Sturgis Bancorp Reports Earnings for First Quarter 2019

STURGIS, Mich., April 23, 2019 (GLOBE NEWSWIRE) -- Sturgis Bancorp, Inc. (OTCQX: STBI) today announced net income of $1.0 million for the first quarter of 2019.

Sturgis Bancorp is the holding company for Sturgis Bank & Trust Company (Bank), and its subsidiaries Oakleaf Financial Services, Inc., Oak Mortgage, LLC, Oak Insurance Services, LLC, and Oak Title Services, LLC. The Bank provides a full array of trust, commercial and consumer banking services from banking centers in Sturgis, Bangor, Bronson, Centreville, Climax, Colon, South Haven, Three Rivers and White Pigeon, MI. The Bank also has a loan production office in Portage, Michigan. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oak Mortgage offers residential mortgages in all markets of the Bank. Oak Insurance Services offers various competitive commercial and consumer insurance products. Oak Title Services offers commercial and consumer title insurance.

Key Highlights for the first quarter of 2019:

Net income increased 38% for the first quarter of 2019 to $1,042,000, compared to $756,000 for the first quarter of 2018, primarily due to higher net interest income.
The Bank maintained strong capital ratios, exceeding “well-capitalized” requirements, with Tier 1 leverage capital at 8.71%. Total capital at March 31, 2018 was 13.45% of risk-weighted assets.
Total assets increased 2.3% to $441.4 million. The Bank's risk-weighted assets were $302.9 million at March 31, 2019.
Net loans increased 2.9% to $320.1 million.
Total deposits increased 2.8% to $352.2 million.
Allowance for loan losses was 1.02% of loans.

Three months ended March 31, 2019 vs. three months ended March 31, 2018 - Net income for the three months ended March 31, 2019 was $1,042,000, or $0.50 per share, compared to net income of $756,000, or $0.36 per share, for the three months ended March 31, 2018. The tax equivalent net interest margin decreased to 3.99% in the first three months of 2019 from 3.78% in the first three months of 2018.

Net interest income increased to $3.8 million in 2019 from $3.4 million in 2018. The growth was primarily due to loan interest income, which increased by $681,000 to $4.0 million. Total interest income increased $656,000 to $4.6 million in 2019, and interest expense only increased $202,000 to $779,000 in 2019.

The Company provided $38,000 to the allowance for loan losses in the first three months of 2019, compared to $122,000 in the same quarter of 2018. Net charge-offs were ($2,000) in 2019, unchanged from ($2,000) in 2018.

Noninterest income was $1.2 million in the first quarter of 2019, compared to $1.3 million in the first quarter of 2018. Investment brokerage commission income decreased to $291,000 in 2019 from $391,000 in 2018. Loss on sale of securities was ($43,000) in 2019, compared to $0 in 2018.

Noninterest expense was $3.7 million in 2019, unchanged from 2018. Salaries and employee benefits, the largest component of noninterest expense, increased $195,000, or 8.8%.

Total assets increased to $441.4 million at March 31, 2019 from $431.6 million at December 31, 2018, primarily in loans. Loans increased $9.0 million from December 31, 2018, primarily in commercial real estate loans.

Interest-bearing deposits increased to $271.0 million at March 31, 2019 from $260.1 million at December 31, 2018. The increase in deposit accounts is 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 2019. Brokered deposits, a component of interest-bearing deposits, decreased $11.2 million in the first quarter of 2019, to $23.4 million at March 31, 2019. The growth in deposits funded the loan growth realized in the first quarter.

Total equity was $41.3 million at March 31, 2019, compared to $40.2 million at December 31, 2018. In the first quarter of 2019. The regular quarterly dividend was continued at a record-high $0.15 per share. Book value per share increased to $19.59 ($16.19 tangible) at March 31, 2019 from $19.11 ($15.70 tangible) at December 31, 2018.

