Sturgis Bancorp Reports Earnings for Third Quarter 2022
Sturgis Bancorp, Inc. (OTCQX:STBI) reported a net income of $2.1 million for Q3 2022, a rise from the previous year, with net income of $4.8 million for the first nine months. Total assets grew by 22.7% to $842.2 million, while net loans surged 47.6% to $669.3 million. Strong credit quality was highlighted, with 99.79% of loans performing as agreed. However, mortgage banking revenue faced challenges due to market conditions. The Bank's expansion into new regions contributed significantly to growth, leveraging customer relationships across its services.
- Net income increased to $2.1 million for Q3 2022, from $1.8 million in Q3 2021.
- Total assets rose by 22.7% to $842.2 million within nine months of 2022.
- Net loans increased by 47.6% to $669.3 million, with significant growth in residential and commercial loans.
- Credit quality remains strong with 99.79% of loans performing according to agreements.
- Noninterest income decreased to $1.6 million in Q3 2022, compared to $1.7 million in Q3 2021.
- Mortgage banking revenue declined significantly with residential loan sales dropping from $18.1 million to $4.6 million year-over-year.
STURGIS, MI / ACCESSWIRE / October 31, 2022 / Sturgis Bancorp, Inc. (OTCQX:STBI) today announced net income of
Sturgis Bancorp is the holding company for Sturgis Bank & Trust Company (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, Niles, Portage, South Haven, St. Joseph, Three Rivers and White Pigeon, MI. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oak 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.
Key Highlights:
- Net income for the third quarter of 2022 was
$2,097,000 , an increase of$271,000. T he increase from 2021 was primarily net interest income, which increased$742,000. - Credit quality is very strong, with
99.79% of loans performing according to loan agreements. Allowance for loan losses was1.05% of loans on September 30, 2022, compared to1.28% on December 31, 2021. Net charge-offs were ($100,000) in the first nine months of 2022, compared to$209,000 in the first nine months of 2021. - The Bank maintained strong capital ratios, exceeding "well-capitalized" requirements, with Tier 1 leverage capital at
8.25% . - Sales of
$35.7 million residential mortgages generated$1.2 million of noninterest income in the first nine months of 2022, compared to$2.1 million on$89.1 million of sales the first nine months of 2021. - Total assets increased
22.7% during the first nine months of 2022, to$842.2 million . - Net loans increased
47.6% to$669.3 million in the first nine months of 2022, including$69.1 million increase in residential mortgages and$35.3 million in commercial real estate loans. - Total non-brokered deposits increased
19.4% to$685.8 million on September 30, 2022, compared to$574.2 million on December 31, 2021.
Eric L. Eishen, President and CEO, stated, "Core business for the Bank has expanded significantly in the first nine months of this year. Both loan and deposit growth have been at historic levels. This is primarily the result of our expansion into the Berrien County area and the success of our Western Market team, a team consisting of well-seasoned bankers and strong community boards. This has allowed the Bank to attract customers served by our staff for many years. We were glad to open full-service branches in Portage and Niles Michigan, relocate one of our South Haven branches to better facilities, and add loan production offices in Marshall and Battle Creek Michigan. While higher rates and low housing inventory have reduced mortgage banking revenue, the net interest income component of earnings continues to expand. Other components of fee revenue also continue to increase. The Bank has grown other sources of fee revenue over the past decade to help mitigate the volatility of the mortgage banking revenue. This fee revenue includes Investment Advisory Services, Title Insurance Services and a complete line of Commercial, Home and Auto Insurance. These allow the Bank to leverage existing customer relationships and more effectively serve our customer base. Credit quality is at an all-time high and the overall franchise value of the Bank is expanding."
Three months ended September 30, 2022 vs. three months ended September 30, 2021 - Net income for the three months ended September 30, 2022 was
Net interest income increased to
The Company made no provision to the allowance for loan losses in the third quarter of 2022, compared to
Noninterest income was
Noninterest expense was
Nine months ended September 30, 2022 vs. nine months ended September 30, 2021 - Net income for the nine months ended September 30, 2022 was
Net interest income increased to
The Company made no provision to the allowance for loan losses in the first nine months of 2022, compared to
Noninterest income was
Noninterest expense was
Balance Sheet - Total assets increased to
Interest-bearing deposits increased to
Total equity was
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 Bancorp, primarily with respect to future events and the future financial performance of the 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 statement. 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 and future litigation and contingencies; trends in consumer behavior and ability to repay loans; and changes of 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.
