings on a per share basis. This YTD performance translates to an ROAA of 0.97%, compared to the same prior year period of 0.92%.

Net interest income before provision expense for the nine months ended September 30, 2020 was $11.9 million compared to $10.2 million for the same period in 2019, an increase of $1.7 million. Growth in earning assets resulted in $668,000 of additional interest income as compared to the same prior year period, even with the Fed's 150 basis point rate reduction in March. Additionally, interest expense decreased by $963,000 over the same time frame due to the lower rate environment and its impact on deposit and borrowing rates, further contributing to the growth in net interest income. YTD provision expense increased by $1.0 million in order to adequately provide for the economic uncertainty resulting from the Covid-19 pandemic and also to absorb current losses through the third quarter of 2020 that are elevated largely due to one legacy credit which has driven larger than normal charge-offs YTD in 2020. Total non-interest income increased $1.2 million to $5.6 million YTD September 2020 from $4.4 million for the same period in 2019. The largest contributing factor to the positive variance was sold mortgage income which has experienced a significant uptick in volume, as noted above. Growing non-interest income to reduce margin dependence continues to be a strategic focus of Springs Valley Bank & Trust. Non-interest expense increased $1.2 million to $11.7 million YTD September 2020 from $10.5 million for the same period in 2019. 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 the bank and serve a growing customer base, as noted in the 2020 third quarter earnings commentary above. The largest components of this expense have been increased staffing, additional premises and equipment expense, and additional data processing expense. Elevated employee expenses related to mortgage volume, primarily in the second and third quarters of 2020, has also been a contributing factor to increased non-interest expense.

"At the third quarter mark of 2020, the main driver of positive financial results compared to our 2020 budget and prior year performance is clearly sold mortgage revenue (with the lion's share being refinances) which is virtually quadruple Springs Valley's previous best year (2019) on record," stated President and CEO, Jamie Shinabarger. Financing rates for new homes are at historic lows (in the low- to mid-2's), but existing housing inventory remains low, spelling challenges for home buyers. On the new construction front, according to the National Association of Home Builders, lumber costs have risen roughly 80% since early Spring to an average price above $600 per thousand board feet, adding $8,000 to $10,000 to the cost of an average project. "On the expense side of the income statement, through September 30, 2020, there has been an impactful reduction in certain areas, such as our cost of funds, travel expenses related to training and seminars, and meals and entertainment expenses with regard to customers and sales calls, due to the Covid-19 environment. Conversely, prudent loan loss reserve building via provision expense was up 141% ($1.0 million) over the prior year partially due to the economic uncertainty of the Covid-19 impact on portfolio credit quality for the first nine months of 2020 and beyond. All in all, the net impact is a very respectable net income of $3.5 million (0.97% ROAA) in the face of major uncertainty and operational challenges," concluded Shinabarger.

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

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. 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. More information can be found online at www.svbt.bank. The company'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.

Springs Valley Bank & Trust 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)

SOURCE: SVB&T Corporation