COLDWATER, Mich., Oct. 23, 2019 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced third quarter 2019 net income of $2,540,000, or $1.10 per share, compared to net income of $2,283,000, or $0.98 per share, for the third quarter of 2018. Southern earned $6,786,000, or $2.94 per share, for the nine-month period ended September 30, 2019 compared to $6,301,000, or $2.73 per share, for the same nine-month period a year ago.
John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “We are pleased to report record earnings for both the third quarter and nine-month period of 2019 as well as total assets exceeding $800 million for the first time in company history.”
Castle continued, “While loan growth has been modest in 2019, a number of commercial loan opportunities have been approved and are expected to begin funding during the first quarter of 2020.”
Total consolidated assets at September 30, 2019 were $811.5 million. This compared to $738.8 million at December 31, 2018. Loan totals grew from December 31, 2018 levels of $532.0 million to $547.6 million. Deposits increased to $659.6 million at September 30, 2019, an increase of $53.7 million or 8.9 percent, from $605.9 million at year end 2018.
No provision for loan losses was required during the third quarter of 2019. For the first nine months of 2019, $150,000 of loan loss provision was recorded. No provision for loan losses was recorded during the nine month period ending September 30, 2018. The allowance for loan losses totaled $5,121,000, or 0.94% of loans at September 30, 2019. Net charge offs totaled $146,000, or annualized 0.04% of loans, for the nine-month period ended September 30, 2019 compared to net charges offs of $98,000, or 0.02% of loans annualized, for the same period of 2018.
The annualized return on average assets for the nine-month periods ended September 30, 2019 and 2018 were both 1.16%. The annualized return on average equity was 11.43% for the first nine months of 2019 compared to 11.72% for the same period of 2018. The tax equivalent net interest margin for the nine-month periods ended September 30, 2019 and 2018 were 3.70% and 3.79%, 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)
| September 30, 2019 | December 31, 2018 | ||||||
| ASSETS | |||||||
| Cash and cash equivalents | $ | 82,945 | $ | 54,741 | |||
| Federal funds sold | 284 | 1,065 | |||||
| Securities available for sale | 126,499 | 101,439 | |||||
| Loans held for sale | 497 | - | |||||
| Loans, net of allowance for loan losses of $5,121 - 2019 ($5,117 – 2018) | 542,492 | 526,857 | |||||
| Premises and equipment, net | 14,560 | 14,296 | |||||
| Accrued interest receivable | 3,638 | 3,294 | |||||
| Net cash surrender value of life insurance | 15,536 | 15,685 | |||||
| Goodwill | 13,422 | 13,422 | |||||
| Other intangible assets, net | 300 | 327 | |||||
| Other assets | 11,307 | 7,705 | |||||
| TOTAL ASSETS | $ | 811,480 | $ | 738,831 | |||
| LIABILITIES | |||||||
| Deposits : | |||||||
| Non-interest bearing | $ | 130,715 | $ | 129,923 | |||
| Interest bearing | 528,877 | 475,970 | |||||
| Total deposits | 659,592 | 605,893 | |||||
| Securities sold under agreements to repurchase and overnight borrowings | 14,064 | 15,342 | |||||
| Accrued expenses and other liabilities | 12,376 | 8,414 | |||||
| Other borrowings | 37,750 | 28,500 | |||||
| Subordinated debentures | 5,155 | 5,155 | |||||
| Total liabilities | 728,937 | 663,304 | |||||
| SHAREHOLDERS’ EQUITY | |||||||
| Preferred stock, 100,000 shares authorized; none issued or outstanding | - | - | |||||
| Common stock, $2.50 par value: | |||||||
| Authorized - 5,000,000 shares | |||||||
| Issued and outstanding – 2,315,143 shares in 2019 (2,315,505 shares in 2018) | 5,782 | 5,783 | |||||
| Additional paid-in capital | 15,307 | 15,246 | |||||
| Retained earnings | 61,181 | 55,972 | |||||
| Accumulated other comprehensive loss, net | 744 | (1,301 | ) | ||||
| Unearned Employee Stock Ownership Plan shares | (471 | ) | (173 | ) | |||
| Total shareholders’ equity | 82,543 | 75,527 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 811,480 | $ | 738,831 | |||
Southern Michigan Bancorp, Inc.
