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 | ||||||||