STURGIS, Mich., Oct. 25, 2017 (GLOBE NEWSWIRE) -- Sturgis Bancorp, Inc. (OTCQX:STBI) today announced net income of $2.3 million for the first nine months of 2017 and $739,000 for the third quarter of 2017.
Sturgis Bancorp is the holding company for Sturgis Bank & Trust Company (Bank), and its subsidiaries Oakleaf Financial Services, Inc. and Oak Mortgage, LLC. Sturgis Bancorp provides a full array of trust, commercial and consumer banking services from 12 banking centers in Sturgis, Bangor, Bronson, Centreville, Climax, Colon, South Haven, Three Rivers and White Pigeon, Michigan. Oakleaf Financial Services offers a complete range of investment and financial advisory services. Oak Mortgage offers residential mortgages in all markets of the Bank.
Key Highlights for the second quarter of 2017:
- Net income increased 19% for the first nine months of 2017 to $2.3 million, compared to $2.0 million for the first nine months of 2016, primarily due to higher net interest income, lower provisions for ALLL, and net gain on cash flow hedges.
- The Bank maintained strong capital ratios, exceeding “well-capitalized” requirements, with Tier 1 leverage capital at 8.42%. Total capital at September 30, 2017 was 14.10% of risk-weighted assets. The Bank's risk-weighted assets were $262.4 million at September 30, 2017.
- Total deposits increased 1.0% to $300.7 million, mostly noninterest-bearing deposits.
- Allowance for loan losses was 1.12% of gross loans, down slightly from 1.20% on December 31, 2016.
- Asset quality improved, with 0.29% of loans in nonaccrual status on September 30, 2017, compared to 0.34% on December 31, 2016. Loans past due 90 days and accruing were 0.04% of loans on September 30, 2017, compared to 0.10% on December 31, 2016.
Three months ended September 30, 2017 vs. three months ended September 30, 2016 - Net income for the three months ended September 30, 2017 was $739,000, or $0.35 per share, compared to net income of $670,000, or $0.32 per share, for the three months ended September 30, 2016. The tax equivalent net interest margin decreased to 3.72% in the third quarter of 2017 from 3.83% in the third quarter of 2016.
Noninterest income was $1.3 million in the third quarter of 2017, compared to $1.4 million in the third quarter of 2016. Most of the decrease was due to $15,000 gain on sale of real estate owned in 2017, compared to $196,000 in 2016. Service charges and other fees increased $132,000, to $391,000, primarily due to changes in checking account fee income.
Noninterest expense was $3.6 million in 2017 and $3.6 million in 2016. Salaries and employee benefits, the largest component of noninterest expense, increased $48,000, primarily due to higher pension funding in 2017 and cost of living increases.
The Company provided $59,000 to the allowance for loan losses in the third quarter of 2017, compared to $102,000 in the same quarter of 2016. Net charge-offs were $47,000 in 2017, compared to $118,000 in 2016.
Nine months ended September 30, 2017 vs. nine months ended September 30, 2016 - Net income for the first nine months of 2017 was $2.3 million, or $1.12 per share, compared to net income of $2.0 million, or $0.95 per share, for the first nine months of 2016. The tax equivalent net interest margin decreased to 3.75% in the first nine months of 2017 from 3.79% in the first nine months of 2016.
Noninterest income was $4.2 million in the first nine months of 2017, compared to $3.9 million in the first nine months of 2016. Most of the increase was $258,000 net gain on cash flow hedges. Service charges and other fees also increased $247,000, to $1.0 million, primarily due to changes in checking account fee income. Investment brokerage commission income decreased to $1.1 million in 2017 from $1.2 million in 2016. The decrease in commission income was primarily due to the Department of Labor's Fiduciary Rule and the 2016 conversion to Raymond James Financial Inc. from LPL Financial. Gain on sale of real estate owned also decreased to $23,000 in 2017 from $196,000 in 2016.
