IR Menu

Press Release

Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2018 Earnings

Company Release - 2/15/2019 8:00 AM ET

COLDWATER, Mich., Feb. 15, 2019 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported net income of $8,125,000 for 2018 compared to $5,421,000 for 2017.  Diluted earnings per share were $3.51 for 2018 compared to $2.29 in 2017.  Fourth quarter 2018 net income was $1,824,000, or $0.79 per share, compared to $739,000, or $0.32 per share for the fourth quarter of 2017.  2017 results were impacted by the passage of tax reform legislation on December 22, 2017, which resulted in an income tax charge of $989,000, or $0.42 per share, in the fourth quarter of 2017.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “We are pleased to report record earnings of $8,125,000 for 2018, an increase of 49.9% over 2017.  Southern benefited from continued strong credit quality, growth in the balance sheet, and lower federal income tax rates, as well as four increases in the Federal Reserve managed rates.”

Castle continued, “In 2019 we will remain focused on providing excellent products and customer service, while working to improve long-term shareholder returns.”

Total consolidated assets at December 31, 2018 were $738.8 million compared to $712.3 million at December 31, 2017.  Loans increased to $532.0 million as of December 31, 2018, as compared to $523.4 million at year end 2017.  Deposits also increased, totaling $605.9 million at December 31, 2018, an increase of $28.7 million or 5.0%, as compared to year end 2017.

Southern provided $250,000 for loan losses in 2018, with an allowance for loan losses at December 31, 2018 of $5,117,000, or 0.96% of loans.  This compared to a provision for loan losses of $175,000 for 2017, with an allowance for loan losses at December 31, 2017 of $5,009,000, or 0.96% of loans.   The 2018 provision for loan losses resulted from increased specific reserves on impaired loans.  Net charge-offs for 2018 totaled $142,000, or 0.03% of loans. 

The annualized return on average assets for 2018 was 1.11% compared to 0.80% for 2017.  The annualized return on average equity was 11.21% for 2018 compared to 7.64% for 2017.

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, 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 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, 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
CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share data)December 31, 
 2018 2017 
ASSETS      
Cash$5,804 $4,177 
Due from banks 48,937  13,244 
 Cash and cash equivalents 54,741  17,421 
Federal funds sold 1,065  18,492 
Securities available for sale 101,439  105,184 
Loans held for sale -  515 
Loans, net of allowance for loan losses of $5,117 - 2018 ($5,009 - 2017) 526,857  518,438 
Premises and equipment, net 14,296  14,265 
Accrued interest receivable 3,294  3,211 
Cash surrender value of life insurance 15,685  14,796 
Goodwill 13,422  13,422 
Other intangible assets, net 327  - 
Other assets 7,705  6,601 
 Total Assets$738,831 $712,345 
       
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Liabilities      
 Deposits      
 Non-interest bearing$129,923 $129,098 
 Interest bearing 475,970  448,046 
 Total deposits 605,893  577,144 
 Securities sold under agreements to repurchase and overnight
 borrowings
 15,342  13,950 
 Accrued expenses and other liabilities 8,414  6,559 
 Other borrowings 28,500  39,500 
 Subordinated debentures 5,155  5,155 
 Total Liabilities 663,304  642,308 
       
       
Shareholders’ equity      
 Preferred stock, 100,000 shares authorized; none issued or outstanding -  - 
 Common stock, $2.50 par value:      
 Authorized – 4,000,000 shares      
  Issued and outstanding – 2,315,505 shares in 2018      
  (2,316,779 shares in 2017) 5,783  5,787 
 Additional paid-in capital 15,246  15,415 
 Retained earnings 55,972  49,747 
 Accumulated other comprehensive loss, net (1,301) (613)
 Unearned Employee Stock Ownership Plan shares (173) (299)
 Total Shareholders’ Equity 75,527  70,037 
 Total Liabilities and Shareholders’ Equity$738,831 $712,345 

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

(In thousands, except per share amounts)Three Months Ended
December 31,
 Year Ended
December 31,
 
   2018   2017   2018   2017 
Interest income:            
 Loans, including fees$6,960 $6,189 $26,912 $22,944 
 Securities:            
 Taxable 361  306  1,328  1,183 
 Tax-exempt 205  230  883  906 
 Other 288  105  659  318 
Total interest income 7,814  6,830  29,782  25,351 
             
Interest expense:            
 Deposits 1,031  557  3,274  1,753 
 Other 289  343  1,224  1,015 
Total interest expense 1,320  900  4,498  2,768 
Net interest income 6,494  5,930  25,284  22,583 
Provision for loan losses 250  -  250  175 
Net interest income after provision for loan losses 6,244  5,930  25,034  22,408 
             
Non-interest income:            
 Service charges on deposit accounts 542  426  1,751  1,642 
 Trust fees 548  462  2,027  1,658 
 Net securities gains/(losses) (161) -  (161) 3 
 Net gains on loan sales 137  215  604  749 
 Earnings on life insurance assets 97  93  389  374 
  ATM and debit card fee income 361  340  1,422  1,374 
 Other 173  113  423  608 
Total non-interest income 1,697  1,649  6,455  6,408 
             
Non-interest expense:            
 Salaries and employee benefits 3,226  3,204  12,843  12,050 
 Occupancy, net 325  311  1,406  1,330 
 Equipment 344  273  1,150  967 
 Printing, postage and supplies 103  111  409  421 
 Telecommunication 114  76  338  297 
  Professional and outside services 461  393  1,492  1,375 
 Software maintenance 422  344  1,513  1,240 
  Amortization of other intangibles 9  57  33  229 
  ATM expenses 130  125  522  489 
  Advertising and marketing 168  100  444  317 
  FDIC deposit assessments 53  54  225  219 
 Other 401  316  1,554  1,419 
Total non-interest expense 5,756  5,364  21,929  20,353 
             
INCOME BEFORE INCOME TAXES 2,185  2,215  9,560  8,463 
Federal income tax provision  361  1,476  1,435  3,042 
NET INCOME $1,824 $739 $8,125 $5,421 
             
Basic Earnings Per Common Share$0.79 $0.32 $3.52 $2.30 
Diluted Earnings Per Common Share$0.79 $0.32 $3.51 $2.29 
Dividends Declared Per Common Share$0.22 $0.21 $0.87 $0.83 


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

SMB Bancorp - Green PANTONE 3435 CP CMYK - NO TAGLINE.png

Source: Southern Michigan Bancorp Inc