Southern Michigan Bancorp, Inc. Announces Second Quarter 2021 Earnings

Coldwater, Michigan, UNITED STATES


COLDWATER, Mich., July 28, 2021 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced second quarter 2021 net income of $3,009,000, or $0.66 per share, compared to net income of $1,831,000, or $0.40 per share, for the second quarter of 2020. Southern earned $6,097,000, or $1.33 per share, for the six-month period ending June 30, 2021 compared to $3,344,000, or $0.73 per share, for the same six-month period a year ago.   

Total consolidated assets at June 30, 2021 increased 12.7%, reaching $1.124 billion compared to $997.6 million at December 31, 2020.   Loan totals grew 10.3%, from December 31, 2020 levels of $635.9 million to $701.1 million. Deposits also increased totaling $944.8 million at June 30, 2021, an increase of $106.5 million or 12.7%, as compared to year end 2020.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “We are pleased to report record earnings for both the second quarter and six-month period of 2021 as well as solid loan and deposit growth resulting in record high balance sheet footings for loans, deposits and total assets. Additional loan growth is expected during the third and fourth quarters of 2021 as approved loans in the commercial pipeline fund.”

The allowance for loan losses totaled $8,229,000, or 1.17% of loans at June 30, 2021. Net loan recoveries totaled $40,000 for the first six months of 2021, compared to net loan recoveries of $2,000 during the first six months of 2020. Loan delinquencies dropped from 0.72% of gross loans on December 31, 2020 to 0.21% of gross loans on June 30, 2021. Likewise, total non-performing assets dropped from .49% of total assets on December 31, 2020 to 0.15% of total assets on June 30, 2021. Southern provided $400,000 of provision for loan loss expense during the second quarter of 2021 to support loan growth. This contrasts with $1,750,000 of provision for loan loss expense during the first six months of 2020.

The annualized return on average assets for the six-month periods ending June 30, 2021 and 2020 was 1.13% and 0.78%, respectively. The annualized return on average equity was 13.12% for the first six months of 2021 compared to 7.80% for the first six months of 2020. The tax equivalent net interest margins for the six-month periods ending June 30, 2021 and 2020 was 3.16% and 3.31%, 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)

 June 30,
2021
 December 31,
2020
 
ASSETS      
Cash and cash equivalents$106,781 $99,610 
Federal funds sold 245  231 
Securities available for sale 258,848  208,380 
Loans held for sale 1,287  1,691 
Loans, net of allowance for loan losses of $8,229 - 2021 ($7,789 – 2020) 692,932  628,081 
Premises and equipment, net 13,280  13,698 
Accrued interest receivable 4,390  4,749 
Net cash surrender value of life insurance 19,236  16,016 
Goodwill 13,422  13,422 
Other intangible assets, net 237  255 
Other assets 13,218  11,441 
TOTAL ASSETS$1,123,876 $997,574 
       
LIABILITIES       
Deposits:      
Non-interest bearing$256,870 $220,786 
Interest bearing 687,935  617,512 
Total deposits 944,805  838,298 
      
Securities sold under agreements to repurchase and overnight borrowings 15,977  20,083 
Accrued expenses and other liabilities 13,087  14,561 
Other borrowings 20,000  26,500 
Subordinated debentures 34,480  5,155 
Total liabilities 1,028,349  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 – 4,571,691 shares in 2021 (2,301,269 shares in 2020) 11,425  5,748 
Additional paid-in capital 14,628  15,416 
Retained earnings 67,003  67,741 
Accumulated other comprehensive income, net 2,711  4,362 
Unearned Employee Stock Ownership Plan shares (240) (290)
Total shareholders’ equity 95,527  92,977 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,123,876 $997,574 
       

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,
 2021 2020 2021 2020
Interest income:           
Loans, including fees$7,662 $7,260 $15,467 $14,187
Federal funds sold and balances with banks 39  29  70  256
Securities:           
Taxable 861  567  1,595  1,274
Tax-exempt 287  169  518  285
Total interest income 8,849  8,025  17,650  16,002
            
Interest expense:           
Deposits 589  1,032  1,275  2,289
Other 412  302  634  621
Total interest expense 1,001  1,334  1,909  2,910
Net interest income 7,848  6,691  15,741  13,092
Provision for loan losses 400  750  400  1,750
Net interest income after provision for loan losses 7,448  5,941  15,341  11,342
            
Non-interest income:           
Service charges on deposit accounts 276  255  569  718
Trust fees 545  504  1,094  1,021
Net gains on loan sales 698  538  1,442  787
Earnings on life insurance assets 286  95  387  189
ATM and debit card fee income 479  380  889  728
Other 153  113  298  263
Total non-interest income 2,437  1,885  4,679  3,706
            
Non-interest expense:           
Salaries and employee benefits 3,834  3,309  7,833  6,567
Occupancy, net 400  375  809  772
Equipment 283  277  587  590
Printing, postage and supplies 82  109  197  212
Telecommunication expenses 84  122  184  250
Professional and outside services 440  400  777  737
Software maintenance 394  388  794  768
ATM expenses 170  157  321  288
Other 607  482  1,171  882
Total non-interest expense 6,294  5,619  12,673  11,066
INCOME BEFORE INCOME TAXES 3.591  2,207  7,347  3,982
Federal income tax provision 582  376  1,250  638
NET INCOME$3,009 $1,831 $6,097 $3,344
            
Basic Earnings Per Common Share$0.66 $0.40 $1.33 $0.73
Diluted Earnings Per Common Share 0.66  0.40  1.33  0.73
Dividends Declared Per Common Share 0.12  0.12  0.24  0.23
            
 

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