Southern Michigan Bancorp, Inc. Announces First Quarter 2022 Earnings

Coldwater, Michigan, UNITED STATES

COLDWATER, Michigan, April 27, 2022 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced first quarter net income of $2,933,000, or $0.65 per share, compared to net income of $3,088,000, or $0.68 per share, for the first quarter of 2021.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “We are pleased with our first quarter results. The core loan growth we have experienced over the last year has provided a stable stream of revenue that has offset the significant reductions from nonrecurring PPP loan revenue and mortgage loan sales that have dropped off due to market conditions.”

As of March 31, 2022, total consolidated assets were at a record high $1.225 billion compared to $1.161 billion on December 31, 2021. As of March 31, 2022, total loans and deposits also were at record levels totaling $765.1 million and $1.060 billion, respectively.

The allowance for loan losses totaled $9,307,000, or 1.22% of loans at March 31, 2022. Net loan charge-offs totaled $13,000 for the first quarter of 2022, compared to net loan loss recoveries of $29,000 during the first quarter of 2021. Loan delinquencies at both March 31, 2022 and December 31, 2021 were at 0.20% of gross loans. No provision for loan loss expense was required during the first quarter of 2022 or 2021.

Shareholders’ equity totaled $86.9 million as of March 31, 2022, down from $97.7 million at year-end 2021. Like many banks are experiencing, the change in equity was caused by higher market interest rates that resulted in net unrealized losses on securities in the investment portfolio and was recorded as other comprehensive loss. This change in shareholders’ equity has no impact on regulatory capital requirements.

The annualized return on average assets for the three-month periods ended March 31, 2022 and March 31, 2021 were 0.98% and 1.19% respectively. The annualized return on average equity was 12.23% for the first quarter of 2022 compared to 13.29% for the first quarter of 2021. The tax equivalent net interest margin for the three-month period ending March 31, 2022 was 3.02% compared to 3.35% for the same period of 2021.

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$135,682  $119,389 
Federal funds sold 266   271 
Securities available for sale 267,693   245,846 
Loans held for sale 356   1,146 
Loans, net of allowance for loan losses of $9,307 - 2022 ($9,320 - 2021) 755,821   732,088 
Premises and equipment, net 13,485   13,115 
Accrued interest receivable 4,508   4,193 
Net cash surrender value of life insurance 18,788   18,671 
Goodwill 13,422   13,422 
Other intangible assets, net 210   219 
Other assets 14,816   12,794 
TOTAL ASSETS$1,225,047  $1,161,154 
Non-interest bearing$274,737  $262,980 
Interest bearing 785,122   711,372 
Total deposits 1,059,859   974,352 
Securities sold under agreements to repurchase and overnight borrowings 11,937   20,609 
Accrued expenses and other liabilities 11,778   13,930 
Other borrowings 20,000   20,000 
Subordinated debentures 34,532   34,514 
Total liabilities 1,138,106   1,063,405 
Preferred stock, 100,000 shares authorized; none issued or outstanding -   - 
Common stock, $2.50 par value:       
Authorized - 10,000,000 shares       
Issued and outstanding – 4,538,061 shares in 2022
(4,516,377 shares in 2021)
 11,342   11,287 
Additional paid-in capital 14,050   14,235 
Retained earnings 73,919   71,581 
Accumulated other comprehensive income/(loss), net (12,160)  856 
Unearned Employee Stock Ownership Plan shares (210)  (210)
Total shareholders’ equity 86,941   97,749 


(In thousands, except per share data)

 Three Months Ended March 31,
 2022 2021
Interest income:       
Loans, including fees$7,985  $7,805 
Taxable 901   734 
Tax-exempt 277   231 
Other 50   31 
Total interest income 9,213   8,801 
Interest expense:       
Deposits 486   686 
Other 463   222 
Total interest expense 949   908 
Net interest income 8,264   7,893 
Provision for loan losses -   - 
Net interest income after provision for loan losses 8,264   7,893 
Non-interest income:       
Service charges on deposit accounts 362   293 
Trust fees 577   549 
Net gains on loan sales 264   744 
Earnings on life insurance assets 117   101 
ATM and debit card fee income 416   410 
Other 160   145 
Total non-interest income 1,896   2,242 
Non-interest expense:       
Salaries and employee benefits 3,991   3,999 
Occupancy, net 439   409 
Equipment 283   304 
Printing, postage and supplies 112   115 
Telecommunication expenses 84   100 
Professional and outside services 389   337 
Software maintenance 466   400 
ATM expenses 180   151 
Amortization of other intangibles 9   9 
Other 672   555 
Total non-interest expense 6,625   6,379 
Federal income tax provision 602   668 
NET INCOME$2,933  $3,088 
Basic Earnings Per Common Share$0.65  $0.68 
Diluted Earnings Per Common Share$0.65  $0.67 
Dividends Declared Per Common Share$0.13  $0.12 


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