COLDWATER, Mich., Feb. 15, 2023 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported net income of $13,491,000 for 2022 compared to $11,757,000 for 2021. Diluted earnings per share were $2.97 for 2022 compared to $2.58 for 2021. Fourth quarter 2022 net income was $3,584,000, or $0.79 per share, compared to $2,522,000, or $0.56 per share for the fourth quarter of 2021.
Total consolidated assets at December 31, 2022 reached $1.28 billion compared to $1.16 billion at December 31, 2021. Loan totals grew 19.6 percent, from December 31, 2021 levels of $741.4 million to $886.6 million. Deposits also increased to $1.09 billion at December 31, 2022, an increase of $116.7 million or 12.0 percent, as compared to year end 2021.
Southern Michigan Bancorp, Inc., Chairman and Chief Executive Officer John H. Castle stated, “We are pleased to report continued strong operating results with net income reaching $13,491,000 for the year, 14.7 percent higher than the previous high of $11,757,000 reported in 2021. Our steadfast, disciplined credit culture resulted in total delinquencies ending the year of 13 basis points, or $1,190,000, net charge-offs of $7,000 for the full year, and a reserve coverage ratio of more than 848 percent at year end.”
Castle continued, “Looking ahead, we expect the strength of our balance sheet and positive momentum to enable us to meet the changing economic conditions and ongoing interest rate fluctuations, which are inevitable.”
Southern provided $275,000 for loan losses in 2022, with an allowance for loan losses at December 31, 2022 of $9,588,000, or 1.08% of loans. This compared to a provision for loan losses of $1.5 million for 2021, with an allowance for loan losses at December 31, 2021 of $9,320,000, or 1.26% of loans. Net loan losses totaled $7,000 for 2022 compared to net loan loss recoveries of $31,000 for 2021.
The return on average assets for 2022 was 1.10% compared to 1.06% for 2021. The return on average equity was 15.68% for 2022 compared to 12.32% for 2021. The tax equivalent net interest margins for 2022 and 2021 were 3.33% and 3.27%, respectively.
Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 14 branches within Branch, Calhoun, Hillsdale, 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,” “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, 2022 | December 31, 2021 | |||||||||
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 77,255 | $ | 119,389 | ||||||
| Federal funds sold | 253 | 271 | ||||||||
| Securities available-for-sale, at fair value | 178,154 | 245,846 | ||||||||
| Securities held-to-maturity, at amortized cost | 69,661 | - | ||||||||
| Loans held for sale | - | 1,146 | ||||||||
| Loans, net of allowance for loan losses of $9,588 - 2022 ($9,320 – 2021) | 877,038 | 732,088 | ||||||||
| Premises and equipment, net | 16,545 | 13,115 | ||||||||
| Accrued interest receivable | 5,535 | 4,193 | ||||||||
| Net cash surrender value of life insurance | 18,124 | 18,671 | ||||||||
| Goodwill | 13,422 | 13,422 | ||||||||
| Other intangible assets, net | 183 | 219 | ||||||||
| Other assets | 20,353 | 12,794 | ||||||||
| TOTAL ASSETS | $ | 1,276,523 | $ | 1,161,154 | ||||||
| LIABILITIES | ||||||||||
| Deposits: | ||||||||||
| Non-interest bearing | $ | 268,704 | $ | 262,980 | ||||||
| Interest bearing | 822,347 | 711,372 | ||||||||
| Total deposits | 1,091,051 | 974,352 | ||||||||
| Securities sold under agreements to repurchase and overnight borrowings | 11,179 | 20,609 | ||||||||
