Sturgis Bancorp Reports Earnings for Second Quarter 2016
/EINPresswire.com/ -- STURGIS, MI -- (Marketwired) -- 07/20/16 -- Sturgis Bancorp, Inc. (OTCQX: STBI) today announced net income of $705,000 for the second 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 second quarter of 2016:
- Net income for the second quarter of 2016 was $705,000, compared to $706,000 for the second quarter of 2015.
- The Bank maintained strong capital ratios, exceeding "well-capitalized" requirements, with Tier 1 leverage capital at 8.50%. Total capital at June 30, 2016 was 14.44% of risk-weighted assets. The Bank's risk-weighted assets were $242.0 million at June 30, 2016.
- Total assets increased 4.6% to $382.9 million, led by $9.1 million growth in loans.
- Total deposits increased 5.3% to $299.2 million, mostly in municipal deposits.
- Allowance for loan losses was 1.25% of loans, unchanged from December 31, 2016.
Three months ended June 30, 2016 vs. three months ended June 30, 2015 - Net income for the three months ended June 30, 2016 was $705,000, or $0.34 per share, compared to net income of $706,000, or $0.34 per share, for the three months ended June 30, 2015. The tax equivalent net interest margin increased to 3.78% in the three months ended June 30, 2016 from 3.55% in 2015.
Net interest income increased by $407,000 in the three months ended June 30, 2016, primarily due to growth in securities and loans.
Noninterest income was $1.4 million in the second quarter of 2016, compared to $1.9 million in the second quarter of 2015. The Bank received $700,000 of death benefit in excess of recorded cash value from bank-owned life insurance in the second quarter of 2015. Income from mortgage banking activities increased to $196,000 from $133,000 in 2015.
Noninterest expense was $3.4 million in the second quarter of 2016, compared to $3.8 million in 2015. Most of the decrease was due to the 2015 acquisition of West Michigan Savings Bank, with most acquisition expenses recorded in the second quarter of 2015.
Salaries and employee benefits, the largest component of noninterest expense, increased $46,000, partially due to staffing requirements of the acquired Bank.
The Company provided $88,000 to the allowance for loan losses in the second quarter of 2016, compared to $113,000 in the same quarter of 2015. Net charge-offs were $35,000 in 2016, compared to $140,000 in 2015.
Six months ended June 30, 2016 vs. six months ended June 30, 2015 - Net income for the six months ended June 30, 2016 was $1.3 million, or $0.62 per share, compared to net income of $1.1 million, or $0.53 per share, for the six months ended June 30, 2015. The tax equivalent net interest margin increased to 3.76% in the first half of 2016 from 3.54% in the first half of 2015.
Net interest income increased by $978,000 in the first half of 2016, primarily due to net earning assets acquired from West Michigan Savings Bank and additional growth in securities and loans.
Noninterest income was $2.6 million in the first half of 2016, compared to $3.3 million in the first half of 2015. The Bank received $700,000 of death benefit in excess of recorded cash value from bank-owned life insurance in the second quarter of 2015.
Noninterest expense was $6.8 million in the first half of 2016, compared to $7.1 million in 2015. Most of the decrease was due to the 2015 acquisition of West Michigan Savings Bank, with most acquisition expenses recorded in the second quarter of 2015. Salaries and employee benefits, the largest component of noninterest expense, remained unchanged at $3.8 million.
The Company provided $182,000 to the allowance for loan losses in the first half of 2016, compared to $28,000 in the first half of 2015. Net charge-offs were $104,000 in 2016, compared to $123,000 in 2015.
Total assets increased to $382.9 million at June 30, 2016 from $368.6 million at December 31, 2015, primarily in loans. Loans increased $9.1 million from December 31, 2015. Most of the increase in loans was in Commercial loans.
Noninterest-bearing deposits increased to $69.9 million at June 30, 2016 from $65.0 million at December 31, 2015. Average noninterest-bearing deposits were $65.2 million for the three months ended June 30, 2016 and $64.0 million for the first half of 2016. Interest-bearing deposits also increased to $229.3 million at June 30, 2016 from $219.0 million at December 31, 2015. Average interest-bearing deposits were $233.8 million for the three months ended June 30, 2016 and $228.8 million for the first half of 2016. Brokered deposits increased $5.3 million to $13.0 million at June 30, 2016. The growth in deposits allowed borrowed funds to decrease by $3.7 million to $44.1 million at June 30, 2016.
