SVB&T Corporation Q1 earnings down from previous year

SVB&T Corporation (OTCQX: SVBT), parent company of Springs Valley Bank & Trust Company, announced 2024 first quarter unaudited earnings of $1.40 million or $1.28 earnings per share (EPS), a 3.76% decrease over the same prior year period earnings on a per share basis. This first quarter 2024 performance translates to a return on average assets (ROAA) of 0.93%, compared to the same prior year period of 1.03%.

Net interest income before provision expense for the first quarter ended March 31, 2024 was $4.06 million compared to $4.52 million for the same period in 2023. Interest income increased $1.35 million compared to the prior year first quarter, primarily due to increased loan balances and increased interest rates on loans resulting from the higher rate environment and assets repricing. Interest expense increased $1.81 million compared to the same prior year quarter due to the higher interest rate environment and increased deposit balances, as well as the mix between interest- and noninterest-bearing deposits.

Provision expense decreased by $230,000 over the prior year first quarter. Additionally, noninterest income increased approximately $312,000 to $2.29 million from $1.98 million. The higher income can largely be attributed to increased revenue over the prior year first quarter from 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 $178,000 to $4.75 million from $4.57 million, attributable to increases in general operating expenses, the largest of which being increased salaries, health insurance expenditures, and electronic banking expenses in the first quarter of 2024.

Quarter-over trailing quarter earnings increased approximately $313,000 or 28.73%. The earnings increase was largely driven by higher Financial Advisory Group income and servicing fees on sold loans. Additionally, decreased provision, health insurance claims, core processing, and marketing expenses contributed to the quarter over quarter change.

SVB&T Corporation book value has increased from $51.36 per share as of March 31, 2023, to $55.58 as of March 31, 2024, an 8.22% increase. SVB&T Corporation stock closed at $40.90 per share on the OTCQX exchange on March 31, 2024. 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 first quarter of 2024, 5,952 additional shares have been repurchased under the newly approved plan, with an average purchase price of $42.00.

Total assets decreased $11.28 million to $602.27 million on March 31, 2024, compared to December 31, 2023 assets of $613.55 million. Total loans before allowance decreased $1.15 million to $482.45 million on March 31, 2024, from $483.60 million on December 31, 2023. Growth in commercial real estate loans on the balance sheet essentially replaced decreased balances in commercial construction loans and agriculture real estate loans.

Springs Valley has experienced healthy loan demand so far in 2024; however, the Bank is strategically managing loan growth to alleviate some of the pressure on the funding side of the balance sheet as cost of funds continue 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 1.45% as of March 31, 2024, compared to 1.44% as of December 31, 2023.

Total deposits decreased $10.03 million to $523.43 million on March 31, 2024, from $533.46 million on December 31, 2023. Noninterest-bearing deposits decreased by approximately $1.75 million due largely to decreases in business accounts. Interest-bearing deposits have decreased by approximately $8.28 million. These decreases occurred primarily in Springs Valley’s money market and public funds accounts, as well as in various time deposit categories, including brokered, public funds, and CDARS CDs. Core deposit growth continues to be a primary focus of Springs Valley’s as it is a critical component in generating sustainable, long-term profitability for the institution.

“Springs Valley has gotten out of the gates well in 2024 with a respectable first quarter earnings number given the variety of external factors being dealt with today, including high interest rates for borrowers, volatile crop prices for farmers, stubborn inflation, and a slowing economy,” President J. Craig Buse commented. “Our strategic focus remains the same relationship-oriented community banking in order to drive continued financial performance for all stakeholders.”

CEO Jamie Shinabarger concurred and added, “We are executing the core fundamentals of banking very well, within the constraints of the inverted yield curve. That said, our ability to outperform the 2024 budget will largely hinge on variables such as the quarterly Financial Advisory Group’s accrual true-ups, asset quality and corresponding provisioning, and the remaining seven months of claims experience on the Bank’s self-insured health plan for SVBT team members.”