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Southern Michigan Bancorp, Inc. Announces Second Quarter 2019 Earnings

Company Release - 7/24/2019 8:00 AM ET

COLDWATER, Mich., July 24, 2019 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced second quarter 2019 net income of $2,326,000, or $1.01 per share, compared to net income of $2,216,000, or $0.96 per share, for the second quarter of 2018.  Southern earned $4,246,000, or $1.84 per share, for the six-month period ending June 30, 2019 compared to $4,018,000, or $1.74 per share, for the same six-month period a year ago.   

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “We are pleased with our second quarter and year-to-date performance, which resulted in record first and second quarter earnings and solid returns for our shareholders.”

Total consolidated assets at June 30, 2019 were $779.0 million compared to $738.8 million at December 31, 2018.    

The allowance for loan losses was $5,157,000, or 0.95% of loans at June 30, 2019 and $4,987,000, or 0.91% of loans at June 30, 2018.  Net charge offs totaled $107,000 for the second quarter of 2019, compared to $6,000 for the second quarter of 2018.  For the six-month period ending June 30, 2019, net charge offs totaled $110,000, compared to $22,000 for the same period of 2018.  No provision for loan losses was required during the second quarter of 2019.  For the first six months of 2019, $150,000 of loan loss provision was recorded. 

The annualized return on average assets for the six-month periods ending June 30, 2019 and 2018 was 1.10% and 1.12%, respectively.  The annualized return on average equity was 10.94% for the first six months of 2019 compared to 11.36% for the same period of 2018.  The tax equivalent net interest margin for the six-month periods ending June 30, 2019 and 2018 was 3.73% and 3.83%, respectively.

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.
 
Condensed Consolidated Balance Sheets (Unaudited)
 
  
(In thousands, except share data)
 
 June 30,
2019
 December 31,
2018
 
ASSETS      
Cash and cash equivalents$72,358 $54,741 
Federal funds sold 264  1,065 
Securities available for sale 111,307  101,439 
Loans held for sale 154  - 
Loans, net of allowance for loan losses of $5,157 - 2019 ($5,117 – 2018) 538,041  526,857 
Premises and equipment, net 14,284  14,296 
Accrued interest receivable 3,350  3,294 
Net cash surrender value of life insurance 15,880  15,685 
Goodwill 13,422  13,422 
Other intangible assets, net 309  327 
Other assets 9,601  7,705 
TOTAL ASSETS$778,970 $738,831 
       
LIABILITIES       
Deposits :      
Non-interest bearing$133,275 $129,923 
Interest bearing 499,885  475,970 
Total deposits 633,160  605,893 
       
Securities sold under agreements to repurchase and overnight borrowings 11,477  15,342 
Accrued expenses and other liabilities 11,044  8,414 
Other borrowings 38,000  28,500 
Subordinated debentures   5,155  5,155 
Total liabilities 698,836  663,304 
       
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 – 2,315,043 shares in 2019
     (2,315,505 shares in 2018)
 5,782   
5,783
 
Additional paid-in capital 15,099  15,246 
Retained earnings 59,173  55,972 
Accumulated other comprehensive income/(loss), net 551  (1,301)
Unearned Employee Stock Ownership Plan shares (471) (173)
Total shareholders’ equity 80,134  75,527 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$778,970 $738,831 


Southern Michigan Bancorp, Inc.
 
Condensed Consolidated Statements of Income (Unaudited)
 
  
(In thousands, except per share data)
 
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 
 2019 2018 2019 2018 
Interest income:            
Loans, including fees$7,178 $6,716 $14,023 $13,054 
Federal funds sold and balances with banks 373  75  762  162 
Securities:            
Taxable 448  311  847  638 
Tax-exempt 193  226  396  457 
Total interest income 8,192  7,328  16,028  14,311 
             
Interest expense:            
Deposits 1,297  705  2,448  1,296 
Other 316  316  621  627 
Total interest expense 1,613  1,021  3,069  1,923 
Net interest income 6,579  6,307  12,959  12,388 
Provision for loan losses -  -  150  - 
Net interest income after provision for loan losses 6,579  6,307  12,809  12,388 
             
Non-interest income:            
Service charges on deposit accounts 496  385  982  767 
Trust fees 514  473  1,017  957 
Net gains on loan sales 92  180  180  311 
Net gains on investment security sales 161  -  207  - 
Earnings on life insurance assets 98  101  195  196 
ATM and debit card fee income 361  365  680  704 
Other 165  115  307  130 
Total non-interest income 1,887  1,619  3,568  3,065 
             
Non-interest expense:            
Salaries and employee benefits 3,433  3,199  6,830  6,356 
Occupancy, net 325  359  714  756 
Equipment 266  286  530  558 
Printing, postage and supplies 99  78  205  200 
Telecommunication expenses 93  73  195  146 
Professional and outside services 374  413  690  735 
Software maintenance 397  368  801  735 
ATM expenses 137  124  244  267 
Other 519  523  1,086  1,070 
Total non-interest expense 5,643  5,423  11,295  10,823 
INCOME BEFORE INCOME TAXES 2,823  2,503  5,082  4,630 
Federal income tax provision 497  287  836  612 
NET INCOME$2,326 $2,216 $4,246 $4,018 
             
Basic Earnings Per Common Share$1.01 $0.96 $1.84 $1.74 
Diluted Earnings Per Common Share 1.01  0.96  1.84  1.74 
Dividends Declared Per Common Share 0.23  0.22  0.45  0.43 

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

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Source: Southern Michigan Bancorp Inc