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 | ||||||||
