Southern Michigan Bancorp, Inc. Announces First Quarter 2022 Earnings

Rhea-AI Summary

Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported first quarter net income of $2.93 million, or $0.65 per share, down from $3.09 million, or $0.68 per share, in Q1 2021. Despite reduced nonrecurring PPP loan revenue and mortgage loan sales, core loan growth contributed to a record total asset level of $1.225 billion. Loans and deposits also reached record highs of $765.1 million and $1.060 billion, respectively. Shareholders' equity decreased to $86.9 million due to higher interest rates impacting securities. The annualized return on average assets was 0.98%, and net interest margin was 3.02%.

Positive

• Core loan growth resulted in stable revenue streams.
• Total consolidated assets reached a record high of $1.225 billion.
• Record total loans of $765.1 million and deposits of $1.060 billion.

Negative

• Net income decreased to $2.93 million from $3.09 million year-over-year.
• Shareholders' equity declined from $97.7 million to $86.9 million.
• The annualized return on average equity fell to 12.23% from 13.29%.

COLDWATER, Michigan, April 27, 2022 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced first quarter net income of $2,933,000, or $0.65 per share, compared to net income of $3,088,000, or $0.68 per share, for the first quarter of 2021.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “We are pleased with our first quarter results. The core loan growth we have experienced over the last year has provided a stable stream of revenue that has offset the significant reductions from nonrecurring PPP loan revenue and mortgage loan sales that have dropped off due to market conditions.”

As of March 31, 2022, total consolidated assets were at a record high $1.225 billion compared to $1.161 billion on December 31, 2021. As of March 31, 2022, total loans and deposits also were at record levels totaling $765.1 million and $1.060 billion, respectively.

The allowance for loan losses totaled $9,307,000, or 1.22% of loans at March 31, 2022. Net loan charge-offs totaled $13,000 for the first quarter of 2022, compared to net loan loss recoveries of $29,000 during the first quarter of 2021. Loan delinquencies at both March 31, 2022 and December 31, 2021 were at 0.20% of gross loans. No provision for loan loss expense was required during the first quarter of 2022 or 2021.

Shareholders’ equity totaled $86.9 million as of March 31, 2022, down from $97.7 million at year-end 2021. Like many banks are experiencing, the change in equity was caused by higher market interest rates that resulted in net unrealized losses on securities in the investment portfolio and was recorded as other comprehensive loss. This change in shareholders’ equity has no impact on regulatory capital requirements.

The annualized return on average assets for the three-month periods ended March 31, 2022 and March 31, 2021 were 0.98% and 1.19% respectively. The annualized return on average equity was 12.23% for the first quarter of 2022 compared to 13.29% for the first quarter of 2021. The tax equivalent net interest margin for the three-month period ending March 31, 2022 was 3.02% compared to 3.35% for the same period of 2021.

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, 2022				December 31, 2021
ASSETS
Cash and cash equivalents			$	135,682			$	119,389
Federal funds sold				266				271
Securities available for sale				267,693				245,846
Loans held for sale				356				1,146
Loans, net of allowance for loan losses of $9,307 - 2022 ($9,320 - 2021)				755,821				732,088
Premises and equipment, net				13,485				13,115
Accrued interest receivable				4,508				4,193
Net cash surrender value of life insurance				18,788				18,671
Goodwill				13,422				13,422
Other intangible assets, net				210				219
Other assets				14,816				12,794
TOTAL ASSETS			$	1,225,047			$	1,161,154
LIABILITIES
Deposits:
Non-interest bearing			$	274,737			$	262,980
Interest bearing				785,122				711,372
Total deposits				1,059,859				974,352
Securities sold under agreements to repurchase and overnight borrowings				11,937				20,609
Accrued expenses and other liabilities				11,778				13,930
Other borrowings				20,000				20,000
Subordinated debentures				34,532				34,514
Total liabilities				1,138,106				1,063,405
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 – 4,538,061 shares in 2022 (4,516,377 shares in 2021)				11,342				11,287
Additional paid-in capital				14,050				14,235
Retained earnings				73,919				71,581
Accumulated other comprehensive income/(loss), net				(12,160	)			856
Unearned Employee Stock Ownership Plan shares				(210	)			(210	)
Total shareholders’ equity				86,941				97,749
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	1,225,047			$	1,161,154

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

(In thousands, except per share data)

	Three Months Ended March 31,
	2022				2021
Interest income:
Loans, including fees	$	7,985			$	7,805
Securities:
Taxable		901				734
Tax-exempt		277				231
Other		50				31
Total interest income		9,213				8,801
Interest expense:
Deposits		486				686
Other		463				222
Total interest expense		949				908
Net interest income		8,264				7,893
Provision for loan losses		-				-
Net interest income after provision for loan losses		8,264				7,893
Non-interest income:
Service charges on deposit accounts		362				293
Trust fees		577				549
Net gains on loan sales		264				744
Earnings on life insurance assets		117				101
ATM and debit card fee income		416				410
Other		160				145
Total non-interest income		1,896				2,242
Non-interest expense:
Salaries and employee benefits		3,991				3,999
Occupancy, net		439				409
Equipment		283				304
Printing, postage and supplies		112				115
Telecommunication expenses		84				100
Professional and outside services		389				337
Software maintenance		466				400
ATM expenses		180				151
Amortization of other intangibles		9				9
Other		672				555
Total non-interest expense		6,625				6,379
INCOME BEFORE INCOME TAXES		3,535				3,756
Federal income tax provision		602				668
NET INCOME	$	2,933			$	3,088
Basic Earnings Per Common Share	$	0.65			$	0.68
Diluted Earnings Per Common Share	$	0.65			$	0.67
Dividends Declared Per Common Share	$	0.13			$	0.12

FAQ

What were Southern Michigan Bancorp's earnings for Q1 2022?

Southern Michigan Bancorp reported Q1 2022 net income of $2.93 million, or $0.65 per share.

How did loan growth impact Southern Michigan Bancorp's financial performance?

Core loan growth provided stable revenue streams despite reductions from nonrecurring PPP loan revenue.

What is the current state of Southern Michigan Bancorp's assets?

As of March 31, 2022, total consolidated assets were at a record high of $1.225 billion.

How has net interest margin changed for Southern Michigan Bancorp?

The tax equivalent net interest margin for Q1 2022 was 3.02%, down from 3.35% in Q1 2021.

What is the current total equity of Southern Michigan Bancorp?

As of March 31, 2022, shareholders' equity totaled $86.9 million, down from $97.7 million at the end of 2021.