Southern Michigan Bancorp, Inc. Announces Second Quarter 2012 Earnings

COLDWATER, Mich., July 27, 2012 /PRNewswire/ -- Southern Michigan Bancorp, Inc. (OTCBB: SOMC.OB) announced second quarter 2012 net income of $1,027,000, or $0.43 per share, compared to net income of $762,000, or $0.33 per share, for the second quarter of 2011.  Southern's net income for the six months ended June 30, 2012, was $2,029,000, or $0.86 per share, compared to net income of $1,510,000, or $0.65 per share, for the same six month period a year ago.   

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Total consolidated assets at June 30, 2012 were $503.9 million compared to $509.2 million at December 31, 2011. 

Southern provided $475,000 for loan losses during the second quarter of 2012 resulting in an allowance for loan losses of $5,167,000, or 1.48% of loans, at June 30, 2012.  This compared to $375,000 of provision for loan losses expense for the second quarter of 2011.  Net charge-offs totaled $833,000 during the second quarter of 2012, compared to $549,000 during the second quarter of 2011. 

For the six month period ended June 30, 2012, net charge offs totaled $946,000 compared to $792,000 for the same six month period in 2011.  Specific reserves on impaired loans decreased $387,000 during the first six months of 2012 resulting in a lower provision for loan losses. 

Net interest income for the six months ended June 30, 2012 totaled $8.4 million, an increase of $803,000 or 10.6%, as compared to $7.6 million for the same six month period of 2011.

The annualized return on average assets for the six month periods ended June 30, 2012 and 2011 was 0.78% and 0.61%, respectively.  The annualized return on average equity was 7.66% for the first six months of 2012 compared to 6.17% for the same period of 2011.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, "For the second quarter of 2012, we are pleased to report continued improvement in our financial performance.  As expected, loan balances increased $16.3 million during the second quarter of 2012, contributing to higher net interest income.  Non-interest income also increased as continued low rates on longer term mortgage products resulted in an increase in net gains on loan sales."

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.

SOURCE Southern Michigan Bancorp, Inc.