Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2023 Earnings


COLDWATER, Mich., Feb. 12, 2024 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced fourth quarter 2023 net income of $2,437,000, or $0.54 per share, compared to net income of $3,584,000, or $0.79 per share, for the fourth quarter of 2022. Southern earned $10,905,000, or $2.40 per share, for the year ended December 31, 2023 compared to $13,491,000, or $2.97 per share, for the same period a year ago.   

Consolidated assets at December 31, 2023 totaled $1.41 billion compared to $1.28 billion at December 31, 2022. Total loans grew 16.9%, from December 31, 2022 levels of $886.6 million to $1.04 billion. Deposits totaled $1.16 billion at December 31, 2023, an increase of $66.9 million or 6.1%, as compared to December 31, 2022.  

John Waldron, President and CEO of Southern Michigan Bancorp, Inc. stated, “We had a solid year despite the challenging rate environment and higher deposit costs. Overhead increased in part due to higher FTE counts associated with our recent expansion.”

The allowance for credit losses totaled $11,697,000, or 1.13% of loans at December 31, 2023 compared to $9,588,000, or 1.08% of loans at December 31, 2022. Net loan losses totaled $15,000 for 2023, compared to $7,000 for 2022. Asset quality remains strong with loan delinquencies totaling just 0.10% of gross loans at December 31, 2023. During 2023, the Bank recognized a $950,000 provision for credit losses, primarily due to loan growth. This compares with a $275,000 provision for credit losses recognized for 2022.

The annualized return on average assets for the year ended December 31, 2023 and 2022 was 0.80% and 1.10%, respectively. The annualized return on average equity was 11.94% for the year ended December 31, 2023 compared to 15.68% for the year ended December 31, 2022. The tax equivalent net interest margin for the years ended December 31, 2023 and 2022 was 3.16% and 3.36%, 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)

 December 31,
2023
 December 31,
2022
ASSETS      
Cash and cash equivalents$71,620 $77,255 
Federal funds sold 1,468  253 
Securities available for sale, at fair value 169,740  178,154 
Securities held-to-maturity, at amortized cost 61,600  69,661 
Loans held for sale 169  - 
Loans, net of allowance for credit losses of $11,697 - 2023 ($9,588 – 2022) 1,024,720  877,038 
Premises and equipment, net 23,114  16,545 
Net cash surrender value of life insurance 22,472  18,124 
Goodwill 13,422  13,422 
Other intangible assets, net 147  183 
Other assets 26,323  25,888 
TOTAL ASSETS$1,414,795 $1,276,523 
       
LIABILITIES       
Deposits :      
Non-interest bearing$226,178 $268,704 
Interest bearing 931,793  822,347 
Total deposits 1,157,971  1,091,051 
       
Securities sold under agreements to repurchase and overnight borrowings 1,738  11,179 
Accrued expenses and other liabilities 15,703  13,545 
Other borrowings 106,900  40,000 
Subordinated debentures 34,653  34,584 
Total liabilities 1,316,965  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 – 4,533,637 shares in 2023  (4,519,179 shares in 2022) 11,330  11,294 
Additional paid-in capital 13,126  14,066 
Retained earnings 89,808  82,705 
Accumulated other comprehensive loss, net (16,434) (21,901)
Total shareholders’ equity 97,830  86,164 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,414,795 $1,276,523 


Southern Michigan Bancorp, Inc.

Condensed consolidated statements of income (unaudited)
(In thousands, except per share data)

 Three Months Ended
December 31,
 Year Ended
December 31,
 
 2023 2022 2023 2022 
Interest income:            
Loans, including fees$15,308 $10,802 $54,887 $36,583 
Federal funds sold and deposits with other banks 766  490  3,125  1,249 
Securities:            
Taxable 1,635  1,527  6,291  4,948 
Tax-exempt 304  401  1,265  1,354 
Total interest income 18,013  13,220  65,568  44,134 
             
Interest expense:            
Deposits 6,078  2,045  20,593  4,118 
Other 1,606  555  4,995  1,914 
Total interest expense 7,684  2,600  25,588  6,032 
Net interest income 10,329  10,620  39,980  38,102 
Provision for credit losses -  275  950  275 
Net interest income after provision for credit losses 10,329  10,345  39,030  37,827 
             
Non-interest income:            
Service charges on deposit accounts 422  401  1,670  1,516 
Trust fees 632  589  2,419  2,264 
Net losses on securities -  (666) -  (666)
Net gains on loan sales 119  41  305  606 
Earnings on life insurance assets 161  125  617  472 
Gain from life insurance -  747  -  747 
ATM and debit card fee income 447  430  1,786  1,749 
Other 296  138  941  692 
Total non-interest income 2,077  1,805  7,738  7,380 
             
Non-interest expense:            
Salaries and employee benefits 5,836  5,162  20,586  18,134 
Occupancy, net 416  431  1,813  1,675 
Equipment 385  340  1,449  1,294 
Printing, postage and supplies 118  106  437  413 
Telecommunication expenses 109  63  376  303 
Professional and outside services 770  450  2,243  1,742 
Software maintenance 608  491  2,247  1,911 
ATM expenses 201  208  803  755 
Other 940  793  3,466  2,907 
Total non-interest expense 9,383  8,044  33,420  29,134 
INCOME BEFORE INCOME TAXES 3,023  4,106  13,348  16,073 
Federal income tax provision 586  522  2,443  2,582 
NET INCOME$2,437 $3,584 $10,905 $13,491 
             
Basic Earnings Per Common Share$0.54 $0.79 $2.40 $2.98 
Diluted Earnings Per Common Share 0.54  0.79  2.40  2.97 
Dividends Declared Per Common Share 0.14  0.13  0.56  0.52 
 

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