Market Overview

Southern Michigan Bancorp, Inc. Announces First Quarter 2018 Earnings


COLDWATER, Mich., April 24, 2018 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC:SOMC) announced first quarter net income increased 24.6% to $1,802,000, compared to net income of $1,446,000, for the first quarter of 2017.  First quarter 2018 earnings per share increased 32.2% to $0.78 per share, compared to $0.59 per share, for the first quarter of 2017.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "We are pleased with our first quarter financial results.  Earnings grew 10.5% year over year excluding the benefit of tax reform.  Strong core earnings were fueled by $83.1 million of year over year loan growth and continued strong credit quality in the portfolio."  

Total consolidated assets at March 31, 2018 were $719.2 million compared to $712.3 million at December 31, 2017.    

No provision for loan losses was required during the first quarter of 2018.  The allowance for loan losses was $4,993,000, or 0.93% of loans at March 31, 2018.  Net charge-offs totaled $16,000 for the first quarter of 2018, compared to $57,000 during the first quarter of 2017.  Total delinquent loans decreased to 0.25% of total loans as of March 31, 2018, down from 0.38% as of March 31, 2017. 

The annualized return on average assets for the three month period ended March 31, 2018 was 1.01% compared to 0.89% for the first quarter of 2017.  The annualized return on average equity was 10.26% for the first quarter of 2018 compared to 8.11% for the first quarter of 2017.  The tax equivalent net interest margin for the three month period ending March 31, 2018 was 3.79% compared to 3.75% for the same period of 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, and a loan production office in Steuben County, 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.

(In thousands, except share data)
  March 31,
  December 31,
Cash and cash equivalents $ 29,636   $ 17,421  
Federal funds sold   1,669     18,492  
Securities available for sale   102,062     105,184  
Loans held for sale   564     515  
Loans, net of allowance for loan losses of  $4,993 - 2018 ($5,009 - 2017)   531,625     518,438  
Premises and equipment, net   14,291     14,265  
Accrued interest receivable   3,277     3,211  
Net cash surrender value of life insurance   15,391     14,796  
Goodwill   13,422     13,422  
Other intangible assets, net   354     -  
Other assets   6,936     6,601  
TOTAL ASSETS $ 719,227   $ 712,345  
Non-interest bearing $ 124,948   $ 129,098  
Interest bearing   470,237     448,046  
Total deposits   595,185     577,144  
Securities sold under agreements to repurchase and overnight borrowings   12,629     13,950  
Accrued expenses and other liabilities   6,953     6,559  
Other borrowings   29,250     39,500  
Subordinated debentures   5,155     5,155  
Total liabilities   649,172     642,308  
Preferred stock, 100,000 shares authorized; none issued or outstanding   -     -  
Common stock, $2.50 par value:            
Authorized - 4,000,000 shares            
Issued and outstanding – 2,320,737 shares in 2018 (2,316,779 shares in 2017)   5,796     5,787  
Additional paid-in capital   14,841     15,415  
Retained earnings   51,059     49,747  
Accumulated other comprehensive loss, net   (1,362 )   (613 )
Unearned Employee Stock Ownership Plan shares   (279 )   (299 )
Total shareholders' equity   70,055     70,037  

(In thousands, except per share data)
  Three Months Ended March 31,  
  2018   2017  
Interest income:            
Loans, including fees $ 6,338   $ 5,244  
Taxable   327     298  
Tax-exempt   231     231  
Other   87     47   
Total interest income   6,983     5,820  
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