Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2020 Earnings


COLDWATER, Mich., Feb. 12, 2021 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported net income of $7,386,000 for 2020 compared to $8,622,000 for 2019.   Earnings per share were $3.21 for 2020 compared to $3.74 for 2019. Fourth quarter 2020 net income was $2,024,000, or $0.88 per share, compared to $1,836,000, or $0.80 per share for the fourth quarter of 2019.

Total consolidated assets at December 31, 2020 increased 23.2%, reaching $997.6 million compared to $809.7 million at December 31, 2019.   Loan totals grew 13.0%, from December 31, 2019 levels of $562.9 million to $635.9 million. Deposits also increased totaling $838.3 million at December 31, 2020, an increase of $182.5 million or 27.8 percent, as compared to year end 2019.

“Southern finished 2020 with solid financial performance despite the unique challenges presented by COVID-19,” commented John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., continuing, “Net income was a record for the fourth quarter, 10.2% higher than the previous fourth quarter high. Total assets, loans and deposits all expanded to new record highs at year end 2020.”

Castle continued, “While we have not identified any specific asset quality concerns, we have elected to increase provision expense and the allowance for loan losses through December 31, 2020 due to the economic uncertainty caused by the pandemic.”

Southern provided $2.6 million for loan losses in 2020, with an allowance for loan losses at December 31, 2020 of $7,789,000, or 1.22% of loans. This compared to a provision for loan losses of $225,000 for 2019, with an allowance for loan losses at December 31, 2019 of $5,184,000, or 0.92% of loans. Net loan loss recoveries totaled $5,000 for 2020 compared to net loan charge offs of $158,000 for 2019.

The return on average assets for 2020 was 0.82% compared to 1.09% for 2019. The return on average equity was 8.36% for 2020 compared to 11.21% for 2019. The tax equivalent net interest margins for 2020 and 2019 were 3.22% and 3.66%, 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) 
  
 December 31,
2020
 December 31,
2019
 
ASSETS      
Cash and cash equivalents$99,610 $68,723 
Federal funds sold 231  265 
Securities available for sale 208,380  123,436 
Loans held for sale 1,691  1,171 
Loans, net of allowance for loan losses of $7,789 - 2020 ($5,184 – 2019) 628,081  557,680 
Premises and equipment, net 13,698  14,515 
Accrued interest receivable 4,749  3,380 
Net cash surrender value of life insurance 16,016  15,633 
Goodwill 13,422  13,422 
Other intangible assets, net 255  291 
Other assets 11,441  11,200 
TOTAL ASSETS$997,574 $809,716 
       
LIABILITIES       
Deposits :      
 Non-interest bearing$220,786 $136,430 
 Interest bearing 617,512  519,332 
Total deposits 838,298  655,762 
       
Securities sold under agreements to repurchase and overnight borrowings 20,083  15,401 
Accrued expenses and other liabilities 14,561  12,553 
Other borrowings 26,500  37,500 
Subordinated debentures 5,155  5,155 
Total liabilities 904,597  726,371 
       
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 – 2,301,269 shares in 2020
   (2,314,878 shares in 2019)
 5,748  5,781 
Additional paid-in capital 15,416  15,521 
Retained earnings 67,741  62,484 
Accumulated other comprehensive income/(loss), net 4,362  (52)
Unearned Employee Stock Ownership Plan shares (290) (389)
Total shareholders’ equity 92,977  83,345 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$997,574 $809,716 
       


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,
 
 2020 2019 2020 2019 
Interest income:            
Loans, including fees$7,202 $7,151 $28,377 $28,265 
Federal funds sold and balances with banks 33  295  314  1,482 
Securities:            
Taxable 643  698  2,482  2,185 
Tax-exempt 185  105  645  621 
Total interest income 8,063  8,249  31,818  32,553 
             
Interest expense:            
Deposits 800  1,331  4,025  5,128 
Other 246  336  1,116  1,299 
Total interest expense 1,046  1,667  5,141  6,427 
Net interest income 7,017  6,582  26,677  26,126 
Provision for loan losses 350  75  2,600  225 
Net interest income after provision for loan losses 6,667  6,507  24,077  25,901 
             
Non-interest income:            
Service charges on deposit accounts 334  494  1,373  2,003 
Trust fees 513  544  2,048  2,085 
Net gains on loan sales 636  246  2,389  683 
Earnings on life insurance assets 98  97  383  443 
ATM and debit card fee income 394  393  1,543  1,460 
Net securities gains -  -  -  366 
Other 236  133  642  615 
Total non-interest income 2,211  1,907  8,378  7,655 
             
Non-interest expense:            
Salaries and employee benefits 4,157  3,589  14,580  13,828 
Occupancy, net 352  331  1,519  1,384 
Equipment 300  335  1,180  1,205 
Printing, postage and supplies 84  105  386  428 
Telecommunication expenses 89  123  451  426 
Professional and outside services 423  540  1,532  1,617 
Software maintenance 400  338  1,552  1,565 
ATM expenses 138  187  578  570 
Other 497  650  1,888  2,224 
Total non-interest expense 6,440  6,198  23,666  23,247 
INCOME BEFORE INCOME TAXES 2,438  2,216  8,789  10,309 
Federal income tax provision 414  380  1,403  1,687 
NET INCOME$2,024 $1,836 $7,386 $8,622 
             
Basic Earnings Per Common Share$0.88 $0.80 $3.21 $3.74 
Diluted Earnings Per Common Share 0.88  0.80  3.21  3.74 
Dividends Declared Per Common Share 0.23  0.23  0.92  0.91 
             
 

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