2014

Southern Michigan Bancorp, Inc. Announces First Quarter 2014 Earnings

COLDWATER, Mich., April 21, 2014 /PRNewswire/ -- Southern Michigan Bancorp, Inc. (OTCQB: SOMC) reported net income of $1,102,000, or $0.46 per share, for the quarter ended March 31, 2014. This compared to net income of $1,055,000, or $0.44 per share, for the first quarter of 2013. 

Total consolidated assets at March 31, 2014 were $583.3 million compared to $539.5 million at December 31, 2013.  The increase in assets is in part due to $31.3 million deposited at the end of the quarter resulting in a temporary increase in cash and non-interest bearing deposits.  This deposit is short term in nature and the money is expected to move out of the bank within 60 days. 

No provision for loan losses was required during the first quarter of 2014.  The allowance for loan losses was $5,098,000, or 1.34% of loans at March 31, 2014.  This compared to $225,000 of provision for loan losses expense for the first quarter of 2013.   Net charge-offs decreased 68.8%, totaling $140,000 for the first quarter of 2013, compared to $448,000 during the first quarter of 2013.  Total delinquent loans decreased to 1.00% as of March 31, 2014 from 1.74% as of March 31, 2013. 

The annualized return on average assets for the three month period ended March 31, 2014 was 0.80% compared to 0.79% for the first quarter of 2013.  The annualized return on average equity was 7.65% for the first quarter of 2014 compared to 7.62% for the first quarter of 2013.  The tax equivalent net interest margin for the three month period ending March 31, 2014 was 3.78% compared to 3.67% for the same period of 2013.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "We are pleased with our first quarter results including a 4.5% increase in earnings as compared to the first quarter of 2013, and significant reductions in net charge-offs, loan delinquencies and non-performing loans which resulted in reduced credit costs and overall improvement to credit quality." 

Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust.  It operates 15 branches within Branch, Calhoun, Hillsdale 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,
2014


December 31,
2013



ASSETS








     Cash and cash equivalents

$

66,178


$

32,366



     Federal funds sold


392



148



     Securities available for sale


93,222



76,005



     Loans held for sale


690



115



     Loans, net of allowance for loan losses of  $5,098 - 2014 ($5,238 - 2013)


374,087



380,773



     Premises and equipment, net


12,257



12,366



     Accrued interest receivable


2,552



2,351



     Net cash surrender value of life insurance


11,061



10,979



     Goodwill


13,422



13,422



     Other intangible assets, net


974



1,045



     Other assets


8,495



9,889



TOTAL ASSETS

$

583,330


$

539,459











LIABILITIES








     Deposits:








          Non-interest bearing

$

121,734


$

85,670



          Interest bearing


377,658



364,730



     Total deposits


499,392



450,400











     Securities sold under agreements to repurchase and overnight borrowings


13,941



18,479



     Accrued expenses and other liabilities


5,116



6,351



     Subordinated debentures


5,155



5,155



     Common stock subject to repurchase obligation in Employee








         Stock Ownership Plan, shares outstanding 123,564 in 2014








          (126,931 shares in 2013)


2,164



2,247



Total liabilities


525,768



482,632











SHAREHOLDERS' EQUITY








     Preferred stock, 100,000 shares authorized; none issued or outstanding


-



-



     Common stock, $2.50 par value:








         Authorized - 4,000,000 shares








         Issued –2,406,519 shares in 2014 (2,392,630 shares in 2013)








          Outstanding (other than ESOP shares) – 2,282,955 shares in 2014
          (2,265,699 shares in 2013)


5,702



5,665



     Additional paid-in capital


17,519



17,533



     Retained earnings


35,133



34,346



     Accumulated other comprehensive income, net


(792)



(717)



     Total shareholders' equity


57,562



56,827



TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

583,330


$

539,459













 

 

SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)





(In thousands, except per share data)






Three Months Ended March 31,



2014


2013









Interest income:







     Loans, including fees

$

4,588


$

4,498


     Securities:







          Taxable


193



122


          Tax-exempt


196



225


     Other


20



25


Total interest income


4,997



4,870









Interest expense:







     Deposits


389



505


     Other


74



78


Total interest expense


463



583


Net interest income


4,534



4,287


Provision for loan losses


-



225


Net interest income after provision for loan losses


4,534



4,062









Non-interest income:







     Service charges on deposit accounts


486



397


     Trust fees


290



280


     Net gains on security calls


33



-


     Net gains on loan sales


196



523


     Earnings on life insurance assets


82



84


     ATM and debit card fee income


290



279


     Other


201



1600


Total non-interest income


1,578



1,723


Non-interest expense:







     Salaries and employee benefits


2,364



2,535


     Occupancy, net


367



292


     Equipment


173



208


     Printing, postage and supplies


105



109


     Telecommunication expenses


73



69


     Professional and outside services


344



310


     Software maintenance


198



272


     FDIC assessments


88



88


     Loan related expenses   


341



59


     Amortization of other intangibles


71



74


     Other


477



387


Total non-interest expense


4,601



4,403


INCOME BEFORE INCOME TAXES


1,511



1,382


Federal income tax provision


409



327


NET INCOME

$

1,102


$

1,055


Basic Earnings Per Common Share

$

0.46


$

0.44


Diluted Earnings Per Common Share

$

0.46


$

0.44


Dividends Declared Per Common Share

$

0.13


$

0.12










 

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SOURCE Southern Michigan Bancorp, Inc.



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