Southern Michigan Bancorp, Inc. Announces First Quarter 2020 Earnings

Coldwater, Michigan, UNITED STATES

COLDWATER, Mich., April 29, 2020 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced first quarter net income of $1,513,000, a 21.2% decrease compared to net income of $1,920,000 for the first quarter of 2019. Earnings per share for the first quarter of 2020 were $0.66 per share, a decrease of 20.5% compared to $0.83 per share for the first quarter of 2019.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “These are unprecedented times. We are proud of the work our employees are doing to help our customers and each other through this pandemic.”

As of March 31, 2020, total consolidated assets were $828.3 million compared to $809.7 million at December 31, 2019.

“While our asset quality metrics remained strong at March 31, 2020, the overall impact COVID-19 will have on the economy and our customers is unknown. Given this uncertainty, we believed it prudent to increase our provision for loan losses during the quarter,” Castle added.

As a result of these economic conditions, Southern provided $1,000,000 for provision expense during the first quarter of 2020, raising the allowance for loan losses to $6,177,000, or 1.10% of loans. This contrasts with $150,000 of provision for loan losses during the first quarter of 2019. The allowance for loan losses totaled $5,264,000, or 0.96% of loans at March 31, 2019. Net charge-offs totaled $7,000 for the first quarter of 2020, compared to $3,000 during the first quarter of 2019.

The annualized return on average assets for the three-month periods ended March 31, 2020 and March 31, 2019 were 0.73% and 1.01% respectively. The annualized return on average equity was 7.06% for the first quarter of 2020 compared to 10.03% for the first quarter of 2019. The tax equivalent net interest margin for the three-month period ending March 31, 2020 was 3.49% compared to 3.72% for the same period of 2019.

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 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$73,132 $68,723 
Federal funds sold 572  265 
Securities available for sale 140,097  123,436 
Loans held for sale 987  1,171 
Loans, net of allowance for loan losses of $6,177 - 2020 ($5,184 - 2019) 554,262  557,680 
Premises and equipment, net 14,310  14,515 
Accrued interest receivable 4,150  3,380 
Net cash surrender value of life insurance 15,727  15,633 
Goodwill 13,422  13,422 
Other intangible assets, net 282  291 
Other assets 11,365  11,200 
TOTAL ASSETS$828,306 $809,716 
Non-interest bearing$141,495 $136,430 
Interest bearing 535,918  519,332 
Total deposits 677,413  655,762 
Securities sold under agreements to repurchase and overnight borrowings 12,145  15,401 
Accrued expenses and other liabilities 12,672  12,553 
Other borrowings 37,250  37,500 
Subordinated debentures 5,155  5,155 
Total liabilities 744,635  726,371 
Preferred stock, 100,000 shares authorized; none issued or outstanding -  - 
Common stock, $2.50 par value:      
Authorized - 5,000,000 shares      
Issued and outstanding – 2,311,307 shares in 2020
(2,314,878 shares in 2019) 5,773  5,781 
Additional paid-in capital 15,062  15,521 
Retained earnings 63,462  62,484 
Accumulated other comprehensive loss, net (237) (52)
Unearned Employee Stock Ownership Plan shares (389) (389)
 Total shareholders’ equity 83,671  83,345 


(In thousands, except per share data) 
 Three Months Ended March 31, 
 2020 2019 
Interest income:      
Loans, including fees$6,927 $6,845 
Taxable 707  399 
Tax-exempt 116  202 
Other 227  390 
Total interest income 7,977  7,836 
Interest expense:      
Deposits 1,257  1,151 
Other 319  305 
Total interest expense 1,576  1,456 
Net interest income 6,401  6,380 
Provision for loan losses 1,000  150 
Net interest income after provision for loan losses 5,401  6,230 
Non-interest income:      
Service charges on deposit accounts 463  486 
Trust fees 517  503 
Net gains on loan sales 249  87 
Earnings on life insurance assets 94  97 
ATM and debit card fee income 348  319 
Other 150  188 
Total non-interest income 1,821  1,680 
Non-interest expense:      
Salaries and employee benefits 3,258  3,397 
Occupancy, net 397  389 
Equipment 313  265 
Printing, postage and supplies 103  105 
Telecommunication expenses 128  102 
Professional and outside services 337  316 
Software maintenance 380  403 
ATM expenses 131  107 
Amortization of other intangibles 9  9 
Other 391  558 
Total non-interest expense 5,447  5,651 
Federal income tax provision 262  339 
NET INCOME$1,513 $1,920 
Basic Earnings Per Common Share$0.66 $0.83 
Diluted Earnings Per Common Share$0.66 $0.83 
Dividends Declared Per Common Share$0.23 $0.22 



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