Sturgis Bancorp, Inc. Reports Financial Results for Second Quarter 2024

Rhea-AI Summary

Sturgis Bancorp (OTCQX:STBI) reported financial results for Q2 2024. Key highlights include:

• Net income of $1.3 million, rebounding from Q1's $2.0 million loss
• Earnings per share of $0.60
• Paid dividend of $0.17 per share
• Total assets increased to $942 million
• Deposits decreased to $800 million

The bank maintained strong capital ratios, with Tier 1 leverage capital at 7.66%. Credit quality remains robust, with 99.20% of unguaranteed loans performing. Net interest income increased 0.68% from Q1 to $6.84 million, while noninterest income decreased 29.35% to $2.2 million. The bank's CEO noted challenges in the current economic environment but emphasized focus on credit quality and margin management.

Positive

• Net income rebounded to $1.3 million in Q2 2024 from a $2.0 million loss in Q1 2024
• Total assets increased to $942 million, up 1.85% from Q1 2024 and 5.31% from Q2 2023
• Strong credit quality with 99.20% of unguaranteed loans performing
• Tier 1 leverage capital ratio at 7.66%, exceeding 'well-capitalized' requirements
• Net interest income increased 0.68% from Q1 2024 to $6.84 million

Negative

• Year-to-date net loss of $673,000 compared to $3.2 million income in the same period of 2023
• Deposits decreased to $800 million from $807 million in Q1 2024
• Net interest income decreased 5.12% compared to Q2 2023
• Noninterest income decreased 29.35% from Q1 2024 to $2.2 million
• Provision for credit losses increased to $4.8 million YTD 2024 compared to $232,000 YTD 2023

STURGIS, MI / ACCESSWIRE / July 19, 2024 / Sturgis Bancorp, Inc. (OTCQX:STBI) today announced for the second quarter of 2024:

Key Quarterly Highlights

• Net income was $1.3 million.

• Earnings per share of $0.60.

• Paid dividend of $0.17 per share.

• Total assets increased to $942 million.

• Deposits decreased to $800 million.

• Credit quality remains strong, with 99.20% of unguaranteed loans performing according to loan agreements.

• The Bank maintained strong capital ratios, exceeding "well-capitalized" requirements, with Tier 1 leverage capital at 7.66%.

From Jason J. Hyska, Sturgis Bancorp, Inc. Chief Executive Officer

"This has been a challenging year for the Bank. The current economic environment and political climate seem to make for much uncertainty in all lines of business. The Bank continues to be focused on credit quality and margin management. Our staff continues to focus on relationship banking, and we continue to bring in new relationships that see value in the Community Banking model we offer. I am encouraged by those new relationships as we continue to grow in our newer markets."

Quarterly Income Statement Highlights

• Net income for the quarter (2Q24) was $1.3 million, rebounding from last quarter's (1Q24) $(2.0 million) loss, while down from the net income of $1.7 million reported for the same quarter of the prior year (2Q23).

• Earnings (loss) per share were $0.60 for 2Q24, $(0.92) for 1Q24, and $0.80 for 2Q23.

• Net interest income was $6.84 million during 2Q24, a 0.68% increase from 1Q24's $6.79 million. This also represents a 5.12% decrease from 2Q23's $7.2 million in net interest income. The change from the same quarter a year ago was primarily due to:

  • Interest expense of $4.7 million in 2Q24, compared to $2.7 million in 2Q23.

• Tax equivalent net interest margin remained at 3.21% for 2Q24, as it was in 1Q24, a decrease from the 3.59% margin in 2Q23.

• During 2Q24, $165,000 was provided to the allowance for credit losses, compared to $4.7 million in 1Q24, and a reversal of the allowance for credit losses of $35,000 in 2Q23.

  • 1Q24's provision for credit losses was heavily impacted by the one-time write-off of one customer's loans in the amount of $5.5 million. Due to the timing of the write-off, the Bank is very early in the recovery process, thus immaterial recoveries have been recognized.

• Noninterest income totaled $2.2 million during 2Q24, a 29.35% decrease from 1Q24's $3.1 million, while it was a 21.37% increase from 2Q23's $1.8 million. These fluctuations were primarily due to:

  • Investment brokerage commission income for 2Q24 was $641,000, compared to $594,000 for 1Q24, and $541,000 for 2Q23.

