Southern Michigan Bancorp, Inc. Announces First Quarter 2018 Earnings

Coldwater, Michigan, UNITED STATES

COLDWATER, Mich., April 24, 2018 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink:SOMC) announced first quarter net income increased 24.6% to $1,802,000, compared to net income of $1,446,000, for the first quarter of 2017.  First quarter 2018 earnings per share increased 32.2% to $0.78 per share, compared to $0.59 per share, for the first quarter of 2017.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “We are pleased with our first quarter financial results.  Earnings grew 10.5% year over year excluding the benefit of tax reform.  Strong core earnings were fueled by $83.1 million of year over year loan growth and continued strong credit quality in the portfolio.”  

Total consolidated assets at March 31, 2018 were $719.2 million compared to $712.3 million at December 31, 2017.    

No provision for loan losses was required during the first quarter of 2018.  The allowance for loan losses was $4,993,000, or 0.93% of loans at March 31, 2018.  Net charge-offs totaled $16,000 for the first quarter of 2018, compared to $57,000 during the first quarter of 2017.  Total delinquent loans decreased to 0.25% of total loans as of March 31, 2018, down from 0.38% as of March 31, 2017. 

The annualized return on average assets for the three month period ended March 31, 2018 was 1.01% compared to 0.89% for the first quarter of 2017.  The annualized return on average equity was 10.26% for the first quarter of 2018 compared to 8.11% for the first quarter of 2017.  The tax equivalent net interest margin for the three month period ending March 31, 2018 was 3.79% compared to 3.75% for the same period of 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, and a loan production office in Steuben County, 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.

(In thousands, except share data)
 March 31,
 December 31,
Cash and cash equivalents$29,636 $17,421 
Federal funds sold 1,669  18,492 
Securities available for sale 102,062  105,184 
Loans held for sale 564  515 
Loans, net of allowance for loan losses of  $4,993 - 2018 ($5,009 - 2017) 531,625  518,438 
Premises and equipment, net 14,291  14,265 
Accrued interest receivable 3,277  3,211 
Net cash surrender value of life insurance 15,391  14,796 
Goodwill 13,422  13,422 
Other intangible assets, net 354  - 
Other assets 6,936  6,601 
TOTAL ASSETS$719,227 $712,345 
Non-interest bearing$124,948 $129,098 
Interest bearing 470,237  448,046 
Total deposits 595,185  577,144 
Securities sold under agreements to repurchase and overnight borrowings 12,629  13,950 
Accrued expenses and other liabilities 6,953  6,559 
Other borrowings 29,250  39,500 
Subordinated debentures 5,155  5,155 
Total liabilities 649,172  642,308 
Preferred stock, 100,000 shares authorized; none issued or outstanding -  - 
Common stock, $2.50 par value:      
Authorized - 4,000,000 shares      
Issued and outstanding – 2,320,737 shares in 2018 (2,316,779 shares in 2017) 5,796  5,787 
Additional paid-in capital 14,841  15,415 
Retained earnings 51,059  49,747 
Accumulated other comprehensive loss, net (1,362) (613)
Unearned Employee Stock Ownership Plan shares (279) (299)
Total shareholders’ equity 70,055  70,037 

(In thousands, except per share data)
 Three Months Ended March 31, 
 2018 2017 
Interest income:      
Loans, including fees$6,338 $5,244 
Taxable 327  298 
Tax-exempt 231  231 
Other 87  47  
Total interest income 6,983  5,820 
Interest expense:      
Deposits 591  361 
Other 311  138 
Total interest expense 902  499 
Net interest income 6,081  5,321 
Provision for loan losses -  - 
Net interest income after provision for loan losses 6,081  5,321 
Non-interest income:      
Service charges on deposit accounts 382  395 
Trust fees 484  367 
Net gains on loan sales 131  138 
Earnings on life insurance assets 95  96 
ATM and debit card fee income 339  335 
Other 15  241 
Total non-interest income 1,446  1,572 
Non-interest expense:      
Salaries and employee benefits 3,157  2,889 
Occupancy, net 397  355 
Equipment 272  246 
Printing, postage and supplies 122  118 
Telecommunication expenses 73  76 
Professional and outside services 322  302 
Software maintenance 367  293 
ATM expenses 143  142 
Amortization of other intangibles 6  57 
Other 541  490 
Total non-interest expense 5,400  4,968 
Federal income tax provision 325  479 
NET INCOME$1,802 $1,446 
Basic Earnings Per Common Share$0.78 $0.59 
Diluted Earnings Per Common Share$0.78 $0.59 
Dividends Declared Per Common Share$0.21 $0.20 


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