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Press Release

Southern Michigan Bancorp, Inc. Announces First Quarter 2019 Earnings

Company Release - 4/24/2019 8:00 AM ET

COLDWATER, Mich., April 24, 2019 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced first quarter net income increased 6.5% to $1,920,000, compared to net income of $1,802,000, for the first quarter of 2018. Earnings per share for the first quarter of 2019 increased 6.4% to $0.83 per share, compared to $0.78 per share, for the first quarter of 2018.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “We are pleased to report strong overall results for the first quarter of 2019. Earnings grew 6.5% year over year, and we experienced solid loan and deposit growth which resulted in record high balance sheet footings for loans, deposits and total assets.”  

Total consolidated assets at March 31, 2019 were $785.8 million compared to $738.8 million at December 31, 2018.   

As a result of loan growth, Southern provided $150,000 for loan losses during the first quarter of 2019, raising the allowance for loan losses to $5,264,000, or 0.96% of loans. This compared to no provision for loan losses during the first quarter of 2018. The allowance for loan losses totaled $4,993,000, or 0.93% of loans at March 31, 2018. Net charge-offs totaled $3,000 for the first quarter of 2019, compared to $16,000 during the first quarter of 2018.    

The annualized return on average assets for the three-month period ended March 31, 2019 and March 31, 2018 was 1.01%. The annualized return on average equity was 10.03% for the first quarter of 2019 compared to 10.26% for the first quarter of 2018. The tax equivalent net interest margin for the three-month period ending March 31, 2019 was 3.72% compared to 3.79% for the same period of 2018.

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
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share data)  
 March 31,
2019
 December 31,
2018
 
ASSETS      
 Cash and cash equivalents$87,083 $54,741 
 Federal funds sold 172  1,065 
 Securities available for sale 98,637  101,439 
 Loans held for sale 1,001  - 
 Loans, net of allowance for loan losses of $5,264 - 2019 ($5,117 - 2018) 543,202  526,857 
 Premises and equipment, net 14,198  14,296 
 Accrued interest receivable 3,515  3,294 
 Net cash surrender value of life insurance 15,782  15,685 
 Goodwill 13,422  13,422 
 Other intangible assets, net 318  327 
 Other assets 8,510  7,705 
TOTAL ASSETS$785,840 $738,831 
       
LIABILITIES       
 Deposits:      
 Non-interest bearing$132,109 $129,923 
 Interest bearing 519,914  475,970 
 Total deposits 652,023  605,893 
       
Securities sold under agreements to repurchase and overnight borrowings 13,681  15,342 
Accrued expenses and other liabilities 9,441  8,414 
Other borrowings 28,250  28,500 
Subordinated debentures 5,155  5,155 
Total liabilities 708,550  663,304 
       
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 – 2,321,678 shares in 2019 (2,315,505 shares in 2018) 5,798  5,783 
 Additional paid-in capital 15,135  15,246 
 Retained earnings 57,378  55,972 
 Accumulated other comprehensive loss, net (467) (1,301)
 Unearned Employee Stock Ownership Plan shares (554) (173)
 Total shareholders’ equity 77,290  75,527 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$785,840 $738,831 


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

(In thousands, except per share data)

 Three Months Ended March 31, 
 2019 2018 
       
Interest income:      
Loans, including fees$6,845 $6,338 
Securities:      
Taxable 399  327 
Tax-exempt 202  231 
Other 390  87 
Total interest income 7,836  6,983 
       
Interest expense:      
Deposits 1,151  591 
Other 305  311 
Total interest expense 1,456  902 
Net interest income 6,380  6,081 
Provision for loan losses 150  - 
Net interest income after provision for loan losses 6,230  6,081 
       
Non-interest income:      
Service charges on deposit accounts 486  382 
Trust fees 503  484 
Net gains on loan sales 87  131 
Earnings on life insurance assets 97  95 
ATM and debit card fee income 319  339 
Other 188  15 
Total non-interest income 1,680  1,446 
Non-interest expense:      
Salaries and employee benefits 3,397  3,157 
Occupancy, net 389  397 
Equipment 265  272 
Printing, postage and supplies 105  122 
Telecommunication expenses 102  73 
Professional and outside services 316  322 
Software maintenance 403  367 
ATM expenses 107  143 
Amortization of other intangibles 9  6 
Other 558  541 
Total non-interest expense 5,651  5,400 
INCOME BEFORE INCOME TAXES 2,259  2,127 
Federal income tax provision 339  325 
NET INCOME$1,920 $1,802 
Basic Earnings Per Common Share$0.83 $0.78 
Diluted Earnings Per Common Share$0.83 $0.78 
Dividends Declared Per Common Share$0.22 $0.21 



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

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Source: Southern Michigan Bancorp Inc