Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2018 Earnings
COLDWATER, Mich., Feb. 15, 2019 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported net income of $8,125,000 for 2018 compared to $5,421,000 for 2017. Diluted earnings per share were $3.51 for 2018 compared to $2.29 in 2017. Fourth quarter 2018 net income was $1,824,000, or $0.79 per share, compared to $739,000, or $0.32 per share for the fourth quarter of 2017. 2017 results were impacted by the passage of tax reform legislation on December 22, 2017, which resulted in an income tax charge of $989,000, or $0.42 per share, in the fourth quarter of 2017.
John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “We are pleased to report record earnings of $8,125,000 for 2018, an increase of 49.9% over 2017. Southern benefited from continued strong credit quality, growth in the balance sheet, and lower federal income tax rates, as well as four increases in the Federal Reserve managed rates.”
Castle continued, “In 2019 we will remain focused on providing excellent products and customer service, while working to improve long-term shareholder returns.”
Total consolidated assets at December 31, 2018 were $738.8 million compared to $712.3 million at December 31, 2017. Loans increased to $532.0 million as of December 31, 2018, as compared to $523.4 million at year end 2017. Deposits also increased, totaling $605.9 million at December 31, 2018, an increase of $28.7 million or 5.0%, as compared to year end 2017.
Southern provided $250,000 for loan losses in 2018, with an allowance for loan losses at December 31, 2018 of $5,117,000, or 0.96% of loans. This compared to a provision for loan losses of $175,000 for 2017, with an allowance for loan losses at December 31, 2017 of $5,009,000, or 0.96% of loans. The 2018 provision for loan losses resulted from increased specific reserves on impaired loans. Net charge-offs for 2018 totaled $142,000, or 0.03% of loans.
The annualized return on average assets for 2018 was 1.11% compared to 0.80% for 2017. The annualized return on average equity was 11.21% for 2018 compared to 7.64% for 2017.
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, 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 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, 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. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| (In thousands, except share data) | December 31, | |||||
| 2018 | 2017 | |||||
| ASSETS | ||||||
| Cash | $ | 5,804 | $ | 4,177 | ||
| Due from banks | 48,937 | 13,244 | ||||
| Cash and cash equivalents | 54,741 | 17,421 | ||||
| Federal funds sold | 1,065 | 18,492 | ||||
| Securities available for sale | 101,439 | 105,184 | ||||
| Loans held for sale | - | 515 | ||||
| Loans, net of allowance for loan losses of $5,117 - 2018 ($5,009 - 2017) | 526,857 | 518,438 | ||||
| Premises and equipment, net | 14,296 | 14,265 | ||||
| Accrued interest receivable | 3,294 | 3,211 | ||||
| Cash surrender value of life insurance | 15,685 | 14,796 | ||||
| Goodwill | 13,422 | 13,422 | ||||
| Other intangible assets, net | 327 | - | ||||
| Other assets | 7,705 | 6,601 | ||||
| Total Assets | $ | 738,831 | $ | 712,345 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Liabilities | ||||||
| Deposits | ||||||
| Non-interest bearing | $ | 129,923 | $ | 129,098 | ||
| Interest bearing | 475,970 | 448,046 | ||||
| Total deposits | 605,893 | 577,144 | ||||
| Securities sold under agreements to repurchase and overnight borrowings |
15,342 | 13,950 | ||||
| Accrued expenses and other liabilities | 8,414 | 6,559 | ||||
| Other borrowings | 28,500 | 39,500 | ||||
| Subordinated debentures | 5,155 | 5,155 | ||||
