Southern Michigan Bancorp, Inc. Announces Second Quarter 2024 Earnings

Rhea-AI Summary

Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported Q2 2024 earnings of $2,488,000, or $0.55 per share, down from $2,696,000, or $0.59 per share in Q2 2023. For the first half of 2024, earnings were $5,166,000 or $1.14 per share, compared to $5,701,000 or $1.25 per share in the same period last year. The decrease was attributed to net interest margin compression and increased overhead due to expansion.

As of June 30, 2024, total assets grew to $1.459 billion, with loans at $1.072 billion and deposits at $1.205 billion. The allowance for credit losses was $11,922,000, or 1.11% of loans. The annualized return on average assets for H1 2024 was 0.71%, down from 0.86% in H1 2023. The tax-equivalent net interest margin decreased to 2.94% from 3.25% year-over-year.

Positive

• Total consolidated assets grew to $1.459 billion from $1.415 billion on December 31, 2023
• Total loans increased to $1.072 billion as of June 30, 2024
• Total deposits grew to $1.205 billion as of June 30, 2024
• Non-performing loans as a percentage of total loans improved to 0.08% from 0.09% on December 31, 2023

Negative

• Q2 2024 net income decreased to $2,488,000 from $2,696,000 in Q2 2023
• Earnings per share for Q2 2024 declined to $0.55 from $0.59 in Q2 2023
• First half 2024 earnings decreased to $5,166,000 from $5,701,000 in the same period of 2023
• Net interest margin compressed to 2.94% from 3.25% year-over-year
• Return on average assets for H1 2024 declined to 0.71% from 0.86% in H1 2023
• Return on average equity decreased to 10.34% for H1 2024 from 12.63% in H1 2023

COLDWATER, Mich., July 24, 2024 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced second quarter net income of $2,488,000, or $0.55 per share, compared to net income of $2,696,000, or $0.59 per share, for the second quarter of 2023. For the first six months of 2024, Southern earned $5,166,000 or $1.14 per share, compared with $5,701,000 or $1.25 per share, for the same six-month period one year ago.

John R. Waldron, President and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “Earnings were lower due to continued net interest margin compression in this higher interest rate environment and our overhead increased as we continued our expansion.”

As of June 30, 2024, total consolidated assets grew to $1.459 billion compared to $1.415 billion on December 31, 2023. Likewise, total loans and deposits also grew during the first six months totaling $1.072 billion and $1.205 billion, respectively, on June 30, 2024.

The allowance for credit losses totaled $11,922,000, or 1.11% of loans on June 30, 2024. Net loan charge-offs totaled $11,000 for the first six months of 2024, compared to net recoveries of $3,000 for the first six months of 2023. Non-performing loans as a percentage of total loans were .08% on June 30, 2024 compared to 0.09% on December 31, 2023.

The annualized return on average assets for the six-month periods ended June 30, 2024 and June 30, 2023 was .71% and 0.86% respectively. The annualized return on average equity was 10.34% for the first six months of 2024 compared to 12.63% for the first six months of 2023. The tax equivalent net interest margin for the six-month period ending June 30, 2024 and 2023 was 2.94% and 3.25%, respectively.

Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 17 offices within Branch, Calhoun, Hillsdale, Jackson, 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,” “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 credit losses and other accounting estimates, such as the carrying value of goodwill, other real estate owned, mortgage servicing rights and the fair value of investment securities, involves judgments that are inherently forward-looking. 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, 2024			December 31, 2023
ASSETS
Cash and cash equivalents			$	83,057		$	71,620
Federal funds sold				253			1,468
Securities available for sale, at fair value				160,288			169,740
Securities held-to-maturity, at amortized cost				65,052			61,600
Loans held-for-sale				1,550			169
Loans, net of allowance for credit losses of $11,922 – 2024, $11,697 - 2023				1,060,052			1,024,720
Premises and equipment, net				21,919			23,114
Net cash surrender value of life insurance				22,801			22,472
Goodwill				13,422			13,422
Other intangible assets, net				129			147
Other assets				30,145			26,323
TOTAL ASSETS			$	1,458,668		$	1,414,795
LIABILITIES
Deposits:
Non-interest bearing			$	212,871		$	226,178
Interest bearing				992,434			931,793
Total deposits				1,205,305			1,157,971
Securities sold under agreements to repurchase and overnight borrowings				883			1,738
Accrued expenses and other liabilities				18,804			15,703
Other borrowings				96,900			106,900
Subordinated debentures				34,687			34,653
Total liabilities				1,356,579			1,316,965
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 – 4,564,904 shares in 2024, 4,533,637 shares in 2023				11,408			11,330
Additional paid-in capital				12,973			13,126
Retained earnings				93,595			89,808
Accumulated other comprehensive loss				(15,887	)		(16,434	)
Total shareholders’ equity				102,089			97,830
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	1,458,668		$	1,414,795

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,
	2024			2023			2024			2023
Interest income:
Loans, including fees	$	15,838		$	13,163		$	31,304		$	25,016
Federal funds sold and balances with banks		1,058			950			2,317			1,574
Securities:
Taxable		1,565			1,561			3,048			3,088
Tax-exempt		296			317			595			646
Total interest income		18,757			15,991			37,264			30,324
Interest expense:
Deposits		7,269			4,972			14,088			8,739
Other		1,503			1,158			3,130			1,870
Total interest expense		8,772			6,130			17,218			10,609
Net interest income		9,985			9,861			20,046			19,715
Provision for credit losses		236			650			236			925
Net interest income after provision for credit losses		9,749			9,211			19,810			18,790
Non-interest income:
Service charges on deposit accounts		407			433			831			826
Trust fees		659			591			1,300			1,158
Net gains on loan sales		141			55			237			115
Earnings on life insurance assets		165			153			329			299
ATM and debit card fee income		467			473			891			887
Other		200			226			432			447
Total non-interest income		2,039			1,931			4,020			3,732
Non-interest expense:
Salaries and employee benefits		5,330			4,685			10,626			9,395
Occupancy, net		497			481			996			968
Equipment		409			337			833			659
Professional and outside services		459			557			1,045			1,030
Software maintenance		598			552			1,190			1,071
ATM expenses		210			200			399			407
Printing, postage, and supplies		128			120			289			221
Telecommunication expenses		78			89			165			180
Other		1,036			889			1,988			1,656
Total non-interest expense		8,745			7,910			17,531			15,587
INCOME BEFORE INCOME TAXES		3,043			3,232			6,299			6,935
Federal income tax provision		555			536			1,133			1,234
NET INCOME	$	2,488		$	2,696		$	5,166		$	5,701
Basic Earnings Per Common Share	$	0.55		$	0.59		$	1.14		$	1.25
Diluted Earnings Per Common Share		0.55			0.59			1.14			1.25
Dividends Declared Per Common Share		0.15			0.14			0.30			0.28

FAQ

What was Southern Michigan Bancorp's (SOMC) Q2 2024 earnings per share?

Southern Michigan Bancorp (SOMC) reported earnings of $0.55 per share for Q2 2024.

How did SOMC's Q2 2024 earnings compare to Q2 2023?

SOMC's Q2 2024 earnings of $2,488,000 were lower compared to $2,696,000 in Q2 2023.

What factors affected SOMC's earnings in Q2 2024?

SOMC's earnings were impacted by net interest margin compression in the higher interest rate environment and increased overhead due to expansion.

What was SOMC's total consolidated assets as of June 30, 2024?

SOMC's total consolidated assets grew to $1.459 billion as of June 30, 2024.

How did SOMC's net interest margin change in H1 2024 compared to H1 2023?

SOMC's tax equivalent net interest margin decreased to 2.94% in H1 2024 from 3.25% in H1 2023.