Southern Michigan Bancorp, Inc. Announces Third Quarter 2023 Earnings


COLDWATER, Mich., Oct. 25, 2023 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced third quarter 2023 net income of $2,767,000, or $0.61 per share, compared to net income of $3,613,000, or $0.79 per share, for the third quarter of 2022. Southern earned $8,468,000, or $1.86 per share, for the nine-month period ending September 30, 2023 compared to $9,907,000, or $2.18 per share, for the same nine-month period a year ago.

Consolidated assets at September 30, 2023 totaled $1.429 billion compared to $1.277 billion at December 31, 2022. Loan totals grew 17.1%, from December 31, 2022 levels of $886.6 million to $1.039 billion. Deposits totaled $1.192 billion at September 30, 2023, an increase of $101 million or 9.3%, as compared to year end 2022.  

John Waldron, President and CEO of Southern Michigan Bancorp, Inc. stated, “Despite the challenging rate environment and higher deposit costs, net interest income decreased nominally. Overhead increased in part due to higher FTE counts and the higher wage scale prevalent across the country.”

Waldron continued, “We opened our first branch office in the Jackson market during the third quarter of 2023 and look forward to further expansion in the coming years.”

The allowance for loan losses totaled $11,634,000, or 1.12% of loans at September 30, 2023. Net loan losses totaled $7,000 for the first nine months of 2023, compared to net loan recoveries of $11,000 during the first nine months of 2022. Asset quality remains strong with loan delinquencies totaling just 0.10% of gross loans at September 30, 2023. During the first nine months of 2023 $950,000 of provision for credit loss expense was recorded, a result of loan growth. This contrasts with no provision for credit loss for the first nine months of 2022.

The annualized return on average assets for the nine-month periods ending September 30, 2023 and 2022 was 0.84% and 1.09%, respectively. The annualized return on average equity was 12.42% for the first nine months of 2023 compared to 15.14% for the first nine months of 2022. The tax equivalent net interest margins for the nine-month periods ending September 30, 2023 and 2022 was 3.18% and 3.23%, respectively.

Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 15 branches within Branch, Calhoun, Hillsdale, Jackson, 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,” “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 to- 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, extent, 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,
2023
  December 31,
2022
 
ASSETS       
Cash and cash equivalents$89,925  $77,255 
Federal funds sold 252   253 
Securities available for sale, at fair value 163,252   178,154 
Securities held-to-maturity, at amortized cost 62,613   69,661 
Loans held for sale -   - 
Loans, net of allowance for loan losses of $11,634 - 2023 ($9,588 – 2022) 1,026,910   877,038 
Premises and equipment, net 23,293   16,545 
Accrued interest receivable 6,721   5,535 
Net cash surrender value of life insurance 22,310   18,124 
Goodwill 13,422   13,422 
Other intangible assets, net 156   183 
Other assets 20,612   20,353 
TOTAL ASSETS$1,429,466  $1,276,523 
        
LIABILITIES        
Deposits :       
Non-interest bearing$231,950  $268,704 
Interest bearing 959,921   822,347 
Total deposits 1,191,871   1,091,051 
 
Securities sold under agreements to repurchase and overnight borrowings 1,984   11,179 
Accrued expenses and other liabilities 14,136   13,545 
Other borrowings 96,900   40,000 
Subordinated debentures 34,636   34,584 
Total liabilities 1,339,527   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 – 4,497,490 shares in 2023
  (4,519,179 shares in 2022)
 11,240   11,294 
Additional paid-in capital 13,182   14,066 
Retained earnings 88,000   82,705 
Accumulated other comprehensive loss, net (22,483)  (21,901)
Total shareholders’ equity 89,939   86,164 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,429,466  $1,276,523 
 

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

 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 
 2023 2022 2023 2022 
Interest income:            
Loans, including fees$14,563 $9,369 $39,579 $25,781 
Federal funds sold and balances with banks 786  473  2,360  759 
Securities:            
Taxable 1,567  1,396  4,655  3,421 
Tax-exempt 315  299  961  953 
Total interest income 17,231  11,537  47,555  30,914 
             
Interest expense:            
Deposits 5,777  987  14,516  2,073 
Other 1,519  452  3,389  1,359 
Total interest expense 7,296  1,439  17,905  3,432 
Net interest income 9,935  10,098  29,650  27,482 
Provision for loan losses 25  -  950  - 
Net interest income after provision for loan losses 9,910  10,098  28,700  27,482 
             
Non-interest income:            
Service charges on deposit accounts 422  403  1,248  1,115 
Trust fees 629  542  1,787  1,675 
Net gains on loan sales 71  70  186  565 
Earnings on life insurance assets 157  119  456  347 
ATM and debit card fee income 452  454  1,339  1,319 
Other 197  204  644  554 
Total non-interest income 1,928  1,792  5,660  5,575 
             
Non-interest expense:            
Salaries and employee benefits 5,356  4,681  14,751  12,972 
Occupancy, net 429  410  1,397  1,244 
Equipment 404  338  1,063  954 
Printing, postage and supplies 97  100  318  307 
Telecommunication expenses 88  83  268  240 
Professional and outside services 443  519  1,473  1,292 
Software maintenance 568  470  1,639  1,420 
ATM expenses 195  184  602  547 
Other 869  711  2,525  2,114 
Total non-interest expense 8,449  7,496  24,036  21,090 
INCOME BEFORE INCOME TAXES 3,389  4,394  10,324  11,967 
Federal income tax provision 622  781  1,856  2,060 
NET INCOME$2,767 $3,613 $8,468 $9,907 
             
Basic Earnings Per Common Share$0.61 $0.80 $1.86 $2.19 
Diluted Earnings Per Common Share 0.61  0.79  1.86  2.18 
Dividends Declared Per Common Share 0.14  0.13  0.42  0.39 
 
 

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