Noninterest expense was $11.0 million in 2017 and $10.4 million in 2016. Salaries and employee benefits, the largest component of noninterest expense, increased $601,000, primarily due to higher pension funding in 2017 and cost of living increases.
The Company provided ($182,000) to the allowance for loan losses in the first nine months of 2017, compared to $284,000 in the first nine months of 2016. Net charge-offs were ($48,000) in 2017, compared to $329,000 in 2016.
Total assets increased to $404.7 million at September 30, 2017 from $398.6 million at December 31, 2016, primarily in loans. Loans increased $11.0 million from December 31, 2016. Most of the increase in loans was in commercial loans.
Noninterest-bearing deposits increased to $75.1 million at September 30, 2017 from $65.5 million at December 31, 2016. Interest-bearing deposits decreased to $225.5 million at September 30, 2017 from $232.3 million at December 31, 2016. The decrease in interest-bearing deposits includes $3.0 million decrease in brokered deposits.
Total equity was $36.3 million at September 30, 2017, compared to $34.7 million at December 31, 2016. Book value per share increased to $17.37 ($13.88 tangible) at September 30, 2017 from $16.65 ($13.14 tangible) at December 31, 2016.
This release contains statements that constitute forward-looking statements. These statements appear in several places in this release and include statements regarding intent, belief, outlook, objectives, efforts, estimates or expectations of Bancorp, primarily with respect to future events and the future financial performance of the Bancorp. Any such forward-looking statements are not guarantees of future events or performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statement. Factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; government and regulatory policy changes; the outcome of any pending and future litigation and contingencies; trends in consumer behavior and ability to repay loans; and changes of the world, national and local economies. Bancorp undertakes no obligation to update, amend or clarify forward-looking statements as a result of new information, future events, or otherwise. The numbers presented herein are unaudited.
For additional information, visit our website at www.sturgisbank.com.
| CONSOLIDATED BALANCE SHEETS | |||||||
| (Amounts in thousands, except share and per share data) | |||||||
| Sept. 30, | Dec. 31, | ||||||
| 2017 | 2016 | ||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 8,355 | $ | 8,150 | |||
| Other short-term investments | 4,730 | 4,963 | |||||
| Total cash and cash equivalents | 13,085 | 13,113 | |||||
| Interest-earning deposits in banks | 13,585 | 16,068 | |||||
| Securities - available for sale | 29,033 | 32,387 | |||||
| Securities - held to maturity | 35,504 | 33,769 | |||||
| Federal Home Loan Bank stock, at cost | 3,169 | 3,117 | |||||
| Loans held for sale, at fair value | 412 | 1,089 | |||||
| Loans, net of allowance of $3,108 and $3,242 | 277,875 | 266,871 | |||||
| Premises and equipment, net | 8,962 | 8,360 | |||||
| Goodwill | 5,834 | 5,834 | |||||
| Core deposit intangibles | 217 | 259 | |||||
| Originated mortgage servicing rights | 1,238 | 1,216 | |||||
| Real estate owned | 395 | 687 | |||||
| Bank-owned life insurance | 10,198 | 9,998 | |||||
| Accrued interest receivable | 1,642 | 1,407 | |||||
| Other assets | 3,539 | 4,454 | |||||
| Total assets | $ | 404,688 | $ | 398,629 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Liabilities | |||||||
