/EINPresswire.com/ -- STURGIS, MI -- (Marketwired) -- 04/25/16 -- Sturgis Bancorp, Inc. (OTCQX: STBI) today announced net income of $592,000 for the first quarter of 2016.

Sturgis Bancorp is the holding company for Sturgis Bank & Trust Company (Bank), and its subsidiaries Oakleaf Financial Services, Inc. and Oak Mortgage, LLC. Sturgis Bancorp provides a full array of trust, commercial and consumer banking services from 12 banking centers in Sturgis, Bangor, Bronson, Centreville, Climax, Colon, South Haven, Three Rivers and White Pigeon, Mich. Oakleaf Financial Services offers a complete range of investment and financial advisory services. Oak Mortgage offers residential mortgages in all markets of the Bank.

Key Highlights for the first quarter of 2016:

• Net income for the first quarter of 2016 increased to $592,000, compared to $397,000 for the first quarter of 2015, primarily due to higher net interest income.
• The Bank maintained strong capital ratios, exceeding "well-capitalized" requirements, with Tier 1 leverage capital at 8.60%. Total capital at March 31, 2016 was 14.58% of risk-weighted assets. The Bank's risk-weighted assets were $235.8 million at March 31, 2016.
• Total deposits increased 5.5% to $299.6 million, mostly in temporary municipal deposits.
• Allowance for loan losses was 1.25% of loans, unchanged from December 31, 2016.

Three months ended March 31, 2016 vs. three months ended March 31, 2015 - Net income for the three months ended March 31, 2016 was $592,000, or $0.28 per share, compared to net income of $397,000, or $0.19 per share, for the three months ended March 31, 2015. The tax equivalent net interest margin increased to 3.75% in the first three months of 2016 from 3.53% in the first three months of 2015.

Noninterest income was $1.2 million in the first quarter of 2016, compared to $1.4 million in the first quarter of 2015. Most of the decrease was in trust fee income, which decreased to $84,000 in 2016 from $151,000 in 2015, with a large one-time fee assessed in the first quarter of 2015. Mortgage banking income decreased $67,000 to $135,000 in 2016, due to slower loan sale activity. Commission income decreased $48,000 to $445,000 in 2016, based on market volatility.

Noninterest expense was $3.4 million in 2016 and 2015. Salaries and employee benefits, the largest component of noninterest expense, decreased $45,000, primarily due to lower pension funding in 2016. Real estate owned expense decreased to $60,000 in 2016, compared to $141,000 in 2015.

The Company provided $94,000 to the allowance for loan losses in the first three months of 2016, compared to ($85,000) in the same quarter of 2015. Net charge-offs were $69,000 in 2016, compared to ($17,000) in 2015.

Total assets increased to $377.8 million at March 31, 2016 from $368.6 million at December 31, 2015, primarily in loans. Loans increased $4.8 million from December 31, 2015. Most of the increase in loans was in Commercial loans.

Noninterest-bearing deposits increased to $67.6 million at March 31, 2016 from $65.0 million at December 31, 2015. Average noninterest-bearing deposits were $62.8 million for the three months ended March 31, 2016. Interest-bearing deposits also increased to $232.0 million at March 31, 2016 from $219.0 million at December 31, 2015. Average interest-bearing deposits were $223.9 million for the three months ended March 31, 2016. These increases in deposit accounts are typical for the first quarter of each year, as municipalities deposit property tax revenues. Municipalities historically have either used or reinvested those funds elsewhere during the second quarter of the year, and Management expects that pattern to continue for 2016. Brokered deposits increased $2.2 million to $9.9 million at March 31, 2016. The growth in deposits allowed borrowed funds to decrease by $7.1 million to $40.7 million at March 31, 2016.

Total equity was $32.9 million at March 31, 2016, compared to $32.6 million at December 31, 2015. Book value per share increased to $15.80 ($12.23 tangible) at March 31, 2016 from $15.70 ($12.08 tangible) at December 31, 2015. Average equity was $32.7 million for the three months ended March 31, 2016.

This release contains statements that constitute forward-looking statements. These statements appear in several places in this release and include statements regarding intent, belief, outlook, objectives, efforts, estimates or expectations of Bancorp, primarily with respect to future events and the future financial performance of the Bancorp. Any such forward-looking statements are not guarantees of future events or performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statement. Factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; government and regulatory policy changes; the outcome of any pending and future litigation and contingencies; trends in consumer behavior and ability to repay loans; and changes of the world, national and local economies. Bancorp undertakes no obligation to update, amend or clarify forward-looking statements as a result of new information, future events, or otherwise. The numbers presented herein are unaudited.

For additional information, visit our website at www.sturgisbank.com.

