Southern Michigan Bancorp, Inc. Announces First Quarter 2023 Earnings
April 26, 2023 at 01:26 pm
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COLDWATER, Mich., April 26, 2023 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced first quarter net income of $3,005,000, or $0.66 per share, compared to net income of $2,933,000, or $0.65 per share, for the first quarter of 2022.
John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “We are pleased with our first quarter financial performance. Total loans, assets and deposits all reached record highs. We look forward to opening our first branch location in downtown Jackson two blocks from the loan production office located on West Michigan Avenue. The new branch is scheduled to open in July.”
As of March 31, 2023, total consolidated assets grew to $1.327 billion compared to $1.277 billion on December 31, 2022. Likewise, total loans and deposits also grew during the quarter totaling $933.5 million and $1.127 billion, respectively, on March 31, 2023.
The allowance for credit losses totaled $10,963,000, or 1.17% of loans on March 31, 2023. Net loan charge-offs totaled $0 for the first quarter of 2023, compared to net loan charge-offs of $13,000 during the first quarter of 2022. Loan delinquencies at both March 31, 2023 and December 31, 2022 were 0.13% of gross loans. On January 1, 2023, Southern adopted Accounting Standard Update 2016-13. The adoption resulted in an increase of $1.1 million to the allowance for credit losses and the establishment of a $500,000 reserve for unfunded commitments. A one-time adjustment to capital for $1.6 million, net of tax, was recorded. Southern provided an additional $275,000 for loan losses during the first quarter of 2023, while no provision for loan loss expense was required during the first quarter of 2022.
The annualized return on average assets for the three-month periods ended March 31, 2023 and March 31, 2022 were 0.93% and 0.98% respectively. The annualized return on average equity was 13.68% for the first quarter of 2023 compared to 12.23% for the first quarter of 2022. The tax equivalent net interest margin for the three-month period ending March 31, 2023 was 3.31% compared to 3.02% for the same period of 2022.
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 Jackson County, providing a broad range of consumer, business and wealth management services throughout the region.
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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 to 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 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
March 31, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
79,184
$
77,255
Federal funds sold
265
253
Securities available for sale, at fair value
179,581
178,154
Securities held-to-maturity, at amortized cost
68,946
69,661
Loans, net of allowance for loan losses of $10,963 - 2023 ($9,588 - 2022)
922,536
877,038
Premises and equipment, net
17,554
16,545
Accrued interest receivable
5,666
5,535
Net cash surrender value of life insurance
22,001
18,124
Goodwill
13,422
13,422
Other intangible assets, net
174
183
Other assets
17,636
20,353
TOTAL ASSETS
$
1,326,965
$
1,276,523
LIABILITIES
Deposits:
Non-interest bearing
$
248,448
$
268,704
Interest bearing
878,669
822,347
Total deposits
1,127,117
1,091,051
Securities sold under agreements to repurchase and overnight borrowings
10,659
11,179
Accrued expenses and other liabilities
12,905
13,545
Other borrowings
50,900
40,000
Subordinated debentures
34,601
34,584
Total liabilities
1,236,182
1,190,359
SHAREHOLDERS’ EQUITY
Preferred stock, 100,000 shares authorized; none issued or outstanding
-
-
Common stock, $2.50 par value:
Authorized - 10,000,000 shares
Issued and outstanding – 4,577,171 shares in 2023 (4,519,179 shares in 2022)
11,439
11,294
Additional paid-in capital
14,098
14,066
Retained earnings
83,800
82,705
Accumulated other comprehensive loss, net
(18,554
)
(21,901
)
Total shareholders’ equity
90,783
86,164
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
1,326,965
$
1,276,523
SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
Three Months Ended March 31,
2023
2022
Interest income:
Loans, including fees
$
11,853
$
7,985
Securities:
Taxable
1,527
901
Tax-exempt
329
277
Other
624
50
Total interest income
14,333
9,213
Interest expense:
Deposits
3,767
486
Other
712
463
Total interest expense
4,479
949
Net interest income
9,854
8,264
Provision for loan losses
275
-
Net interest income after provision for loan losses
Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust (The Bank). The Bank operates about 18 branches within Branch, Calhoun, Hillsdale, Jackson, Kalamazoo, and St. Joseph counties, providing a range of consumer, business, and wealth management services throughout the region. Its business, which it conducts primarily through the Bank, is concentrated in a single industry segment, commercial banking. The Bank offers a variety of deposit, payment, credit, and other financial services to all types of customers. The Bankâs commercial lending covers categories, such as business, industrial, agricultural, construction, inventory, and real estate. It offers trust and investment services, which include investment management, trustee services, and others. It also owns Southern Michigan Bancorp Capital Trust I, SMB Risk Management, Inc., and 27 Marshall Street, LLC. The Bank wholly owns SMB Financial Services, Inc.