Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2009 Earnings
COLDWATER, Mich., Feb. 24 /PRNewswire-FirstCall/ -- Southern Michigan Bancorp, Inc. (OTC Bulletin Board: SOMC) reported net income of $1,936,000 for 2009 compared to $813,000 for 2008. Earnings per share were $0.84 for the full year of 2009 compared to $0.36 in 2008. Fourth quarter 2009 net income was $685,000 compared to a net loss of $758,000 in the fourth quarter of 2008.
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Total consolidated assets at December 31, 2009 were $462.4 million compared to $475.0 million at December 31, 2008.
During 2009, Southern added $2,725,000 to its provision for loan losses, with an allowance for loan losses at December 31, 2009 of $6,075,000, or 1.82% of loans. This compared to provision expense of $5,080,000 for 2008, with an allowance at December 31, 2008 of $7,104,000, or 2.12% of loans. The decrease in the provision for loan losses resulted primarily from reduced specific reserves. Net charge-offs totaled $3,754,000 for 2009. Non-performing loans totaled $7,599,000 at December 31, 2009, or 2.28% of total loans, representing a decrease of $1,553,000, or 17.0% from December 31, 2008.
Southern's 4.14% net interest margin for 2009 remained strong when compared to peers. This compared to 4.36% for 2008. The decline in net interest margin was attributable to lower rates being in effect for all of 2009.
Non-interest income for 2009 was $809,000 greater than in 2008. The increase was a result of $682,000 of net securities gains being recorded during the year compared to $15,000 in 2008 and a $420,000 increase in gains recorded from the sale of secondary market loans, offset by the $390,000 reduction of life insurance proceeds recorded in 2008.
Total non-interest expense was flat for 2009 as compared to 2008. For the full year of 2009, FDIC deposit insurance expense increased $676,000 to $855,000, an increase of 377.7% over 2008 premium costs of $179,000. In the second quarter of 2009, Southern was assessed $217,000 by the FDIC as a special assessment paid by all banks to help cover the costs of bank failures. Additionally, on December 30, 2009, Southern paid $2.4 million to the FDIC as a required three year prepayment of FDIC premiums, of which $2.2 million will be expensed over the next three years. Southern was successful in reducing other non-interest expense categories. Salary and employee benefit costs decreased $780,000, or 7.4%, as a result of cost saving initiatives implemented in 2009.
The annualized return on average assets for 2009 and 2008 was 0.41% and 0.17%, respectively. The annualized return on average equity was 4.29% for 2009 compared to 1.77% for 2008.
John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "Like most banks during the past year, net income has been adversely affected by higher than historically normal provision for loan losses, extraordinary FDIC premium assessments and OREO property expenses. In spite of the challenging environment, we are pleased to be performing better than many in our industry. Our results, while adequate in this environment, are not at levels we would like to see. We have been proactive throughout 2009 in working with our clients and recognizing credit problems as they occur, as well as looking for efficiencies within our organization. While we are beginning to see some improvement in the credit markets and in economic news, we anticipate a gradual turnaround in economic conditions. We will continue to focus on initiatives to mitigate loss and increase efficiencies during 2010."
Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 18 branches within Branch, Calhoun, Cass, Hillsdale and St. Joseph Counties, 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 "will", "anticipate" or "continue" and other similar words or expressions. Management's determination of the provision and allowance for loan losses and other accounting estimates, such as the carrying value of goodwill 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 successfully implement new programs and initiatives, increase efficiencies, 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. Additional information about factors that may adversely affect the matters addressed in forward-looking statements are contained in Southern's reports filed with the Securities and Exchange Commission. Other risk factors exist and new risk factors may emerge at any time. Investors should not place undue reliance on forward-looking statements as predictions of future results. Southern undertakes no obligation to update or revise any forward-looking statements to reflect developments or information obtained after the date of this press release.
SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31, December 31,
2009 2008
---- ----
(In thousands, except share data)
ASSETS
Cash and due from banks $24,814 $27,989
Federal funds sold 2,540 3,320
Securities available for sale 56,948 65,718
Loans held for sale, net of
valuation allowance of $0
in 2009 and 2008 605 121
Loans, net of allowance for
loan losses of $6,075 in
2009 (2008 -$7,104) 327,004 328,206
Premises and equipment, net 12,914 13,286
Accrued interest receivable 2,054 2,614
Net cash surrender value of
life insurance 9,881 9,523
Goodwill 13,422 13,422
Other intangible assets, net 2,355 2,717
Other assets 9,872 8,080
----- -----
TOTAL ASSETS $462,409 $474,996
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing $55,250 $57,216
Interest bearing 325,655 336,827
------- -------
Total deposits 380,905 394,043
Securities sold under
agreements to repurchase 14,799 13,890
Accrued expenses and other
liabilities 4,039 4,272
Other borrowings 10,832 12,492
Subordinated debentures 5,155 5,155
Common stock subject to
repurchase obligation in
Employee Stock Ownership Plan,
shares outstanding – 101,999
in 2009 (100,392 shares in 2008) 945 728
--- ---
Total liabilities 416,675 430,580
Shareholders' equity:
Preferred stock, 100,000
shares authorized; none
issued or outstanding
Common stock, $2.50 par
value per share:
Authorized--4,000,000 shares - -
Issued-2,323,410 shares in
2009 (2,311,740 shares in 2008)
Outstanding (other than
ESOP shares)-2,221,411 shares
in 2009 (2,211,348 shares
in 2008) 5,553 5,528
Additional paid-in capital 18,363 18,473
Retained earnings 22,062 20,593
Accumulated other
comprehensive income, net 193 413
Unearned Employee Stock
Ownership Plan shares (437) (591)
---- ----
Total shareholders' equity 45,734 44,416
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $462,409 $474,996
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SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
(In thousands, except per share amounts)
Interest income:
Loans, including
fees $4,971 $5,227 $19,852 $22,528
Securities:
Taxable 239 510 1,134 2,100
Tax-exempt 199 227 883 943
Other 27 19 69 358
--- --- --- ---
Total interest
income 5,436 5,983 21,938 25,929
----- ----- ------ ------
Interest expense:
Deposits 1,110 1,539 4,671 6,992
Other 185 288 729 1,197
--- --- --- -----
Total interest
expense 1,295 1,827 5,400 8,189
----- ----- ----- -----
Net Interest
Income 4,141 4,156 16,538 17,740
Provision for
loan losses 425 2,350 2,725 5,080
--- ----- ----- -----
Net interest
income after
provision for
loan losses 3,716 1,806 13,813 12,660
Non-interest
income:
Service charges
on deposit
accounts 655 668 2,746 2,744
Trust fees 271 246 987 1,090
Net securities
gains 275 - 682 15
Net gains
on loan sales 153 41 756 336
Earnings on
life insurance
assets 107 107 358 363
Income from
automated
teller machines 189 149 703 624
Gain on
life insurance
proceeds - - - 390
Other 222 187 940 801
--- --- --- ---
Total non-interest
income 1,872 1,398 7,172 6,363
Non-interest
expense:
Salaries
and employee
benefits 2,447 2,605 9,802 10,582
Occupancy, net 304 335 1,351 1,383
Equipment 245 307 917 1,234
Printing,
postage and
supplies 145 170 615 659
Telecommunication 109 96 372 379
Software maintenance 100 92 415 396
Professional
and outside
services 355 479 1,354 1,575
Amortization
of other
intangibles 90 93 362 374
Automated
teller machines 417 76 521 297
FDIC deposit
assessments 179 122 855 179
Other real
estate
owned expense 30 90 319 201
Loss on
sale of
other real
estate owned 130 76 318 213
Other 237 106 1,769 1,498
--- --- ----- -----
Total non-interest
expense 4,788 4,647 18,970 18,970
----- ----- ------ ------
INCOME (LOSS)
BEFORE INCOME
TAXES 800 (1,443) 2,015 53
Federal income
tax provision
(credit) 115 (685) 79 (760)
--- ---- --- ----
NET INCOME (LOSS) $685 $(758) $1,936 $813
==== ===== ====== ====
Basic Earnings
(Loss) Per
Common Share $0.29 $(0.33) $0.84 $0.36
===== ====== ===== =====
Diluted Earnings
(Loss) Per
Common Share $0.29 $(0.33) $0.84 $0.36
===== ====== ===== =====
Dividends
Declared
Per Common Share $0.05 $0.20 $0.20 $0.80
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SOURCE Southern Michigan Bancorp, Inc.
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