Southern Michigan Bancorp, Inc. Announces Second Quarter 2023 Earnings

COLDWATER, Mich., July 26, 2023 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced second quarter 2023 net income of $2,696,000, or $0.59 per share, compared to net income of $3,361,000, or $0.74 per share, for the second quarter of 2022. Southern earned $5,701,000, or $1.25 per share, for the six-month period ending June 30, 2023 compared to $6,294,000, or $1.39 per share, for the same six-month period a year ago.   

Total consolidated assets at June 30, 2023 totaled $1.418 billion compared to $1.277 billion at December 31, 2022.   Loan totals grew 12.8%, from December 31, 2022 levels of $886.6 million to $999.7 million. Deposits totaled $1,180.2 million at June 30, 2023, an increase of $89.2 million or 8.2%, as compared to year end 2022.  

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “Continued loan growth, particularly in the Jackson market, necessitated additional provision expense this quarter. Asset quality remains strong with very little delinquency. Our financial performance remains solid despite the current rate environment.”

The allowance for loan losses totaled $11,616,000, or 1.16% of loans at June 30, 2023. Net loan recoveries totaled $3,000 for the first six months of 2023, compared to net loan losses of $3,000 during the first six months of 2022. Asset quality remains strong with loan delinquencies totaling just 0.12% of gross loans on June 30, 2023. During the first six months of 2023 $925,000 of provision for credit loss expense was recorded, a result of loan growth. This contrasts with no provision for credit loss for the first six months of 2022.

The annualized return on average assets for the six-month periods ending June 30, 2023 and 2022 was 0.86% and 1.04%, respectively. The annualized return on average equity was 12.63% for the first six months of 2023 compared to 14.03% for the first six months of 2022. The tax equivalent net interest margins for the six-month periods ending June 30, 2023 and 2022 was 3.25% and 3.13%, respectively.

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,” “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 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.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share data)

	June 30, 2023			December 31, 2022
ASSETS
Cash and cash equivalents	$	102,311		$	77,255
Federal funds sold		350			253
Securities available for sale, at fair value		174,197			178,154
Securities held-to-maturity, at amortized cost		70,551			69,661
Loans held for sale		130			-
Loans, net of allowance for loan losses of $11,616 - 2023 ($9,588 – 2022)		988,082			877,038
Premises and equipment, net		22,708			16,545
Accrued interest receivable		5,662			5,535
Net cash surrender value of life insurance		22,154			18,124
Goodwill		13,422			13,422
Other intangible assets, net		165			183
Other assets		18,754			20,353
TOTAL ASSETS	$	1,418,486		$	1,276,523
LIABILITIES
Deposits :
Non-interest bearing	$	246,436		$	268,704
Interest bearing		933,800			822,347
Total deposits		1,180,236			1,091,051
Securities sold under agreements to repurchase and overnight borrowings		970			11,179
Accrued expenses and other liabilities		13,424			13,545
Other borrowings		96,900			40,000
Subordinated debentures		34,618			34,584
Total liabilities		1,326,148			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 – 4,571,652 shares in 2023 (4,519,179 shares in 2022)		11,425			11,294
Additional paid-in capital		14,396			14,066
Retained earnings		85,856			82,705
Accumulated other comprehensive loss, net		(19,339	)		(21,901		)
Total shareholders’ equity		92,338			86,164
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,418,486		$	1,276,523

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

(In thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Interest income:
Loans, including fees	$	13,163		$	8,427		$	25,016		$	16,412
Federal funds sold and balances with banks		950			236			1,574			286
Securities:
Taxable		1,561			1,123			3,088			2,025
Tax-exempt		317			378			646			654
Total interest income		15,991			10,164			30,324			19,377
Interest expense:
Deposits		4,972			600			8,739			1,086
Other		1,158			444			1,870			907
Total interest expense		6,130			1,044			10,609			1,993
Net interest income		9,861			9,120			19,715			17,384
Provision for loan losses		650			-			925			-
Net interest income after provision for loan losses		9,211			9,120			18,790			17,384
Non-interest income:
Service charges on deposit accounts		433			350			826			712
Trust fees		591			556			1,158			1,133
Net gains on loan sales		55			231			115			495
Earnings on life insurance assets		153			111			299			228
ATM and debit card fee income		473			449			887			865
Other		226			190			447			350
Total non-interest income		1,931			1,887			3,732			3,783
Non-interest expense:
Salaries and employee benefits		4,685			4,299			9,395			8,291
Occupancy, net		481			395			968			834
Equipment		337			333			659			616
Printing, postage and supplies		120			95			221			207
Telecommunication expenses		89			73			180			157
Professional and outside services		557			383			1,030			773
Software maintenance		552			485			1,071			950
ATM expenses		200			183			407			363
Other		889			723			1,656			1,403
Total non-interest expense		7,910			6,969			15,587			13,594
INCOME BEFORE INCOME TAXES		3,232			4,038			6,935			7,573
Federal income tax provision		536			677			1,234			1,279
NET INCOME	$	2,696		$	3,361		$	5,701		$	6,294
Basic Earnings Per Common Share	$	0.59		$	0.74		$	1.25		$	1.39
Diluted Earnings Per Common Share		0.59			0.74			1.25			1.39
Dividends Declared Per Common Share		0.14			0.13			0.28			0.26

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