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Southern Michigan Bancorp, Inc. Announces Third Quarter 2012 Earnings

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COLDWATER, Mich., Oct. 26, 2012 /PRNewswire/ -- Southern Michigan Bancorp, Inc. (OTCBB: SOMC) announced net income of $1,154,000, or $0.49 per diluted share, for the three months ended September 30, 2012. This compares to net income of $887,000, or $0.38 per diluted share, for the three months ended September 30, 2011.  Southern's net income for the nine months ended September 30, 2012, was $3,183,000, or $1.34 per diluted share, compared to net income of $2,397,000, or $1.03 per diluted share, for the same nine month period a year ago. 

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

Total consolidated assets at September 30, 2012 were $515.6 million compared to $509.2 million at December 31, 2011. 

Southern provided $350,000 for loan losses during the third quarter of 2012 compared to a $375,000 provision for loan losses for the third quarter of 2011.  Net charge offs totaled $155,000 during the third quarter of 2012 compared to $379,000 in the third quarter of 2011.  For the nine month period ended September 30, 2012, net charge offs totaled $1,100,000 compared to $1,171,000 for the same nine month period in 2011.  Loan delinquencies decreased 21 basis points to 2.06% at September 30, 2012 as compared to 2.27% at September 30, 2011. 

The annualized return on average assets for the nine month periods ended September 30, 2012 and 2011 was 0.82% and 0.64%, respectively.  The annualized return on average equity was 7.94% for the first nine months of 2012 compared to 6.46% for the same period of 2011.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "We continue to be pleased with our strong results.  The 32.8% increase in earnings for the first nine months of 2012 was driven by our commitment to core banking; an increase in outstanding loan volumes, a reduction in funding costs and strong secondary market residential loan volumes.  With our current liquidity levels and solid capital ratios, Southern remains well positioned to respond to increasing credit demand from businesses and consumers."

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. 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, 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.
Consolidated Balance Sheets (Unaudited)

(In thousands, except share data)







September 30,
2012


December 31,
2011


ASSETS







     Cash and cash equivalents

$

44,085


$

42,185


     Federal funds sold


255



287


     Securities available for sale


75,594



90,344


     Loans held for sale


2,412



1,088


     Loans, net of allowance for loan losses of  $5,362 - 2012 ($5,412 - 2011)


345,126



327,392


     Premises and equipment, net


12,328



12,546


     Accrued interest receivable


2,527



2,148


     Net cash surrender value of life insurance


10,562



10,312


     Goodwill


13,422



13,422


     Other intangible assets, net


1,422



1,666


     Other assets


7,828



7,830


TOTAL ASSETS

$

515,561


$

509,220









LIABILITIES







     Deposits:







          Non-interest bearing

$

70,853


$

61,930


          Interest bearing


360,132



358,581


     Total deposits


430,985



420,511









     Securities sold under agreements to repurchase and overnight borrowings


16,331



18,074


     Accrued expenses and other liabilities


4,803



4,568


     Other borrowings


2,294



7,751


     Subordinated debentures


5,155



5,155


     Common stock subject to repurchase obligation in Employee







         Stock Ownership Plan, shares outstanding 121,181 in 2012







         (115,170 shares in 2011)


1,666



1,296


Total liabilities


461,234



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 – 2,375,642 shares in 2012 (2,358,599 shares in 2011)







          Outstanding (other than ESOP shares) – 2,254,461 shares in 2012
          (2,243,429 shares in 2011)


5,636



5,609


     Additional paid-in capital


18,021



18,278


     Retained earnings


30,164



27,576


     Accumulated other comprehensive income, net


575



571


     Unearned Employee Stock Ownership Plan shares


(69)



(169)


     Total shareholders' equity


54,327



51,865


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

515,561


$

509,220











 

Southern Michigan Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)

(In thousands, except per share data)







Three Months Ended
September 30,


Nine Months Ended
September 30,



2012


2011


2012


2011


Interest income:













     Loans, including fees

$

4,679


$

4,444


$

13,819


$

13,148


     Securities:













         Taxable


120



164



339



473


         Tax-exempt


238



237



726



671


     Other


20



31



77



129


Total interest income


5,057



4,876



14,961



14,421















Interest expense:













     Deposits


554



771



1,802



2,418


     Other


119



146



381



453


Total interest expense


673



917



2,183



2,871


Net interest income


4,384



3,959



12,778



11,550


Provision for loan losses


350



375



1,050



875


Net interest income after provision for loan losses


4,034



3,584



11,728



10,675


Non-interest income:













     Service charges on deposit accounts


449



489



1,256



1,568


     Trust fees


276



284



837



852


     Net gains on security calls and sales


-



2



3



4


     Net gains on loan sales


519



309



1,397



831


     Earnings on life insurance assets


82



87



250



251


      Brokerage income


53



76



156



170


     ATM and debit card fee income


289



263



853



755


     Other


137



134



418



371


Total non-interest income


1,805



1,644



5,170



4,802















Non-interest expense:













     Salaries and employee benefits


2,492



2,310



7,180



7,051


     Occupancy, net


237



230



797



939


     Equipment


197



158



606



565


     Printing, postage and supplies


104



139



348



382


     Telecommunication expenses


55



74



212



271


     Professional and outside services


309



253



845



673


     FDIC assessments


94



101



294



376


     Software maintenance


125



110



356



325


     Amortization of other intangibles


82



85



244



254


     Expenses relating to OREO property


74



72



276



203


     ATM expenses


108



93



318



267


     Other


440



468



1,265



1,137


Total non-interest expense


4,317



4,093



12,741



12,443


INCOME BEFORE INCOME TAXES


1,522



1,135



4,157



3,034


Federal income tax provision


368



248



974



637


NET INCOME

$

1,154


$

887


$

3,183


$

2,397


Basic Earnings Per Common Share

$

0.49


$

0.38


$

1.35


$

1.03


Diluted Earnings Per Common Share


0.49



0.38



1.34



1.03


Dividends Declared Per Common Share


0.09



0.05



0.25



0.15


 

SOURCE Southern Michigan Bancorp, Inc.



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