JASPER, IN / ACCESSWIRE / August 11, 2023 / SVB&T Corporation (OTCQX:SVBT), parent company of Springs Valley Bank & Trust Company, today announced 2023 second quarter unaudited earnings of $1.48 million or $1.35 earnings per share (EPS), a 2.17% decrease over the same prior year period earnings on a per share basis. This second quarter 2023 performance translates to a return on average assets (ROAA) of 1.01%, compared to the same prior year period of 1.16%. SVB&T Corporation also announced that its Board of Directors declared a quarterly dividend of $0.18 per share of the Corporation's common stock. The quarterly dividend is payable on or about October 16, 2023, to shareholders of record as of the close of business on September 15, 2023.The dividend declared is a 12.50% annualized increase (adjusted for the stock split that occurred in March 2022) over the total dividend declared for the 2022 fiscal year.

Net interest income before provision expense for the second quarter ended June 30, 2023 was $4.47 million compared to $4.23 million for the same period in 2022. Interest income increased $2.65 million compared to the prior year second quarter, primarily due to increased loan balances and increased interest rates on loans resulting from the rising rate environment. Interest expense increased $2.41 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 $10,000 over the prior year second quarter. Additionally, noninterest income decreased approximately $343,000 to $1.92 million from $2.27 million. The reduced income can largely be attributed to 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 as compared to 2022 volume and reduced income from servicing fees on the sold mortgage portfolio as compared to the second quarter of 2022. 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 decreased $14,000 to $4.58 million from $4.59 million, attributable to decreases in general operating expenses, the largest of which being decreased health insurance expense resulting from fewer claims in the second quarter of 2023.

Quarter over trailing quarter earnings increased approximately $24,000 or 1.66%. The earnings increase was largely driven by higher electronic banking income, primarily due to increased interchange income and reduced provision expense. With an escalating marginal cost of funds, Springs Valley has been strategic in our approach to loan growth from a pricing standpoint in 2023, which has naturally resulted in a slower growing loan portfolio, reducing the need for provision expense in the second quarter of 2023. 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 $47.84 per share as of June 30, 2022, to $52.37 as of June 30, 2023, a 9.47% increase. SVB&T Corporation stock closed at $37.15 per share on the OTCQX exchange on June 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 second quarter, no shares have been repurchased under the newly approved plan.

Total assets increased $48.10 million to $608.76 million on June 30, 2023, compared to December 31, 2022 assets of $560.66 million. Total loans before allowance increased $16.82 million to $469.86 million on June 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), commercial and agriculture lines of credit, and consumer real estate lending. Springs Valley experienced substantial loan demand throughout 2022 and has a healthy pipeline so far in 2023 as well. The Bank is strategically managing loan growth in 2023 to alleviate some of the pressure on the funding side of the balance sheet, 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 1.58% as of June 30, 2023, compared to 1.55% as of December 31, 2022. Total deposits increased $64.59 million to $533.81 million on June 30, 2023, from $469.22 million on December 31, 2022. Noninterest-bearing deposits decreased by approximately $12.14 million due largely to decreases in business accounts. Interest-bearing deposits have increased by approximately $76.73 million. These increases occurred primarily in Springs Valley's reciprocal deposit products (ICS and CDARS), public funds accounts, and retail CDs, as well as increases due to the utilization of wholesale funding in the form of brokered deposits.

Year to date (YTD) unaudited earnings for the six months ended June 30, 2023 was $2.94 million or $2.67 EPS, a 11.00% decrease over the same prior year period earnings on a per share basis. This YTD performance translates to a ROAA of 1.02%, compared to the same prior year period of 1.29%.

Net interest income before provision expense for the six months ended June 30, 2023 was $8.99 million compared to $8.66 million for the same period in 2022, an increase of $333,000. Interest income increased approximately $4.54 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 $4.21 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 $55,000, 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 first half of 2023. Total noninterest income decreased $755,000 to $3.90 million YTD June 2023 from $4.65 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 mortgage portfolio; and no gain on sale of other real estate owned (OREO) as was generated 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 $191,000 to $9.15 million YTD June 2023 from $8.95 million for the same period in 2022. 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 component of this expense has been increased salary expense.

"While overblown, the financial sector continues to make the news with headlines that point out mounting cost of funds and potentially detrimental office space commercial real estate (CRE) exposure," CEO Jamie Shinabarger remarked. Continuing he said, "SVB&T Corporation continues to manage the funding side of the balance sheet strategically. Coupled with minimal exposure to commercial office real estate, given that all six of our locations are in generally rural communities by choice, we remain well positioned to ride out the storm." Asset quality indicators remain steady despite the rapid series of eleven increases in the federal funds rate totaling 525 basis points over the past seventeen months. Shinabarger added, "Management and the Board take solace in the fact that the momentum of Springs Valley's net interest margin (NIM) contraction has moderated from the first quarter (32 basis points of contraction or 8.75%) to the second quarter (11 basis points of contraction or 3.27%)."

There remain some occasional signals from the Fed that increases may have to continue beyond 2023 year-end to cool inflation to their 2% target level from the current 4.9% (core CPI). "This uncertainty hangs over the head of the industry and along with several other factors is responsible for the punishment of bank stock valuations broadly, which largely hit in the second quarter in response to the failure of a few outlier banks with exotic business models. The banking industry as a whole is solid, well capitalized, and well managed," Shinabarger concluded.

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

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)

SOURCE: SVB&T Corporation