Southern Michigan Bancorp, Inc., Announces Fourth Quarter and Full Year 2022 Earnings


COLDWATER, Mich., Feb. 15, 2023 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported net income of $13,491,000 for 2022 compared to $11,757,000 for 2021. Diluted earnings per share were $2.97 for 2022 compared to $2.58 for 2021. Fourth quarter 2022 net income was $3,584,000, or $0.79 per share, compared to $2,522,000, or $0.56 per share for the fourth quarter of 2021.

Total consolidated assets at December 31, 2022 reached $1.28 billion compared to $1.16 billion at December 31, 2021. Loan totals grew 19.6 percent, from December 31, 2021 levels of $741.4 million to $886.6 million. Deposits also increased to $1.09 billion at December 31, 2022, an increase of $116.7 million or 12.0 percent, as compared to year end 2021.

Southern Michigan Bancorp, Inc., Chairman and Chief Executive Officer John H. Castle stated, “We are pleased to report continued strong operating results with net income reaching $13,491,000 for the year, 14.7 percent higher than the previous high of $11,757,000 reported in 2021. Our steadfast, disciplined credit culture resulted in total delinquencies ending the year of 13 basis points, or $1,190,000, net charge-offs of $7,000 for the full year, and a reserve coverage ratio of more than 848 percent at year end.”

Castle continued, “Looking ahead, we expect the strength of our balance sheet and positive momentum to enable us to meet the changing economic conditions and ongoing interest rate fluctuations, which are inevitable.”

Southern provided $275,000 for loan losses in 2022, with an allowance for loan losses at December 31, 2022 of $9,588,000, or 1.08% of loans. This compared to a provision for loan losses of $1.5 million for 2021, with an allowance for loan losses at December 31, 2021 of $9,320,000, or 1.26% of loans. Net loan losses totaled $7,000 for 2022 compared to net loan loss recoveries of $31,000 for 2021.

The return on average assets for 2022 was 1.10% compared to 1.06% for 2021. The return on average equity was 15.68% for 2022 compared to 12.32% for 2021. The tax equivalent net interest margins for 2022 and 2021 were 3.33% and 3.27%, 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, and a loan production office in Jackson County, 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)

 December 31,
2022
 December 31,
2021
 
ASSETS      
Cash and cash equivalents$77,255 $119,389 
Federal funds sold 253  271 
Securities available-for-sale, at fair value 178,154  245,846 
Securities held-to-maturity, at amortized cost 69,661  - 
Loans held for sale -  1,146 
Loans, net of allowance for loan losses of $9,588 - 2022 ($9,320 – 2021) 877,038  732,088 
Premises and equipment, net 16,545  13,115 
Accrued interest receivable 5,535  4,193 
Net cash surrender value of life insurance 18,124  18,671 
Goodwill 13,422  13,422 
Other intangible assets, net 183  219 
Other assets 20,353  12,794 
TOTAL ASSETS$1,276,523 $1,161,154 
       
LIABILITIES       
Deposits:      
Non-interest bearing$268,704 $262,980 
Interest bearing 822,347  711,372 
Total deposits 1,091,051  974,352 
       
Securities sold under agreements to repurchase and overnight borrowings 11,179  20,609 
Accrued expenses and other liabilities 13,545  13,930 
Other borrowings 40,000  20,000 
Subordinated debentures, net of issuance costs 34,584  34,514 
Total liabilities 1,190,359  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 – 4,519,179 shares in 2022
 (4,516,377 shares in 2021)
 11,294  11,287 
Additional paid-in capital 14,066  14,235 
Retained earnings 82,705  71,581 
Accumulated other comprehensive income (loss), net (21,901) 856 
Unearned Employee Stock Ownership Plan shares -  (210)
Total shareholders’ equity 86,164  97,749 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,276,523 $1,161,154 


Southern Michigan Bancorp, Inc.
condensed consolidated statements of income (unaudited)
(In thousands, except per share data)

 Three Months Ended
December 31,
 Year Ended
December 31,
 
 2022 2021 2022 2021 
Interest income:            
Loans, including fees$10,802 $8,535 $36,583 $32,593 
Federal funds sold and balances with banks 490  41  1,249  148 
Securities:            
Taxable 1,527  843  4,948  3,330 
Tax-exempt 401  269  1,354  1,069 
Total interest income 13,220  9,688  44,134  37,140 
             
Interest expense:            
Deposits 2,045  485  4,118  2,268 
Other 555  460  1,914  1,553 
Total interest expense 2,600  945  6,032  3,821 
Net interest income 10,620  8,743  38,102  33,319 
Provision for loan losses 275  450  275  1,500 
Net interest income after provision for loan losses 10,345  8,293  37,827  31,819 
             
Non-interest income:            
Service charges on deposit accounts 401  373  1,516  1,286 
Trust fees 589  586  2,264  2,267 
Net gains (losses) on securities (666) -  (666) 5 
Net gains on loan sales 41  381  606  2,293 
Earnings on life insurance assets 125  122  472  464 
Gain from life insurance 747  62  747  231 
ATM and debit card fee income 430  463  1,749  1,823 
Other 138  173  692  640 
Total non-interest income 1,805  2,160  7,380  9,009 
             
Non-interest expense:            
Salaries and employee benefits 5,162  4,612  18,134  16,492 
Occupancy, net 431  368  1,675  1,565 
Equipment 340  313  1,294  1,174 
Printing, postage and supplies 106  100  413  390 
Telecommunication expenses 63  90  303  356 
Professional and outside services 450  596  1,742  1,814 
Software maintenance 491  449  1,911  1,677 
ATM expenses 208  177  755  670 
Other 793  771  2,907  2,570 
Total non-interest expense 8,044  7,476  29,134  26,708 
INCOME BEFORE INCOME TAXES 4,106  2,977  16,073  14,120 
Federal income tax provision 522  455  2,582  2,363 
NET INCOME$3,584 $2,522 $13,491 $11,757 
             
Basic Earnings Per Common Share$0.79 $0.56 $2.98 $2.59 
Diluted Earnings Per Common Share 0.79  0.56  2.97  2.58 
Dividends Declared Per Common Share 0.13  0.12  0.52  0.48 
 

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