Southern Michigan Bancorp, Inc. Announces Third Quarter 2021 Earnings

Wednesday, 27. October 2021 14:15

COLDWATER, Mich., Oct. 27, 2021 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced third quarter 2021 net income of $3,138,000, or $0.69 per share, compared to net income of $2,018,000, or $0.44 per share, for the third quarter of 2020. Southern earned $9,235,000, or $2.02 per share, for the nine-month period ending September 30, 2021 compared to $5,362,000, or $1.17 per share, for the same nine-month period a year ago.   

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “During the third quarter Southern continued to capitalize on market opportunities presented to us. We are pleased to report continued loan and deposit growth during the quarter, with additional growth expected during the fourth quarter. Earnings through the third quarter now exceed our 2019 annual record net income benchmark of $8,622,000.”

Total consolidated assets at September 30, 2021 increased 14.5%, reaching $1.142 billion compared to $997.6 million at December 31, 2020.   Loan totals grew 15.3%, from December 31, 2020 levels of $635.9 million to $733.3 million. Deposits also increased totaling $962.6 million at September 30, 2021, an increase of $124.3 million or 14.8%, as compared to year end 2020.  

The allowance for loan losses totaled $8,879,000, or 1.21% of loans at September 30, 2021. Net loan recoveries totaled $40,000 for the first nine months of 2021, compared to net loan losses of $10,000 during the first nine months of 2020. Loan delinquencies dropped from 0.72% of gross loans on December 31, 2020 to 0.19% of gross loans on September 30, 2021. Likewise, total non-performing assets dropped from .49% of total assets on December 31, 2020 to 0.14% of total assets on September 30, 2021. As a result of loan growth, Southern provided $650,000 of provision for loan loss expense during the third quarter of 2021, with total provision expense of $1,050,000 through the first nine months of 2021. This contrasts with $2,250,000 of provision for loan loss expense recorded during the first nine months of 2020.

The annualized return on average assets for the nine-month periods ending September 30, 2021 and 2020 was 1.13% and 0.81%, respectively. The annualized return on average equity was 13.02% for the first nine months of 2021 compared to 8.20% for the first nine months of 2020. The tax equivalent net interest margins for the nine-month periods ending September 30, 2021 and 2020 was 3.27% and 3.26%, 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, December 31, 
 2021 2020 
ASSETS      
Cash and cash equivalents$101,565 $99,610 
Federal funds sold 246  231 
Securities available for sale 251,726  208,380 
Loans held for sale 1,201  1,691 
Loans, net of allowance for loan losses of $8,879 - 2021 ($7,789 – 2020) 724,387  628,081 
Premises and equipment, net 13,240  13,698 
Accrued interest receivable 4,816  4,749 
Net cash surrender value of life insurance 18,884  16,016 
Goodwill 13,422  13,422 
Other intangible assets, net 228  255 
Other assets 12,148  11,441 
TOTAL ASSETS$1,141,863 $997,574 
       
LIABILITIES       
Deposits :      
Non-interest bearing$257,493 $220,786 
Interest bearing 705,131  617,512 
Total deposits 962,624  838,298 
       
Securities sold under agreements to repurchase and overnight borrowings 15,413  20,083 
Accrued expenses and other liabilities 13,132  14,561 
Other borrowings 20,000  26,500 
Subordinated debentures 34,497  5,155 
Total liabilities 1,045,666  904,597 
       
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 – 4,515,777 shares in 2021
 (2,301,269 shares in 2020)
 11,285  5,748 
Additional paid-in capital 13,996  15,416 
Retained earnings 69,600  67,741 
Accumulated other comprehensive income, net 1,556  4,362 
Unearned Employee Stock Ownership Plan shares (240) (290)
Total shareholders’ equity 96,197  92,977 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,141,863 $997,574 


Southern Michigan Bancorp, Inc.

Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)

 Three Months Ended Nine Months Ended 
 September 30, September 30, 
 2021 2020 2021 2020 
Interest income:            
Loans, including fees$8,591 $6,988 $24,058 $21,175 
Federal funds sold and balances with banks 37  25  107  281 
Securities:            
Taxable 892  565  2,487  1,839 
Tax-exempt 282  175  800  460 
Total interest income 9,802  7,753  27,452  23,755 
             
Interest expense:            
Deposits 508  936  1,783  3,225 
Other 459  249  1,093  870 
Total interest expense 967  1,185  2,876  4,095 
Net interest income 8,835  6,568  24,576  19,660 
Provision for loan losses 650  500  1,050  2,250 
Net interest income after provision for loan losses 8,185  6,068  23,526  17,410 
             
Non-interest income:            
Service charges on deposit accounts 345  322  913  1,039 
Trust fees 587  514  1,681  1,535 
Net gains on loan sales 470  966  1,912  1,753 
Earnings on life insurance assets 124  96  511  285 
ATM and debit card fee income 470  421  1,360  1,149 
Other 174  142  472  406 
Total non-interest income 2,170  2,461  6,849  6,167 
             
Non-interest expense:            
Salaries and employee benefits 4,047  3,856  11,880  10,423 
Occupancy, net 388  395  1,197  1,167 
Equipment 274  290  861  880 
Printing, postage and supplies 93  90  290  302 
Telecommunication expenses 82  112  266  362 
Professional and outside services 441  373  1,218  1,109 
Software maintenance 434  384  1,228  1,152 
ATM expenses 173  152  493  440 
Other 627  509  1,799  1,391 
Total non-interest expense 6,559  6,161  19,232  17,226 
INCOME BEFORE INCOME TAXES 3,796  2,368  11,143  6,351 
Federal income tax provision 658  350  1,908  989 
NET INCOME$3,138 $2,018 $9,235 $5,362 
             
Basic Earnings Per Common Share$0.69 $0.44 $2.02 $1.17 
Diluted Earnings Per Common Share 0.69  0.44  2.02  1.17 
Dividends Declared Per Common Share 0.12  0.12  0.36  0.35 



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

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