COLDWATER, Mich., April 26, 2023 (GLOBE NEWSWIRE) — Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced first quarter net income of $3,005,000, or $0.66 per share, compared to net income of $2,933,000, or $0.65 per share, for the first quarter of 2022.
John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “We are pleased with our first quarter financial performance. Total loans, assets and deposits all reached record highs. We look forward to opening our first branch location in downtown Jackson two blocks from the loan production office located on West Michigan Avenue. The new branch is scheduled to open in July.”
As of March 31, 2023, total consolidated assets grew to $1.327 billion compared to $1.277 billion on December 31, 2022. Likewise, total loans and deposits also grew during the quarter totaling $933.5 million and $1.127 billion, respectively, on March 31, 2023.
The allowance for credit losses totaled $10,963,000, or 1.17% of loans on March 31, 2023. Net loan charge-offs totaled $0 for the first quarter of 2023, compared to net loan charge-offs of $13,000 during the first quarter of 2022. Loan delinquencies at both March 31, 2023 and December 31, 2022 were 0.13% of gross loans. On January 1, 2023, Southern adopted Accounting Standard Update 2016-13. The adoption resulted in an increase of $1.1 million to the allowance for credit losses and the establishment of a $500,000 reserve for unfunded commitments. A one-time adjustment to capital for $1.6 million, net of tax, was recorded. Southern provided an additional $275,000 for loan losses during the first quarter of 2023, while no provision for loan loss expense was required during the first quarter of 2022.
The annualized return on average assets for the three-month periods ended March 31, 2023 and March 31, 2022 were 0.93% and 0.98% respectively. The annualized return on average equity was 13.68% for the first quarter of 2023 compared to 12.23% for the first quarter of 2022. The tax equivalent net interest margin for the three-month period ending March 31, 2023 was 3.31% compared to 3.02% for the same period of 2022.
Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 14 branches within Branch, Calhoun, Hillsdale, Kalamazoo and St. Joseph Counties, and a loan production office in Jackson 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 to 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, 2023 |
December 31, 2022 |
|||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 79,184 | $ | 77,255 | ||||
| Federal funds sold | 265 | 253 | ||||||
| Securities available for sale, at fair value | 179,581 | 178,154 | ||||||
| Securities held-to-maturity, at amortized cost | 68,946 | 69,661 | ||||||
| Loans, net of allowance for loan losses of $10,963 – 2023 ($9,588 – 2022) | 922,536 | 877,038 | ||||||
| Premises and equipment, net | 17,554 | 16,545 | ||||||
| Accrued interest receivable | 5,666 | 5,535 | ||||||
| Net cash surrender value of life insurance | 22,001 | 18,124 | ||||||
| Goodwill | 13,422 | 13,422 | ||||||
| Other intangible assets, net | 174 | 183 | ||||||
| Other assets | 17,636 | 20,353 | ||||||
| TOTAL ASSETS | $ | 1,326,965 | $ | 1,276,523 | ||||
| LIABILITIES | ||||||||
| Deposits: | ||||||||
| Non-interest bearing | $ | 248,448 | $ | 268,704 | ||||
| Interest bearing | 878,669 | 822,347 | ||||||
| Total deposits | 1,127,117 | 1,091,051 | ||||||
| Securities sold under agreements to repurchase and overnight borrowings | 10,659 | 11,179 | ||||||
| Accrued expenses and other liabilities | 12,905 | 13,545 | ||||||
| Other borrowings | 50,900 | 40,000 | ||||||
| Subordinated debentures | 34,601 | 34,584 | ||||||
| Total liabilities | 1,236,182 | 1,190,359 | ||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Preferred stock, 100,000 shares authorized; none issued or outstanding | – | – | ||||||
| Common stock, $2.50 par value: | ||||||||
| Authorized – 10,000,000 shares | ||||||||
| Issued and outstanding – 4,577,171 shares in 2023 (4,519,179 shares in 2022) |
11,439 | 11,294 | ||||||
| Additional paid-in capital | 14,098 | 14,066 | ||||||
| Retained earnings | 83,800 | 82,705 | ||||||
| Accumulated other comprehensive loss, net | (18,554 | ) | (21,901 | ) | ||||
| Total shareholders’ equity | 90,783 | 86,164 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,326,965 | $ | 1,276,523 | ||||
SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
| Three Months Ended March 31, | |||||||
| 2023 | 2022 | ||||||
| Interest income: | |||||||
| Loans, including fees | $ | 11,853 | $ | 7,985 | |||
| Securities: | |||||||
| Taxable | 1,527 | 901 | |||||
| Tax-exempt | 329 | 277 | |||||
| Other | 624 | 50 | |||||
| Total interest income | 14,333 | 9,213 | |||||
| Interest expense: | |||||||
| Deposits | 3,767 | 486 | |||||
| Other | 712 | 463 | |||||
| Total interest expense | 4,479 | 949 | |||||
| Net interest income | 9,854 | 8,264 | |||||
| Provision for loan losses | 275 | – | |||||
| Net interest income after provision for loan losses | 9,579 | 8,264 | |||||
| Non-interest income: | |||||||
| Service charges on deposit accounts | 393 | 362 | |||||
| Trust fees | 567 | 577 | |||||
| Net gains on loan sales | 60 | 264 | |||||
| Earnings on life insurance assets | 146 | 117 | |||||
| ATM and debit card fee income | 414 | 416 | |||||
| Other | 221 | 160 | |||||
| Total non-interest income | 1,801 | 1,896 | |||||
| Non-interest expense: | |||||||
| Salaries and employee benefits | 4,710 | 3,991 | |||||
| Occupancy, net | 487 | 439 | |||||
| Equipment | 322 | 283 | |||||
| Printing, postage and supplies | 101 | 112 | |||||
| Telecommunication expenses | 91 | 84 | |||||
| Professional and outside services | 473 | 389 | |||||
| Software maintenance | 519 | 466 | |||||
| ATM expenses | 207 | 180 | |||||
| Amortization of other intangibles | 9 | 9 | |||||
| Other | 758 | 672 | |||||
| Total non-interest expense | 7,677 | 6,625 | |||||
| INCOME BEFORE INCOME TAXES | 3,703 | 3,535 | |||||
| Federal income tax provision | 698 | 602 | |||||
| NET INCOME | $ | 3,005 | $ | 2,933 | |||
| Basic Earnings Per Common Share | $ | 0.66 | $ | 0.65 | |||
| Diluted Earnings Per Common Share | $ | 0.66 | $ | 0.65 | |||
| Dividends Declared Per Common Share | $ | 0.14 | $ | 0.13 | |||