  • Mortgage banking activities for 2Q24 were $487,000, compared to $486,000 for 1Q24, and $343,000 for 2Q23.

  • Trust fee income for 2Q24 was $166,000, compared to $87,000 for 1Q24, and $110,000 for 2Q23.

  • A one-time gain on termination of interest rate swaps resulted in recognizing $1.1 million during 1Q24, while there were no such gains (or losses) on termination of interest rate swaps for 2Q24 or 2Q23.

• Noninterest expenses totaled $7.3 million during 2Q24, a 6.65% decrease from 1Q24's $7.8 million. This was a 4.98% increase from 2Q23's $7.0 million in noninterest expenses. These fluctuations were primarily due to:

  • Compensation and benefits in 2Q24 were $4.3 million, compared to $4.6 million for 1Q24, and $3.9 million for 2Q23.

Year-to-Date Income Statement Highlights

• Net income (loss) for the first six months of 2024 (YTD 2024) was a $(673,000) loss, compared to $3.2 million income for the first six months of 2023 (YTD 2023).

• Earnings (loss) per share were $(0.31) for YTD 2024 and $1.52 for YTD 2023.

• Net interest income was $13.6 million for YTD 2024, a 5.05% decrease from YTD 2023's $14.4 million. This decrease was primarily due to:

  • Interest expense of $9.1 million for YTD 2024, compared to $5.0 million for YTD 2023.

• During YTD 2024, $4.8 million was provided to the allowance for credit losses, compared to $232,000 for YTD 2023.

• Noninterest income totaled $5.3 million for YTD 2024, compared to $3.5 million for YTD 2023. This represents a 50.84% increase. This increase was primarily due to:

  • Investment brokerage commission income of $1.2 million in YTD 2024, compared to $961,000 in YTD 2023.

  • Mortgage banking activities of $973,000 in YTD 2024, compared to $593,000 in YTD 2023.

  • The aforementioned $1.1 million one-time gain on termination of interest rate swaps in YTD 2024.

• Noninterest expenses totaled $15.1 million for YTD 2024, compared to $13.7 million for YTD 2023. This represents a 10.35% increase. This increase was primarily due to:

  • Compensation and benefits in YTD 2024 were $8.9 million, compared to $8.0 million in YTD 2023.

Balance Sheet Highlights

• Total assets increased to $942 million as of the end of 2Q24, a 1.85% increase from the end of 1Q24's $925 million balance, and a 5.31% increase from the end of 2Q23's $895 million balance. These increases were primarily due to:

  • Cash and cash equivalents ended 2Q24 at $21.1 million, compared to $16.5 million as of the end of 1Q24, and $24.1 million as of the end of 2Q23.

  • Securities - available-for-sale increased to $79.1 million as of the end of 2Q24, from $75.4 million as of the end of 1Q24, and $53.5 million as of the end of 2Q23.

  • Net loans increased to $753 million as of the end of 2Q24, from $742 million as of the end of 1Q24, and $724 million as of the end of 2Q23.

• Total deposits as of the end of 2Q24 were $800 million, compared with $807 million as of the end of 1Q24, and $796 million as of the end of 2Q23. These fluctuations were comprised of:

  • Noninterest-bearing deposits increased to $169 million as of the end of 2Q24, from $155 million as of the end of 1Q24, and $160 million as of the end of 2Q23.

  • Interest-bearing deposits decreased to $631 million as of the end of 2Q24, from $652 million as of the end of 1Q24, and $637 million as of the end of 2Q23.

• Borrowed funds increased to $65 million as of the end of 2Q24, from $41 million as of the end of 1Q24, and $20 million as of the end of 2Q23.

• Total equity as of the end of 2Q24 was $53.5 million, compared to $52.7 million as of the end of 1Q24, and $54.5 million as of the end of 2Q23.

• Book value per share was $24.81($20.66 tangible) as of the end of 2Q24, compared to $24.49 ($20.37 tangible) as of the end of 1Q24, and $25.41 ($21.33 tangible) as of the end of 2Q23.

About Sturgis Bancorp, Inc.

