SVB&T Corporation (OTCQX: SVBT), the parent company of Springs Valley Bank & Trust Company, announced its 2024 second quarter unaudited earnings were $1.70 million or $1.55 earnings per share (EPS), a 14.81% increase over the same prior year period earnings on a per share basis.
This second quarter 2024 performance translates to a return on average assets (ROAA) of 1.12%, compared to the same prior year period of 1.01%. 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 October 15, 2024, to shareholders of record as of the close of business on September 16, 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 second quarter ended June 30, 2024, was $4.07 million compared to $4.47 million for the same period in 2023. Interest income increased by $890,000 compared to the prior year’s second 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 by $1.29 million compared to the same prior-year quarter, again 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 $20,000 over the prior year’s second quarter. Additionally, noninterest income increased by approximately $922,000 to $2.84 million from $1.92 million. The higher income can be attributed to increased revenue over the prior year’s second quarter from a variety of areas, including the Financial Advisory Group, servicing fees on sold loans, sold mortgage income, and a gain on sale of other real estate owned.
As it has been in the past, noninterest income generation continues to be a strategic focus of SVB&T 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 $277,000 to $4.85 million from $4.57 million, attributable to increases in general operating expenses, the largest of which being increased core processing expenses, health insurance expenditures, and electronic banking expenses in the second quarter of 2024.
Quarter-over trailing quarter earnings increased approximately $294,000 or 21.00%. The earnings increase was largely driven by higher electronic banking income, servicing fees on sold loans, sold mortgage income, and a gain on the sale of other real estate owned.
SVB&T Corporation’s book value has increased from $52.37 per share as of June 30, 2023, to $56.77 as of June 30, 2024, an 8.40% increase. SVB&T Corporation stock closed at $38.42 per share on the OTCQX exchange on June 30, 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 second 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 increased $8.78 million to $622.33 million on June 30, 2024, compared to December 31, 2023 assets of $613.55 million. Total loans before allowance increased $2.98 million to $486.58 million on June 30, 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 lines of credit and agriculture real estate loans.
Springs Valley 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 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 1.46% as of June 30, 2024, compared to 1.44% as of December 31, 2023. Total deposits increased $1.71 million to $535.17 million on June 30, 2024, from $533.46 million on December 31, 2023. Noninterest‐bearing deposits decreased by approximately $6.79 million due largely to decreases in business account balances and the Bank’s free checking account product balances. Interest‐bearing deposits have increased by approximately $8.50 million. These increases occurred primarily in Springs Valley’s public funds accounts and retail CDs. Core deposit growth continues to be a primary focus of Springs Valley as it is a critical component in generating sustainable, long‐term profitability for the institution.
Year-to-date (YTD) unaudited earnings for the six months ended June 30, 2024, was $3.10 million or $2.82 EPS, a 5.62% increase over the same prior year period earnings on a per-share basis. This YTD performance translates to an ROAA of 1.02%, which is in line with the same prior year period ROAA of 1.02% as well. Net interest income before provision expense for the six months ended June 30, 2024, was $8.13 million compared to $8.99 million for the same period in 2023, a decrease of $858,000.
Interest income increased approximately $2.24 million as compared to the same prior year period, largely due to increased loan
balances and increased interest rates on loans resulting from the higher rate environment and assets repricing. Additionally, interest expense increased by $3.10 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 $250,000, 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 2024. Total noninterest income increased $1.23 million to $5.13 million YTD June 2024 from $3.90 million for the same period in 2023.
The largest contributing factors to the favorable variance were increased Financial Advisory Group revenues, Financial Services income from annuity sales, electronic banking income, servicing fees on sold loans, income from sold mortgages, and a gain on the sale of other real estate owned. Growing noninterest income to reduce margin dependence continues to be a strategic focus of Springs Valley Bank & Trust. Noninterest expense increased $456,000 to $9.60 million YTD June 2024 from $9.14 million for the same period in 2023. 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 components of this expense increase have been increased salary, health insurance, and electronic banking expenses.
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