Southern Michigan Bancorp, Inc. Announces Third Quarter 2022 Earnings

Rhea-AI Summary

Southern Michigan Bancorp, Inc. (SOMC) reported a third quarter 2022 net income of $3,613,000, or $0.79 per share, reflecting a 15.1% increase from $3,138,000, or $0.69 per share, in Q3 2021. For the nine-month period ending September 30, 2022, net income totaled $9,907,000, or $2.18 per share, up from $9,235,000, or $2.02 per share, in 2021. Consolidated assets grew to $1.243 billion, with loans increasing 11.1% to $823.4 million and deposits rising 12.1% to $1.092 billion. Loan delinquencies remain low at 0.16%, and net loan recoveries showed improvement.

Positive

• Net income for Q3 2022 increased 15.1% year-over-year.
• Loan total rose 11.1% compared to 2021, reaching $823.4 million.
• Deposits grew by 12.1% since year-end 2021, totaling $1.092 billion.
• Return on average equity improved to 15.14% from 13.02% in 2021.

Negative

• Annualized return on average assets slightly decreased from 1.13% in 2021 to 1.09% in 2022.
• Net loan recoveries declined from $40,000 in 2021 to $11,000 in 2022.

COLDWATER, Mich., Oct. 26, 2022 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced third quarter 2022 net income of $3,613,000, or $0.79 per share, compared to net income of $3,138,000, or $0.69 per share, for the third quarter of 2021. Southern earned $9,907,000, or $2.18 per share, for the nine-month period ending September 30, 2022 compared to $9,235,000, or $2.02 per share, for the same nine-month period a year ago.   

Consolidated assets at September 30, 2022 totaled $1.243 billion compared to $1.161 billion at December 31, 2021.   Loan totals grew 11.1%, from December 31, 2021 levels of $741.4 million to $823.4 million. Deposits totaled $1.092 billion at September 30, 2022, an increase of $117.6 million or 12.1%, as compared to year end 2021.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “We are pleased to report our third quarter 2022 results which reflect continued loan growth, strong asset quality and record profitability. Net income for the third quarter increased 15.1% over third quarter 2021; loans totaled $823.4 million at the end of the third quarter, growing $90.1 million, or 12.3% compared to September 30, 2021; and loan delinquencies total just 0.16% of gross loans as of September 30, 2022. Additional loan growth is expected during the fourth quarter of 2022 as we continue to expand in the Jackson market and approved loans in the commercial pipeline fund.”    

The allowance for loan losses totaled $9,331,000, or 1.13% of loans at September 30, 2022. Net loan recoveries totaled $11,000 for the first nine months of 2022, compared to net loan recoveries of $40,000 during the first nine months of 2021. No provision for loan loss expense was required during the first nine months of 2022. This contrasts with $1,050,000 of provision for loan loss expense during the first nine months of 2021.

The annualized return on average assets for the nine-month periods ending September 30, 2022 and 2021 was 1.09% and 1.13%, respectively. The annualized return on average equity was 15.14% for the first nine months of 2022 compared to 13.02% for the first nine months of 2021. The tax equivalent net interest margins for the nine-month periods ending September 30, 2022 and 2021 was 3.25% and 3.27%, 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 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, 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)

	September 30, 2022				December 31, 2021
ASSETS
Cash and cash equivalents	$	89,299			$	119,389
Federal funds sold		260				271
Investment securities		269,896				245,846
Loans held for sale		200				1,146
Loans, net of allowance for loan losses of $9,331 - 2022 ($9,320 – 2021)		814,029				732,088
Premises and equipment, net		14,791				13,115
Accrued interest receivable		4,922				4,193
Net cash surrender value of life insurance		18,849				18,671
Goodwill		13,422				13,422
Other intangible assets, net		192				219
Other assets		17,552				12,794
TOTAL ASSETS	$	1,243,412			$	1,161,154
LIABILITIES
Deposits :
Non-interest bearing	$	272,688			$	262,980
Interest bearing		819,271				711,372
Total deposits		1,091,959				974,352
Securities sold under agreements to repurchase and overnight borrowings		12,467				20,609
Accrued expenses and other liabilities		12,924				13,930
Other borrowings		10,000				20,000
Subordinated debentures		34,566				34,514
Total liabilities		1,161,916				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 – 4,544,944 shares in 2022 (4,516,377 shares in 2021)		11,358				11,287
Additional paid-in capital		14,386				14,235
Retained earnings		79,711				71,581
Accumulated other comprehensive income/(loss), net		(23,778	)			856
Unearned Employee Stock Ownership Plan shares		(181	)			(210	)
Total shareholders’ equity		81,496				97,749
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,243,412			$	1,161,154

Southern Michigan Bancorp, Inc.
condensed consolidated statements of income (unaudited)
(In thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Interest income:
Loans, including fees	$	9,369		$	8,591		$	25,781		$	24,058
Federal funds sold and balances with banks		473			37			759			107
Securities:
Taxable		1,396			892			3,421			2,487
Tax-exempt		299			282			953			800
Total interest income		11,537			9,802			30,914			27,452
Interest expense:
Deposits		987			508			2,073			1,783
Other		452			459			1,359			1,093
Total interest expense		1,439			967			3,432			2,876
Net interest income		10,098			8,835			27,482			24,576
Provision for loan losses		-			650			-			1,050
Net interest income after provision for loan losses		10,098			8,185			27,482			23,526
Non-interest income:
Service charges on deposit accounts		403			345			1,115			913
Trust fees		542			587			1,675			1,681
Net gains on loan sales		70			470			565			1,912
Earnings on life insurance assets		119			124			347			511
ATM and debit card fee income		454			470			1,319			1,360
Other		204			174			554			472
Total non-interest income		1,792			2,170			5,575			6,849
Non-interest expense:
Salaries and employee benefits		4,681			4,047			12,972			11,880
Occupancy, net		410			388			1,244			1,197
Equipment		338			274			954			861
Printing, postage and supplies		100			93			307			290
Telecommunication expenses		83			82			240			266
Professional and outside services		519			441			1,292			1,218
Software maintenance		470			434			1,420			1,228
ATM expenses		184			173			547			493
Other		711			627			2,114			1,799
Total non-interest expense		7,496			6,559			21,090			19,232
INCOME BEFORE INCOME TAXES		4,394			3,796			11,967			11,143
Federal income tax provision		781			658			2,060			1,908
NET INCOME	$	3,613		$	3,138		$	9,907		$	9,235
Basic Earnings Per Common Share	$	0.80		$	0.69		$	2.19		$	2.02
Diluted Earnings Per Common Share		0.79			0.69			2.18			2.02
Dividends Declared Per Common Share		0.13			0.12			0.39			0.36

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

FAQ

What were Southern Michigan Bancorp's earnings for Q3 2022?

Southern Michigan Bancorp reported earnings of $3,613,000 or $0.79 per share for Q3 2022.

How much did Southern Michigan Bancorp's net income increase compared to the previous year?

Net income increased by 15.1% compared to Q3 2021.

What are the total assets for Southern Michigan Bancorp as of September 30, 2022?

Total assets stood at $1.243 billion as of September 30, 2022.

What is the loan delinquency rate reported by Southern Michigan Bancorp?

The loan delinquency rate is reported at 0.16% of gross loans as of September 30, 2022.

What was the return on average equity for Southern Michigan Bancorp in 2022?

The return on average equity for the first nine months of 2022 was 15.14%.