Sturgis Bancorp, Inc. is the holding company for Sturgis Bank & Trust Company (the Bank), and its subsidiaries: Oakleaf Financial Services, Oak Mortgage, Ayres/Oak Insurance, and Oak Title Services. The Bank provides a full array of trust, commercial, and consumer banking services from banking centers in: Sturgis, Bangor, Bronson, Centreville, Climax, Colon, Marshall, Niles, Portage, South Haven, St. Joseph, Three Rivers, and White Pigeon, Michigan. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oakleaf Mortgage offers residential mortgages in all markets of the Bank. Ayres/Oak Insurance offers various competitive commercial and consumer insurance products. Oak Title Services offers commercial and consumer title insurance services.

Forward-Looking Statements

This release contains statements that constitute forward-looking statements. These statements appear in several places in this release and include statements regarding intent, belief, outlook, objectives, efforts, estimates, or expectations of Sturgis Bancorp, Inc. (Bancorp), primarily with respect to future events and the future financial performance of Bancorp. Any such forward-looking statements are not guarantees of future events or performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statements. Factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; government and regulatory policy changes; the outcome of any pending or future litigation and contingencies; trends in consumer behavior and ability to repay loans; and changes in the world, national, and local economies. Bancorp undertakes no obligation to update, amend, or clarify forward-looking statements as a result of new information, future events, or otherwise. The numbers presented herein are unaudited.

For additional information, visit our website at www.sturgis.bank.

Sturgis Bancorp, Inc. Contacts

• Jason J. Hyska, CEO & President or Brian P. Hoggatt, CFO - (269) 651-9345

CONSOLIDATED BALANCE SHEETS
(Unaudited - Amounts in thousands, except share and per share data)

		Jun 30,				Mar 31,				Jun 30,
		2024				2024				2023
		2Q24				1Q24				2Q23
ASSETS
Cash and due from banks		$	9,629			$	8,711			$	12,617
Other short-term investments			11,501				7,784				11,518
Total cash and cash equivalents			21,130				16,495				24,135
Securities - available-for-sale			79,101				75,354				53,477
Securities - held-to-maturity			20,310				20,615				21,375
Federal Home Loan Bank stock			8,563				7,599				8,381
Loans held for sale			2,445				4,865				6,446
Loans, net of allowance for credit losses of $9,502; $9,381;
and $9,176 at 2Q24; 1Q24; and 2Q23, respectively			752,756				742,472				723,784
Premises and equipment, net			18,700				18,846				17,597
Goodwill			5,834				5,834				5,834
Mortgage servicing rights			3,110				3,036				2,908
Real estate owned			248				188				285
Bank-owned life insurance			16,047				15,939				16,185
Accrued interest receivable			3,439				3,239				2,763
Other assets			10,736				10,815				11,730
Total assets		$	942,419			$	925,297			$	894,900
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing		$	169,000			$	155,116			$	159,615
Interest-bearing			631,394				652,251				636,658
Total deposits			800,394				807,367				796,273
Federal Home Loan Bank advances and other borrowings			65,000				41,000				20,000
Subordinated debentures - $15,000 face amount (less
unamortized debt issuance costs of $123; $143; and $205
at 2Q24; 1Q24; and 2Q23, respectively)			14,877				14,857				14,795
Accrued interest payable			1,870				1,752				1,510
Other liabilities			6,821				7,606				7,806
Total liabilities			888,962				872,582				840,384
Stockholders' equity
Common stock - $1 par value: authorized - 9,000,000 shares;
issued and outstanding - 2,154,691 shares at 2Q24;
2,152,441 shares at 1Q24; and 2,145,691 shares at 2Q23			2,155				2,152				2,146
Additional paid-in capital			8,624				8,590				8,477
Retained earnings			50,624				49,694				49,983
Accumulated other comprehensive (loss)			(7,946	)			(7,721	)			(6,090	)
Total stockholders' equity			53,457				52,715				54,516
Total liabilities and stockholders' equity		$	942,419			$	925,297			$	894,900

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Amounts in thousands, except share and per share data)

