2014

Southern Michigan Bancorp, Inc. Announces Fourth Quarter And Full Year 2013 Earnings

COLDWATER, Mich., Feb. 14, 2014 /PRNewswire/ -- Southern Michigan Bancorp, Inc. (OTCQB: SOMC) reported net income of $4,499,000 for 2013 compared to $4,350,000 for 2012, an increase of $149,000, or 3.4%.  Earnings per share were $1.88 for 2013 compared to $1.84 in 2012.  Fourth quarter 2013 net income was $1,158,000, or $0.49 per share, compared to $1,167,000, or $0.49 per share in the fourth quarter of 2012. 

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"As the result of several strategic initiatives throughout 2013 we are pleased to announce record earnings for the year," said John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. "The core system conversion was completed in the third quarter; loans reached an all-time high of $386.0 million as of year-end and we are seeing continued improvements in asset quality metrics including loan delinquencies, non-performing loans and net charge-offs."

Castle continued, "2014 will be another challenging year for all community banks.  However, we remain confident that we are positioned to be successful in meeting both the economic and regulatory challenges." 

Total consolidated assets at December 31, 2013 were $539.5 million compared to $528.9 million at December 31, 2012.   

Southern provided $750,000 for loan losses in 2013, with an allowance for loan losses at December 31, 2013 of $5,238,000, or 1.36% of loans. This compared to a provision for loan losses of $1,350,000 for 2012, with an allowance for loan losses at December 31, 2012 of $5,455,000, or 1.48% of loans. The decrease in the provision for loan losses resulted from a reduction in net charge-offs, reduced delinquencies and a reduction in specific reserves on impaired loans offset by loan growth in the commercial loan portfolio. Net charge-offs for 2013 totaled $967,000, or .25% of loans, down from $1,307,000, or .35% of loans in 2012. 

Net interest income increased $593,000, or 3.5% in 2013 compared to 2012. Interest expense decreased $669,000 as higher priced deposits and other borrowings decreased.

Non-interest income for 2013 was slightly higher at $7.24 million compared to $7.19 million in 2012.  The increase was primarily the result of increased service charge income, gains on the sale of securities and ATM and debit card fee income offset by a 21.6% decrease in gain on loans sold.    

The annualized return on average assets for both 2013 and 2012 was 0.84%.  The annualized return on average equity was 8.01% for 2013 compared to 8.09% for 2012.

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, 2012.  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,



2013


2012


ASSETS







Cash

$

4,006


$

3,545


Due from banks


28,360



46,789


     Cash and cash equivalents


32,366



50,334


Federal funds sold


148



276


Securities available for sale


76,005



64,525


Loans held for sale


115



1,776


Loans, net of allowance for loan losses of $5,238 - 2013 ($5,455 - 2012)


380,773



364,150


Premises and equipment, net


12,366



12,419


Accrued interest receivable


2,351



2,059


Net cash surrender value of life insurance


10,979



10,644


Goodwill


13,422



13,422


Other intangible assets, net


1,045



1,341


Other assets


9,889



7,914


     Total Assets

$

539,459


$

528,860









LIABILITIES AND SHAREHOLDERS' EQUITY







Liabilities







     Deposits







          Non-interest bearing

$

85,670


$

87,013


          Interest bearing


364,730



357,157


               Total deposits


450,400



444,170


     Securities sold under agreements to repurchase and overnight
        borrowings


18,479



16,134


     Accrued expenses and other liabilities


6,351



5,662


     Other borrowings


-



1,039


     Subordinated debentures


5,155



5,155


Common stock subject to repurchase obligation in
  Employee Stock Ownership Plan, 126,931 shares outstanding in 2013
  (125,125 shares in 2012)


2,247



2,065


          Total Liabilities


482,632



474,225
















Shareholders' equity







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


-



-


     Common stock, $2.50 par value:







          Authorized – 4,000,000 shares







          Issued – 2,392,630  shares in 2013 (2,375,975 shares in 2012)







          Outstanding (other than ESOP shares) – 2,265,699 shares







               in 2013 (2,250,850 shares in 2012)


5,665



5,627


     Additional paid-in capital


17,533



17,700


     Retained earnings


34,346



31,046


     Accumulated other comprehensive income (loss), net


(717)



297


     Unearned Employee Stock Ownership Plan shares


-



(35)


          Total Shareholders' Equity


56,827



54,635


     Total Liabilities and Shareholders' Equity

$

539,459


$

528,860


 

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,



2013


2012


2013


2012


Interest income:













     Loans, including fees

$

4,620


$

4,659


$

18,302


$

18,478


     Securities:













          Taxable


187



111



645



450


          Tax-exempt


217



233



879



959


     Other


20



27



89



104


Total interest income


5,044



5,030



19,915



19,991















Interest expense:













     Deposits


432



527



1,853



2,329


     Other


78



107



295



488


Total interest expense


510



634



2,148



2,817


Net interest income


4,534



4,396



17,767



17,174


Provision for loan losses


100



300



750



1,350


Net interest income after provision for loan losses


4,434



4,096



17,017



15,824















Non-interest income:













     Service charges on deposit accounts


546



439



2,015



1,695


     Trust fees


279



289



1,128



1,126


     Net securities gains


128



-



140



3


     Net gains on loan sales


288



711



1,653



2,108


     Earnings on life insurance assets


86



82



335



332


     ATM and debit card fee income


311



294



1,214



1,147


     Other


199



196



752



770


Total non-interest income


1,837



2,011



7,237



7,181















Non-interest expense:













     Salaries and employee benefits


2,735



2,533



10,368



9,713


     Occupancy, net


245



199



1,034



996


     Equipment


169



215



709



821


     Printing, postage and supplies


126



104



492



452


     Telecommunication


70



61



274



273


     Software maintenance


196



199



986



555


     Professional and outside services


351



340



1,322



1,185


     Amortization of other intangibles


74



81



296



325


     Automated teller machines


107



104



449



422


     Advertising and marketing


83



64



275



316


     FDIC deposit assessments


90



96



360



390


     Other real estate owned expense


84



57



190



233


     Loss (gain) on sale of other real estate owned


16



32



(38)



132


     Other


258



399



1,311



1,412


Total non-interest expense


4,604



4,484



18,028



17,225


INCOME BEFORE INCOME TAXES


1,667



1,623



6,226



5,780


Federal income tax provision


509



456



1,727



1,430


NET INCOME

$

1,158


$

1,167


$

4,499


$

4,350















Basic Earnings Per Common Share

$

0.49


$

0.49


$

1.88


$

1.84


Diluted Earnings Per Common Share

$

0.49


$

0.49


$

1.88


$

1.84


Dividends Declared Per Common Share

$

0.13


$

0.12


$

0.50


$

0.37


 

SOURCE Southern Michigan Bancorp, Inc.



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