STURGIS, Mich., July 15, 2019 (GLOBE NEWSWIRE) -- Sturgis Bancorp, Inc. (OTCQX: STBI) today announced net income of $2.3 million for the first half of 2018 and $1.3 million for the second quarter of 2019.
Sturgis Bancorp is the holding company for Sturgis Bank & Trust Company (Bank), and its subsidiaries Oakleaf Financial Services, Inc., Oak Mortgage, LLC, Oak Insurance Services, LLC, and Oak Title Services, LLC. The Bank provides a full array of trust, commercial and consumer banking services from banking centers in Sturgis, Bangor, Bronson, Centreville, Climax, Colon, South Haven, Three Rivers and White Pigeon, MI. The Bank also has a loan production office in Portage, Michigan. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oak Mortgage offers residential mortgages in all markets of the Bank. Oak Insurance Services offers various competitive commercial and consumer insurance products. Oak Title Services offers commercial and consumer title insurance.
Key Highlights:
- Net income increased 22% for the first half of 2019 to $2,339,000, compared to $1,911,000 for the first half of 2018, primarily due to higher net interest income.
- The Bank maintained strong capital ratios, exceeding “well-capitalized” requirements, with Tier 1 leverage capital at 8.73%. Total capital at June 30, 2019 was 13.44% of risk-weighted assets.
- Total assets increased 4.6% to $450.0 million. The Bank's risk-weighted assets were $311.8 million at June 30, 2019.
- Net loans increased 5.9% to $329.5 million.
- Total deposits increased 2.0% to $349.3 million.
- Allowance for loan losses was 1.0% of loans.
Six months ended June 30, 2019 vs. six months ended June 30, 2018 - Net income for the first half of 2019 was $2,339,000, or $1.11 per share, compared to net income of $1,911,000, or $0.91 per share, in the first half of 2018. The tax equivalent net interest margin increased to 4.01% in the first half of 2019 from 3.77% in the first half of 2018.
Net interest income increased to $7.8 million in 2019 from $7.0 million in 2018. The growth was primarily due to loan interest income, which increased by $1.3 million. Total interest income increased $1.2 million to $9.4 million in 2019, and interest expense only increased $420,000 to $1.6 million in 2019.
The Company provided $113,000 to the allowance for loan losses in the first six months of 2019, compared to $139,000 in the same period of 2018. Net charge-offs were $0 in the first half of 2019, compared to ($5,000) in the first half of 2018.
Noninterest income was $2.6 million in the first half of 2019 and 2018, despite $112,000 decrease in investment brokerage commission income.
Noninterest expense was $7.5 million in the first six months of 2019, compared to $7.3 million in the first six months of 2018. Salaries and employee benefits, the largest component of noninterest expense, increased $313,000, or 7.2%.
Three months ended June 30, 2019 vs. three months ended June 30, 2018 - Net income for the three months ended June 30, 2019 was $1,297,000, or $0.62 per share, compared to net income of $1,154,000, or $0.36 per share, for the three months ended June 30, 2018. The tax equivalent net interest margin increased to 4.02% in the second quarter of 2019 from 3.91% in the second quarter of 2018.
Net interest income increased to $4.0 million in 2019 from $3.7 million in 2018. The growth was primarily due to loan interest income, which increased by $619,000 to $4.3 million. Total interest income increased $567,000 to $4.8 million in 2019, and interest expense only increased $218,000 to $836,000 in 2019.
The Company provided $75,000 to the allowance for loan losses in the second quarter of 2019, compared to $17,000 in the same quarter of 2018. Net charge-offs were $3,000 in the second quarter of 2019, compared to ($3,000) in the second quarter of 2018.
Noninterest income was $1.4 million in the second quarter of 2019, compared to $1.3 million in the second quarter of 2018, with increases primarily in gain on sale of securities and trust fee income.
Noninterest expense was $3.8 million in the second quarter of 2019, compared to$3,6 million in the second quarter of 2018. Salaries and employee benefits, the largest component of noninterest expense, increased $118,000, or 5.5%.
Total assets increased to $450.0 million at June 30, 2019 from $431.6 million at December 31, 2018, primarily in loans. Loans increased $18.5 million from December 31, 2018, primarily in commercial real estate loans.
Interest-bearing deposits increased to $263.0 million at June 30, 2019 from $260.1 million at December 31, 2018. Brokered deposits, a component of interest-bearing deposits, decreased $11.2 million in the first half of 2019, to $23.6 million at June 30, 2019. The growth in deposits, along with $10.0 million additional borrowed funds, provided the funding for the loan growth realized in the first six months of 2019.
Total equity was $41.4 million at June 30, 2019, compared to $40.2 million at December 31, 2018. The regular quarterly dividend was continued at a record-high $0.15 per share. Book value per share increased to $19.64 ($16.25 tangible) at June 30, 2019 from $19.11 ($15.70 tangible) at December 31, 2018.
