Southern Michigan Bancorp, Inc. Announces Third Quarter 2013 Earnings

COLDWATER, Mich., Oct. 23, 2013 /PRNewswire/ -- Southern Michigan Bancorp, Inc. (OTCQB: SOMC) announced third quarter 2013 net income of $1,207,000, or $0.50 per share, compared to net income of $1,154,000, or $0.49 per share, for the third quarter of 2012.  Southern's net income for the nine month period ended September 30, 2013, was $3,341,000, or $1.40 per share, compared to net income of $3,183,000, or $1.34 per share, for the same nine month period a year ago.

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Total consolidated assets at September 30, 2013 were $535.5 million compared to $528.9 million at December 31, 2012. 

Southern provided $250,000 for loan losses during the third quarter of 2013 resulting in an allowance for loan losses of $5,397,000, or 1.46% of loans at September 30, 2013.  This compared to $350,000 of provision for loan losses expense for the third quarter of 2012.   Net charge-offs totaled $447,000 during the third quarter of 2013, compared to net charge-offs of $155,000 during the third quarter of 2012.  Specific reserves decreased $256,000 during the third quarter of 2013 reducing the amount of provision for loan losses.  For the nine month period ended September 30, 2013, net charge offs totaled $708,000, or annualized 0.26% of loans, compared to $1,101,000, or annualized 0.42% of loans, for the same nine month period of 2012. 

The annualized return on average assets for the nine month periods ended September 30, 2013 and 2012 was 0.84% and 0.82%, respectively.  The annualized return on average equity was 7.97% for the first nine months of 2013 compared to 7.94% for the same period of 2012.  The tax equivalent net interest margin for both nine month periods ended September 30, 2013 and 2012 was 3.81%.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, "We are pleased that earnings increased 5.0% compared to the same nine month period of 2012 in spite of $538,000 in non-reoccurring expense relating to the core processing system conversion. The new operating system went live in August and we are beginning to see benefits from it." 

Castle continued, "We are encouraged by renewed loan demand from creditworthy borrowers.  Based on the volume in our commercial loan pipeline, we expect to see loan growth during the fourth quarter of 2013 and continuing into the first quarter of 2014."

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. 

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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 to 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, 2012.  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.