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

JASPER, IN / ACCESSWIRE / November 10, 2022 / SVB&T Corporation (OTCQX:SVBT), parent company of Springs Valley Bank & Trust Company, today announced 2022 third quarter unaudited earnings of $1.62 million or $1.47 earnings per share (EPS), a 15.52% decrease over the same prior year period earnings on a per share basis. This third quarter 2022 performance translates to a return on average assets (ROAA) of 1.23%, compared to the same prior year period of 1.53%. Although earnings are down relative to the third quarter of 2021, the Corporation is still performing at a high level relative to historical and 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, as well as increased funding costs.

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 January 16, 2023, to shareholders of record as of the close of business on December 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 third quarter ended September 30, 2022 was $4.87 million compared to $4.75 million for the same period in 2021. Interest income increased compared to the prior year third quarter, primarily due to increased loan balances and increased interest rates on loans resulting from the increasing rate environment. Interest expense also increased compared to the same prior year quarter, again due to the rising interest rate environment and increased deposit balances. Provision expense decreased $175,000 from the prior year third 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 third quarter of 2022. Additionally, compared to the prior year third quarter, noninterest income decreased approximately $107,000 to $2.03 million from $2.14 million. The reduced income can primarily be attributed to lower revenue from the Financial Advisory Group, resulting from a down equities market for much of the quarter, and reduced 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 $538,000 to $4.76 million from $4.22 million, attributable to increases in professional services fees and in other general operating expenses, the largest of which being increased salary and employee benefits expenses 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 increased approximately $105,000 or 6.90%. The earnings increase was driven by higher interest income, primarily due to the increase in loan balances and rates as prime and the rate environment in general continues to move higher, as well as the second quarter interest income impact from moving a large USDA guaranteed commercial real estate loan to nonaccrual status, which caused a reversal of accrued interest income from earnings on the aforementioned loan.

SVB&T Corporation book value (adjusted for the 2022 stock split) has decreased from $50.89 per share as of September 30, 2021, to $48.09 as of September 30, 2022, a 5.50% decrease. The book value decrease can be attributed to the unrealized loss position on the securities portfolio, resulting from the increasing rate environment. This is not a material issue for the Corporation as tangible capital is still at a very healthy level above 10%, and the securities portfolio is maintained to provide diversification and liquidity rather than generating gains on sale of securities. SVB&T Corporation stock closed at $46.60 per share on the OTCQX exchange on September 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 September 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 $32.04 million to $522.14 million on September 30, 2022, compared to December 31, 2021 assets of $490.10 million. Total loans before allowance increased $37.83 million to $425.05 million on September 30, 2022, from $387.22 million on December 31, 2021. The loan growth was primarily generated through commercial and agriculture real estate, commercial and agriculture lines of credit, and consumer real estate lending. Springs Valley has seen an uptick in loan demand throughout the first three quarters of 2022 and has a healthy pipeline heading into the fourth quarter as well. 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 September 2022, Springs Valley had no remaining PPP loans on the balance sheet; 100% of the 2020 Round 1 and 2021 Round 2 PPP loans have been forgiven or paid off as of the end of September. Allowance as a percent of total loans was 1.54% as of September 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 Covid-19 pandemic. Total deposits increased $63.65 million to $450.56 million on September 30, 2022, from $386.91 million on December 31, 2021. Noninterest-bearing deposits increased by approximately $1.36 million due primarily to increases in business accounts. Interest-bearing deposits have increased by approximately $62.29 million. These increases generally occurred across the board in most interest-bearing deposit categories with the largest increases occurring in Springs Valley's reciprocal deposit products and retail CDs, as well as increases due to 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 has originated in 2022.

Year to date (YTD) unaudited earnings for the nine months ended September 30, 2022 was $4.92 million or $4.47 EPS, a 19.89% decrease over the same prior year period earnings on a per share basis. This YTD performance translates to a ROAA of 1.27%, compared to the same prior year period of 1.65%.

Net interest income before provision expense for the nine months ended September 30, 2022 was $13.53 million compared to $14.03 million for the same period in 2021, a decrease of $502,000. Interest income decreased approximately $237,000 as compared to the same prior year period, largely due to the reduction in PPP loan origination fee income that had occurred in 2021 and the reversal of interest income due to moving a large USDA guaranteed loan to nonaccrual status in the second quarter of 2022. Additionally, interest expense increased by $265,000 over the same period due to increased balances and rates on interest-bearing deposits across the board. YTD provision expense decreased by $350,000, 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 in 2022. Total noninterest income increased $76,000 to $6.69 million YTD September 2022 from $6.61 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, electronic banking income, servicing fees from sold loans, 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 $1.42 million to $13.71 million YTD September 2022 from $12.29 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 Springs Valley Bank & Trust 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. To a lesser degree, professional service fees and marketing expenses increased over the same prior year period as well.

"Year to date, the earnings momentum of SVB&T Corporation continues to taper modestly in direct response to the drag of the Federal Reserve's four large (+0.75%) bumps and six overall increases to the federal funds target rate. Year to date net income of $4.92 million represents a solid 1.27% ROA and a 12.09% ROE," stated President and CEO, Jamie Shinabarger. "Balance sheet fundamentals remain strong. The Corporation's tangible capital ratio remains higher than peer at 10.11%. Without the negative impact on capital from the unrealized loss position on the investment portfolio in accumulated other comprehensive income (AOCI), the Corporation's tangible capital ratio would be 11.17%," he added. Noninterest income is expected to remain soft through the remainder of 2022 largely due to fewer sold mortgages and a more challenging equities market which will negatively impact Financial Advisory revenue in the short-term. "All in all, given the myriad of uncertainties swirling around the midterms, disruptive global geopolitical factors, and with unruly inflation hitting everything from energy to housing, Springs Valley Bank is well positioned to help our communities manage through the highs and lows of the next twelve months while remaining diligent on behalf of our shareholders," concluded Mr. 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. 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.

SOURCE: SVB&T Corporation