Southern Michigan Bancorp, Inc. Announces First Quarter 2021 Earnings

Rhea-AI Summary

Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported first quarter net income of $3,088,000, reflecting a 104.1% increase from $1,513,000 in Q1 2020. Earnings per share rose to $1.35, up from $0.66 per share year-over-year. Total consolidated assets reached a record $1.076 billion, with loans and deposits also at record levels of $644.4 million and $924.5 million, respectively. The company processed over 700 PPP loans worth over $40 million and closed a $30 million subordinated debt offering to support growth.

Positive

• Net income increased by 104.1% to $3,088,000 year-over-year.
• Earnings per share rose to $1.35, up $0.69 from $0.66.
• Record total consolidated assets of $1.076 billion.
• Record total loans of $644.4 million and deposits of $924.5 million.
• Loan delinquencies decreased from 0.72% to 0.26%.
• No provision for loan loss expense was required in Q1 2021.

Negative

• Tax equivalent net interest margin decreased from 3.49% in Q1 2020 to 3.35% in Q1 2021.

COLDWATER, Mich., April 28, 2021 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced first quarter net income of $3,088,000, a 104.1% increase compared to net income of $1,513,000 for the first quarter of 2020. Earnings per share for the first quarter of 2021 increased to $1.35 per share, up $0.69 per share, from $0.66 per share for the first quarter of 2020.

As of March 31, 2021, total consolidated assets were at a record high of $1.076 billion compared to $997.6 million on December 31, 2020. As of March 31, 2021, total loans and deposits also were at record levels totaling $644.4 million and $924.5 million, respectively.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “We are pleased with the strong results posted in the first quarter. Our continued focus on meeting our customers’ needs has resulted in over 700 additional PPP loans being processed for our customers totaling over $40 million. In addition, the commercial loan pipeline is robust with funding expected to start in the second quarter.” Castle continued, “The successful closing of the $30 million subordinated debt offering this month provides capital to support additional growth in the bank.”

The allowance for loan losses totaled $7,818,000, or 1.21% of loans at March 31, 2021. Net loan loss recoveries totaled $29,000 for the first quarter of 2021, compared to net loan charge-offs of $7,000 during the first quarter of 2020.   Loan delinquencies dropped from 0.72% of gross loans on December 31, 2020 to 0.26% of gross loans on March 31, 2021. Likewise, total non-performing assets dropped from .49% of total assets on December 31, 2020 to 0.17% of total assets on March 31, 2021. No provision for loan loss expense was required during the first quarter of 2021. This contrasts with $1.0 million of provision for loan loss expense during the first quarter of 2020.

The annualized return on average assets for the three-month periods ended March 31, 2021 and March 31, 2020 were 1.19% and 0.73% respectively. The annualized return on average equity was 13.29% for the first quarter of 2021 compared to 7.06% for the first quarter of 2020. The tax equivalent net interest margin for the three-month period ending March 31, 2021 was 3.35% compared to 3.49% for the same period of 2020.

Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 13 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,” “anticipated,” 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 the COVID-19 pandemic, 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, 2021			December 31, 2020
ASSETS
Cash and cash equivalents			$	140,410		$	99,610
Federal funds sold				249			231
Securities available for sale				238,712			208,380
Loans held for sale				2,198			1,691
Loans, net of allowance for loan losses of $7,818 - 2021 ($7,789 - 2020)				636,611			628,081
Premises and equipment, net				13,415			13,698
Accrued interest receivable				4,838			4,749
Net cash surrender value of life insurance				16,118			16,016
Goodwill				13,422			13,422
Other intangible assets, net				246			255
Other assets				9,458			11,441
TOTAL ASSETS			$	1,075,677		$	997,574
LIABILITIES
Deposits:
Non-interest bearing			$	245,168		$	220,786
Interest bearing				679,374			617,512
Total deposits				924,542			838,298
Securities sold under agreements to repurchase and overnight borrowings				17,059			20,083
Accrued expenses and other liabilities				12,823			14,561
Other borrowings				26,250			26,500
Subordinated debentures				5,155			5,155
Total liabilities				985,829			904,597
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 – 2,292,376 shares in 2021           (2,301,269 shares in 2020)				5,725			5,748
Additional paid-in capital				14,585			15,416
Retained earnings				70,275			67,741
Accumulated other comprehensive income/(loss), net				(447	)		4,362
Unearned Employee Stock Ownership Plan shares				(290	)		(290	)
Total shareholders’ equity				89,848			92,977
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	1,075,677		$	997,574

SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share data)

	Three Months Ended March 31,
	2021			2020
Interest income:
Loans, including fees	$	7,805		$	6,927
Securities:
Taxable		734			707
Tax-exempt		231			116
Other		31			227
Total interest income		8,801			7,977
Interest expense:
Deposits		686			1,257
Other		222			319
Total interest expense		908			1,576
Net interest income		7,893			6,401
Provision for loan losses		-			1,000
Net interest income after provision for loan losses		7,893			5,401
Non-interest income:
Service charges on deposit accounts		293			463
Trust fees		549			517
Net gains on loan sales		744			249
Earnings on life insurance assets		101			94
ATM and debit card fee income		410			348
Other		145			150
Total non-interest income		2,242			1,821
Non-interest expense:
Salaries and employee benefits		3,999			3,258
Occupancy, net		409			397
Equipment		304			313
Printing, postage and supplies		115			103
Telecommunication expenses		100			128
Professional and outside services		337			337
Software maintenance		400			380
ATM expenses		151			131
Amortization of other intangibles		9			9
Other		555			391
Total non-interest expense		6,379			5,447
INCOME BEFORE INCOME TAXES		3,756			1,775
Federal income tax provision		668			262
NET INCOME	$	3,088		$	1,513
Basic Earnings Per Common Share	$	1.35		$	0.66
Diluted Earnings Per Common Share	$	1.35		$	0.66
Dividends Declared Per Common Share	$	0.24		$	0.23

CONTACT:  John H. Castle, CEO
(517) 279-5500

FAQ

What were Southern Michigan Bancorp's earnings for Q1 2021?

Southern Michigan Bancorp reported a net income of $3,088,000 for Q1 2021.

How much did earnings per share increase for SOMC in Q1 2021?

Earnings per share for Southern Michigan Bancorp increased to $1.35, up from $0.66 in Q1 2020.

What is the total asset value of Southern Michigan Bancorp as of March 31, 2021?

As of March 31, 2021, total consolidated assets were at a record high of $1.076 billion.

How many PPP loans were processed by SOMC in the first quarter?

Southern Michigan Bancorp processed over 700 PPP loans totaling over $40 million in Q1 2021.

What is the current status of loan delinquencies for SOMC?

Loan delinquencies decreased to 0.26% of gross loans as of March 31, 2021.