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CST: 20/11/2019 00:11:59   

Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2018 Earnings

277 Days ago

COLDWATER, Mich., Feb. 15, 2019 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported net income of $8,125,000 for 2018 compared to $5,421,000 for 2017.  Diluted earnings per share were $3.51 for 2018 compared to $2.29 in 2017.  Fourth quarter 2018 net income was $1,824,000, or $0.79 per share, compared to $739,000, or $0.32 per share for the fourth quarter of 2017.  2017 results were impacted by the passage of tax reform legislation on December 22, 2017, which resulted in an income tax charge of $989,000, or $0.42 per share, in the fourth quarter of 2017.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “We are pleased to report record earnings of $8,125,000 for 2018, an increase of 49.9% over 2017.  Southern benefited from continued strong credit quality, growth in the balance sheet, and lower federal income tax rates, as well as four increases in the Federal Reserve managed rates.”

Castle continued, “In 2019 we will remain focused on providing excellent products and customer service, while working to improve long-term shareholder returns.”

Total consolidated assets at December 31, 2018 were $738.8 million compared to $712.3 million at December 31, 2017.  Loans increased to $532.0 million as of December 31, 2018, as compared to $523.4 million at year end 2017.  Deposits also increased, totaling $605.9 million at December 31, 2018, an increase of $28.7 million or 5.0%, as compared to year end 2017.

Southern provided $250,000 for loan losses in 2018, with an allowance for loan losses at December 31, 2018 of $5,117,000, or 0.96% of loans.  This compared to a provision for loan losses of $175,000 for 2017, with an allowance for loan losses at December 31, 2017 of $5,009,000, or 0.96% of loans.   The 2018 provision for loan losses resulted from increased specific reserves on impaired loans.  Net charge-offs for 2018 totaled $142,000, or 0.03% of loans. 

The annualized return on average assets for 2018 was 1.11% compared to 0.80% for 2017.  The annualized return on average equity was 11.21% for 2018 compared to 7.64% for 2017.

Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust.  It operates 14 branches within Branch, Calhoun, Hillsdale, Kalamazoo and St. Joseph Counties, providing a broad range of consumer, business and wealth management services throughout the region. 

This press release contains forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and Southern Michigan Bancorp, Inc. Forward-looking statements are identifiable by words or phrases such as “expected”, “begin” and other similar words or expressions.  All statements with reference to a future time period are forward-looking.  Management’s determination of the provision and allowance for loan losses and other accounting estimates, such as the carrying value of goodwill, other real estate owned and mortgage servicing rights and the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment), involves judgments that are inherently forward-looking.  There can be no assurance that future loan losses will be limited to the amounts estimated.  Our ability sell other real estate owned at its carrying value or at all, successfully implement new programs and initiatives, increase efficiencies, maintain our current level of deposits and other sources of funding, respond to declines in collateral values and credit quality, and improve profitability is not entirely within our control and is not assured.  The future effect of changes in the financial and credit markets and the national and regional economy on the banking industry, generally, and Southern Michigan Bancorp, Inc., specifically, are also inherently uncertain.  These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extend, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed in or implied by such forward-looking statements. Southern Michigan Bancorp, Inc. does not undertake to update forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share data) December 31,  
  2018   2017  
ASSETS            
Cash $ 5,804   $ 4,177  
Due from banks   48,937     13,244  
 Cash and cash equivalents   54,741     17,421  
Federal funds sold   1,065     18,492  
Securities available for sale   101,439     105,184  
Loans held for sale   -     515  
Loans, net of allowance for loan losses of $5,117 - 2018 ($5,009 - 2017)   526,857     518,438  
Premises and equipment, net   14,296     14,265  
Accrued interest receivable   3,294     3,211  
Cash surrender value of life insurance   15,685     14,796  
Goodwill   13,422     13,422  
Other intangible assets, net   327     -  
Other assets   7,705     6,601  
 Total Assets $ 738,831   $ 712,345  
             
