COLDWATER, Mich., Feb. 13, 2020 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported net income of $8,622,000 for 2019 compared to $8,125,000 for 2018.  Diluted earnings per share were $3.74 for 2019 compared to $3.51 for 2018.  Fourth quarter 2019 net income was $1,836,000, or $0.80 per share, compared to $1,824,000, or $0.79 per share for the fourth quarter of 2018.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “We are pleased to report record earnings of $8,622,000 for 2019, an increase of 6.1% over 2018.  The primary drivers for the increase to net income included our ongoing disciplined approach to credit quality and growth of the balance sheet.  We remain focused on delivering long-term value to our shareholders.  At year end our book value and tangible book value per share were $36.00 and $30.08, respectively, reflecting increases of 10.4 percent and 12.7 percent from December 31, 2018.”

Total consolidated assets at December 31, 2019 were $809.7 million.  This compared to $738.8 million at December 31, 2018.  Loan totals grew from December 31, 2018 levels of $532.0 million to $562.9 million.  Deposits also increased totaling $655.8 million at December 31, 2019, an increase of $49.9 million or 8.2 percent, as compared to year end 2018.

Southern provided $225,000 for loan losses in 2019, with an allowance for loan losses at December 31, 2019 of $5,184,000, or 0.92% of loans.  This compared to a provision for loan losses of $250,000 for 2018, with an allowance for loan losses at December 31, 2018 of $5,117,000, or 0.96% of loans.  Net charge offs totaled $158,000, or annualized 0.03% of loans, for 2019 compared to $142,000, or 0.03% of loans for 2018.   

The return on average assets for 2019 was 1.09% compared to 1.11% for 2018.  The return on average equity was 10.74% for 2019 compared to 11.21% for 2018.  The tax equivalent net interest margin for 2019 and 2018 were 3.66% and 3.84%, 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)

 December 31,
2019
 December 31,
2018
 
ASSETS      
Cash and cash equivalents$68,723 $54,741 
Federal funds sold 265  1,065 
Securities available for sale 123,436  101,439 
Loans held for sale 1,171  - 
Loans, net of allowance for loan losses of $5,184 - 2019 ($5,117 – 2018) 557,680  526,857 
Premises and equipment, net 14,515  14,296 
Accrued interest receivable 3,380  3,294 
Net cash surrender value of life insurance 15,633  15,685 
Goodwill 13,422  13,422 
Other intangible assets, net 291  327 
Other assets 11,200  7,705 
TOTAL ASSETS$809,716 $738,831 
       
LIABILITIES       
Deposits :      
Non-interest bearing$136,430 $129,923 
Interest bearing 519,332  475,970 
Total deposits 655,762  605,893 
       
Securities sold under agreements to repurchase and overnight borrowings 15,401  15,342 
Accrued expenses and other liabilities 12,553  8,414 
Other borrowings 37,500  28,500 
Subordinated debentures   5,155  5,155 
Total liabilities 726,371  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 – 2,314,878 shares in 2019
      
(2,315,505 shares in 2018) 5,781  5,783 
Additional paid-in capital 15,521  15,246 
Retained earnings 62,484  55,972 
Accumulated other comprehensive loss, net (52) (1,301)
Unearned Employee Stock Ownership Plan shares (389) (173)
Total shareholders’ equity 83,345  75,527 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$809,716 $738,831 

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

 Three Months Ended
December 31,
 Year Ended
December 31,
 
 2019 2018 2019 2018 
Interest income:            
Loans, including fees$7,151 $6,960 $28,265 $26,912 
Federal funds sold and balances with banks 295  288  1,482  659 
Securities:            
Taxable 698  361  2,185  1,328 
Tax-exempt 105  205  621  883 
Total interest income 8,249  7,814  32,553  29,782 
             
Interest expense:            
Deposits 1,331  1,031  5,128  3,274 
Other 336  289  1,299  1,224 
Total interest expense 1,667  1,320  6,427  4,498 
Net interest income 6,582  6,494  26,126  25,284 
Provision for loan losses 75  250  225  250 
Net interest income after provision for loan losses 6,507  6,244  25,901  25,034 
             
Non-interest income:            
Service charges on deposit accounts 494  542  2,003  1,751 
Trust fees 544  548  2,085  2,027 
Net gains on loan sales 246  137  683  604 
Earnings on life insurance assets 97  97  443  389 
ATM and debit card fee income 393  361  1,460  1,422 
Net securities gains -  (161) 366  (161)
Other 133  173  615  423 
Total non-interest income 1,907  1,697  7,655  6,455 
             
Non-interest expense:            
Salaries and employee benefits 3,589  3,226  13,828  12,843 
Occupancy, net 331  325  1,384  1,406 
Equipment 335  344  1,205  1,150 
Printing, postage and supplies 105  103  428  409 
Telecommunication expenses 123  114  426  338 
Professional and outside services 540  461  1,617  1,492 
Software maintenance 338  422  1,565  1,513 
ATM expenses 187  130  570  522 
Other 650  631  2,224  2,256 
Total non-interest expense 6,198  5,756  23,247  21,929 
INCOME BEFORE INCOME TAXES 2,216  2,185  10,309  9,560 
Federal income tax provision 380  361  1,687  1,435 
NET INCOME$1,836 $1,824 $8,622 $8,125 
             
Basic Earnings Per Common Share$0.80 $0.79 $3.74 $3.52 
Diluted Earnings Per Common Share 0.80  0.79  3.74  3.51 
Dividends Declared Per Common Share 0.23  0.22  0.91  0.87