SVB&T Corporation fourth quarter earnings

SVB&T Corporation (OTCQX: SVBT), the parent company of Springs Valley Bank & Trust Company, today announced 2023 fourth quarter unaudited earnings of $1.09 million or $0.99 earnings per share (EPS), a 23.85% decrease over the same prior year period earnings on a per share basis. This fourth quarter 2023 performance translates to a return on average assets (ROAA) of 0.73%, compared to the same prior year period of 1.06%.

SVB&T Corporation also announced that its Board of Directors declared a quarterly dividend of $0.20
per share of the Corporation’s common stock. The quarterly dividend is payable on or about April
15, 2024, to shareholders of record as of the close of business on March 15, 2024. The dividend
declared is an 11.11% annualized increase over the total dividend declared for the 2023 fiscal year.

Net interest income before provision expense for the fourth quarter ended December 31, 2023 was
$4.25 million compared to $4.87 million for the same period in 2022. Interest income increased
$1.68 million compared to the prior year fourth quarter, primarily due to increased loan balances and
increased interest rates on loans resulting from the rising rate environment. Interest expense
increased $2.30 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 $300,000 over the prior year’s fourth quarter.

Additionally, noninterest income increased by approximately $152,000 to $2.11 million from $1.96
million. The higher income can largely be attributed to increased revenue over the prior year fourth
quarter from sold mortgage loans, the Financial Advisory Group, 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
increased $297,000 to $5.10 million from $4.80 million, attributable to increases in general operating
expenses, the largest of which being increased salaries and health insurance expenditures in the
fourth quarter of 2023.

Quarter over trailing quarter earnings decreased approximately $531,000 or 32.79%. The earnings
decrease was largely driven by higher interest expense, which was greater than the accompanying
increase in interest income. Additionally, decreased revenue from sold mortgages and servicing fees
on sold loans, as well as higher health insurance claims contributed to the quarter-over-quarter
change.

SVB&T Corporation book value (adjusted for the 2022 stock split) has increased from $50.31 per
share as of December 31, 2022, to $54.86 as of December 31, 2023, an 9.04% increase. SVB&T
Corporation stock closed at $39.00 per share on the OTCQX exchange on December 31, 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 fourth quarter, no shares have been repurchased under the newly approved plan.

Total assets increased $52.35 million to $613.01 million on December 31, 2023, compared to December 31, 2022 assets of $560.66 million. Total loans before allowance increased $30.56 million
to $483.60 million on December 31, 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 2024 to alleviate some of the pressure on the funding side
of the balance sheet as the cost of funds continues 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 1.49% as of December 31, 2023, compared to 1.55% as of December 31, 2022. Total deposits increased $64.24 million to $533.46 million on December 31, 2023, from $469.22 million on December 31, 2022. Noninterest-bearing deposits decreased by approximately $8.80 million due largely to decreases in business accounts. Interest-bearing deposits have increased by approximately $73.04 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 twelve months ended December 31, 2023 was $5.65
million or $5.14 EPS, an 11.07% decrease 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 1.21%.

Net interest income before provision expense for the twelve months ended December 31, 2023, was
$17.63 million compared to $18.39 million for the same period in 2022, a decrease of $760,000.
Interest income increased approximately $8.09 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 $8.85 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 $431,000, 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 was needed during 2023, especially during the fourth quarter.

Total noninterest income decreased from $255,000 to $8.40 million YTD in December 2023 from $8.65 million for the same period in 2022. The largest contributing factors to the unfavorable variance were decreased Financial Services income from annuity sales; and 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 $442,000 to $18.96 million YTD December 2023 from $18.52 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 components of this expense variance have been increased salary expenses, deposit insurance premium expenses, and premises and equipment expenses.

“Despite an unprecedented 525 basis points of interest rate increases in just 16 months (March 2022 to July 2023) with the Fed Funds rate still sitting at 5.25% to 5.50% today, SVB&T was able to deliver to our shareholders a solid 2023 ROAE of 9.96% and ROAA of 0.97%.” CEO Jamie Shinabarger said. “Our strength continues to be our noninterest income, which ended the year at 1.44% of average assets, while our nemesis remains noninterest expense at 3.25%.”

SVB&T Management and the Board of Directors remain squarely focused on growing low-cost core deposits, which is the long-term solution to sustained and incremental profitability improvement. Shinabarger went on to say,

“In the meantime, we have made a recommitment to growing full relationship customers and are being more deliberate in credit extensions, both in terms of quality and return.”

The Corporation weathered 56 basis points of NIM contraction over the course of 2023 (from 3.69%
down to 3.13%), and the Bank’s cost of funds (2.35%) finished the year 18% higher than the
average across all Indiana banks (1.99%).

“Given that the FOMC now seems poised to cut rates at some point in the year, the worst of our shrinking NIM should be behind us,” added President J. Craig Buse. “Further, asset quality numbers were quite good at year-end 2023 and have even improved early in the new year. This bodes well for our 2024 provisioning considerations.”

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