Southern Michigan Bancorp, Inc. Announces Third Quarter 2020 Earnings

Wednesday, 28. October 2020 13:00

COLDWATER, Mich., Oct. 28, 2020 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced third quarter 2020 net income of $2,018,000, or $0.88 per share, compared to net income of $2,540,000, or $1.10 per share, for the third quarter of 2019. Southern earned $5,362,000, or $2.33 per share, for the nine-month period ended September 30, 2020 compared to $6,786,000, or $2.94 per share, for the same nine-month period a year ago.    

Total consolidated assets at September 30, 2020 were $934.6 million. This compared to $809.7 million at December 31, 2019.   Loan totals grew from December 31, 2019 levels of $562.9 million to $625.0 million. Deposits increased to $779.8 million at September 30, 2020, an increase of $124.0 million or 18.9 percent, from $655.8 million at year end 2019.

The allowance for loan losses was $7,424,000, or 1.19% of loans at September 30, 2020 and $5,184,000, or 0.92% of loans at December 31, 2019. Excluding SBA guaranteed PPP loans the allowance at September 30 was 1.35% of gross loans. Net charge offs totaled $12,000 for the third quarter of 2020, compared to net charge offs of $36,000 for the third quarter of 2019. For the nine-month period ending September 30, 2020, net charge offs totaled $10,000, compared to net charge offs of $146,000 for the same period of 2019. Southern provided $500,000 for loan losses during the third quarter of 2020, bringing the nine-month total to $2,250,000. For the first nine months of 2019, $150,000 of loan loss provision was recorded.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “We are encouraged that all loan customers coming out of their COVID-19 related deferrals are making payments as agreed. Our credit quality metrics remain outstanding with total non-performing assets just 0.46 percent of total assets. However, due to continued economic weakness and uncertainty surrounding COVID-19, an additional $500,000 was prudently added to the allowance for loan loss during the third quarter. We remain focused on taking appropriate actions for our customers, employees and shareholders during these tumultuous times.”

The annualized return on average assets for the nine-month periods ended September 30, 2020 and 2019 was 0.81% and 1.16%, respectively. The annualized return on average equity was 8.20% for the first nine months of 2020 compared to 11.43% for the same period of 2019. The tax equivalent net interest margin for the nine-month periods ended September 30, 2020 and 2019 was 3.26% and 3.70%, 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,
2020
 December 31,
2019
 
ASSETS      
Cash and cash equivalents$76,478 $68,723 
Federal funds sold 257  265 
Securities available for sale 177,793  123,436 
Loans held for sale 1,778  1,171 
Loans, net of allowance for loan losses of $7,424 - 2020 ($5,184 – 2019) 617,576  557,680 
Premises and equipment, net 13,851  14,515 
Accrued interest receivable 5,426  3,380 
Net cash surrender value of life insurance 15,918  15,633 
Goodwill 13,422  13,422 
Other intangible assets, net 264  291 
Other assets 11,830  11,200 
TOTAL ASSETS$934,593 $809,716 
       
LIABILITIES       
Deposits :      
Non-interest bearing$189,309 $136,430 
Interest bearing 590,486  519,332 
Total deposits 779,795  655,762 
      
Securities sold under agreements to repurchase and overnight borrowings 19,047  15,401 
Accrued expenses and other liabilities 13,221  12,553 
Other borrowings 26,750  37,500 
Subordinated debentures 5,155  5,155 
Total liabilities 843,968  726,371 
       
SHAREHOLDERS’ EQUITY      
Preferred stock, 100,000 shares authorized; none issued or outstanding -  - 
Common stock, $2.50 par value:      
Authorized - 5,000,000 shares      
Issued and outstanding – 2,311,307 shares in 2020 (2,314,878 shares in 2019) 5,773  5,781 
Additional paid-in capital 15,491  15,521 
Retained earnings 66,248  62,484 
Accumulated other comprehensive income/(loss), net 3,453  (52)
Unearned Employee Stock Ownership Plan shares (340) (389)
Total shareholders’ equity 90,625  83,345 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$934,593 $809,716 
       


 
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,
 2020 2019 2020 2019
Interest income:           
Loans, including fees$6,988 $7,091 $21,175 $21,114
Federal funds sold and balances with banks 25  425  281  1,187
Securities:           
Taxable 565  640  1,839  1,487
Tax-exempt 175  120  460  515
Total interest income 7,753  8,276  23,755  24,303
            
Interest expense:           
Deposits 936  1,349  3,225  3,797
Other 249  342  870  963
Total interest expense 1,185  1,691  4,095  4,760
Net interest income 6,568  6,585  19,660  19,543
Provision for loan losses 500  -  2,250  150
Net interest income after provision for loan losses 6,068  6,585  17,410  19,393
            
Non-interest income:           
Service charges on deposit accounts 322  526  1,039  1,509
Trust fees 514  525  1,535  1,541
Net gains on loan sales 966  257  1,753  437
Earnings on life insurance assets 96  152  285  346
ATM and debit card fee income 421  387  1,149  1,067
Net securities gains -  159  -  366
Other 142  175  406  483
Total non-interest income 2,461  2,181  6,167  5,749
            
Non-interest expense:           
Salaries and employee benefits 3,856  3,410  10,423  10,239
Occupancy, net 395  339  1,167  1,053
Equipment 290  339  880  870
Printing, postage and supplies 90  118  302  323
Telecommunication expenses 112  108  362  303
Professional and outside services 373  387  1,109  1,077
Software maintenance 384  427  1,152  1,227
ATM expenses 152  139  440  383
Other 509  488  1,391  1,574
Total non-interest expense 6,161  5,755  17,226  17,049
INCOME BEFORE INCOME TAXES 2,368  3,011  6,351  8,093
Federal income tax provision 350  471  989  1,307
NET INCOME$2,018 $2,540 $5,362 $6,786
            
Basic Earnings Per Common Share$0.88 $1.10 $2.33 $2.95
Diluted Earnings Per Common Share 0.88  1.10  2.33  2.94
Dividends Declared Per Common Share 0.23  0.23  0.69  0.68
            
CONTACT:  John H. Castle, CEO
(517) 279-5500

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