COLDWATER, Mich., Feb. 11, 2023 (GLOBE NEWSWIRE) — Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported net income of $11,757,000 for 2023 compared to $7,386,000 for 2020. Diluted earnings per share were $2.58 for 2023 compared to $1.61 for 2020 after adjusting for the 100 percent stock dividend issued in May 2023. Fourth quarter 2023 net income was $2,522,000, or $0.56 per share, compared to $2,024,000, or $0.44 per share for the fourth quarter of 2020.
Total consolidated assets at December 31, 2023 increased 16.4 percent, reaching $1.16 billion compared to $997.6 million at December 31, 2020. Loan totals grew 16.6 percent, from December 31, 2020 levels of $635.9 million to $741.4 million. Deposits also increased to $974.4 million at December 31, 2023, an increase of $136.1 million or 16.2 percent, as compared to year end 2020.
Southern Michigan Bancorp, Inc., Chairman and Chief Executive Officer John H. Castle stated, “Net income was a record for the year, 36.4 percent higher than the previous high of $8,622,000 reported in 2019. Total assets, loans and deposits also continued to grow, expanding to new record highs at year end 2023. Excluding the forgiveness of $46.9 million of PPP loans during the year, loan growth exceeded $150 million. Additionally, the commercial loan pipeline remains strong. With liquidity remaining elevated, continued loan growth will be a key to positive earnings momentum in 2023.”
Southern provided $1.5 million for loan losses in 2023, with an allowance for loan losses at December 31, 2023 of $9,320,000, or 1.26% of loans. This compared to a provision for loan losses of $2.6 million for 2020, with an allowance for loan losses at December 31, 2020 of $7,789,000, or 1.22% of loans. Net loan loss recoveries totaled $31,000 for 2023 compared to $5,000 for 2020.
The return on average assets for 2023 was 1.06% compared to 0.82% for 2020. The return on average equity was 12.32% for 2023 compared to 8.36% for 2020. The tax equivalent net interest margins for 2023 and 2020 were 3.27% and 3.24%, respectively.
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 to 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) |
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| (In thousands, except share data) | |||||||
| December 31, 2021 |
December 31, 2020 |
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| ASSETS | |||||||
| Cash and cash equivalents | $ | 119,389 | $ | 99,610 | |||
| Federal funds sold | 271 | 231 | |||||
| Securities available for sale | 245,846 | 208,380 | |||||
| Loans held for sale | 1,146 | 1,691 | |||||
| Loans, net of allowance for loan losses of $9,320 – 2023 ($7,789 – 2020) | 732,088 | 628,081 | |||||
| Premises and equipment, net | 13,115 | 13,698 | |||||
| Accrued interest receivable | 4,193 | 4,749 | |||||
| Net cash surrender value of life insurance | 18,671 | 16,016 | |||||
| Goodwill | 13,422 | 13,422 | |||||
| Other intangible assets, net | 219 | 255 | |||||
| Other assets | 12,794 | 11,441 | |||||
| TOTAL ASSETS | $ | 1,161,154 | $ | 997,574 | |||
| LIABILITIES | |||||||
| Deposits : | |||||||
| Non-interest bearing | $ | 262,980 | $ | 220,786 | |||
| Interest bearing | 711,372 | 617,512 | |||||
| Total deposits | 974,352 | 838,298 | |||||
| Securities sold under agreements to repurchase and overnight borrowings | 20,609 | 20,083 | |||||
| Accrued expenses and other liabilities | 13,930 | 14,561 | |||||
