Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2011 Earnings

COLDWATER, Mich., Feb. 20, 2012 /PRNewswire/ -- Southern Michigan Bancorp, Inc. (OTCBB: SOMC) reported net income of $3,402,000 for 2011 compared to $3,098,000 for 2010.  Earnings per share were $1.46 for the full year of 2011 compared to $1.34 in 2010.  Fourth quarter 2011 net income was $1,005,000 compared to $723,000 in the fourth quarter of 2010.  

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Total consolidated assets at December 31, 2011 were $509.2 million compared to $493.9 million at December 31, 2010.  

Southern provided $1,050,000 for loan losses in 2011, with an allowance for loan losses at December 31, 2011 of $5,412,000, or 1.63% of loans.  This compared to provision for loan losses expense of $1,375,000 for 2010, with an allowance for loan losses at December 31, 2010 of $5,694,000, or 1.84% of loans.   The decrease in the provision for loan losses resulted primarily from reduced net loan charge-offs and a reduction in specific reserves on impaired loans. Net charge-offs for 2011 were at the lowest level in four years totaling $1,332,000, or .40% of loans, down from $1,756,000, or .55% of loans in 2010.  

Net interest income decreased $318,000, or 2.0% in 2011 compared to 2010, however fourth quarter 2011 net interest income increased $123,000, or 3.0% compared to 2010.  The fourth quarter increase is a result of growth in the loan portfolio and is expected to enhance both net interest income and margin during 2012.

Non-interest income for 2011 was lower at $6,796,000 compared to $7,207,000 in 2010.  The decrease was primarily a result of reduced service charges on deposit accounts.  Southern made changes to its overdraft protection program to comply with regulatory guidance that became effective in July 2011.

Total non-interest expense of $17,312,000 for 2011 decreased $946,000, or 5.2%, as compared to 2010.  

The annualized return on average assets for 2011 and 2010 was 0.68% and 0.65%, respectively.  The annualized return on average equity was 6.80% for 2011 compared to 6.56% for 2010.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "A number of key objectives were met for Southern in 2011; earnings reached their highest level since 2007, loan totals increased by $23.3 million while maintaining a conservative credit culture, and overhead was reduced by completing cost saving measures throughout the organization.  These cost saving measures included the closure of two branch locations and reducing staffing levels from 196 FTEs at December 31, 2010 to 171 FTEs at December 31, 2011."

Castle continued, "While we are pleased with the progress we are making, current economic and regulatory conditions demand that we continue to look for new ways to bring value and service to our customers while maintaining or reducing the cost of doing business.  We anticipate continued success in 2012."

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 "anticipate", "expected", "continue", "look for", "new", "objectives"  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 to identify new ways to bring value and service to our customers while maintaining or reducing the cost of doing business, 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, 2010.  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.

SOURCE Southern Michigan Bancorp, Inc.