                        CONSOLIDATED BALANCE SHEETS
                    March 31, 2016 and December 31, 2015
          (Amounts in thousands, except share and per share data)

                                                       March 31,   Dec. 31,
                                                          2016       2015
                                                       ---------  ---------
ASSETS
  Cash and due from banks                              $  10,781  $  10,786
  Other short-term investments                             8,380      5,084
                                                       ---------  ---------
    Total cash and cash equivalents                       19,161     15,870

  Interest-earning deposits in banks                      16,805     16,805
  Securities - Available for sale                         27,225     27,635
  Securities - Held to maturity                           21,569     19,245
  Federal Home Loan Bank stock, at cost                    2,632      2,632
  Loans held for sale                                        684      1,575
  Loans, net of allowance of $3,238 and $3,213           258,637    253,830
  Premises and equipment, net                              7,990      8,114
  Goodwill                                                 5,834      5,834
  Core deposit intangibles                                   304        320
  Originated mortgage servicing rights                     1,283      1,349
  Real estate owned                                        1,158        827
  Bank-owned life insurance                                9,800      9,735
  Accrued interest receivable                              1,363      1,183
  Other assets                                             3,356      3,605
                                                       ---------  ---------

    Total assets                                       $ 377,801  $ 368,559
                                                       =========  =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
  Deposits
    Noninterest-bearing                                $  67,622  $  65,041
    Interest-bearing                                     232,008    218,998
                                                       ---------  ---------
      Total deposits                                     299,630    284,039
  Federal Home Loan Bank advances and other borrowings    40,704     47,812
  Accrued interest payable                                   224        243
  Other liabilities                                        4,392      3,853
                                                       ---------  ---------
    Total liabilities                                    344,950    335,947

Stockholders' equity
  Preferred stock - $1 par value: authorized -
   1,000,000 shares issued and outstanding - 0 shares
  Common stock - $1 par value: authorized - 9,000,000
   shares issued and outstanding 2,079,741 shares at
   March 31, 2016 and 2,077,791 at December 31, 2015       2,080      2,078
  Additional paid-in capital                               7,296      7,277
  Retained earnings                                       23,871     23,445
  Accumulated other comprehensive income (loss)             (396)      (188)
                                                       ---------  ---------
    Total stockholders' equity                            32,851     32,612
                                                       ---------  ---------

      Total liabilities and stockholders' equity       $ 377,801  $ 368,559
                                                       =========  =========



                     CONSOLIDATED STATEMENTS OF INCOME
                 Three Months ended March 31, 2016 and 2015
          (Amounts in thousands, except share and per share data)

                                                        Three Months ended
                                                             March 31,
                                                          2016       2015
                                                       ---------  ---------
Interest income
  Loans                                                $   3,007  $   2,702
  Investment securities:
    Taxable                                                  156         91
    Tax-exempt                                               204         22
  Dividends                                                   28         40
                                                       ---------  ---------
    Total interest income                                  3,395      2,855
Interest expense
  Deposits                                                   166        159
  Borrowed funds                                             274        312
                                                       ---------  ---------
    Total interest expense                                   440        471
                                                       ---------  ---------

Net interest income                                        2,955      2,384

Provision for loan losses                                     94        (85)
                                                       ---------  ---------

Net interest income after provision for loan losses        2,861      2,469

Noninterest income:
  Service charges and other fees                             251        246
  Interchange income                                         167        147
  Investment brokerage commission income                     445        493
  Mortgage banking activities                                135        202
  Trust fee income                                            79        151
  Increase in value of bank owned life insurance              65         67
  Gain (loss) on sale of real estate owned                    (1)        71
  Other income                                                99         13
                                                       ---------  ---------
    Total noninterest income                               1,240      1,390
Noninterest expenses:
  Salaries and employee benefits                           1,908      1,953
  Occupancy and equipment                                    405        411
  Interchange expenses                                        98         87
  Data processing                                            197        177
  Professional services                                       61        137
  Real estate owned expense                                   60        141
  Advertising                                                 61         40
  Other                                                      578        405
                                                       ---------  ---------
    Total noninterest expenses                             3,368      3,351
                                                       ---------  ---------

Income before income tax expense (benefit)                   733        508

Income tax expense                                           141        111
                                                       ---------  ---------

Net income                                             $     592  $     397
                                                       =========  =========

Earnings per share                                     $    0.28  $    0.19
Dividends declared per share                           $    0.08  $    0.03
    Key Ratios:
Return on average equity                                    7.31%      5.27%
Return on average assets                                    0.63%      0.50%
Net interest margin (tax equivalent)                        3.75%      3.53%

Contacts:
Sturgis Bancorp
Eric Eishen
President & CEO
or
Brian P. Hoggatt
CFO
P: 269 651-9345

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