| Other borrowings | 20,000 | 26,500 | |||||
| Subordinated debentures | 34,514 | 5,155 | |||||
| Total liabilities | 1,063,405 | 904,597 | |||||
| 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 – 4,516,377 shares in 2023 (2,301,269 shares in 2020) |
11,287 | 5,748 | |||||
| Additional paid-in capital | 14,235 | 15,416 | |||||
| Retained earnings | 71,581 | 67,741 | |||||
| Accumulated other comprehensive income, net | 856 | 4,362 | |||||
| Unearned Employee Stock Ownership Plan shares | (210 | ) | (290 | ) | |||
| Total shareholders’ equity | 97,749 | 92,977 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,161,154 | $ | 997,574 | |||
| Southern Michigan Bancorp, Inc. condensed consolidated statements of income (unaudited) (In thousands, except per share data) |
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| Three Months Ended December 31, |
Year Ended December 31, |
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| 2021 | 2020 | 2021 | 2020 | |||||||||
| Interest income: | ||||||||||||
| Loans, including fees | $ | 8,535 | $ | 7,202 | $ | 32,593 | $ | 28,377 | ||||
| Federal funds sold and balances with banks | 41 | 33 | 148 | 314 | ||||||||
| Securities: | ||||||||||||
| Taxable | 843 | 643 | 3,330 | 2,482 | ||||||||
| Tax-exempt | 269 | 185 | 1,069 | 645 | ||||||||
| Total interest income | 9,688 | 8,063 | 37,140 | 31,818 | ||||||||
| Interest expense: | ||||||||||||
| Deposits | 485 | 800 | 2,268 | 4,025 | ||||||||
| Other | 460 | 246 | 1,553 | 1,116 | ||||||||
| Total interest expense | 945 | 1,046 | 3,821 | 5,141 | ||||||||
| Net interest income | 8,743 | 7,017 | 33,319 | 26,677 | ||||||||
| Provision for loan losses | 450 | 350 | 1,500 | 2,600 | ||||||||
| Net interest income after provision for loan losses | 8,293 | 6,667 | 31,819 | 24,077 | ||||||||
| Non-interest income: | ||||||||||||
| Service charges on deposit accounts | 373 | 334 | 1,286 | 1,373 | ||||||||
| Trust fees | 586 | 513 | 2,267 | 2,048 | ||||||||
| Net gains on loan sales | 381 | 636 | 2,293 | 2,389 | ||||||||
| Earnings on life insurance assets | 184 | 98 | 695 | 383 | ||||||||
| ATM and debit card fee income | 463 | 394 | 1,823 | 1,543 | ||||||||
| Other | 173 | 236 | 645 | 642 | ||||||||
| Total non-interest income | 2,160 | 2,211 | 9,009 | 8,378 | ||||||||
| Non-interest expense: | ||||||||||||
| Salaries and employee benefits | 4,612 | 4,157 | 16,492 | 14,580 | ||||||||
| Occupancy, net | 368 | 352 | 1,565 | 1,519 | ||||||||
| Equipment | 313 | 300 | 1,174 | 1,180 | ||||||||
| Printing, postage and supplies | 100 | 84 | 390 | 386 | ||||||||
| Telecommunication expenses | 90 | 89 | 356 | 451 | ||||||||
| Professional and outside services | 596 | 423 | 1,814 | 1,532 | ||||||||
| Software maintenance | 449 | 400 | 1,677 | 1,552 | ||||||||
| ATM expenses | 177 | 138 | 670 | 578 | ||||||||
| Other | 771 | 497 | 2,570 | 1,888 | ||||||||
| Total non-interest expense | 7,476 | 6,440 | 26,708 | 23,666 | ||||||||
| INCOME BEFORE INCOME TAXES | 2,977 | 2,438 | 14,120 | 8,789 | ||||||||
| Federal income tax provision | 455 | 414 | 2,363 | 1,403 | ||||||||
| NET INCOME | $ | 2,522 | $ | 2,024 | $ | 11,757 | $ | 7,386 | ||||
| Basic Earnings Per Common Share | $ | 0.56 | $ | 0.44 | $ | 2.59 | $ | 1,61 | ||||
| Diluted Earnings Per Common Share | 0.56 | 0.44 | 2.58 | 1.61 | ||||||||
| Dividends Declared Per Common Share | 0.12 | 0.12 | 0.48 | 0.46 | ||||||||
