Southern Michigan Bancorp, Inc. Announces First Quarter 2016 Earnings

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Apr 26, 2016, 04:59 ET

COLDWATER, Mich., April 26, 2016 /PRNewswire/ -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported net income of $1,374,000, or $0.57 per share, for the quarter ended March 31, 2016. This compared to net income of $1,209,000, or $0.50 per share, for the first quarter of 2015.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "We are pleased with our first quarter financial performance. The 13.6% increase in year over year earnings positions us well for 2016. During the first quarter of 2016 we increased our quarterly shareholder dividend to $0.18 per share, a $0.02 per share increase over the January 22, 2016 dividend of $0.16 per share."

Total consolidated assets at March 31, 2016 were $598.9 million compared to $582.8 million at December 31, 2015.

Southern provided $100,000 for loan losses during the first quarter of 2016 resulting in an allowance for loan losses of $5,182,000, or 1.23% of loans. This compared to $75,000 provision for loan losses during the first quarter of 2015. The allowance for loan losses was $5,144,000, or 1.26% of loans at March 31, 2015. Net charge-offs totaled $191,000 for the first quarter of 2016, compared to $108,000 during the first quarter of 2015. Total delinquent loans decreased to 0.60% of total loans as of March 31, 2016, down from 1.13% as of December 31, 2015.

The annualized return on average assets for the three month period ended March 31, 2016 was 0.93% compared to 0.87% for the first quarter of 2015. The annualized return on average equity was 7.96% for the first quarter of 2016 compared to 7.56% for the first quarter of 2015. The tax equivalent net interest margin for the three month period ending March 31, 2016 was 3.90% compared to 3.93% for the same period of 2015.

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, Kalamazoo and St. Joseph Counties, and a loan production office in Steuben County, 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, 2016		December 31, 2015
ASSETS
Cash and cash equivalents	$	15,024	$	13,487
Federal funds sold		25,174		6,941
Securities available for sale		90,847		97,150
Loans held for sale		106		328
Loans, net of allowance for loan losses of $5,182 - 2016 ($5,273 - 2015)		416,842		416,716
Premises and equipment, net		13,014		12,685
Accrued interest receivable		2,681		2,517
Net cash surrender value of life insurance		14,093		11,939
Goodwill		13,422		13,422
Other intangible assets, net		424		489
Other assets		7,293		7,097
TOTAL ASSETS	$	598,920	$	582,771

LIABILITIES
Deposits:
Non-interest bearing	$	105,493	$	101,186
Interest bearing		391,800		376,299
Total deposits		497,293		477,485

Securities sold under agreements to repurchase and overnight borrowings		11,353		15,943
Accrued expenses and other liabilities		6,152		6,419
Other borrowings		10,000		10,000
Subordinated debentures		5,155		5,155
Total liabilities		529,953		515,002

SHAREHOLDERS' EQUITY
Preferred stock, 100,000 shares authorized; none issued or outstanding		-		-
Common stock, $2.50 par value:
Authorized - 4,000,000 shares
Issued and outstanding - 2,417,561 shares in 2016 (2,406,508 shares in 2015)		6,039		6,011
Additional paid-in capital		19,416		19,572
Retained earnings		42,965		42,029
Accumulated other comprehensive income, net		804		414
Unearned Employee Stock Ownership Plan shares		(257)		(257)
Total shareholders' equity		68,967		67,769
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	598,920	$	582,771

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

(In thousands, except per share data)
	Three Months Ended March 31,
	2016		2015

Interest income:
Loans, including fees	$	5,040	$	4,741
Securities:
Taxable		196		179
Tax-exempt		230		198
Other		29		7
Total interest income		5,495		5,125

Interest expense:
Deposits		300		299
Other		127		81
Total interest expense		427		380
Net interest income		5,068		4,745
Provision for loan losses		100		75
Net interest income after provision for loan losses		4,968		4,670

Non-interest income:
Service charges on deposit accounts		380		416
Trust fees		513		322
Net gains on security calls and sales		42		24
Net gains on loan sales		218		228
Earnings on life insurance assets		48		83
ATM and debit card fee income		333		310
Other		214		227
Total non-interest income		1,748		1,610
Non-interest expense:
Salaries and employee benefits		2,616		2,591
Occupancy, net		343		293
Equipment		209		162
Printing, postage and supplies		128		119
Telecommunication expenses		76		60
Professional and outside services		415		267
Software maintenance		233		208
ATM expenses		150		124
FDIC assessments		74		87
Loan related expenses		94		121
Loss on sale or write down of other real estate owned		51		146
Amortization of other intangibles		65		70
Other		349		365
Total non-interest expense		4,803		4,613
INCOME BEFORE INCOME TAXES		1,913		1,667
Federal income tax provision		539		458
NET INCOME	$	1,374	$	1,209
Basic Earnings Per Common Share	$	0.57	$	0.50
Diluted Earnings Per Common Share	$	0.57	$	0.50
Dividends Declared Per Common Share	$	0.18	$	0.15

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SOURCE Southern Michigan Bancorp, Inc.

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