Southern Michigan Bancorp, Inc. Announces First Quarter 2023 Earnings

Rhea-AI Summary

Southern Michigan Bancorp (OTC Pink: SOMC) reported a first quarter net income of $3,005,000, equating to $0.66 per share, surpassing the $2,933,000 or $0.65 per share from the same period in 2022. This growth is attributed to record highs in total loans, assets, and deposits, with total consolidated assets reaching $1.327 billion, an increase from $1.277 billion at the end of 2022. Total loans amounted to $933.5 million and deposits to $1.127 billion as of March 31, 2023. The company also adopted a new accounting standard affecting provisions for loan losses, resulting in a one-time net capital adjustment of $1.6 million. A new branch in downtown Jackson is set to open in July, indicating continued expansion.

Positive

• Net income increased to $3,005,000 for Q1 2023, up from $2,933,000 in Q1 2022.
• Earnings per share rose to $0.66 compared to $0.65 year-over-year.
• Total consolidated assets grew to $1.327 billion from $1.277 billion.
• Total loans reached $933.5 million, and total deposits rose to $1.127 billion.
• Annualized return on average equity improved to 13.68% from 12.23%.

Negative

• Annualized return on average assets decreased to 0.93% from 0.98%.
• Additional allowance for credit losses of $1.1 million impacted capital.

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.

***

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		9,579			8,264
Non-interest income:
Service charges on deposit accounts		393			362
Trust fees		567			577
Net gains on loan sales		60			264
Earnings on life insurance assets		146			117
ATM and debit card fee income		414			416
Other		221			160
Total non-interest income		1,801			1,896
Non-interest expense:
Salaries and employee benefits		4,710			3,991
Occupancy, net		487			439
Equipment		322			283
Printing, postage and supplies		101			112
Telecommunication expenses		91			84
Professional and outside services		473			389
Software maintenance		519			466
ATM expenses		207			180
Amortization of other intangibles		9			9
Other		758			672
Total non-interest expense		7,677			6,625
INCOME BEFORE INCOME TAXES		3,703			3,535
Federal income tax provision		698			602
NET INCOME	$	3,005		$	2,933
Basic Earnings Per Common Share	$	0.66		$	0.65
Diluted Earnings Per Common Share	$	0.66		$	0.65
Dividends Declared Per Common Share	$	0.14		$	0.13

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

FAQ

What are the latest earnings results for Southern Michigan Bancorp (SOMC)?

The first quarter of 2023 showed a net income of $3,005,000 or $0.66 per share for Southern Michigan Bancorp.

What is the total asset growth for Southern Michigan Bancorp (SOMC) as of Q1 2023?

Total assets reached $1.327 billion, an increase from $1.277 billion at the end of 2022.

What is the current dividend declared per share for Southern Michigan Bancorp (SOMC)?

The dividend declared per common share is $0.14 for the latest quarter.

What is the current loan and deposit figure for Southern Michigan Bancorp (SOMC)?

Total loans totaled $933.5 million, while total deposits reached $1.127 billion as of March 31, 2023.