Southern Michigan Bancorp, Inc. Announces First Quarter 2017 Earnings

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Apr 25, 2017, 08:00 ET

COLDWATER, Mich., April 25, 2017 /PRNewswire/ -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported net income of $1,446,000, or $0.59 per share, for the quarter ended March 31, 2017. This compared to net income of $1,374,000, or $0.57 per share, for the first quarter of 2016.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "We are pleased to report continued improvement in our financial performance. First quarter net income increased 5.2% compared to the first quarter of 2016. Loans increased $31.5 million year over year. Additional loan growth is expected throughout 2017 as approved loans in the commercial loan pipeline fund."

Total consolidated assets at March 31, 2017 were $649.7 million compared to $641.5 million at December 31, 2016.

No provision for loan losses was required during the first quarter of 2017. The allowance for loan losses was $4,785,000, or 1.06% of loans at March 31, 2017. This compared to $100,000 provision for loan losses during the first quarter of 2016. The allowance for loan losses was $4,842,000, or 1.08% of loans at March 31, 2016. Net charge-offs totaled $57,000 for the first quarter of 2017, compared to $191,000 during the first quarter of 2016. Total delinquent loans decreased to 0.38% of total loans as of March 31, 2017, down from 0.52% as of December 31, 2016.

The annualized return on average assets for the three month period ended March 31, 2017 was 0.89% compared to 0.93% for the first quarter of 2016. The annualized return on average equity was 8.11% for the first quarter of 2017 compared to 7.96% for the first quarter of 2016. The tax equivalent net interest margin for the three month period ending March 31, 2017 was 3.75% compared to 3.90% for the same period of 2016.

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.

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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, 2017		December 31, 2016
ASSETS
Cash and cash equivalents	$	16,631	$	16,320
Federal funds sold		23,726		18,486
Securities available for sale		107,852		109,963
Loans held for sale		641		84
Loans, net of allowance for loan losses of $4,785 - 2017 ($4,842 - 2016)		448,714		444,973
Premises and equipment, net		13,302		12,798
Accrued interest receivable		2,801		2,871
Net cash surrender value of life insurance		14,518		14,422
Goodwill		13,422		13,422
Other intangible assets, net		172		229
Other assets		7,969		7,964
TOTAL ASSETS	$	649,748	$	641,532

LIABILITIES
Deposits:
Non-interest bearing	$	113,965	$	107,410
Interest bearing		428,352		428,435
Total deposits		542,317		535,845

Securities sold under agreements to repurchase and overnight borrowings		12,821		13,311
Accrued expenses and other liabilities		7,690		6,890
Other borrowings		10,200		10,200
Subordinated debentures		5,155		5,155
Total liabilities		578,183		571,401

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 – 2,469,263 shares in 2017 (2,406,538 shares in 2016)		6,168		6,011
Additional paid-in capital		19,107		19,246
Retained earnings		47,233		46,282
Accumulated other comprehensive loss, net		(559)		(1,004)
Unearned Employee Stock Ownership Plan shares		(384)		(404)
Total shareholders' equity		71,565		70,131
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	649,748	$	641,532

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


(In thousands, except per share data)
	Three Months Ended March 31,
	2017		2016

Interest income:
Loans, including fees	$	5,244	$	5,040
Securities:
Taxable		298		196
Tax-exempt		231		230
Other		47		29
Total interest income		5,820		5,495

Interest expense:
Deposits		361		300
Other		138		127
Total interest expense		499		427
Net interest income		5,321		5,068
Provision for loan losses		-		100
Net interest income after provision for loan losses		5,321		4,968

Non-interest income:
Service charges on deposit accounts		395		380
Trust fees		367		513
Net gains on security calls and sales		1		42
Net gains on loan sales		138		218
Earnings on life insurance assets		96		48
ATM and debit card fee income		335		333
Other		240		214
Total non-interest income		1,572		1,748
Non-interest expense:
Salaries and employee benefits		2,889		2,616
Occupancy, net		355		343
Equipment		246		209
Printing, postage and supplies		118		128
Telecommunication expenses		76		76
Professional and outside services		302		415
Software maintenance		293		233
ATM expenses		142		150
FDIC assessments		59		74
Amortization of other intangibles		57		65
Other		431		494
Total non-interest expense		4,968		4,803
INCOME BEFORE INCOME TAXES		1,925		1,913
Federal income tax provision		479		539
NET INCOME	$	1,446	$	1,374
Basic Earnings Per Common Share	$	0.59	$	0.57
Diluted Earnings Per Common Share	$	0.59	$	0.57
Dividends Declared Per Common Share	$	0.20	$	0.18