Total equity was $33.4 million at June 30, 2016, compared to $32.6 million at December 31, 2015. Book value per share increased to $16.04 ($12.48 tangible) at June 30, 2016 from $15.70 ($12.08 tangible) at December 31, 2015. Average equity was $33.1 million for the three months ended June 30, 2016 and $32.9 million for the first half of 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
June 30, 2016 and December 31, 2015
(Amounts in thousands, except share and per share data)
June 30, Dec. 31,
2016 2015
--------- ---------
ASSETS
Cash and due from banks $ 7,005 $ 10,786
Other short-term investments 9,472 5,084
--------- ---------
Total cash and cash equivalents 16,477 15,870
Interest-earning deposits in banks 16,061 16,805
Securities - Available for sale 27,349 27,635
Securities - Held to maturity 24,458 19,245
Federal Home Loan Bank stock, at cost 2,632 2,632
Loans held for sale 1,723 1,575
Loans, net of allowance of $3,291 and $3,213 262,900 253,830
Premises and equipment, net 7,983 8,114
Goodwill 5,834 5,834
Core deposit intangibles 288 320
Originated mortgage servicing rights 1,291 1,349
Real estate owned 1,229 827
Bank-owned life insurance 9,866 9,735
Accrued interest receivable 1,315 1,183
Other assets 3,537 3,605
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Total assets $ 382,943 $ 368,559
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing $ 69,901 $ 65,041
Interest-bearing 229,329 218,998
--------- ---------
Total deposits 299,230 284,039
Federal Home Loan Bank advances and other borrowings 44,096 47,812
Accrued interest payable 223 243
Other liabilities 5,998 3,853
--------- ---------
Total liabilities 349,547 335,947
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 2,081,591 shares at
June 30, 2016 and 2,077,791 at December 31, 2015 2,082 2,078
Additional paid-in capital 7,315 7,277
Retained earnings 24,368 23,445
Accumulated other comprehensive income (loss) (369) (188)
--------- ---------
Total stockholders' equity 33,396 32,612
--------- ---------
Total liabilities and stockholders' equity $ 382,943 $ 368,559
========= =========
CONSOLIDATED STATEMENTS OF INCOME
Three Months ended June 30, 2016 and 2015
(Amounts in thousands, except share and per share data)
Three Months ended
June 30,
2016 2015
--------- ---------
Interest income
Loans $ 3,079 $ 2,887
Investment securities:
Taxable 147 138
Tax-exempt 220 55
Dividends 28 34
--------- ---------
Total interest income 3,474 3,114
Interest expense
Deposits 172 174
Borrowed funds 270 315
--------- ---------
Total interest expense 442 489
--------- ---------
Net interest income 3,032 2,625
Provision for loan losses 88 113
--------- ---------
Net interest income after provision for loan losses 2,944 2,512
Noninterest income:
Service charges and other fees 249 226
Interchange income 187 173
Investment brokerage commission income 510 465
Mortgage banking activities 196 133
Trust fee income 129 96
Increase in value of bank owned life insurance 65 767
Gain (loss) on sale of real estate owned - 5
Other income 17 31
--------- ---------
Total noninterest income 1,353 1,896
Noninterest expenses:
Salaries and employee benefits 1,904 1,858
Occupancy and equipment 488 410
Interchange expenses 114 96
Data processing 198 276
Professional services 45 150
Real estate owned expense 107 69
Advertising 55 42
Other 497 887
--------- ---------
Total noninterest expenses 3,408 3,788
--------- ---------
Income before income tax expense (benefit) 889 620
Income tax expense 184 (86)
--------- ---------
Net income $ 705 $ 706
========= =========
Earnings per share $ 0.34 $ 0.34
Dividends declared per share $ 0.10 $ 0.03
Key Ratios:
Return on average equity 8.56% 9.09%
Return on average assets 0.75% 0.80%
Net interest margin (tax equivalent) 3.78% 3.55%
CONSOLIDATED STATEMENTS OF INCOME
Six Months ended June 30, 2016 and 2015
(Amounts in thousands, except share and per share data)
Six Months ended
June 30,
2016 2015
--------- ---------
Interest income
Loans $ 6,086 $ 5,590
Investment securities:
Taxable 303 229
Tax-exempt 424 77
Dividends 56 73
--------- ---------
Total interest income 6,869 5,969
Interest expense
Deposits 338 333
Borrowed funds 544 627
--------- ---------
Total interest expense 882 960
--------- ---------
Net interest income 5,987 5,009
Provision for loan losses 182 28
--------- ---------
Net interest income after provision for loan losses 5,805 4,981
Noninterest income:
Service charges and other fees 501 473
Interchange income 354 320
Investment brokerage commission income 954 958
Mortgage banking activities 332 335
Trust fee income 208 247
Increase in value of bank owned life insurance 130 834
Gain (loss) on sale of real estate owned (1) 5
Other income 115 115
--------- ---------
Total noninterest income 2,593 3,287
Noninterest expenses:
Salaries and employee benefits 3,812 3,811
Occupancy and equipment 894 820
Interchange expenses 212 182
Data processing 395 453
Professional services 106 286
Real estate owned expense 167 210
Advertising 115 81
Other 1,075 1,297
--------- ---------
Total noninterest expenses 6,776 7,140
--------- ---------
Income before income tax expense (benefit) 1,622 1,128
Income tax expense 324 26
--------- ---------
Net income $ 1,298 $ 1,102
========= =========
Earnings per share $ 0.62 $ 0.53
Dividends declared per share $ 0.18 $ 0.06
Key Ratios:
Return on average equity 7.93% 7.21%
Return on average assets 0.70% 0.66%
Net interest margin (tax equivalent) 3.76% 3.54%
Contacts:
Sturgis Bancorp
Eric Eishen
President & CEO
or
Brian P. Hoggatt
CFO
P: 269 651-9345
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