condensed consolidated statements of income (unaudited)
(In thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Interest income: | ||||||||||||
| Loans, including fees | $ | 7,091 | $ | 6,898 | $ | 21,114 | $ | 19,952 | ||||
| Federal funds sold and balances with banks | 425 | 208 | 1,187 | 370 | ||||||||
| Securities: | ||||||||||||
| Taxable | 640 | 330 | 1,487 | 968 | ||||||||
| Tax-exempt | 120 | 221 | 515 | 678 | ||||||||
| Total interest income | 8,276 | 7,657 | 24,303 | 21,968 | ||||||||
| Interest expense: | ||||||||||||
| Deposits | 1,349 | 946 | 3,797 | 2,242 | ||||||||
| Other | 342 | 309 | 963 | 936 | ||||||||
| Total interest expense | 1,691 | 1,255 | 4,760 | 3,178 | ||||||||
| Net interest income | 6,585 | 6,402 | 19,543 | 18,790 | ||||||||
| Provision for loan losses | - | - | 150 | - | ||||||||
| Net interest income after provision for loan losses | 6,585 | 6,402 | 19,393 | 18,790 | ||||||||
| Non-interest income: | ||||||||||||
| Service charges on deposit accounts | 526 | 442 | 1,509 | 1,209 | ||||||||
| Trust fees | 525 | 522 | 1,541 | 1,479 | ||||||||
| Net gains on loan sales | 257 | 156 | 437 | 467 | ||||||||
| Earnings on life insurance assets | 152 | 96 | 346 | 292 | ||||||||
| ATM and debit card fee income | 387 | 357 | 1,067 | 1,061 | ||||||||
| Net securities gains | 159 | - | 366 | - | ||||||||
| Other | 175 | 120 | 483 | 250 | ||||||||
| Total non-interest income | 2,181 | 1,693 | 5,749 | 4,758 | ||||||||
| Non-interest expense: | ||||||||||||
| Salaries and employee benefits | 3,410 | 3,261 | 10,239 | 9,617 | ||||||||
| Occupancy, net | 339 | 326 | 1,053 | 1,082 | ||||||||
| Equipment | 339 | 247 | 870 | 805 | ||||||||
| Printing, postage and supplies | 118 | 106 | 323 | 306 | ||||||||
| Telecommunication expenses | 108 | 77 | 303 | 223 | ||||||||
| Professional and outside services | 387 | 297 | 1,077 | 1,032 | ||||||||
| Software maintenance | 427 | 356 | 1,227 | 1,091 | ||||||||
| ATM expenses | 139 | 125 | 383 | 392 | ||||||||
| Other | 488 | 555 | 1,574 | 1,625 | ||||||||
| Total non-interest expense | 5,755 | 5,350 | 17,049 | 16,173 | ||||||||
| INCOME BEFORE INCOME TAXES | 3,011 | 2,745 | 8,093 | 7,375 | ||||||||
| Federal income tax provision | 471 | 462 | 1,307 | 1,074 | ||||||||
| NET INCOME | $ | 2,540 | $ | 2,283 | $ | 6,786 | $ | 6,301 | ||||
| Basic Earnings Per Common Share | $ | 1.10 | $ | 0.99 | $ | 2.95 | $ | 2.73 | ||||
| Diluted Earnings Per Common Share | 1.10 | 0.98 | 2.94 | 2.72 | ||||||||
| Dividends Declared Per Common Share | 0.23 | 0.22 | 0.68 | 0.65 | ||||||||