| Deposits | |||||||
| Noninterest-bearing | $ | 75,155 | $ | 65,455 | |||
| Interest-bearing | 225,526 | 232,312 | |||||
| Total deposits | 300,681 | 297,767 | |||||
| Federal Home Loan Bank advances and other borrowings | 62,987 | 61,180 | |||||
| Accrued interest payable | 246 | 243 | |||||
| Other liabilities | 4,429 | 4,712 | |||||
| Total liabilities | 368,343 | 363,902 | |||||
| Stockholders' equity | |||||||
| Preferred stock - $1 par value: authorized - 1,000,000 shares | |||||||
| issued and outstanding – 0 shares | - | - | |||||
| Common stock – $1 par value: authorized – 9,000,000 shares | |||||||
| issued and outstanding 2,092,741 shares at Sept. 30, 2017 | |||||||
| and 2,085,991 at December 31, 2016 | 2,093 | 2,086 | |||||
| Additional paid-in capital | 7,473 | 7,367 | |||||
| Retained earnings | 26,821 | 25,234 | |||||
| Accumulated other comprehensive loss | (42 | ) | 40 | ||||
| Total stockholders' equity | 36,345 | 34,727 | |||||
| Total liabilities and stockholders' equity | $ | 404,688 | $ | 398,629 | |||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||
| (Amounts in thousands, except share and per share data) | |||||||
| Three Months Ended Sept. 30, | |||||||
| 2017 | 2016 | ||||||
| Interest income | |||||||
| Loans | $ | 3,255 | $ | 3,220 | |||
| Investment securities: | |||||||
| Taxable | 208 | 168 | |||||
| Tax-exempt | 278 | 234 | |||||
| Dividends | 35 | 28 | |||||
| Total interest income | 3,776 | 3,650 | |||||
| Interest expense | |||||||
| Deposits | 177 | 171 | |||||
| Borrowed funds | 368 | 290 | |||||
| Total interest expense | 545 | 461 | |||||
| Net interest income | 3,231 | 3,189 | |||||
| Provision (benefit) for loan losses | 59 | 102 | |||||
| Net interest income after provision (benefit) for loan losses | 3,172 | 3,087 | |||||
| Noninterest income: | |||||||
| Service charges and other fees | 391 | 259 | |||||
| Interchange income | 195 | 190 | |||||
| Investment brokerage commission income | 368 | 267 | |||||
| Mortgage banking activities | 161 | 201 | |||||
| Trust fee income | 117 | 143 | |||||
| Earnings on cash value of bank-owned life insurance | 68 | 66 | |||||
| Gain on sale of real estate owned | 15 | 197 | |||||
| Other income | 33 | 28 | |||||
| Total noninterest income | 1,348 | 1,351 | |||||
| Noninterest expenses: | |||||||
| Salaries and employee benefits | 2,064 | 2,016 | |||||
| Occupancy and equipment | 461 | 409 | |||||
| Interchange expenses | 97 | 105 | |||||
| Data processing | 182 | 209 | |||||
| Professional services | 110 | 93 | |||||
| Real estate owned expense | 39 | 42 | |||||
| Advertising | 87 | 66 | |||||
| FDIC premiums | 43 | 65 | |||||
| Realized loss (gain) on available for sale securities | 20 | (1 | ) | ||||
| Other expenses | 503 | 591 | |||||
| Total noninterest expenses | 3,606 | 3,595 | |||||
| Income before income tax expense | 914 | 843 | |||||
| Income tax expense | 175 | 173 | |||||
| Net income | $ | 739 | $ | 670 | |||
| Earnings per share | $ | 0.35 | $ | 0.32 | |||
| Dividends per share | 0.12 | 0.12 | |||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (Amounts in thousands, except share and per share data) | ||||||||
| Nine Months Ended Sept. 30, | ||||||||
| 2017 | 2016 | |||||||
| Interest income | ||||||||
| Loans | $ | 9,564 | $ | 9,306 | ||||
| Investment securities: | ||||||||
| Taxable | 620 | 471 | ||||||
| Tax-exempt | 820 | 658 | ||||||
| Dividends | 96 | 84 | ||||||
