Southern Michigan Bancorp, Inc. Announces First Quarter 2021 Earnings

Coldwater, Michigan, UNITED STATES

COLDWATER, Mich., April 28, 2021 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced first quarter net income of $3,088,000, a 104.1% increase compared to net income of $1,513,000 for the first quarter of 2020. Earnings per share for the first quarter of 2021 increased to $1.35 per share, up $0.69 per share, from $0.66 per share for the first quarter of 2020.

As of March 31, 2021, total consolidated assets were at a record high of $1.076 billion compared to $997.6 million on December 31, 2020. As of March 31, 2021, total loans and deposits also were at record levels totaling $644.4 million and $924.5 million, respectively.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “We are pleased with the strong results posted in the first quarter. Our continued focus on meeting our customers’ needs has resulted in over 700 additional PPP loans being processed for our customers totaling over $40 million. In addition, the commercial loan pipeline is robust with funding expected to start in the second quarter.” Castle continued, “The successful closing of the $30 million subordinated debt offering this month provides capital to support additional growth in the bank.”

The allowance for loan losses totaled $7,818,000, or 1.21% of loans at March 31, 2021. Net loan loss recoveries totaled $29,000 for the first quarter of 2021, compared to net loan charge-offs of $7,000 during the first quarter of 2020.   Loan delinquencies dropped from 0.72% of gross loans on December 31, 2020 to 0.26% of gross loans on March 31, 2021. Likewise, total non-performing assets dropped from .49% of total assets on December 31, 2020 to 0.17% of total assets on March 31, 2021. No provision for loan loss expense was required during the first quarter of 2021. This contrasts with $1.0 million of provision for loan loss expense during the first quarter of 2020.

The annualized return on average assets for the three-month periods ended March 31, 2021 and March 31, 2020 were 1.19% and 0.73% respectively. The annualized return on average equity was 13.29% for the first quarter of 2021 compared to 7.06% for the first quarter of 2020. The tax equivalent net interest margin for the three-month period ending March 31, 2021 was 3.35% compared to 3.49% for the same period of 2020.

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,” “anticipated,” 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 the COVID-19 pandemic, 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$140,410 $99,610 
     Federal funds sold 249  231 
     Securities available for sale 238,712  208,380 
     Loans held for sale 2,198  1,691 
     Loans, net of allowance for loan losses of $7,818 - 2021 ($7,789 - 2020) 636,611  628,081 
     Premises and equipment, net 13,415  13,698 
     Accrued interest receivable 4,838  4,749 
     Net cash surrender value of life insurance 16,118  16,016 
     Goodwill 13,422  13,422 
     Other intangible assets, net 246  255 
     Other assets 9,458  11,441 
TOTAL ASSETS$1,075,677 $997,574 
          Non-interest bearing$245,168 $220,786 
          Interest bearing 679,374  617,512 
     Total deposits 924,542  838,298 
     Securities sold under agreements to repurchase and overnight borrowings 17,059  20,083 
     Accrued expenses and other liabilities 12,823  14,561 
     Other borrowings 26,250  26,500 
     Subordinated debentures 5,155  5,155 
Total liabilities 985,829  904,597 
     Preferred stock, 100,000 shares authorized; none issued or outstanding -  - 
     Common stock, $2.50 par value:      
         Authorized - 10,000,000 shares      
         Issued and outstanding – 2,292,376 shares in 2021
          (2,301,269 shares in 2020)
 5,725  5,748 
     Additional paid-in capital 14,585  15,416 
     Retained earnings 70,275  67,741 
     Accumulated other comprehensive income/(loss), net (447) 4,362 
     Unearned Employee Stock Ownership Plan shares (290) (290)
     Total shareholders’ equity 89,848  92,977 


(In thousands, except per share data)

 Three Months Ended March 31, 
 2021 2020 
Interest income:      
     Loans, including fees$7,805 $6,927 
          Taxable 734  707 
          Tax-exempt 231  116 
     Other 31  227 
Total interest income 8,801  7,977 
Interest expense:      
     Deposits 686  1,257 
     Other 222  319 
Total interest expense 908  1,576 
Net interest income 7,893  6,401 
Provision for loan losses -  1,000 
Net interest income after provision for loan losses 7,893  5,401 
Non-interest income:      
     Service charges on deposit accounts 293  463 
     Trust fees 549  517 
     Net gains on loan sales 744  249 
     Earnings on life insurance assets 101  94 
     ATM and debit card fee income 410  348 
     Other 145  150 
Total non-interest income 2,242  1,821 
Non-interest expense:      
     Salaries and employee benefits 3,999  3,258 
     Occupancy, net 409  397 
     Equipment 304  313 
     Printing, postage and supplies 115  103 
     Telecommunication expenses 100  128 
     Professional and outside services 337  337 
     Software maintenance 400  380 
     ATM expenses 151  131 
     Amortization of other intangibles 9  9 
     Other 555  391 
Total non-interest expense 6,379  5,447 
Federal income tax provision 668  262 
NET INCOME$3,088 $1,513 
Basic Earnings Per Common Share$1.35 $0.66 
Diluted Earnings Per Common Share$1.35 $0.66 
Dividends Declared Per Common Share$0.24 $0.23 

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