COLDWATER, Mich., July 25, 2018 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink:SOMC) announced second quarter 2018 net income of $2,216,000, or $0.96 per share, compared to net income of $1,493,000, or $0.63 per share, for the second quarter of 2017. Southern earned $4,018,000, or $1.74 per share, for the six-month period ended June 30, 2018 compared to $2,939,000, or $1.22 per share, for the same six-month period a year ago.
John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “We are extremely pleased with the strong growth in quarterly and year to date earnings. Commercial loan growth, continued strong asset quality and a lower effective income tax rate all positively contributed to the 36.7% increase in profitability for the first half of 2018.”
Total consolidated assets at June 30, 2018 were $733.7 million compared to $712.3 million at December 31, 2017.
No provision for loan losses was required during the first six months of 2018 or 2017. The allowance for loan losses was $4,987,000, or 0.91% of loans at June 30, 2018 and $4,897,000, or 1.00% of loans at June 30, 2017. Net charge offs totaled $6,000 for the second quarter of 2018, compared to net charge recoveries of $112,000 for the second quarter of 2017. For the six month period ending June 30, 2018, net charge offs totaled $22,000, compared to net recoveries of $55,000 for the first six months of 2017. Non-performing assets as of June 30, 2018 totaled just $2.2 million or .30% of total assets, a decrease of $400,000 from $2.6 million as of June 30, 2017.
The annualized return on average assets for the six-month periods ended June 30, 2018 and 2017 was 1.12% and 0.90%, respectively. The annualized return on average equity was 11.36% for the first six months of 2018 compared to 8.28% for the same period of 2017. The tax equivalent net interest margin for the six-month periods ending June 30, 2018 and 2017 was 3.83% and 3.80%, respectively.
Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 14 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.
SOUTHERN MICHIGAN BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
| June 30, 2018 | December 31, 2017 | |||||||||
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 35,507 | $ | 17,421 | ||||||
| Federal funds sold | 1,776 | 18,492 | ||||||||
| Securities available for sale | 100,604 | 105,184 | ||||||||
| Loans held for sale | 670 | 515 | ||||||||
| Loans, net of allowance for loan losses of $4,987 - 2018 ($5,009 – 2017) | 541,142 | 518,438 | ||||||||
| Premises and equipment, net | 14,206 | 14,265 | ||||||||
| Accrued interest receivable | 2,958 | 3,211 | ||||||||
| Net cash surrender value of life insurance | 15,492 | 14,796 | ||||||||
| Goodwill | 13,422 | 13,422 | ||||||||
| Other intangible assets, net | 345 | - | ||||||||
| Other assets | 7,561 | 6,601 | ||||||||
| TOTAL ASSETS | $ | 733,683 | $ | 712,345 | ||||||
| LIABILITIES | ||||||||||
| Deposits: | ||||||||||
| Non-interest bearing | $ | 127,428 | $ | 129,098 | ||||||
| Interest bearing | 471,152 | 448,046 | ||||||||
| Total deposits | 598,580 | 577,144 | ||||||||
| Securities sold under agreements to repurchase and overnight borrowings | 10,652 | 13,950 | ||||||||
| Accrued expenses and other liabilities | 8,463 | 6,559 | ||||||||
| Other borrowings | 39,000 | 39,500 | ||||||||
| Subordinated debentures | 5,155 | 5,155 | ||||||||
| Total liabilities | 661,850 | 642,308 | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||
| Preferred stock, 100,000 shares authorized; none issued or outstanding | - | - | ||||||||
| Common stock, $2.50 par value: | ||||||||||
| Authorized - 4,000,000 shares | ||||||||||
| Issued and outstanding – 2,321,462 shares in 2018 (2,316,779 shares in 2017) | 5,798 | 5,787 | ||||||||
| Additional paid-in capital | 15,048 | 15,415 | ||||||||
| Retained earnings | 52,764 | 49,747 | ||||||||
| Accumulated other comprehensive loss, net | (1,531 | ) | (613 | ) | ||||||
| Unearned Employee Stock Ownership Plan shares | (246 | ) | (299 | ) | ||||||
| Total shareholders’ equity | 71,833 | 70,037 | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 733,683 | $ | 712,345 | ||||||
SOUTHERN MICHIGAN BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||
| Interest income: | ||||||||||||
| Loans, including fees | $ | 6,716 | $ | 5,535 | $ | 13,054 | $ | 10,779 | ||||
| Federal funds sold and balances with banks | 75 | 64 | 162 | 111 | ||||||||
| Securities: | ||||||||||||
| Taxable | 311 | 294 | 638 | 592 | ||||||||
| Tax-exempt | 226 | 221 | 457 | 452 | ||||||||
| Total interest income | 7,328 | 6,114 | 14,311 | 11,934 | ||||||||
| Interest expense: | ||||||||||||
| Deposits | 705 | 363 | 1,296 | 724 | ||||||||
| Other | 316 | 172 | 627 | 310 | ||||||||
| Total interest expense | 1,021 | 535 | 1,923 | 1,034 | ||||||||
| Net interest income | 6,307 | 5,579 | 12,388 | 10,900 | ||||||||
| Provision for loan losses | - | - | - | - | ||||||||
| Net interest income after provision for loan losses | 6,307 | 5,579 | 12,388 | 10,900 | ||||||||
| Non-interest income: | ||||||||||||
| Service charges on deposit accounts | 385 | 398 | 767 | 793 | ||||||||
| Trust fees | 473 | 396 | 957 | 763 | ||||||||
| Net gains on loan sales | 180 | 185 | 311 | 323 | ||||||||
| Earnings on life insurance assets | 101 | 93 | 196 | 189 | ||||||||
| ATM and debit card fee income | 365 | 351 | 704 | 686 | ||||||||
| Other | 115 | 94 | 130 | 335 | ||||||||
| Total non-interest income | 1,619 | 1,517 | 3,065 | 3,089 | ||||||||
| Non-interest expense: | ||||||||||||
| Salaries and employee benefits | 3,199 | 3,055 | 6,356 | 5,944 | ||||||||
| Occupancy, net | 359 | 350 | 756 | 705 | ||||||||
| Equipment | 286 | 236 | 558 | 482 | ||||||||
| Printing, postage and supplies | 78 | 87 | 200 | 205 | ||||||||
| Telecommunication expenses | 73 | 72 | 146 | 148 | ||||||||
| Professional and outside services | 413 | 359 | 735 | 661 | ||||||||
| Software maintenance | 368 | 298 | 735 | 591 | ||||||||
| ATM expenses | 124 | 88 | 267 | 230 | ||||||||
| Other | 523 | 572 | 1,070 | 1,119 | ||||||||
| Total non-interest expense | 5,423 | 5,117 | 10,823 | 10,085 | ||||||||
| INCOME BEFORE INCOME TAXES | 2,503 | 1,979 | 4,630 | 3,904 | ||||||||
| Federal income tax provision | 287 | 486 | 612 | 965 | ||||||||
| NET INCOME | $ | 2,216 | $ | 1,493 | $ | 4,018 | $ | 2,939 | ||||
| Basic Earnings Per Common Share | $ | 0.96 | $ | 0.63 | $ | 1.74 | $ | 1.22 | ||||
| Diluted Earnings Per Common Share | 0.96 | 0.63 | 1.74 | 1.22 | ||||||||
| Dividends Declared Per Common Share | 0.22 | 0.21 | 0.43 | 0.41 | ||||||||