		Three Months Ended
		Jun 30,				Mar 31,			Jun 30,
		2024				2024			2023
		2Q24				1Q24			2Q23
Interest and dividend income
Loans (including fees)		$	10,524			$	10,210		$	9,292
Investment securities:
Taxable			804				761			415
Tax-exempt			39				61			98
Dividends			172				147			110
Total interest and dividend income			11,539				11,179			9,915
Interest expense
Deposits			3,777				3,750			2,295
Borrowed funds			922				635			411
Total interest expense			4,699				4,385			2,706
Net interest income			6,840				6,794			7,209
Credit loss expense			165				4,663			(35	)
Net interest income, after credit loss expense			6,675				2,131			7,244
Noninterest income
Service charges on deposits and other fees			345				335			336
Interchange income			350				308			342
Investment brokerage commission income			641				594			541
Mortgage banking activities			487				486			343
Trust fee income			166				87			110
Earnings on cash value of bank-owned life insurance			108				107			99
Gain on sale of real estate owned, net			26				1			2
Gain on termination of interest rate swap			-				1,070			-
Proportionate net income from unconsolidated subsidiaries			61				114			26
Other income			15				11			13
Total noninterest income			2,199				3,113			1,812
Noninterest expenses
Compensation and benefits			4,340				4,569			3,945
Occupancy and equipment			1,029				1,064			919
Interchange expenses			166				165			152
Data processing			287				290			270
Professional services			120				169			95
Advertising			213				201			183
FDIC premiums			197				181			211
Other expenses			945				1,178			1,176
Total noninterest expenses			7,297				7,817			6,951
Income (loss) before income tax expense (benefit)			1,577				(2,573	)		2,105
Income tax expense (benefit)			280				(603	)		384
Net income (loss)		$	1,297			$	(1,970	)	$	1,721
Earnings (loss) per share		$	0.60			$	(0.92	)	$	0.80
Dividends per share		$	0.17			$	0.17		$	0.17

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Amounts in thousands, except share and per share data)

		Six Months Ended
		Jun 30,				Jun 30,
		2024				2023
		2Q24				2Q23
Interest and dividend income
Loans (including fees)		$	20,734			$	18,010
Investment securities:
Taxable			1,565				914
Tax-exempt			100				222
Dividends			319				217
Total interest and dividend income			22,718				19,363
Interest expense
Deposits			7,526				4,166
Borrowed funds			1,558				839
Total interest expense			9,084				5,005
Net interest income			13,634				14,358
Credit loss expense			4,828				232
Net interest income, after credit loss expense			8,806				14,126
Noninterest income
Service charges on deposits and other fees			680				655
Interchange income			658				654
Investment brokerage commission income			1,235				961
Mortgage banking activitives			973				593
Trust fee income			253				247
Earnings on cash value of bank-owned life insurance			215				197
Gain on sale of real estate owned, net			28				18
Gain on termination of interest rate swap			1,070				-
Proportionate net income from unconsolidated subsidiaries			174				57
Other income			26				140
Total noninterest income			5,312				3,522
Noninterest expenses
Compensation and benefits			8,909				7,980
Occupancy and equipment			2,093				1,770
Interchange expenses			332				301
Data processing			577				528
Professional services			592				562
Advertising			413				355
FDIC premiums			378				338
Other expenses			1,820				1,863
Total noninterest expenses			15,114				13,697
Income (loss) before income tax expense (benefit)			(996	)			3,951
Income tax expense (benefit)			(323	)			708
Net income (loss)		$	(673	)		$	3,243
Earnings (loss) per share		$	(0.31	)		$	1.52
Dividends per share		$	0.34			$	0.34

SOURCE: Sturgis Bancorp, Inc.

View the original press release on accesswire.com

FAQ

What was Sturgis Bancorp's (STBI) net income for Q2 2024?

Sturgis Bancorp (STBI) reported a net income of $1.3 million for Q2 2024.

How did Sturgis Bancorp's (STBI) Q2 2024 earnings compare to Q1 2024?

Sturgis Bancorp's (STBI) Q2 2024 earnings of $1.3 million rebounded from a $2.0 million loss in Q1 2024.

What was Sturgis Bancorp's (STBI) earnings per share for Q2 2024?

Sturgis Bancorp (STBI) reported earnings per share of $0.60 for Q2 2024.

How much dividend did Sturgis Bancorp (STBI) pay in Q2 2024?

Sturgis Bancorp (STBI) paid a dividend of $0.17 per share in Q2 2024.

What was Sturgis Bancorp's (STBI) total asset value at the end of Q2 2024?

Sturgis Bancorp's (STBI) total assets increased to $942 million at the end of Q2 2024.