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CST: 20/11/2019 00:11:53   

Southern Michigan Bancorp, Inc. Announces Third Quarter 2019 Earnings

27 Days ago

COLDWATER, Mich., Oct. 23, 2019 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced third quarter 2019 net income of $2,540,000, or $1.10 per share, compared to net income of $2,283,000, or $0.98 per share, for the third quarter of 2018.  Southern earned $6,786,000, or $2.94 per share, for the nine-month period ended September 30, 2019 compared to $6,301,000, or $2.73 per share, for the same nine-month period a year ago.   

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “We are pleased to report record earnings for both the third quarter and nine-month period of 2019 as well as total assets exceeding $800 million for the first time in company history.” 

Castle continued, “While loan growth has been modest in 2019, a number of commercial loan opportunities have been approved and are expected to begin funding during the first quarter of 2020.”     

Total consolidated assets at September 30, 2019 were $811.5 million.  This compared to $738.8 million at December 31, 2018.  Loan totals grew from December 31, 2018 levels of $532.0 million to $547.6 million.  Deposits increased to $659.6 million at September 30, 2019, an increase of $53.7 million or 8.9 percent, from $605.9 million at year end 2018. 

No provision for loan losses was required during the third quarter of 2019.  For the first nine months of 2019, $150,000 of loan loss provision was recorded.  No provision for loan losses was recorded during the nine month period ending September 30, 2018.  The allowance for loan losses totaled $5,121,000, or 0.94% of loans at September 30, 2019.  Net charge offs totaled $146,000, or annualized 0.04% of loans, for the nine-month period ended September 30, 2019 compared to net charges offs of $98,000, or 0.02% of loans annualized, for the same period of 2018.   

The annualized return on average assets for the nine-month periods ended September 30, 2019 and 2018 were both 1.16%.  The annualized return on average equity was 11.43% for the first nine months of 2019 compared to 11.72% for the same period of 2018.  The tax equivalent net interest margin for the nine-month periods ended September 30, 2019 and 2018 were 3.70% and 3.79%, respectively.

Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust.  It operates 13 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 to 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.
Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share data)

  September 30,
2019

    December 31,
2018

 
ASSETS              
Cash and cash equivalents $ 82,945     $ 54,741  
Federal funds sold   284       1,065  
Securities available for sale   126,499       101,439  
Loans held for sale   497       -  
Loans, net of allowance for loan losses of  $5,121 - 2019 ($5,117 – 2018)   542,492       526,857  
Premises and equipment, net   14,560       14,296  
Accrued interest receivable   3,638       3,294  
Net cash surrender value of life insurance   15,536       15,685  
Goodwill   13,422       13,422  
Other intangible assets, net   300       327  
Other assets   11,307       7,705  
TOTAL ASSETS $ 811,480     $ 738,831  
               
LIABILITIES              
Deposits :              
Non-interest bearing $ 130,715     $ 129,923  
Interest bearing   528,877       475,970  
Total deposits   659,592       605,893  
               
Securities sold under agreements to repurchase and overnight borrowings   14,064       15,342  
Accrued expenses and other liabilities   12,376       8,414  
Other borrowings   37,750       28,500  
Subordinated debentures    5,155       5,155  
Total liabilities   728,937       663,304  
               
SHAREHOLDERS’ EQUITY              
Preferred stock, 100,000 shares authorized; none issued or outstanding   -       -  
Common stock, $2.50 par value:              
Authorized - 5,000,000 shares              
Issued and outstanding – 2,315,143 shares in 2019 (2,315,505 shares in 2018)   5,782       5,783  
Additional paid-in capital   15,307       15,246  
Retained earnings   61,181       55,972  
Accumulated other comprehensive loss, net   744       (1,301 )
Unearned Employee Stock Ownership Plan shares   (471 )     (173 )
Total shareholders’ equity   82,543       75,527  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 811,480     $ 738,831  
               

Southern Michigan Bancorp, Inc.
condensed consolidated statements of income (unaudited
)
(In thousands, except per share data)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2019   2018   2019   2018  
Interest income:                        
Loans, including fees $ 7,091   $ 6,898   $ 21,114   $ 19,952  
Federal funds sold and balances with banks   425     208     1,187     370  
Securities:                        
Taxable   640     330     1,487     968  
Tax-exempt   120     221     515     678  
Total interest income   8,276     7,657     24,303     21,968  
                         
Interest expense:                        
Deposits   1,349     946     3,797     2,242  
Other   342     309     963     936  
Total interest expense   1,691     1,255     4,760     3,178  
Net interest income   6,585     6,402     19,543     18,790  
Provision for loan losses   -     -     150     -  
Net interest income after provision for loan losses   6,585     6,402     19,393     18,790  
                         
Non-interest income:                        
Service charges on deposit accounts   526     442     1,509     1,209  
Trust fees   525     522     1,541     1,479  
Net gains on loan sales   257     156     437     467  
Earnings on life insurance assets   152     96     346     292  
ATM and debit card fee income   387     357     1,067     1,061  
Net securities gains   159     -     366     -  
Other   175     120     483     250  
Total non-interest income   2,181     1,693     5,749     4,758  
                         
Non-interest expense:                        
Salaries and employee benefits   3,410     3,261     10,239     9,617  
Occupancy, net   339     326     1,053     1,082  
Equipment   339     247     870     805  
Printing, postage and supplies   118     106     323     306  
Telecommunication expenses   108     77     303     223  
Professional and outside services   387     297     1,077     1,032  
Software maintenance   427     356     1,227     1,091  
ATM expenses   139     125     383     392  
Other   488     555     1,574     1,625  
Total non-interest expense   5,755     5,350     17,049     16,173  
INCOME BEFORE INCOME TAXES   3,011     2,745     8,093     7,375  
Federal income tax provision   471     462     1,307     1,074  
NET INCOME $ 2,540   $ 2,283   $ 6,786   $ 6,301  
                         
Basic Earnings Per Common Share $ 1.10   $ 0.99   $ 2.95   $ 2.73  
Diluted Earnings Per Common Share   1.10     0.98     2.94     2.72  
Dividends Declared Per Common Share   0.23     0.22     0.68     0.65  
                         
CONTACT:  John H. Castle, CEO
(517) 279-5500

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