Southern Michigan Bancorp, Inc. Announces Second Quarter 2022 Earnings

Coldwater, Michigan, UNITED STATES


COLDWATER, Mich., July 27, 2022 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced second quarter 2022 net income of $3,361,000, or $0.74 per share, compared to net income of $3,009,000, or $0.66 per share, for the second quarter of 2021. Southern earned $6,294,000, or $1.39 per share, for the six-month period ending June 30, 2022 compared to $6,097,000, or $1.33 per share, for the same six-month period a year ago.

Total consolidated assets at June 30, 2022 totaled $1.183 billion compared to $1.161 billion at December 31, 2021. Loan totals grew 6.5%, from December 31, 2021 levels of $741.4 million to $789.6 million. Deposits totaled $1,030.9 million at June 30, 2022, an increase of $56.5 million or 5.8%, as compared to year end 2021.

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 2022. Positive contributions to income came from growth in the loan portfolio, continued strong credit quality, as well as increased interest rates. Additional loan growth is expected during the second half of 2022 as we look to expand into the Jackson market and approved loans in the commercial pipeline fund.”

The allowance for loan losses totaled $9,317,000, or 1.18% of loans at June 30, 2022. Net loan losses totaled $3,000 for the first six months of 2022, compared to net loan recoveries of $40,000 during the first six months of 2021. Asset quality remains strong with loan delinquencies totaling just 0.17% of gross loans on June 30, 2022. No provision for loan loss expense was required during the first six months of 2022. This contrasts with $400,000 of provision for loan loss expense during the first six months of 2021.

The annualized return on average assets for the six-month periods ending June 30, 2022 and 2021 was 1.04% and 1.13%, respectively. The annualized return on average equity was 14.03% for the first six months of 2022 compared to 13.12% for the first six months of 2021. The tax equivalent net interest margins for the six-month periods ending June 30, 2022 and 2021 was 3.13% and 3.16%, 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,” “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 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,
2022
 December 31,
2021
 
ASSETS      
Cash and cash equivalents$54,822 $119,389 
Federal funds sold 255  271 
Investment securities 279,937  245,846 
Loans held for sale -  1,146 
Loans, net of allowance for loan losses of $9,317 - 2022 ($9,320 – 2021) 780,270  732,088 
Premises and equipment, net 14,202  13,115 
Accrued interest receivable 4,214  4,193 
Net cash surrender value of life insurance 18,730  18,671 
Goodwill 13,422  13,422 
Other intangible assets, net 201  219 
Other assets 17,124  12,794 
TOTAL ASSETS$1,183,177 $1,161,154 
       
LIABILITIES      
Deposits :      
Non-interest bearing$266,647 $262,980 
Interest bearing 764,247  711,372 
Total deposits 1,030,894  974,352 
       
Securities sold under agreements to repurchase and overnight borrowings 10,961  20,609 
Accrued expenses and other liabilities 12,781  13,930 
Other borrowings 10,000  20,000 
Subordinated debentures 34,549  34,514 
Total liabilities 1,099,185  1,063,405 
       
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 – 4,545,461 shares in 2022
(4,516,377 shares in 2021)
 11,359  11,287 
Additional paid-in capital 14,211  14,235 
Retained earnings 76,690  71,581 
Accumulated other comprehensive income/(loss), net (18,087) 856 
Unearned Employee Stock Ownership Plan shares (181) (210)
Total shareholders’ equity 83,992  97,749 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,183,177 $1,161,154 
       


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,
 
 2022 2021 2022 2021 
Interest income:            
Loans, including fees$8,427 $7,662 $16,412 $15,467 
Federal funds sold and balances with banks 236  39  286  70 
Securities:            
Taxable 1,123  861  2,025  1,595 
Tax-exempt 378  287  654  518 
Total interest income 10,164  8,849  19,377  17,650 
             
Interest expense:            
Deposits 600  589  1,086  1,275 
Other 444  412  907  634 
Total interest expense 1,044  1,001  1,993  1,909 
Net interest income 9,120  7,848  17,384  15,741 
Provision for loan losses -  400  -  400 
Net interest income after provision for loan losses 9,120  7,448  17,384  15,341 
             
Non-interest income:            
Service charges on deposit accounts 350  276  712  569 
Trust fees 556  545  1,133  1,094 
Net gains on loan sales 231  698  495  1,442 
Earnings on life insurance assets 111  286  228  387 
ATM and debit card fee income 449  479  865  889 
Other 190  153  350  298 
Total non-interest income 1,887  2,437  3,783  4,679 
             
Non-interest expense:            
Salaries and employee benefits 4,299  3,834  8,291  7,833 
Occupancy, net 395  400  834  809 
Equipment 333  283  616  587 
Printing, postage and supplies 95  82  207  197 
Telecommunication expenses 73  84  157  184 
Professional and outside services 383  440  773  777 
Software maintenance 485  394  950  794 
ATM expenses 183  170  363  321 
Other 723  607  1,403  1,171 
Total non-interest expense 6,969  6,294  13,594  12,673 
INCOME BEFORE INCOME TAXES 4,038  3.591  7,573  7,347 
Federal income tax provision 677  582  1,279  1,250 
NET INCOME$3,361 $3,009 $6,294 $6,097 
             
Basic Earnings Per Common Share$0.74 $0.66 $1.39 $1.33 
Diluted Earnings Per Common Share 0.74  0.66  1.39  1.33 
Dividends Declared Per Common Share 0.13  0.12  0.26  0.24 
             
 

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