COLDWATER, Mich., Oct. 27, 2021 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced third quarter 2021 net income of $3,138,000, or $0.69 per share, compared to net income of $2,018,000, or $0.44 per share, for the third quarter of 2020. Southern earned $9,235,000, or $2.02 per share, for the nine-month period ending September 30, 2021 compared to $5,362,000, or $1.17 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, “During the third quarter Southern continued to capitalize on market opportunities presented to us. We are pleased to report continued loan and deposit growth during the quarter, with additional growth expected during the fourth quarter. Earnings through the third quarter now exceed our 2019 annual record net income benchmark of $8,622,000.”
Total consolidated assets at September 30, 2021 increased 14.5%, reaching $1.142 billion compared to $997.6 million at December 31, 2020. Loan totals grew 15.3%, from December 31, 2020 levels of $635.9 million to $733.3 million. Deposits also increased totaling $962.6 million at September 30, 2021, an increase of $124.3 million or 14.8%, as compared to year end 2020.
The allowance for loan losses totaled $8,879,000, or 1.21% of loans at September 30, 2021. Net loan recoveries totaled $40,000 for the first nine months of 2021, compared to net loan losses of $10,000 during the first nine months of 2020. Loan delinquencies dropped from 0.72% of gross loans on December 31, 2020 to 0.19% of gross loans on September 30, 2021. Likewise, total non-performing assets dropped from .49% of total assets on December 31, 2020 to 0.14% of total assets on September 30, 2021. As a result of loan growth, Southern provided $650,000 of provision for loan loss expense during the third quarter of 2021, with total provision expense of $1,050,000 through the first nine months of 2021. This contrasts with $2,250,000 of provision for loan loss expense recorded during the first nine months of 2020.
The annualized return on average assets for the nine-month periods ending September 30, 2021 and 2020 was 1.13% and 0.81%, respectively. The annualized return on average equity was 13.02% for the first nine months of 2021 compared to 8.20% for the first nine months of 2020. The tax equivalent net interest margins for the nine-month periods ending September 30, 2021 and 2020 was 3.27% and 3.26%, 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, | December 31, | ||||||||
| 2021 | 2020 | ||||||||
| ASSETS | |||||||||
| Cash and cash equivalents | $ | 101,565 | $ | 99,610 | |||||
| Federal funds sold | 246 | 231 | |||||||
| Securities available for sale | 251,726 | 208,380 | |||||||
| Loans held for sale | 1,201 | 1,691 | |||||||
| Loans, net of allowance for loan losses of $8,879 - 2021 ($7,789 – 2020) | 724,387 | 628,081 | |||||||
| Premises and equipment, net | 13,240 | 13,698 | |||||||
| Accrued interest receivable | 4,816 | 4,749 | |||||||
| Net cash surrender value of life insurance | 18,884 | 16,016 | |||||||
| Goodwill | 13,422 | 13,422 | |||||||
| Other intangible assets, net | 228 | 255 | |||||||
| Other assets | 12,148 | 11,441 | |||||||
| TOTAL ASSETS | $ | 1,141,863 | $ | 997,574 | |||||
| LIABILITIES | |||||||||
| Deposits : | |||||||||
| Non-interest bearing | $ | 257,493 | $ | 220,786 | |||||
| Interest bearing | 705,131 | 617,512 | |||||||
| Total deposits | 962,624 | 838,298 | |||||||
| Securities sold under agreements to repurchase and overnight borrowings | 15,413 | 20,083 | |||||||
| Accrued expenses and other liabilities | 13,132 | 14,561 | |||||||
| Other borrowings | 20,000 | 26,500 | |||||||
| Subordinated debentures | 34,497 | 5,155 | |||||||
| Total liabilities | 1,045,666 | 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 – 4,515,777 shares in 2021 (2,301,269 shares in 2020) | 11,285 | 5,748 | |||||||
| Additional paid-in capital | 13,996 | 15,416 | |||||||
| Retained earnings | 69,600 | 67,741 | |||||||
| Accumulated other comprehensive income, net | 1,556 | 4,362 | |||||||
| Unearned Employee Stock Ownership Plan shares | (240 | ) | (290 | ) | |||||
| Total shareholders’ equity | 96,197 | 92,977 | |||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,141,863 | $ | 997,574 | |||||
Southern Michigan Bancorp, Inc.
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Interest income: | ||||||||||||
| Loans, including fees | $ | 8,591 | $ | 6,988 | $ | 24,058 | $ | 21,175 | ||||
| Federal funds sold and balances with banks | 37 | 25 | 107 | 281 | ||||||||
| Securities: | ||||||||||||
| Taxable | 892 | 565 | 2,487 | 1,839 | ||||||||
| Tax-exempt | 282 | 175 | 800 | 460 | ||||||||
| Total interest income | 9,802 | 7,753 | 27,452 | 23,755 | ||||||||
| Interest expense: | ||||||||||||
| Deposits | 508 | 936 | 1,783 | 3,225 | ||||||||
| Other | 459 | 249 | 1,093 | 870 | ||||||||
| Total interest expense | 967 | 1,185 | 2,876 | 4,095 | ||||||||
| Net interest income | 8,835 | 6,568 | 24,576 | 19,660 | ||||||||
| Provision for loan losses | 650 | 500 | 1,050 | 2,250 | ||||||||
| Net interest income after provision for loan losses | 8,185 | 6,068 | 23,526 | 17,410 | ||||||||
| Non-interest income: | ||||||||||||
| Service charges on deposit accounts | 345 | 322 | 913 | 1,039 | ||||||||
| Trust fees | 587 | 514 | 1,681 | 1,535 | ||||||||
| Net gains on loan sales | 470 | 966 | 1,912 | 1,753 | ||||||||
| Earnings on life insurance assets | 124 | 96 | 511 | 285 | ||||||||
| ATM and debit card fee income | 470 | 421 | 1,360 | 1,149 | ||||||||
| Other | 174 | 142 | 472 | 406 | ||||||||
| Total non-interest income | 2,170 | 2,461 | 6,849 | 6,167 | ||||||||
| Non-interest expense: | ||||||||||||
| Salaries and employee benefits | 4,047 | 3,856 | 11,880 | 10,423 | ||||||||
| Occupancy, net | 388 | 395 | 1,197 | 1,167 | ||||||||
| Equipment | 274 | 290 | 861 | 880 | ||||||||
| Printing, postage and supplies | 93 | 90 | 290 | 302 | ||||||||
| Telecommunication expenses | 82 | 112 | 266 | 362 | ||||||||
| Professional and outside services | 441 | 373 | 1,218 | 1,109 | ||||||||
| Software maintenance | 434 | 384 | 1,228 | 1,152 | ||||||||
| ATM expenses | 173 | 152 | 493 | 440 | ||||||||
| Other | 627 | 509 | 1,799 | 1,391 | ||||||||
| Total non-interest expense | 6,559 | 6,161 | 19,232 | 17,226 | ||||||||
| INCOME BEFORE INCOME TAXES | 3,796 | 2,368 | 11,143 | 6,351 | ||||||||
| Federal income tax provision | 658 | 350 | 1,908 | 989 | ||||||||
| NET INCOME | $ | 3,138 | $ | 2,018 | $ | 9,235 | $ | 5,362 | ||||
| Basic Earnings Per Common Share | $ | 0.69 | $ | 0.44 | $ | 2.02 | $ | 1.17 | ||||
| Diluted Earnings Per Common Share | 0.69 | 0.44 | 2.02 | 1.17 | ||||||||
| Dividends Declared Per Common Share | 0.12 | 0.12 | 0.36 | 0.35 | ||||||||