| Accrued expenses and other liabilities | 13,545 | 13,930 | ||||||||
| Other borrowings | 40,000 | 20,000 | ||||||||
| Subordinated debentures, net of issuance costs | 34,584 | 34,514 | ||||||||
| Total liabilities | 1,190,359 | 1,063,405 | ||||||||
| 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 – 4,519,179 shares in 2022 (4,516,377 shares in 2021) | 11,294 | 11,287 | ||||||||
| Additional paid-in capital | 14,066 | 14,235 | ||||||||
| Retained earnings | 82,705 | 71,581 | ||||||||
| Accumulated other comprehensive income (loss), net | (21,901 | ) | 856 | |||||||
| Unearned Employee Stock Ownership Plan shares | - | (210 | ) | |||||||
| Total shareholders’ equity | 86,164 | 97,749 | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,276,523 | $ | 1,161,154 | ||||||
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, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Interest income: | ||||||||||||
| Loans, including fees | $ | 10,802 | $ | 8,535 | $ | 36,583 | $ | 32,593 | ||||
| Federal funds sold and balances with banks | 490 | 41 | 1,249 | 148 | ||||||||
| Securities: | ||||||||||||
| Taxable | 1,527 | 843 | 4,948 | 3,330 | ||||||||
| Tax-exempt | 401 | 269 | 1,354 | 1,069 | ||||||||
| Total interest income | 13,220 | 9,688 | 44,134 | 37,140 | ||||||||
| Interest expense: | ||||||||||||
| Deposits | 2,045 | 485 | 4,118 | 2,268 | ||||||||
| Other | 555 | 460 | 1,914 | 1,553 | ||||||||
| Total interest expense | 2,600 | 945 | 6,032 | 3,821 | ||||||||
| Net interest income | 10,620 | 8,743 | 38,102 | 33,319 | ||||||||
| Provision for loan losses | 275 | 450 | 275 | 1,500 | ||||||||
| Net interest income after provision for loan losses | 10,345 | 8,293 | 37,827 | 31,819 | ||||||||
| Non-interest income: | ||||||||||||
| Service charges on deposit accounts | 401 | 373 | 1,516 | 1,286 | ||||||||
| Trust fees | 589 | 586 | 2,264 | 2,267 | ||||||||
| Net gains (losses) on securities | (666 | ) | - | (666 | ) | 5 | ||||||
| Net gains on loan sales | 41 | 381 | 606 | 2,293 | ||||||||
| Earnings on life insurance assets | 125 | 122 | 472 | 464 | ||||||||
| Gain from life insurance | 747 | 62 | 747 | 231 | ||||||||
| ATM and debit card fee income | 430 | 463 | 1,749 | 1,823 | ||||||||
| Other | 138 | 173 | 692 | 640 | ||||||||
| Total non-interest income | 1,805 | 2,160 | 7,380 | 9,009 | ||||||||
| Non-interest expense: | ||||||||||||
| Salaries and employee benefits | 5,162 | 4,612 | 18,134 | 16,492 | ||||||||
| Occupancy, net | 431 | 368 | 1,675 | 1,565 | ||||||||
| Equipment | 340 | 313 | 1,294 | 1,174 | ||||||||
| Printing, postage and supplies | 106 | 100 | 413 | 390 | ||||||||
| Telecommunication expenses | 63 | 90 | 303 | 356 | ||||||||
| Professional and outside services | 450 | 596 | 1,742 | 1,814 | ||||||||
| Software maintenance | 491 | 449 | 1,911 | 1,677 | ||||||||
| ATM expenses | 208 | 177 | 755 | 670 | ||||||||
| Other | 793 | 771 | 2,907 | 2,570 | ||||||||
| Total non-interest expense | 8,044 | 7,476 | 29,134 | 26,708 | ||||||||
| INCOME BEFORE INCOME TAXES | 4,106 | 2,977 | 16,073 | 14,120 | ||||||||
| Federal income tax provision | 522 | 455 | 2,582 | 2,363 | ||||||||
| NET INCOME | $ | 3,584 | $ | 2,522 | $ | 13,491 | $ | 11,757 | ||||
| Basic Earnings Per Common Share | $ | 0.79 | $ | 0.56 | $ | 2.98 | $ | 2.59 | ||||
| Diluted Earnings Per Common Share | 0.79 | 0.56 | 2.97 | 2.58 | ||||||||
| Dividends Declared Per Common Share | 0.13 | 0.12 | 0.52 | 0.48 | ||||||||
