Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2021 Earnings

Coldwater, Michigan, UNITED STATES


COLDWATER, Mich., Feb. 11, 2022 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported net income of $11,757,000 for 2021 compared to $7,386,000 for 2020.   Diluted earnings per share were $2.58 for 2021 compared to $1.61 for 2020 after adjusting for the 100 percent stock dividend issued in May 2021. Fourth quarter 2021 net income was $2,522,000, or $0.56 per share, compared to $2,024,000, or $0.44 per share for the fourth quarter of 2020.

Total consolidated assets at December 31, 2021 increased 16.4 percent, reaching $1.16 billion compared to $997.6 million at December 31, 2020.   Loan totals grew 16.6 percent, from December 31, 2020 levels of $635.9 million to $741.4 million. Deposits also increased to $974.4 million at December 31, 2021, an increase of $136.1 million or 16.2 percent, as compared to year end 2020.

Southern Michigan Bancorp, Inc., Chairman and Chief Executive Officer John H. Castle stated, “Net income was a record for the year, 36.4 percent higher than the previous high of $8,622,000 reported in 2019. Total assets, loans and deposits also continued to grow, expanding to new record highs at year end 2021. Excluding the forgiveness of $46.9 million of PPP loans during the year, loan growth exceeded $150 million.   Additionally, the commercial loan pipeline remains strong. With liquidity remaining elevated, continued loan growth will be a key to positive earnings momentum in 2022.”

Southern provided $1.5 million for loan losses in 2021, with an allowance for loan losses at December 31, 2021 of $9,320,000, or 1.26% of loans. This compared to a provision for loan losses of $2.6 million for 2020, with an allowance for loan losses at December 31, 2020 of $7,789,000, or 1.22% of loans. Net loan loss recoveries totaled $31,000 for 2021 compared to $5,000 for 2020.

The return on average assets for 2021 was 1.06% compared to 0.82% for 2020. The return on average equity was 12.32% for 2021 compared to 8.36% for 2020. The tax equivalent net interest margins for 2021 and 2020 were 3.27% and 3.24%, 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,
2021
  December 31,
2020
 
ASSETS       
Cash and cash equivalents$119,389  $99,610 
Federal funds sold 271   231 
Securities available for sale 245,846   208,380 
Loans held for sale 1,146   1,691 
Loans, net of allowance for loan losses of $9,320 - 2021 ($7,789 – 2020) 732,088   628,081 
Premises and equipment, net 13,115   13,698 
Accrued interest receivable 4,193   4,749 
Net cash surrender value of life insurance 18,671   16,016 
Goodwill 13,422   13,422 
Other intangible assets, net 219   255 
Other assets 12,794   11,441 
TOTAL ASSETS$1,161,154  $997,574 
        
LIABILITIES        
Deposits :       
Non-interest bearing$262,980  $220,786 
Interest bearing 711,372   617,512 
Total deposits 974,352   838,298 
        
Securities sold under agreements to repurchase and overnight borrowings 20,609   20,083 
Accrued expenses and other liabilities 13,930   14,561 
Other borrowings 20,000   26,500 
Subordinated debentures 34,514   5,155 
Total liabilities 1,063,405   904,597 
        
SHAREHOLDERS’ EQUITY       
Preferred stock, 100,000 shares authorized; none issued or outstanding -   - 
Common stock, $2.50 par value:       
Authorized - 10,000,000 shares       
Issued and outstanding – 4,516,377 shares in 2021
 (2,301,269 shares in 2020)
 11,287   5,748 
Additional paid-in capital 14,235   15,416 
Retained earnings 71,581   67,741 
Accumulated other comprehensive income, net 856   4,362 
Unearned Employee Stock Ownership Plan shares (210)  (290)
Total shareholders’ equity 97,749   92,977 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,161,154  $997,574 
        


 
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,
 
 2021 2020 2021 2020 
Interest income:            
Loans, including fees$8,535 $7,202 $32,593 $28,377 
Federal funds sold and balances with banks 41  33  148  314 
Securities:            
Taxable 843  643  3,330  2,482 
Tax-exempt 269  185  1,069  645 
Total interest income 9,688  8,063  37,140  31,818 
             
Interest expense:            
Deposits 485  800  2,268  4,025 
Other 460  246  1,553  1,116 
Total interest expense 945  1,046  3,821  5,141 
Net interest income 8,743  7,017  33,319  26,677 
Provision for loan losses 450  350  1,500  2,600 
Net interest income after provision for loan losses 8,293  6,667  31,819  24,077 
             
Non-interest income:            
Service charges on deposit accounts 373  334  1,286  1,373 
Trust fees 586  513  2,267  2,048 
Net gains on loan sales 381  636  2,293  2,389 
Earnings on life insurance assets 184  98  695  383 
ATM and debit card fee income 463  394  1,823  1,543 
Other 173  236  645  642 
Total non-interest income 2,160  2,211  9,009  8,378 
             
Non-interest expense:            
Salaries and employee benefits 4,612  4,157  16,492  14,580 
Occupancy, net 368  352  1,565  1,519 
Equipment 313  300  1,174  1,180 
Printing, postage and supplies 100  84  390  386 
Telecommunication expenses 90  89  356  451 
Professional and outside services 596  423  1,814  1,532 
Software maintenance 449  400  1,677  1,552 
ATM expenses 177  138  670  578 
Other 771  497  2,570  1,888 
Total non-interest expense 7,476  6,440  26,708  23,666 
INCOME BEFORE INCOME TAXES 2,977  2,438  14,120  8,789 
Federal income tax provision 455  414  2,363  1,403 
NET INCOME$2,522 $2,024 $11,757 $7,386 
             
Basic Earnings Per Common Share$0.56 $0.44 $2.59 $1,61 
Diluted Earnings Per Common Share 0.56  0.44  2.58  1.61 
Dividends Declared Per Common Share 0.12  0.12  0.48  0.46 
             

 

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