| Total Liabilities | 663,304 | 642,308 | ||||
| Shareholders’ equity | ||||||
| Preferred stock, 100,000 shares authorized; none issued or outstanding | - | - | ||||
| Common stock, $2.50 par value: | ||||||
| Authorized – 4,000,000 shares | ||||||
| Issued and outstanding – 2,315,505 shares in 2018 | ||||||
| (2,316,779 shares in 2017) | 5,783 | 5,787 | ||||
| Additional paid-in capital | 15,246 | 15,415 | ||||
| Retained earnings | 55,972 | 49,747 | ||||
| Accumulated other comprehensive loss, net | (1,301 | ) | (613 | ) | ||
| Unearned Employee Stock Ownership Plan shares | (173 | ) | (299 | ) | ||
| Total Shareholders’ Equity | 75,527 | 70,037 | ||||
| Total Liabilities and Shareholders’ Equity | $ | 738,831 | $ | 712,345 | ||
SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| (In thousands, except per share amounts) | Three Months Ended December 31, |
Year Ended December 31, |
||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||
| Interest income: | ||||||||||||
| Loans, including fees | $ | 6,960 | $ | 6,189 | $ | 26,912 | $ | 22,944 | ||||
| Securities: | ||||||||||||
| Taxable | 361 | 306 | 1,328 | 1,183 | ||||||||
| Tax-exempt | 205 | 230 | 883 | 906 | ||||||||
| Other | 288 | 105 | 659 | 318 | ||||||||
| Total interest income | 7,814 | 6,830 | 29,782 | 25,351 | ||||||||
| Interest expense: | ||||||||||||
| Deposits | 1,031 | 557 | 3,274 | 1,753 | ||||||||
| Other | 289 | 343 | 1,224 | 1,015 | ||||||||
| Total interest expense | 1,320 | 900 | 4,498 | 2,768 | ||||||||
| Net interest income | 6,494 | 5,930 | 25,284 | 22,583 | ||||||||
| Provision for loan losses | 250 | - | 250 | 175 | ||||||||
| Net interest income after provision for loan losses | 6,244 | 5,930 | 25,034 | 22,408 | ||||||||
| Non-interest income: | ||||||||||||
| Service charges on deposit accounts | 542 | 426 | 1,751 | 1,642 | ||||||||
| Trust fees | 548 | 462 | 2,027 | 1,658 | ||||||||
| Net securities gains/(losses) | (161 | ) | - | (161 | ) | 3 | ||||||
| Net gains on loan sales | 137 | 215 | 604 | 749 | ||||||||
| Earnings on life insurance assets | 97 | 93 | 389 | 374 | ||||||||
| ATM and debit card fee income | 361 | 340 | 1,422 | 1,374 | ||||||||
| Other | 173 | 113 | 423 | 608 | ||||||||
| Total non-interest income | 1,697 | 1,649 | 6,455 | 6,408 | ||||||||
| Non-interest expense: | ||||||||||||
| Salaries and employee benefits | 3,226 | 3,204 | 12,843 | 12,050 | ||||||||
| Occupancy, net | 325 | 311 | 1,406 | 1,330 | ||||||||
| Equipment | 344 | 273 | 1,150 | 967 | ||||||||
| Printing, postage and supplies | 103 | 111 | 409 | 421 | ||||||||
| Telecommunication | 114 | 76 | 338 | 297 | ||||||||
| Professional and outside services | 461 | 393 | 1,492 | 1,375 | ||||||||
| Software maintenance | 422 | 344 | 1,513 | 1,240 | ||||||||
| Amortization of other intangibles | 9 | 57 | 33 | 229 | ||||||||
| ATM expenses | 130 | 125 | 522 | 489 | ||||||||
| Advertising and marketing | 168 | 100 | 444 | 317 | ||||||||
| FDIC deposit assessments | 53 | 54 | 225 | 219 | ||||||||
| Other | 401 | 316 | 1,554 | 1,419 | ||||||||
| Total non-interest expense | 5,756 | 5,364 | 21,929 | 20,353 | ||||||||
| INCOME BEFORE INCOME TAXES | 2,185 | 2,215 | 9,560 | 8,463 | ||||||||
| Federal income tax provision | 361 | 1,476 | 1,435 | 3,042 | ||||||||
| NET INCOME | $ | 1,824 | $ | 739 | $ | 8,125 | $ | 5,421 | ||||
| Basic Earnings Per Common Share | $ | 0.79 | $ | 0.32 | $ | 3.52 | $ | 2.30 | ||||
| Diluted Earnings Per Common Share | $ | 0.79 | $ | 0.32 | $ | 3.51 | $ | 2.29 | ||||
| Dividends Declared Per Common Share | $ | 0.22 | $ | 0.21 | $ | 0.87 | $ | 0.83 | ||||
CONTACT: John H. Castle, CEO (517) 279-5500
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