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
(Amounts in thousands, except share and per share data)

		Mar. 31,			Dec. 31,
			2019			2018
ASSETS
	Cash and due from banks	$	7,785		$	12,267
	Other short-term investments		16,777			13,133
	Total cash and cash equivalents		24,562			25,400
	Interest-earning deposits in banks		7,350			7,350
	Securities - available for sale		46,944			46,205
	Securities - held to maturity		4,984			5,472
	Federal Home Loan Bank stock, at cost		3,393			3,393
	Loans held for sale, at fair value		2,039			67
	Loans, net of allowance of $3,269 and $3,228		320,083			311,050
	Premises and equipment, net		9,190			9,274
	Goodwill		5,834			5,834
	Core deposit intangibles		143			155
	Originated mortgage servicing rights		1,199			1,171
	Real estate owned		237			193
	Bank-owned life insurance		10,576			10,515
	Accrued interest receivable		1,722			1,550
	Other assets		3,102			3,946

	Total assets	$	441,358		$	431,575

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
	Deposits
	Noninterest-bearing	$	81,231		$	82,442
	Interest-bearing		270,952			260,058
	Total deposits		352,183			342,500
	Federal Home Loan Bank advances and other borrowings		43,994			44,109
	Accrued interest payable		338			375
	Other liabilities		3,572			4,391
	Total liabilities		400,087			391,375

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 2,106,241 shares at March 31, 2019
	and 2,103,991 at December 31, 2018		2,106			2,104
	Additional paid-in capital		7,740			7,683
	Retained earnings		31,569			30,526
	Accumulated other comprehensive loss		(144	)		(113	)
	Total stockholders' equity		41,271			40,200

	Total liabilities and stockholders' equity	$	441,358		$	431,575

CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share data)

		Three Months Ended March 31,
			2019			2018
Interest income
	Loans	$	4,041		$	3,360
	Investment securities:
	Taxable		280			238
	Tax-exempt		222			277
	Dividends		45			57
	Total interest income		4,588			3,932

Interest expense
	Deposits		502			376
	Borrowed funds		277			201
	Total interest expense		779			577

Net interest income			3,809			3,355

Provision (benefit) for loan losses			38			122

Net interest income after provision (benefit) for loan losses			3,771			3,233

Noninterest income:
	Service charges and other fees		324			345
	Interchange income		192			180
	Investment brokerage commission income		291			391
	Mortgage banking activities		212			188
	Trust fee income		93			113
	Earnings on cash value of bank-owned life insurance		61			62
	Gain (loss) on sale of real estate owned		2			(2	)
	Loss on sale of securities		(43	)		-
	Other income		33			28
	Total noninterest income		1,165			1,305

Noninterest expenses:
	Salaries and employee benefits		2,408			2,213
	Occupancy and equipment		471			432
	Interchange expenses		88			87
	Data processing		196			181
	Professional services		110			122
	Real estate owned expense		5			33
	Advertising		58			49
	FDIC premiums		43			60
	Other expenses		353			523
	Total noninterest expenses		3,732			3,700

Income before income tax expense			1,204			838

Income tax expense			162			82

Net income		$	1,042		$	756

Earnings per share		$	0.50		$	0.36
Dividends per share			0.15			0.14

OTHER FINANCIAL INFORMATION
(Amounts in thousands)

		Three Months Ended March 31,
			2019		2018

Sturgis Bank & Trust Company:
	Average noninterest-bearing deposits	$	79,677	$	80,717
	Average interest-bearing deposits		267,121		271,113
	Average total assets		434,943		427,943
	Total risk-weighted assets		302,938		286,803
Sturgis Bancorp:
	Average equity		40,735		37,807
	Average total assets		435,120		428,139
	Total risk-weighted assets		303,105		287,041

Financial ratios for Sturgis Bancorp:
	Return on average assets		0.97%		0.72%
	Return on average equity		10.37%		8.11%
	Net interest margin		3.92%		3.61%
	Tax equivalent net interest margin		3.99%		3.78%

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

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.

You just read:

Sturgis Bancorp Reports Earnings for First Quarter 2019

Distribution channels: Banking, Finance & Investment Industry

EIN Presswire's priority is author transparency. We do our best to weed out false and misleading content. The content above is the sole responsibility of the author who makes it available. If you have any complaints, kindly contact the author above.