This release contains statements that constitute forward-looking statements. These statements appear in several places in this release and include statements regarding intent, belief, outlook, objectives, efforts, estimates or expectations of Bancorp, primarily with respect to future events and the future financial performance of the Bancorp. Any such forward-looking statements are not guarantees of future events or performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statement. Factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; government and regulatory policy changes; the outcome of any pending and future litigation and contingencies; trends in consumer behavior and ability to repay loans; and changes of the world, national and local economies. Bancorp undertakes no obligation to update, amend or clarify forward-looking statements as a result of new information, future events, or otherwise. The numbers presented herein are unaudited.
For additional information, visit our website at www.sturgisbank.com.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
| June 30, | Dec. 31, | |||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 8,550 | $ | 12,267 | ||||
| Other short-term investments | 17,477 | 13,133 | ||||||
| Total cash and cash equivalents | 26,027 | 25,400 | ||||||
| Interest-earning deposits in banks | 6,109 | 7,350 | ||||||
| Securities - available for sale | 46,599 | 46,205 | ||||||
| Securities - held to maturity | 4,714 | 5,472 | ||||||
| Federal Home Loan Bank stock, at cost | 3,393 | 3,393 | ||||||
| Loans held for sale, at fair value | 1,811 | 67 | ||||||
| Loans, net of allowance of $3,341 and $3,228 | 329,521 | 311,050 | ||||||
| Premises and equipment, net | 9,185 | 9,274 | ||||||
| Goodwill | 5,834 | 5,834 | ||||||
| Core deposit intangibles | 133 | 155 | ||||||
| Originated mortgage servicing rights | 1,194 | 1,171 | ||||||
| Real estate owned | 301 | 193 | ||||||
| Bank-owned life insurance | 10,648 | 10,515 | ||||||
| Accrued interest receivable | 1,641 | 1,550 | ||||||
| Other assets | 2,922 | 3,946 | ||||||
| Total assets | $ | 450,032 | $ | 431,575 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Liabilities | ||||||||
| Deposits | ||||||||
| Noninterest-bearing | $ | 86,330 | $ | 82,442 | ||||
| Interest-bearing | 263,012 | 260,058 | ||||||
| Total deposits | 349,342 | 342,500 | ||||||
| Federal Home Loan Bank advances and other borrowings | 53,879 | 44,109 | ||||||
| Accrued interest payable | 365 | 375 | ||||||
| Other liabilities | 5,026 | 4,391 | ||||||
| Total liabilities | 408,612 | 391,375 | ||||||
| Stockholders' equity | ||||||||
| Preferred stock - $1 par value: authorized - 1,000,000 shares | ||||||||
| issued and outstanding – 0 shares | - | - | ||||||
| Common stock – $1 par value: authorized – 9,000,000 shares | ||||||||
| issued and outstanding 2,108,591 shares at June 30, 2019 | ||||||||
| and 2,103,991 at December 31, 2018 | 2,109 | 2,104 | ||||||
| Additional paid-in capital | 7,791 | 7,683 | ||||||
| Retained earnings | 32,233 | 30,526 | ||||||
| Accumulated other comprehensive loss | (713 | ) | (113 | ) | ||||
| Total stockholders' equity | 41,420 | 40,200 | ||||||
| Total liabilities and stockholders' equity | $ | 450,032 | $ | 431,575 | ||||
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share data)
| Three Months Ended June 30, | |||||||
| 2019 | 2018 | ||||||
| Interest income | |||||||
| Loans | $ | 4,314 | $ | 3,695 | |||
| Investment securities: | |||||||
| Taxable | 259 | 268 | |||||
| Tax-exempt | 215 | 276 | |||||
| Dividends | 55 | 37 | |||||
| Total interest income | 4,843 | 4,276 | |||||
| Interest expense | |||||||
| Deposits | 511 | 417 | |||||
| Borrowed funds | 325 | 201 | |||||
| Total interest expense | 836 | 618 | |||||
| Net interest income | 4,007 | 3,658 | |||||
| Provision (benefit) for loan losses | 75 | 17 | |||||
| Net interest income after provision (benefit) for loan losses | 3,932 | 3,641 | |||||
| Noninterest income: | |||||||
| Service charges and other fees | 313 | 330 | |||||
| Interchange income | 220 | 210 | |||||
| Investment brokerage commission income | 321 | 337 | |||||
| Mortgage banking activities | 194 | 181 | |||||
| Trust fee income | 164 | 126 | |||||
| Earnings on cash value of bank-owned life insurance | 72 | 63 | |||||
| Gain on sale of real estate owned | 59 | 70 | |||||
| Gain on sale of securities | 44 | - | |||||
