$SOMC Southern Michigan Bancorp, Inc. Announces Third Quarter 2021 Earnings
Press Release | 10/27/2021
COLDWATER, Mich., Oct. 27, 2021 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced third quarter 2021 net income of $3,138,000, or $0.69 per share, compared to net income of $2,018,000, or $0.44 per share, for the third quarter of 2020. Southern earned $9,235,000, or $2.02 per share, for the nine-month period ending September 30, 2021 compared to $5,362,000, or $1.17 per share, for the same nine-month period a year ago.
John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “During the third quarter Southern continued to capitalize on market opportunities presented to us. We are pleased to report continued loan and deposit growth during the quarter, with additional growth expected during the fourth quarter. Earnings through the third quarter now exceed our 2019 annual record net income benchmark of $8,622,000.”
Total consolidated assets at September 30, 2021 increased 14.5%, reaching $1.142 billion compared to $997.6 million at December 31, 2020. Loan totals grew 15.3%, from December 31, 2020 levels of $635.9 million to $733.3 million. Deposits also increased totaling $962.6 million at September 30, 2021, an increase of $124.3 million or 14.8%, as compared to year end 2020.
The allowance for loan losses totaled $8,879,000, or 1.21% of loans at September 30, 2021. Net loan recoveries totaled $40,000 for the first nine months of 2021, compared to net loan losses of $10,000 during the first nine months of 2020. Loan delinquencies dropped from 0.72% of gross loans on December 31, 2020 to 0.19% of gross loans on September 30, 2021. Likewise, total non-performing assets dropped from .49% of total assets on December 31, 2020 to 0.14% of total assets on September 30, 2021. As a result of loan growth, Southern provided $650,000 of provision for loan loss expense during the third quarter of 2021, with total provision expense of $1,050,000 through the first nine months of 2021. This contrasts with $2,250,000 of provision for loan loss expense recorded during the first nine months of 2020.
The annualized return on average assets for the nine-month periods ending September 30, 2021 and 2020 was 1.13% and 0.81%, respectively. The annualized return on average equity was 13.02% for the first nine months of 2021 compared to 8.20% for the first nine months of 2020. The tax equivalent net interest margins for the nine-month periods ending September 30, 2021 and 2020 was 3.27% and 3.26%, 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)
(In thousands, except share data)
September 30, December 31,
2021 2020
ASSETS
Cash and cash equivalents $ 101,565 $ 99,610
Federal funds sold 246 231
Securities available for sale 251,726 208,380
Loans held for sale 1,201 1,691
Loans, net of allowance for loan losses of $8,879 - 2021 ($7,789 – 2020) 724,387 628,081
Premises and equipment, net 13,240 13,698
Accrued interest receivable 4,816 4,749
Net cash surrender value of life insurance 18,884 16,016
Goodwill 13,422 13,422
Other intangible assets, net 228 255
Other assets 12,148 11,441
TOTAL ASSETS $ 1,141,863 $ 997,574
LIABILITIES
Deposits :
Non-interest bearing $ 257,493 $ 220,786
Interest bearing 705,131 617,512
Total deposits 962,624 838,298
Securities sold under agreements to repurchase and overnight borrowings 15,413 20,083
Accrued expenses and other liabilities 13,132 14,561
Other borrowings 20,000 26,500
Subordinated debentures 34,497 5,155
Total liabilities 1,045,666 904,597
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 – 4,515,777 shares in 2021
(2,301,269 shares in 2020) 11,285 5,748
Additional paid-in capital 13,996 15,416
Retained earnings 69,600 67,741
Accumulated other comprehensive income, net 1,556 4,362
Unearned Employee Stock Ownership Plan shares (240 ) (290 )
Total shareholders’ equity 96,197 92,977
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,141,863 $ 997,574
Southern Michigan Bancorp, Inc.
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Interest income:
Loans, including fees $ 8,591 $ 6,988 $ 24,058 $ 21,175
Federal funds sold and balances with banks 37 25 107 281
Securities:
Taxable 892 565 2,487 1,839
Tax-exempt 282 175 800 460
Total interest income 9,802 7,753 27,452 23,755
Interest expense:
Deposits 508 936 1,783 3,225
Other 459 249 1,093 870
Total interest expense 967 1,185 2,876 4,095
Net interest income 8,835 6,568 24,576 19,660
Provision for loan losses 650 500 1,050 2,250
Net interest income after provision for loan losses 8,185 6,068 23,526 17,410
Non-interest income:
Service charges on deposit accounts 345 322 913 1,039
Trust fees 587 514 1,681 1,535
Net gains on loan sales 470 966 1,912 1,753
Earnings on life insurance assets 124 96 511 285
ATM and debit card fee income 470 421 1,360 1,149
Other 174 142 472 406
Total non-interest income 2,170 2,461 6,849 6,167
Non-interest expense:
Salaries and employee benefits 4,047 3,856 11,880 10,423
Occupancy, net 388 395 1,197 1,167
Equipment 274 290 861 880
Printing, postage and supplies 93 90 290 302
Telecommunication expenses 82 112 266 362
Professional and outside services 441 373 1,218 1,109
Software maintenance 434 384 1,228 1,152
ATM expenses 173 152 493 440
Other 627 509 1,799 1,391
Total non-interest expense 6,559 6,161 19,232 17,226
INCOME BEFORE INCOME TAXES 3,796 2,368 11,143 6,351
Federal income tax provision 658 350 1,908 989
NET INCOME $ 3,138 $ 2,018 $ 9,235 $ 5,362
Basic Earnings Per Common Share $ 0.69 $ 0.44 $ 2.02 $ 1.17
Diluted Earnings Per Common Share 0.69 0.44 2.02 1.17
Dividends Declared Per Common Share 0.12 0.12 0.36 0.35
CONTACT: John H. Castle, CEO
(517) 279-5500
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