Southern Michigan Bancorp, Inc. Announces First Quarter 2020 Earnings

COLDWATER, Mich., April 29, 2020 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced first quarter net income of $1,513,000, a 21.2% decrease compared to net income of $1,920,000 for the first quarter of 2019. Earnings per share for the first quarter of 2020 were $0.66 per share, a decrease of 20.5% compared to $0.83 per share for the first quarter of 2019.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “These are unprecedented times. We are proud of the work our employees are doing to help our customers and each other through this pandemic.”

As of March 31, 2020, total consolidated assets were $828.3 million compared to $809.7 million at December 31, 2019.

“While our asset quality metrics remained strong at March 31, 2020, the overall impact COVID-19 will have on the economy and our customers is unknown. Given this uncertainty, we believed it prudent to increase our provision for loan losses during the quarter,” Castle added.

As a result of these economic conditions, Southern provided $1,000,000 for provision expense during the first quarter of 2020, raising the allowance for loan losses to $6,177,000, or 1.10% of loans. This contrasts with $150,000 of provision for loan losses during the first quarter of 2019. The allowance for loan losses totaled $5,264,000, or 0.96% of loans at March 31, 2019. Net charge-offs totaled $7,000 for the first quarter of 2020, compared to $3,000 during the first quarter of 2019.

The annualized return on average assets for the three-month periods ended March 31, 2020 and March 31, 2019 were 0.73% and 1.01% respectively. The annualized return on average equity was 7.06% for the first quarter of 2020 compared to 10.03% for the first quarter of 2019. The tax equivalent net interest margin for the three-month period ending March 31, 2020 was 3.49% compared to 3.72% for the same period of 2019.

Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 13 branches within Branch, Calhoun, Hillsdale, Kalamazoo 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 “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 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.

SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share data)
			March 31, 2020			December 31, 2019
ASSETS
Cash and cash equivalents			$	73,132		$	68,723
Federal funds sold				572			265
Securities available for sale				140,097			123,436
Loans held for sale				987			1,171
Loans, net of allowance for loan losses of $6,177 - 2020 ($5,184 - 2019)				554,262			557,680
Premises and equipment, net				14,310			14,515
Accrued interest receivable				4,150			3,380
Net cash surrender value of life insurance				15,727			15,633
Goodwill				13,422			13,422
Other intangible assets, net				282			291
Other assets				11,365			11,200
TOTAL ASSETS			$	828,306		$	809,716
LIABILITIES
Deposits:
Non-interest bearing			$	141,495		$	136,430
Interest bearing				535,918			519,332
Total deposits				677,413			655,762
Securities sold under agreements to repurchase and overnight borrowings				12,145			15,401
Accrued expenses and other liabilities				12,672			12,553
Other borrowings				37,250			37,500
Subordinated debentures				5,155			5,155
Total liabilities				744,635			726,371
SHAREHOLDERS’ EQUITY
Preferred stock, 100,000 shares authorized; none issued or outstanding				-			-
Common stock, $2.50 par value:
Authorized - 5,000,000 shares
Issued and outstanding – 2,311,307 shares in 2020
(2,314,878 shares in 2019)				5,773			5,781
Additional paid-in capital				15,062			15,521
Retained earnings				63,462			62,484
Accumulated other comprehensive loss, net				(237	)		(52	)
Unearned Employee Stock Ownership Plan shares				(389	)		(389	)
Total shareholders’ equity				83,671			83,345
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	828,306		$	809,716

SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share data)
	Three Months Ended March 31,
	2020			2019
Interest income:
Loans, including fees	$	6,927		$	6,845
Securities:
Taxable		707			399
Tax-exempt		116			202
Other		227			390
Total interest income		7,977			7,836
Interest expense:
Deposits		1,257			1,151
Other		319			305
Total interest expense		1,576			1,456
Net interest income		6,401			6,380
Provision for loan losses		1,000			150
Net interest income after provision for loan losses		5,401			6,230
Non-interest income:
Service charges on deposit accounts		463			486
Trust fees		517			503
Net gains on loan sales		249			87
Earnings on life insurance assets		94			97
ATM and debit card fee income		348			319
Other		150			188
Total non-interest income		1,821			1,680
Non-interest expense:
Salaries and employee benefits		3,258			3,397
Occupancy, net		397			389
Equipment		313			265
Printing, postage and supplies		103			105
Telecommunication expenses		128			102
Professional and outside services		337			316
Software maintenance		380			403
ATM expenses		131			107
Amortization of other intangibles		9			9
Other		391			558
Total non-interest expense		5,447			5,651
INCOME BEFORE INCOME TAXES		1,775			2,259
Federal income tax provision		262			339
NET INCOME	$	1,513		$	1,920
Basic Earnings Per Common Share	$	0.66		$	0.83
Diluted Earnings Per Common Share	$	0.66		$	0.83
Dividends Declared Per Common Share	$	0.23		$	0.22

 

CONTACT: CONTACT: John H. Castle, CEO
[phone]