Southern Michigan Bancorp, Inc. Announces Third Quarter 2021 Earnings

Rhea-AI Summary

Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported a significant increase in third quarter 2021 net income, reaching $3,138,000, or $0.69 per share, up from $2,018,000, or $0.44 per share, in Q3 2020. Year-to-date earnings also saw growth, totaling $9,235,000, or $2.02 per share, compared to $5,362,000, or $1.17 per share, last year. Total assets grew by 14.5% to $1.142 billion, with loans increasing by 15.3%. The company achieved a return on average equity of 13.02%, up from 8.20% the previous year.

Positive

• Third quarter net income increased 55.5% year-over-year.
• Total assets rose 14.5% to $1.142 billion.
• Loans grew by 15.3%, reaching $733.3 million.
• Deposits increased by 14.8%, totaling $962.6 million.
• Return on average equity improved to 13.02% from 8.20% year-over-year.

Negative

• None.

COLDWATER, Mich., Oct. 27, 2021 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced third quarter 2021 net income of $3,138,000, or $0.69 per share, compared to net income of $2,018,000, or $0.44 per share, for the third quarter of 2020. Southern earned $9,235,000, or $2.02 per share, for the nine-month period ending September 30, 2021 compared to $5,362,000, or $1.17 per share, for the same nine-month period a year ago.   

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “During the third quarter Southern continued to capitalize on market opportunities presented to us. We are pleased to report continued loan and deposit growth during the quarter, with additional growth expected during the fourth quarter. Earnings through the third quarter now exceed our 2019 annual record net income benchmark of $8,622,000.”

Total consolidated assets at September 30, 2021 increased 14.5%, reaching $1.142 billion compared to $997.6 million at December 31, 2020.   Loan totals grew 15.3%, from December 31, 2020 levels of $635.9 million to $733.3 million. Deposits also increased totaling $962.6 million at September 30, 2021, an increase of $124.3 million or 14.8%, as compared to year end 2020.  

The allowance for loan losses totaled $8,879,000, or 1.21% of loans at September 30, 2021. Net loan recoveries totaled $40,000 for the first nine months of 2021, compared to net loan losses of $10,000 during the first nine months of 2020. Loan delinquencies dropped from 0.72% of gross loans on December 31, 2020 to 0.19% of gross loans on September 30, 2021. Likewise, total non-performing assets dropped from .49% of total assets on December 31, 2020 to 0.14% of total assets on September 30, 2021. As a result of loan growth, Southern provided $650,000 of provision for loan loss expense during the third quarter of 2021, with total provision expense of $1,050,000 through the first nine months of 2021. This contrasts with $2,250,000 of provision for loan loss expense recorded during the first nine months of 2020.

The annualized return on average assets for the nine-month periods ending September 30, 2021 and 2020 was 1.13% and 0.81%, respectively. The annualized return on average equity was 13.02% for the first nine months of 2021 compared to 8.20% for the first nine months of 2020. The tax equivalent net interest margins for the nine-month periods ending September 30, 2021 and 2020 was 3.27% and 3.26%, respectively.

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,” “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.
Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share data)

	September 30,				December 31,
	2021				2020
ASSETS
Cash and cash equivalents	$	101,565			$		99,610
Federal funds sold		246					231
Securities available for sale		251,726					208,380
Loans held for sale		1,201					1,691
Loans, net of allowance for loan losses of $8,879 - 2021 ($7,789 – 2020)		724,387					628,081
Premises and equipment, net		13,240					13,698
Accrued interest receivable		4,816					4,749
Net cash surrender value of life insurance		18,884					16,016
Goodwill		13,422					13,422
Other intangible assets, net		228					255
Other assets		12,148					11,441
TOTAL ASSETS	$	1,141,863			$		997,574
LIABILITIES
Deposits :
Non-interest bearing	$	257,493			$		220,786
Interest bearing		705,131					617,512
Total deposits		962,624					838,298
Securities sold under agreements to repurchase and overnight borrowings		15,413					20,083
Accrued expenses and other liabilities		13,132					14,561
Other borrowings		20,000					26,500
Subordinated debentures		34,497					5,155
Total liabilities		1,045,666					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 – 4,515,777 shares in 2021  (2,301,269 shares in 2020)		11,285					5,748
Additional paid-in capital		13,996					15,416
Retained earnings		69,600					67,741
Accumulated other comprehensive income, net		1,556					4,362
Unearned Employee Stock Ownership Plan shares		(240	)				(290		)
Total shareholders’ equity		96,197					92,977
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,141,863			$		997,574

Southern Michigan Bancorp, Inc.
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Interest income:
Loans, including fees	$	8,591		$	6,988		$	24,058		$	21,175
Federal funds sold and balances with banks		37			25			107			281
Securities:
Taxable		892			565			2,487			1,839
Tax-exempt		282			175			800			460
Total interest income		9,802			7,753			27,452			23,755
Interest expense:
Deposits		508			936			1,783			3,225
Other		459			249			1,093			870
Total interest expense		967			1,185			2,876			4,095
Net interest income		8,835			6,568			24,576			19,660
Provision for loan losses		650			500			1,050			2,250
Net interest income after provision for loan losses		8,185			6,068			23,526			17,410
Non-interest income:
Service charges on deposit accounts		345			322			913			1,039
Trust fees		587			514			1,681			1,535
Net gains on loan sales		470			966			1,912			1,753
Earnings on life insurance assets		124			96			511			285
ATM and debit card fee income		470			421			1,360			1,149
Other		174			142			472			406
Total non-interest income		2,170			2,461			6,849			6,167
Non-interest expense:
Salaries and employee benefits		4,047			3,856			11,880			10,423
Occupancy, net		388			395			1,197			1,167
Equipment		274			290			861			880
Printing, postage and supplies		93			90			290			302
Telecommunication expenses		82			112			266			362
Professional and outside services		441			373			1,218			1,109
Software maintenance		434			384			1,228			1,152
ATM expenses		173			152			493			440
Other		627			509			1,799			1,391
Total non-interest expense		6,559			6,161			19,232			17,226
INCOME BEFORE INCOME TAXES		3,796			2,368			11,143			6,351
Federal income tax provision		658			350			1,908			989
NET INCOME	$	3,138		$	2,018		$	9,235		$	5,362
Basic Earnings Per Common Share	$	0.69		$	0.44		$	2.02		$	1.17
Diluted Earnings Per Common Share		0.69			0.44			2.02			1.17
Dividends Declared Per Common Share		0.12			0.12			0.36			0.35

FAQ

What was Southern Michigan Bancorp's Q3 2021 net income?

Southern Michigan Bancorp reported a net income of $3,138,000 for Q3 2021.

How much did earnings per share increase for SOMC in Q3 2021?

Earnings per share increased to $0.69 in Q3 2021, up from $0.44 in Q3 2020.

What is Southern Michigan Bancorp's total asset growth for 2021?

Total assets grew by 14.5% to $1.142 billion as of September 30, 2021.

How did loan delinquencies change for SOMC?

Loan delinquencies dropped significantly from 0.72% of gross loans to 0.19%.

What was the return on average assets for SOMC in 2021?

The annualized return on average assets was 1.13% for the nine-month period ending September 30, 2021.