Southern Michigan Bancorp, Inc. Announces First Quarter 2023 Earnings


COLDWATER, Mich., April 26, 2023 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced first quarter net income of $3,005,000, or $0.66 per share, compared to net income of $2,933,000, or $0.65 per share, for the first quarter of 2022.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “We are pleased with our first quarter financial performance. Total loans, assets and deposits all reached record highs. We look forward to opening our first branch location in downtown Jackson two blocks from the loan production office located on West Michigan Avenue. The new branch is scheduled to open in July.”

As of March 31, 2023, total consolidated assets grew to $1.327 billion compared to $1.277 billion on December 31, 2022. Likewise, total loans and deposits also grew during the quarter totaling $933.5 million and $1.127 billion, respectively, on March 31, 2023.

The allowance for credit losses totaled $10,963,000, or 1.17% of loans on March 31, 2023. Net loan charge-offs totaled $0 for the first quarter of 2023, compared to net loan charge-offs of $13,000 during the first quarter of 2022. Loan delinquencies at both March 31, 2023 and December 31, 2022 were 0.13% of gross loans. On January 1, 2023, Southern adopted Accounting Standard Update 2016-13. The adoption resulted in an increase of $1.1 million to the allowance for credit losses and the establishment of a $500,000 reserve for unfunded commitments. A one-time adjustment to capital for $1.6 million, net of tax, was recorded. Southern provided an additional $275,000 for loan losses during the first quarter of 2023, while no provision for loan loss expense was required during the first quarter of 2022.

The annualized return on average assets for the three-month periods ended March 31, 2023 and March 31, 2022 were 0.93% and 0.98% respectively. The annualized return on average equity was 13.68% for the first quarter of 2023 compared to 12.23% for the first quarter of 2022. The tax equivalent net interest margin for the three-month period ending March 31, 2023 was 3.31% compared to 3.02% for the same period of 2022.

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.

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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. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share data)       
 March 31,
2023
 December 31,
2022
 
ASSETS      
Cash and cash equivalents$79,184 $77,255 
Federal funds sold 265  253 
Securities available for sale, at fair value 179,581  178,154 
Securities held-to-maturity, at amortized cost 68,946  69,661 
Loans, net of allowance for loan losses of $10,963 - 2023 ($9,588 - 2022) 922,536  877,038 
Premises and equipment, net 17,554  16,545 
Accrued interest receivable 5,666  5,535 
Net cash surrender value of life insurance 22,001  18,124 
Goodwill 13,422  13,422 
Other intangible assets, net 174  183 
Other assets 17,636  20,353 
TOTAL ASSETS$1,326,965 $1,276,523 
       
LIABILITIES       
Deposits:      
Non-interest bearing$248,448 $268,704 
Interest bearing 878,669  822,347 
Total deposits 1,127,117  1,091,051 
       
Securities sold under agreements to repurchase and overnight borrowings 10,659  11,179 
Accrued expenses and other liabilities 12,905  13,545 
Other borrowings 50,900  40,000 
Subordinated debentures 34,601  34,584 
Total liabilities 1,236,182  1,190,359 
       
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 – 4,577,171 shares in 2023
  (4,519,179 shares in 2022)
 11,439  11,294 
Additional paid-in capital 14,098  14,066 
Retained earnings 83,800  82,705 
Accumulated other comprehensive loss, net (18,554) (21,901)
Total shareholders’ equity 90,783  86,164 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,326,965 $1,276,523 


SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share data)

 Three Months Ended March 31, 
 2023 2022 
       
Interest income:      
Loans, including fees$11,853 $7,985 
Securities:      
Taxable 1,527  901 
Tax-exempt 329  277 
Other 624  50 
Total interest income 14,333  9,213 
       
Interest expense:      
Deposits 3,767  486 
Other 712  463 
Total interest expense 4,479  949 
Net interest income 9,854  8,264 
Provision for loan losses 275  - 
Net interest income after provision for loan losses 9,579  8,264 
       
Non-interest income:      
Service charges on deposit accounts 393  362 
Trust fees 567  577 
Net gains on loan sales 60  264 
Earnings on life insurance assets 146  117 
ATM and debit card fee income 414  416 
Other 221  160 
Total non-interest income 1,801  1,896 
Non-interest expense:      
Salaries and employee benefits 4,710  3,991 
Occupancy, net 487  439 
Equipment 322  283 
Printing, postage and supplies 101  112 
Telecommunication expenses 91  84 
Professional and outside services 473  389 
Software maintenance 519  466 
ATM expenses 207  180 
Amortization of other intangibles 9  9 
Other 758  672 
Total non-interest expense 7,677  6,625 
INCOME BEFORE INCOME TAXES 3,703  3,535 
Federal income tax provision 698  602 
NET INCOME$3,005 $2,933 
Basic Earnings Per Common Share$0.66 $0.65 
Diluted Earnings Per Common Share$0.66 $0.65 
Dividends Declared Per Common Share$0.14 $0.13 


CONTACT: John H. Castle, CEO
(517) 279-5500



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