STURGIS, Mich., Oct. 15, 2019 (GLOBE NEWSWIRE) -- Sturgis Bancorp, Inc. (OTCQX: STBI) today announced net income of $3.7 million for the first nine months of 2019 and $1.4 million for the third 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:

• Net income increased 17% for the first nine months of 2019 to $3,706,000, compared to $3,168,000 for the first nine months 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 8.73%.  Total capital at September 30, 2019 was 13.33% of risk-weighted assets. 
• Total assets increased 10.4% to $473.1 million, primarily in loans. The Bank's risk-weighted assets were $322.8 million at September 30, 2019.
• Net loans increased 9.3% to $339.9 million.
• Total deposits increased 8.0% to $369.9 million.
• Allowance for loan losses was 1.0% of loans.

Nine months ended September 30, 2019 vs. nine months ended September 30, 2018 - Net income for the first nine months of 2019 was $3,706,000, or $1.76 per share, compared to net income of $3,168,000, or $1.51 per share, in the first nine months of 2018.  The tax equivalent net interest margin increased to 4.00% in the first nine months of 2019 from 3.80% in the first nine months of 2018. 

Net interest income increased to $11.9 million in 2019 from $10.8 million in 2018.  The growth was primarily due to loan interest income, which increased by $1.8 million.  Total interest income increased $1.8 million to $14.4 million in 2019, and interest expense only increased $579,000 to $2.5 million in 2019.

The Company provided $215,000 to the allowance for loan losses in the first nine months of 2019, compared to $169,000 in the same period of 2018.  Net charge-offs were $56,000 in the first nine months of 2019, compared to ($13,000) in the first nine months of 2018.  

Noninterest income was $3.9 million in the first nine of 2019, compared to $4.0 million in the same period of 2018, primarily due to $96,000 decrease in investment brokerage commission income. Gain on sale of real estate owned also decreased by $76,000.  Noninterest income from mortgage banking activities increased by $122,000, to $672,000.

Noninterest expense was $11.3 million in the first nine months of 2019, compared to $11.0 million in the first nine months of 2018.  Salaries and employee benefits, the largest component of noninterest expense, increased $537,000, or 8.4%. 

Three months ended September 30, 2019 vs. three months ended September 30, 2018 - Net income for the three months ended September 30, 2019 was $1,367,000, or $0.65 per share, compared to net income of $1,257,000, or $0.60 per share, for the three months ended September 30, 2018.  The tax equivalent net interest margin increased to 3.99% in the third quarter of 2019 from 3.87% in the third quarter of 2018. 

Net interest income increased to $4.1 million in 2019 from $3.7 million in 2018.  The growth was primarily due to loan interest income, which increased by $518,000 to $4.4 million.  Total interest income increased $535,000 to $5.0 million in 2019, and interest expense only increased $157,000 to $868,000 in 2019.

The Company provided $102,000 to the allowance for loan losses in the third quarter of 2019, compared to $30,000 in the same quarter of 2018.  Net charge-offs were $56,000 in the third quarter of 2019, compared to ($8,000) in the third quarter of 2018.  

Noninterest income was $1.4 million in the third quarters of 2019 and 2018.  Noninterest income from mortgage banking activities increased $86,000, to $266,000 in the third quarter of 2019.  Gain on sale of real estate owned decreased $70,000.

Noninterest expense was $3.8 million in the third quarter of 2019, compared to $3,7 million in the third quarter of 2018.  Salaries and employee benefits, the largest component of noninterest expense, increased $224,000, or 10.8%. 

Total assets increased to $473.1 million at September 30, 2019 from $431.6 million at December 31, 2018, primarily in loans.  Loans increased $28.9 million from December 31, 2018, including $19.1 million increase in commercial real estate loans.

Interest-bearing deposits increased to $273.8 million at September 30, 2019 from $260.1 million at December 31, 2018.  Brokered deposits, a component of interest-bearing deposits, decreased $14.7 million in the first nine months of 2019, to $20.1 million at September 30, 2019.  The growth in deposits, along with $10.0 million additional borrowed funds, provided the funding for the loan growth realized in the first nine months of 2019.

Total equity was $42.0 million at September 30, 2019, compared to $40.2 million at December 31, 2018. The regular quarterly dividend was continued at a record-high $0.15 per share in the third quarter of 2019.  Book value per share increased to $19.92 ($16.53 tangible) at September 30, 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.

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