LIABILITIES AND SHAREHOLDERS’ EQUITY            
Liabilities            
 Deposits            
 Non-interest bearing $ 129,923   $ 129,098  
 Interest bearing   475,970     448,046  
 Total deposits   605,893     577,144  
 Securities sold under agreements to repurchase and overnight
 borrowings
  15,342     13,950  
 Accrued expenses and other liabilities   8,414     6,559  
 Other borrowings   28,500     39,500  
 Subordinated debentures   5,155     5,155  
 Total Liabilities   663,304     642,308  
             
             
Shareholders’ equity            
 Preferred stock, 100,000 shares authorized; none issued or outstanding   -     -  
 Common stock, $2.50 par value:            
 Authorized – 4,000,000 shares            
  Issued and outstanding – 2,315,505 shares in 2018            
  (2,316,779 shares in 2017)   5,783     5,787  
 Additional paid-in capital   15,246     15,415  
 Retained earnings   55,972     49,747  
 Accumulated other comprehensive loss, net   (1,301 )   (613 )
 Unearned Employee Stock Ownership Plan shares   (173 )   (299 )
 Total Shareholders’ Equity   75,527     70,037  
 Total Liabilities and Shareholders’ Equity $ 738,831   $ 712,345  

SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share amounts) Three Months Ended
December 31,
  Year Ended
December 31,
 
    2018     2017     2018     2017  
Interest income:                        
 Loans, including fees $ 6,960   $ 6,189   $ 26,912   $ 22,944  
 Securities:                        
 Taxable   361     306     1,328     1,183  
 Tax-exempt   205     230     883     906  
 Other   288     105     659     318  
Total interest income   7,814     6,830     29,782     25,351  
                         
Interest expense:                        
 Deposits   1,031     557     3,274     1,753  
 Other   289     343     1,224     1,015  
Total interest expense   1,320     900     4,498     2,768  
Net interest income   6,494     5,930     25,284     22,583  
Provision for loan losses   250     -     250     175  
Net interest income after provision for loan losses   6,244     5,930     25,034     22,408  
                         
Non-interest income:                        
 Service charges on deposit accounts   542     426     1,751     1,642  
 Trust fees   548     462     2,027     1,658  
 Net securities gains/(losses)   (161 )   -     (161 )   3  
 Net gains on loan sales   137     215     604     749  
 Earnings on life insurance assets   97     93     389     374  
  ATM and debit card fee income   361     340     1,422     1,374  
 Other   173     113     423     608  
Total non-interest income   1,697     1,649     6,455     6,408  
                         
Non-interest expense:                        
 Salaries and employee benefits   3,226     3,204     12,843     12,050  
 Occupancy, net   325     311     1,406     1,330  
 Equipment   344     273     1,150     967  
 Printing, postage and supplies   103     111     409     421  
 Telecommunication   114     76     338     297  
  Professional and outside services   461     393     1,492     1,375  
 Software maintenance   422     344     1,513     1,240  
  Amortization of other intangibles   9     57     33     229  
  ATM expenses   130     125     522     489  
  Advertising and marketing   168     100     444     317  
  FDIC deposit assessments   53     54     225     219  
 Other   401     316     1,554     1,419  
Total non-interest expense   5,756     5,364     21,929     20,353  
                         
INCOME BEFORE INCOME TAXES   2,185     2,215     9,560     8,463  
Federal income tax provision   361     1,476     1,435     3,042  
NET INCOME $ 1,824   $ 739   $ 8,125   $ 5,421  
                         
Basic Earnings Per Common Share $ 0.79   $ 0.32   $ 3.52   $ 2.30  
Diluted Earnings Per Common Share $ 0.79   $ 0.32   $ 3.51   $ 2.29  
Dividends Declared Per Common Share $ 0.22   $ 0.21   $ 0.87   $ 0.83  


CONTACT:  John H. Castle, CEO
(517) 279-5500

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