2014

Southern Michigan Bancorp, Inc. Announces Second Quarter 2013 Earnings

COLDWATER, Mich., July 24, 2013 /PRNewswire/ -- Southern Michigan Bancorp, Inc. (OTCQB: SOMC) announced second quarter 2013 net income of $1,079,000, or $0.45 per share, compared to net income of $1,027,000, or $0.43 per share, for the second quarter of 2012.  Southern's net income for the six month period ended June 30, 2013, was $2,134,000, or $0.89 per share, compared to net income of $2,029,000, or $0.86 per share, for the same six month period a year ago.

(Logo: http://photos.prnewswire.com/prnh/20070619/CLTU100LOGO )   

Total consolidated assets at June 30, 2013 were $522.3 million compared to $528.9 million at December 31, 2012. 

Southern provided $175,000 for loan losses during the second quarter of 2013 resulting in an allowance for loan losses of $5,594,000, or 1.52% of loans at June 30, 2013.  This compared to $475,000 of provision for loan losses expense for the second quarter of 2012.  Net recoveries totaled $187,000 during the second quarter of 2013, compared to net charge-offs of $833,000 during the second quarter of 2012.  For the six month period ended June 30, 2013, net charge offs totaled $261,000, or annualized 0.14% of loans, compared to $946,000 for the same six month period of 2012. 

The annualized return on average assets for the six month periods ended June 30, 2013 and 2012 was 0.80% and 0.78%, respectively.  The annualized return on average equity was 7.65% for the first six months of 2013 compared to 7.66% for the same period of 2012.  The tax equivalent net interest margin for the six month periods ending June 30, 2013 and 2012 was 3.76% and 3.74%, respectively.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, "We continue to be pleased with our financial performance.  The 5.2% increase in year over year earnings is especially gratifying considering the core processing conversion costs of $462,000 incurred during the year.  We look forward to the benefits our company and customers will see from the new system."

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.

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.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share data)


June 30,
2013


December 31,
2012


ASSETS







     Cash and cash equivalents

$

33,273


$

50,334


     Federal funds sold


253



276


     Securities available for sale


79,145



64,525


     Loans held for sale


1,294



1,776


     Loans, net of allowance for loan losses of  $5,594 - 2013 ($5,455 – 2012)


361,228



364,150


     Premises and equipment, net


12,484



12,419


     Accrued interest receivable


1,882



2,059


     Net cash surrender value of life insurance


10,814



10,644


     Goodwill


13,422



13,422


     Other intangible assets, net


1,193



1,341


     Other assets


7,360



7,914


TOTAL ASSETS

$

522,348


$

528,860









LIABILITIES







     Deposits :







          Non-interest bearing

$

86,460


$

87,013


          Interest bearing


353,946



357,157


     Total deposits


440,406



444,170









     Securities sold under agreements to repurchase and overnight borrowings


14,394



16,134


     Accrued expenses and other liabilities


4,823



5,662


     Other borrowings


39



1,039


     Subordinated debentures


5,155



5,155


     Common stock subject to repurchase obligation in Employee







         Stock Ownership Plan, shares outstanding –123,652 in 2013







         (125,125 shares in 2012)


2,171



2,065


Total liabilities


466,988



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 – 2,392,907 shares in 2013 (2,375,975 shares in 2012)







          Outstanding (other than ESOP shares) – 2,269,255 shares in 2013
          (2,250,850 shares in 2012)


5,674



5,627


     Additional paid-in capital


17,528



17,700


     Retained earnings


32,604



31,046


     Accumulated other comprehensive income, net


(446)



297


     Unearned Employee Stock Ownership Plan shares


-



(35)


     Total shareholders' equity


55,360



54,635


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

522,348


$

528,860










 

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,



2013


2012


2013


2012


Interest income:













     Loans, including fees

$

4,537


$

4,629


$

9,035


$

9,140


     Federal funds sold and balances with banks


26



31



51



57


     Securities:













          Taxable


166



63



288



219


          Tax-exempt


222



246



447



488


Total interest income


4,951



4,969



9,821



9,904















Interest expense:













     Deposits


465



587



970



1,248


     Other


70



129



148



262


Total interest expense


535



716



1,118



1,510


Net interest income


4,416



4,253



8,703



8,394


Provision for loan losses


175



475



400



700


Net interest income after provision for loan losses


4,241



3,778



8,303



7,694















Non-interest income:













     Service charges on deposit accounts


478



413



875



807


     Trust fees


265



263



545



561


     Net gains on security calls and sales


-



-



-



3


     Net gains on loan sales


453



476



976



878


     Earnings on life insurance assets


86



80



170



168


     ATM and debit card fee income


313



292



592



564


     Other


192



176



352



384


Total non-interest income


1,787



1,700



3,510



3,365















Non-interest expense:













     Salaries and employee benefits


2,390



2,267



4,925



4,688


     Occupancy, net


275



277



567



560


     Equipment


227



217



435



409


     Printing, postage and supplies


124



105



233



244


     Telecommunication expenses


68



61



137



157


     Professional and outside services


369



280



679



536


     FDIC assessments


94



100



182



200


     Software maintenance


260



120



532



231


     Amortization of other intangibles


74



81



148



162


     Expenses relating to OREO property


72



74



12



202


     ATM expenses


112



109



216



210


     Other


445



451



847



825


Total non-interest expense


4,510



4,142



8,913



8,424


INCOME BEFORE INCOME TAXES


1,518



1,336



2,900



2,635


Federal income tax provision


439



309



766



606


NET INCOME

$

1,079


$

1,027


$

2,134


$

2,029















Basic Earnings Per Common Share

$

0.45


$

0.43


$

0.89


$

0.86


Diluted Earnings Per Common Share


0.45



0.43



0.89



0.86


Dividends Declared Per Common Share


0.12



0.09



0.24



0.16


 

SOURCE Southern Michigan Bancorp, Inc.



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