| Other income | 22 | 23 | |||||
| Total noninterest income | 1,409 | 1,340 | |||||
| Noninterest expenses: | |||||||
| Salaries and employee benefits | 2,257 | 2,139 | |||||
| Occupancy and equipment | 477 | 443 | |||||
| Interchange expenses | 99 | 89 | |||||
| Data processing | 198 | 183 | |||||
| Professional services | 70 | 90 | |||||
| Real estate owned expense | 3 | 42 | |||||
| Advertising | 76 | 69 | |||||
| FDIC premiums | 46 | 73 | |||||
| Other expenses | 573 | 511 | |||||
| Total noninterest expenses | 3,799 | 3,639 | |||||
| Income before income tax expense | 1,542 | 1,342 | |||||
| Income tax expense | 245 | 188 | |||||
| Net income | $ | 1,297 | $ | 1,154 | |||
| Earnings per share | $ | 0.62 | $ | 0.55 | |||
| Dividends per share | 0.15 | 0.14 | |||||
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share data)
| Six Months Ended June 30, | |||||||
| 2019 | 2018 | ||||||
| Interest income | |||||||
| Loans | $ | 8,355 | $ | 7,056 | |||
| Investment securities: | |||||||
| Taxable | 539 | 506 | |||||
| Tax-exempt | 437 | 553 | |||||
| Dividends | 100 | 93 | |||||
| Total interest income | 9,431 | 8,208 | |||||
| Interest expense | |||||||
| Deposits | 1,013 | 793 | |||||
| Borrowed funds | 602 | 402 | |||||
| Total interest expense | 1,615 | 1,195 | |||||
| Net interest income | 7,816 | 7,013 | |||||
| Provision (benefit) for loan losses | 113 | 139 | |||||
| Net interest income after provision (benefit) for loan losses | 7,703 | 6,874 | |||||
| Noninterest income: | |||||||
| Service charges and other fees | 637 | 675 | |||||
| Interchange income | 413 | 389 | |||||
| Investment brokerage commission income | 612 | 728 | |||||
| Mortgage banking activities | 406 | 369 | |||||
| Trust fee income | 258 | 239 | |||||
| Earnings on cash value of bank-owned life insurance | 134 | 125 | |||||
| Gain on sale of real estate owned | 61 | 67 | |||||
| Gain on sale of securities | 1 | - | |||||
| Other income | 52 | 52 | |||||
| Total noninterest income | 2,574 | 2,644 | |||||
| Noninterest expenses: | |||||||
| Salaries and employee benefits | 4,665 | 4,352 | |||||
| Occupancy and equipment | 949 | 875 | |||||
| Interchange expenses | 186 | 176 | |||||
| Data processing | 394 | 363 | |||||
| Professional services | 180 | 212 | |||||
| Real estate owned expense | 8 | 75 | |||||
| Advertising | 134 | 117 | |||||
| FDIC premiums | 89 | 133 | |||||
| Other expenses | 926 | 1,035 | |||||
| Total noninterest expenses | 7,531 | 7,338 | |||||
| Income before income tax expense | 2,746 | 2,180 | |||||
| Income tax expense | 407 | 269 | |||||
| Net income | $ | 2,339 | $ | 1,911 | |||
| Earnings per share | $ | 1.11 | $ | 0.91 | |||
| Dividends per share | 0.30 | 0.28 | |||||
OTHER FINANCIAL INFORMATION
(Amounts in thousands)
| Three Months Ended June 30, | ||||||||
| 2019 | 2018 | |||||||
| Sturgis Bank & Trust Company: | ||||||||
| Average noninterest-bearing deposits | $ | 83,926 | $ | 81,874 | ||||
| Average interest-bearing deposits | 265,464 | 275,261 | ||||||
| Average total assets | 446,180 | 434,115 | ||||||
| Total risk-weighted assets | 311,843 | 286,956 | ||||||
| Sturgis Bancorp: | ||||||||
| Average equity | 41,437 | 38,669 | ||||||
| Average total assets | 446,279 | 434,298 | ||||||
| Total risk-weighted assets | 311,923 | 287,169 | ||||||
| Financial ratios for Sturgis Bancorp: | ||||||||
| Return on average assets | 1.17 | % | 1.07 | % | ||||
| Return on average equity | 12.55 | % | 11.98 | % | ||||
| Net interest margin | 3.96 | % | 3.74 | % | ||||
| Tax equivalent net interest margin | 4.02 | % | 3.83 | % | ||||
| Six Months Ended June 30, | ||||||||
| 2019 | 2018 | |||||||
| Sturgis Bank & Trust Company: | ||||||||
| Average noninterest-bearing deposits | $ | 81,813 | $ | 81,079 | ||||
| Average interest-bearing deposits | 266,288 | 273,119 | ||||||
| Average total assets | 440,543 | 431,046 | ||||||
| Sturgis Bancorp: | ||||||||
| Average equity | 41,060 | 38,250 | ||||||
| Average total assets | 440,730 | 431,236 | ||||||
| Financial ratios for Sturgis Bancorp: | ||||||||
| Return on average assets | 1.18 | % | 0.89 | % | ||||
| Return on average equity | 11.49 | % | 10.07 | % | ||||
| Net interest margin | 3.94 | % | 3.68 | % | ||||
| Tax equivalent net interest margin | 4.01 | % | 3.77 | % | ||||
Contacts:
Sturgis Bancorp -- Eric Eishen, President & CEO, or Brian P. Hoggatt, CFO -- P: 269 651-9345