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Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2012 Earnings

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COLDWATER, Mich., Feb. 18, 2013 /PRNewswire/ -- Southern Michigan Bancorp, Inc. (OTCQB: SOMC) reported net income of $4,350,000 for 2012 compared to $3,402,000 for 2011, an increase of $948,000, or 27.9%.  Earnings per share were $1.84 for 2012 compared to $1.46 in 2011.  Fourth quarter 2012 net income was $1,167,000, or $0.49 per share, compared to $1,005,000, or $0.43 per share in the fourth quarter of 2011. 

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John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "We accomplished a great deal during the year including loan portfolio growth of $36.8 million, or 11.1% year-over-year, reaching an all-time high of $369.6 million at December 31, 2012. Deposit totals reached an all-time high increasing by $23.7 million, or 5.6% totaling $444.2 million at year end. Improvements in asset quality metrics continued with net loan charge-offs in 2012 at their lowest level in five years, and loan delinquencies and non-performing loan totals also continued to decline."   

Castle continued, "As a direct result, we are pleased to report Southern achieved record earnings in 2012.  While the milestones realized are noteworthy, we continue to look ahead recognizing challenges in both economic and regulatory conditions remain a concern for us, and for all community bankers. However, we remain confident that our long term strategic objectives and commitment to customer service positions us well for continued success."

Total consolidated assets at December 31, 2012 were $528.9 million compared to $509.2 million at December 31, 2011.   

Southern provided $1,350,000 for loan losses in 2012, with an allowance for loan losses at December 31, 2012 of $5,455,000, or 1.48% of loans.  This compared to a provision for loan losses of $1,050,000 for 2011, with an allowance for loan losses at December 31, 2011 of $5,412,000, or 1.63% of loans.   The increase in the provision for loan losses resulted primarily from loan growth offset by a reduction in specific reserves on impaired loans and lower delinquency and charge off trends. Net charge-offs for 2012 totaled $1,307,000, or .35% of loans, down from $1,332,000, or .40% of loans in 2011. 

Net interest income increased $1,538,000, or 9.8% in 2012 compared to 2011.  Interest income increased as the loan portfolio grew year-over-year.  Interest expense decreased as higher priced deposits and other borrowings decreased.

Non-interest income for 2012 was 10.7% higher at $7,181,000 compared to $6,485,000 in 2011.  The increase was primarily the result of robust mortgage loan activity increasing the net gains on loans sold by $873,000 to $2,108,000 for 2012.  This increase offset a reduction in service charges on deposit accounts of $337,000 for the same period. 

The annualized return on average assets for 2012 and 2011 was 0.84% and 0.68%, respectively.  The annualized return on average equity was 8.09% for 2012 compared to 6.80% for 2011.

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 "continue", "look ahead", "long term", "strategic", "objectives", "trends" 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 meet the challenges presented by economic and regulatory conditions, realize our long term strategic objectives, 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.

Risk factors include, but are not limited to, the risk factors described in "Item 1A - Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2011.  These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.


SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)



(In thousands, except per share amounts)

December 31,


2012


2011

ASSETS






Cash

$

3,545


$

3,531

Due from banks


46,789



38,654

     Cash and cash equivalents


50,334



42,185

Federal funds sold


276



287

Securities available for sale


64,525



90,344

Loans held for sale


1,776



1,088

Loans, net of allowance for loan losses of $5,455 - 2012 ($5,412 - 2011)


364,150



327,392

Premises and equipment, net


12,419



12,546

Accrued interest receivable


2,059



2,148

Net cash surrender value of life insurance


10,644



10,312

Goodwill


13,422



13,422

Other intangible assets, net


1,341



1,666

Other assets


7,914



7,830

     Total Assets

$

528,860


$

509,220







LIABILITIES AND SHAREHOLDERS' EQUITY






Liabilities






     Deposits






          Non-interest bearing

$

87,013


$

61,930

          Interest bearing


357,157



358,581

               Total deposits


444,170



420,511

     Securities sold under agreements to repurchase and overnight
        borrowings


16,134



18,074

     Accrued expenses and other liabilities


5,662



4,568

     Other borrowings


1,039



7,751

     Subordinated debentures


5,155



5,155

Common stock subject to repurchase obligation in
  Employee Stock Ownership Plan, 125,125 shares outstanding in 2012
  (115,170 shares in 2011)


2,065



1,296

          Total Liabilities


474,225



457,355













Shareholders' equity






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


-



-

     Common stock, $2.50 par value:






          Authorized – 4,000,000 shares






          Issued – 2,375,975  shares in 2012 (2,358,599 shares in 2011)






          Outstanding (other than ESOP shares) –2,250,850 shares






               in 2012 (2,243,429 shares in 2011)


5,627



5,609

     Additional paid-in capital


17,700



18,278

     Retained earnings


31,046



27,576

     Accumulated other comprehensive income, net


297



571

     Unearned Employee Stock Ownership Plan shares


(35)



(169)

          Total Shareholders' Equity


54,635



51,865

     Total Liabilities and Shareholders' Equity

$

528,860


$

509,220

 

 

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





(In thousands, except per share amounts)

Three Months Ended
December 31,


Year Ended
December 31,


2012


2011


2012


2011

Interest income:












     Loans, including fees

$

4,659


$

4,516


$

18,478


$

17,664

     Securities:












          Taxable


111



158



450



631

          Tax-exempt


233



249



959



920

     Other


27



43



104



172

Total interest income


5,030



4,966



19,991



19,387













Interest expense:












     Deposits


527



723



2,329



3,141

     Other


107



157



488



610

Total interest expense


634



880



2,817



3,751

Net interest income


4,396



4,086



17,174



15,636

Provision for loan losses


300



175



1,350



1,050

Net interest income after provision for loan losses


4,096



3,911



15,824



14,586













Non-interest income:












     Service charges on deposit accounts


439



464



1,695



2,032

     Trust fees


289



268



1,126



1,120

     Net securities gains


-



25



3



29

     Net gains on loan sales


711



404



2,108



1,235

     Earnings on life insurance assets


82



96



332



347

     ATM and debit card fee income


294



260



1,147



1,015

     Other


196



166



770



707

Total non-interest income


2,011



1,683



7,181



6,485













Non-interest expense:












     Salaries and employee benefits


2,533



2,572



9,713



9,623

     Occupancy, net


199



255



996



1,194

     Equipment


215



192



821



757

     Printing, postage and supplies


104



114



452



496

     Telecommunication


61



105



273



376

     Software maintenance


199



110



555



435

     Professional and outside services


340



236



1,185



909

     Amortization of other intangibles


81



85



325



339

     Automated teller machines


104



104



422



371

     Advertising and marketing


64



62



316



224

     FDIC deposit assessments


96



101



390



477

     Other real estate owned expense


57



38



233



147

     Loss on sale of other real estate owned


32



24



132



118

     Other


399



269



1,412



1,244

Total non-interest expense


4,484



4,267



17,225



16,710

INCOME BEFORE INCOME TAXES


1,623



1,327



5,780



4,361

Federal income tax provision


456



322



1,430



959

NET INCOME

$

1,167


$

1,005


$

4,350


$

3,402













Basic Earnings Per Common Share

$

0.49


$

0.43


$

1.84


$

1.46

Diluted Earnings Per Common Share

$

0.49


$

0.43


$

1.84


$

1.46

Dividends Declared Per Common Share

$

0.12


$

0.07


$

0.37


$

0.22

 

SOURCE Southern Michigan Bancorp, Inc.



RELATED LINKS
http://www.smb-t.com

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