Southern Michigan Bancorp, Inc. Announces Third Quarter 2022 Earnings


COLDWATER, Mich., Oct. 26, 2022 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced third quarter 2022 net income of $3,613,000, or $0.79 per share, compared to net income of $3,138,000, or $0.69 per share, for the third quarter of 2021. Southern earned $9,907,000, or $2.18 per share, for the nine-month period ending September 30, 2022 compared to $9,235,000, or $2.02 per share, for the same nine-month period a year ago.   

Consolidated assets at September 30, 2022 totaled $1.243 billion compared to $1.161 billion at December 31, 2021.   Loan totals grew 11.1%, from December 31, 2021 levels of $741.4 million to $823.4 million. Deposits totaled $1.092 billion at September 30, 2022, an increase of $117.6 million or 12.1%, as compared to year end 2021.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “We are pleased to report our third quarter 2022 results which reflect continued loan growth, strong asset quality and record profitability. Net income for the third quarter increased 15.1% over third quarter 2021; loans totaled $823.4 million at the end of the third quarter, growing $90.1 million, or 12.3% compared to September 30, 2021; and loan delinquencies total just 0.16% of gross loans as of September 30, 2022. Additional loan growth is expected during the fourth quarter of 2022 as we continue to expand in the Jackson market and approved loans in the commercial pipeline fund.”    

The allowance for loan losses totaled $9,331,000, or 1.13% of loans at September 30, 2022. Net loan recoveries totaled $11,000 for the first nine months of 2022, compared to net loan recoveries of $40,000 during the first nine months of 2021. No provision for loan loss expense was required during the first nine months of 2022. This contrasts with $1,050,000 of provision for loan loss expense during the first nine months of 2021.

The annualized return on average assets for the nine-month periods ending September 30, 2022 and 2021 was 1.09% and 1.13%, respectively. The annualized return on average equity was 15.14% for the first nine months of 2022 compared to 13.02% for the first nine months of 2021. The tax equivalent net interest margins for the nine-month periods ending September 30, 2022 and 2021 was 3.25% and 3.27%, respectively.

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 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, 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.
Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share data)

 September 30,
2022
 December 31,
2021
 
ASSETS      
Cash and cash equivalents$89,299 $119,389 
Federal funds sold 260  271 
Investment securities 269,896  245,846 
Loans held for sale 200  1,146 
Loans, net of allowance for loan losses of $9,331 - 2022 ($9,320 – 2021) 814,029  732,088 
Premises and equipment, net 14,791  13,115 
Accrued interest receivable 4,922  4,193 
Net cash surrender value of life insurance 18,849  18,671 
Goodwill 13,422  13,422 
Other intangible assets, net 192  219 
Other assets 17,552  12,794 
TOTAL ASSETS$1,243,412 $1,161,154 
       
LIABILITIES      
Deposits :      
Non-interest bearing$272,688 $262,980 
Interest bearing 819,271  711,372 
Total deposits 1,091,959  974,352 
       
Securities sold under agreements to repurchase and overnight borrowings 12,467  20,609 
Accrued expenses and other liabilities 12,924  13,930 
Other borrowings 10,000  20,000 
Subordinated debentures 34,566  34,514 
Total liabilities 1,161,916  1,063,405 
       
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 – 4,544,944 shares in 2022
(4,516,377 shares in 2021)
 11,358  11,287 
Additional paid-in capital 14,386  14,235 
Retained earnings 79,711  71,581 
Accumulated other comprehensive income/(loss), net (23,778) 856 
Unearned Employee Stock Ownership Plan shares (181) (210)
Total shareholders’ equity 81,496  97,749 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,243,412 $1,161,154 
       

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,
 
 2022 2021 2022 2021 
Interest income:            
Loans, including fees$9,369 $8,591 $25,781 $24,058 
Federal funds sold and balances with banks 473  37  759  107 
Securities:            
Taxable 1,396  892  3,421  2,487 
Tax-exempt 299  282  953  800 
Total interest income 11,537  9,802  30,914  27,452 
             
Interest expense:            
Deposits 987  508  2,073  1,783 
Other 452  459  1,359  1,093 
Total interest expense 1,439  967  3,432  2,876 
Net interest income 10,098  8,835  27,482  24,576 
Provision for loan losses -  650  -  1,050 
Net interest income after provision for loan losses 10,098  8,185  27,482  23,526 
             
Non-interest income:            
Service charges on deposit accounts 403  345  1,115  913 
Trust fees 542  587  1,675  1,681 
Net gains on loan sales 70  470  565  1,912 
Earnings on life insurance assets 119  124  347  511 
ATM and debit card fee income 454  470  1,319  1,360 
Other 204  174  554  472 
Total non-interest income 1,792  2,170  5,575  6,849 
             
Non-interest expense:            
Salaries and employee benefits 4,681  4,047  12,972  11,880 
Occupancy, net 410  388  1,244  1,197 
Equipment 338  274  954  861 
Printing, postage and supplies 100  93  307  290 
Telecommunication expenses 83  82  240  266 
Professional and outside services 519  441  1,292  1,218 
Software maintenance 470  434  1,420  1,228 
ATM expenses 184  173  547  493 
Other 711  627  2,114  1,799 
Total non-interest expense 7,496  6,559  21,090  19,232 
INCOME BEFORE INCOME TAXES 4,394  3,796  11,967  11,143 
Federal income tax provision 781  658  2,060  1,908 
NET INCOME$3,613 $3,138 $9,907 $9,235 
             
Basic Earnings Per Common Share$0.80 $0.69 $2.19 $2.02 
Diluted Earnings Per Common Share 0.79  0.69  2.18  2.02 
Dividends Declared Per Common Share 0.13  0.12  0.39  0.36 

CONTACT:  John H. Castle, CEO 
(517) 279-5500



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