| Total interest income | 11,100 | 10,519 | ||||||
| Interest expense | ||||||||
| Deposits | 506 | 509 | ||||||
| Borrowed funds | 990 | 834 | ||||||
| Total interest expense | 1,496 | 1,343 | ||||||
| Net interest income | 9,604 | 9,176 | ||||||
| Provision (benefit) for loan losses | (182 | ) | 284 | |||||
| Net interest income after provision (benefit) for loan losses | 9,786 | 8,892 | ||||||
| Noninterest income: | ||||||||
| Service charges and other fees | 1,006 | 759 | ||||||
| Interchange income | 577 | 544 | ||||||
| Investment brokerage commission income | 1,101 | 1,222 | ||||||
| Mortgage banking activities | 578 | 533 | ||||||
| Trust fee income | 350 | 351 | ||||||
| Earnings on cash value of bank-owned life insurance | 199 | 196 | ||||||
| Net gain on cash flow hedges | 258 | - | ||||||
| Gain (loss) on sale of real estate owned | 23 | 196 | ||||||
| Other income | 76 | 143 | ||||||
| Total noninterest income | 4,168 | 3,944 | ||||||
| Noninterest expenses: | ||||||||
| Salaries and employee benefits | 6,429 | 5,828 | ||||||
| Occupancy and equipment | 1,348 | 1,302 | ||||||
| Interchange expenses | 284 | 317 | ||||||
| Data processing | 495 | 604 | ||||||
| Professional services | 313 | 198 | ||||||
| Real estate owned expense | 102 | 209 | ||||||
| Advertising | 193 | 182 | ||||||
| FDIC premiums | 139 | 192 | ||||||
| Realized loss (gain) on available for sale securities | 20 | (1 | ) | |||||
| Other expenses | 1,695 | 1,540 | ||||||
| Total noninterest expenses | 11,018 | 10,371 | ||||||
| Income before income tax expense | 2,936 | 2,465 | ||||||
| Income tax expense | 596 | 498 | ||||||
| Net income | $ | 2,340 | $ | 1,967 | ||||
| Earnings per share | $ | 1.12 | $ | 0.95 | ||||
| Dividends per share | 0.36 | 0.30 | ||||||
| OTHER FINANCIAL INFORMATION | ||||||||
| (Amounts in thousands) | ||||||||
| Three Months Ended Sept. 30, | ||||||||
| 2017 | 2016 | |||||||
| Sturgis Bank & Trust Company: | ||||||||
| Average noninterest-bearing deposits | $ | 78,019 | $ | 69,865 | ||||
| Average interest-bearing deposits | 227,151 | 232,795 | ||||||
| Average total assets | 406,536 | 390,372 | ||||||
| Total risk-weighted assets, end of period | 262,358 | 249,328 | ||||||
| Sturgis Bancorp: | ||||||||
| Average equity | 36,021 | 33,616 | ||||||
| Average total assets | 406,695 | 390,489 | ||||||
| Total risk-weighted assets, end of period | 262,569 | 249,582 | ||||||
| Financial ratios for Sturgis Bancorp: | ||||||||
| Return on average assets | 0.72 | % | 0.68 | % | ||||
| Return on average equity | 8.14 | % | 8.04 | % | ||||
| Net interest margin | 3.54 | % | 3.67 | % | ||||
| Tax equivalent net interest margin | 3.72 | % | 3.83 | % | ||||
| Nine Months Ended Sept. 30, | ||||||||
| 2017 | 2016 | |||||||
| Sturgis Bank & Trust Company: | ||||||||
| Average noninterest-bearing deposits | $ | 71,987 | $ | 65,956 | ||||
| Average interest-bearing deposits | 233,601 | 230,164 | ||||||
| Average total assets | 402,865 | 380,111 | ||||||
| Sturgis Bancorp: | ||||||||
| Average equity | 35,592 | 33,142 | ||||||
| Average total assets | 403,031 | 380,217 | ||||||
| Financial ratios for Sturgis Bancorp: | ||||||||
| Return on average assets | 0.78 | % | 0.69 | % | ||||
| Return on average equity | 8.79 | % | 7.98 | % | ||||
| Net interest margin | 3.57 | % | 3.62 | % | ||||
| Tax equivalent net interest margin | 3.75 | % | 3.79 | % | ||||
Contacts:
Sturgis Bancorp -- Eric Eishen, President & CEO, or Brian P. Hoggatt, CFO -- P: 269 651-9345