Southern Michigan Bancorp, Inc. Announces Third Quarter 2023 Earnings

COLDWATER, Mich., Oct. 25, 2023 (GLOBE NEWSWIRE) — Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced third quarter 2023 net income of $2,767,000, or $0.61 per share, compared to net income of $3,613,000, or $0.79 per share, for the third quarter of 2022. Southern earned $8,468,000, or $1.86 per share, for the nine-month period ending September 30, 2023 compared to $9,907,000, or $2.18 per share, for the same nine-month period a year ago.

Consolidated assets at September 30, 2023 totaled $1.429 billion compared to $1.277 billion at December 31, 2022. Loan totals grew 17.1%, from December 31, 2022 levels of $886.6 million to $1.039 billion. Deposits totaled $1.192 billion at September 30, 2023, an increase of $101 million or 9.3%, as compared to year end 2022.  

John Waldron, President and CEO of Southern Michigan Bancorp, Inc. stated, “Despite the challenging rate environment and higher deposit costs, net interest income decreased nominally. Overhead increased in part due to higher FTE counts and the higher wage scale prevalent across the country.”

Waldron continued, “We opened our first branch office in the Jackson market during the third quarter of 2023 and look forward to further expansion in the coming years.”

The allowance for loan losses totaled $11,634,000, or 1.12% of loans at September 30, 2023. Net loan losses totaled $7,000 for the first nine months of 2023, compared to net loan recoveries of $11,000 during the first nine months of 2022. Asset quality remains strong with loan delinquencies totaling just 0.10% of gross loans at September 30, 2023. During the first nine months of 2023 $950,000 of provision for credit loss expense was recorded, a result of loan growth. This contrasts with no provision for credit loss for the first nine months of 2022.

The annualized return on average assets for the nine-month periods ending September 30, 2023 and 2022 was 0.84% and 1.09%, respectively. The annualized return on average equity was 12.42% for the first nine months of 2023 compared to 15.14% for the first nine months of 2022. The tax equivalent net interest margins for the nine-month periods ending September 30, 2023 and 2022 was 3.18% and 3.23%, respectively.

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, Jackson, 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.

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,” “anticipated,” 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, extent, 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.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)

	September 30, 2023				December 31, 2022
ASSETS
Cash and cash equivalents	$	89,925			$				77,255
Federal funds sold		252							253
Securities available for sale, at fair value		163,252							178,154
Securities held-to-maturity, at amortized cost		62,613							69,661
Loans held for sale		–							–
Loans, net of allowance for loan losses of $11,634 – 2023 ($9,588 – 2022)		1,026,910							877,038
Premises and equipment, net		23,293							16,545
Accrued interest receivable		6,721							5,535
Net cash surrender value of life insurance		22,310							18,124
Goodwill		13,422							13,422
Other intangible assets, net		156							183
Other assets		20,612							20,353
TOTAL ASSETS	$	1,429,466			$				1,276,523
LIABILITIES
Deposits :
Non-interest bearing	$	231,950			$				268,704
Interest bearing		959,921							822,347
Total deposits		1,191,871							1,091,051
Securities sold under agreements to repurchase and overnight borrowings		1,984							11,179
Accrued expenses and other liabilities		14,136							13,545
Other borrowings		96,900							40,000
Subordinated debentures		34,636							34,584
Total liabilities		1,339,527							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 – 4,497,490 shares in 2023   (4,519,179 shares in 2022)		11,240							11,294
Additional paid-in capital		13,182							14,066
Retained earnings		88,000							82,705
Accumulated other comprehensive loss, net		(22,483	)						(21,901		)
Total shareholders’ equity		89,939							86,164
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,429,466			$				1,276,523

Southern Michigan Bancorp, Inc.
condensed consolidated statements of income (unaudited)
(In thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Interest income:
Loans, including fees	$	14,563		$	9,369		$	39,579		$	25,781
Federal funds sold and balances with banks		786			473			2,360			759
Securities:
Taxable		1,567			1,396			4,655			3,421
Tax-exempt		315			299			961			953
Total interest income		17,231			11,537			47,555			30,914
Interest expense:
Deposits		5,777			987			14,516			2,073
Other		1,519			452			3,389			1,359
Total interest expense		7,296			1,439			17,905			3,432
Net interest income		9,935			10,098			29,650			27,482
Provision for loan losses		25			–			950			–
Net interest income after provision for loan losses		9,910			10,098			28,700			27,482
Non-interest income:
Service charges on deposit accounts		422			403			1,248			1,115
Trust fees		629			542			1,787			1,675
Net gains on loan sales		71			70			186			565
Earnings on life insurance assets		157			119			456			347
ATM and debit card fee income		452			454			1,339			1,319
Other		197			204			644			554
Total non-interest income		1,928			1,792			5,660			5,575
Non-interest expense:
Salaries and employee benefits		5,356			4,681			14,751			12,972
Occupancy, net		429			410			1,397			1,244
Equipment		404			338			1,063			954
Printing, postage and supplies		97			100			318			307
Telecommunication expenses		88			83			268			240
Professional and outside services		443			519			1,473			1,292
Software maintenance		568			470			1,639			1,420
ATM expenses		195			184			602			547
Other		869			711			2,525			2,114
Total non-interest expense		8,449			7,496			24,036			21,090
INCOME BEFORE INCOME TAXES		3,389			4,394			10,324			11,967
Federal income tax provision		622			781			1,856			2,060
NET INCOME	$	2,767		$	3,613		$	8,468		$	9,907
Basic Earnings Per Common Share	$	0.61		$	0.80		$	1.86		$	2.19
Diluted Earnings Per Common Share		0.61			0.79			1.86			2.18
Dividends Declared Per Common Share		0.14			0.13			0.42			0.39