CONSOLIDATED BALANCE SHEETS | |||||||||
(Amounts in thousands, except share and per share data) | |||||||||
September 30, | Dec. 31, | ||||||||
2022 | 2021 | ||||||||
ASSETS | |||||||||
Cash and due from banks | $ | 13,295 | $ | 15,793 | |||||
Other short-term investments | 7,500 | 23,731 | |||||||
Total cash and cash equivalents | 20,795 | 39,524 | |||||||
Interest-earning deposits in banks | - | 494 | |||||||
Securities - available for sale | 63,664 | 83,134 | |||||||
Securities - held to maturity | 22,308 | 24,347 | |||||||
Federal Home Loan Bank stock, at cost | 8,381 | 7,951 | |||||||
Loans held for sale, at fair value | 1,276 | 7,287 | |||||||
Loans, net of allowance of | 669,260 | 542,196 | |||||||
Premises and equipment, net | 17,371 | 13,231 | |||||||
Goodwill | 5,834 | 5,834 | |||||||
Core deposit intangibles | 31 | 49 | |||||||
Originated mortgage servicing rights | 3,006 | 2,963 | |||||||
Real estate owned | 375 | - | |||||||
Bank-owned life insurance | 15,888 | 15,598 | |||||||
Accrued interest receivable | 2,303 | 1,894 | |||||||
Other assets | 11,744 | 7,233 | |||||||
Total assets | $ | 842,236 | $ | 751,735 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Liabilities | |||||||||
Deposits | |||||||||
Noninterest-bearing | $ | 159,287 | $ | 145,503 | |||||
Interest-bearing | 586,357 | 438,690 | |||||||
Total deposits | 745,644 | 584,193 | |||||||
Federal Home Loan Bank advances and other borrowings | 25,000 | 89,000 | |||||||
Subordinated debentures - | |||||||||
and | 14,734 | 14,673 | |||||||
Accrued interest payable | 527 | 425 | |||||||
Other liabilities | 5,592 | 11,008 | |||||||
Total liabilities | 791,497 | 699,299 | |||||||
Stockholders' equity | |||||||||
Common stock - issued and outstanding 2,138,941 shares at Sept. 30, 2022 and 2,132,291 at Dec. 31, 2021 | 2,139 | 2,132 | |||||||
Additional paid-in capital | 8,345 | 8,210 | |||||||
Retained earnings | 47,489 | 43,823 | |||||||
Accumulated other comprehensive loss | (7,234 | ) | (1,729 | ||||||
Total stockholders' equity | 50,739 | 52,436 | |||||||
Total liabilities and stockholders' equity | $ | 842,236 | $ | 751,735 |
CONSOLIDATED STATEMENTS OF INCOME | ||||||||
(Amounts in thousands, except share and per share data) | ||||||||
Three Months | ||||||||
Ended September 30, | ||||||||
2022 | 2021 | |||||||
Interest income | ||||||||
Loans | $ | 6,995 | $ | 6,311 | ||||
Investment securities: | ||||||||
Taxable | 417 | 383 | ||||||
Tax-exempt | 125 | 129 | ||||||
Dividends | 81 | 47 | ||||||
Total interest income | 7,618 | 6,870 | ||||||
Interest expense | ||||||||
Deposits | 698 | 636 | ||||||
Borrowed funds | 338 | 394 | ||||||
Total interest expense | 1,036 | 1,030 | ||||||
Net interest income | 6,582 | 5,840 | ||||||
Provision (benefit) for loan losses | - | 81 | ||||||
Net interest income after provision (benefit) for loan losses | 6,582 | 5,759 | ||||||
Noninterest income: | ||||||||
Service charges and other fees | 314 | 298 | ||||||
Interchange income | 349 | 317 | ||||||
Investment brokerage commission income | 409 | 498 | ||||||
Mortgage banking activities | 139 | 235 | ||||||
Trust fee income | 118 | 96 | ||||||
Earnings on cash value of bank-owned life insurance | 100 | 73 | ||||||
Other income | 173 | 181 | ||||||
Total noninterest income | 1,602 | 1,698 | ||||||
Noninterest expenses: | ||||||||
Compensation and benefits | 3,831 | 3,266 | ||||||
Occupancy and equipment | 842 | 669 | ||||||
Interchange expenses | 154 | 126 | ||||||
Data processing | (241 | ) | 228 | |||||
Professional services | 67 | 50 | ||||||
Real estate owned expense | 3 | 1 | ||||||
Advertising | 144 | 218 | ||||||
FDIC premiums | 98 | 53 | ||||||
Other expenses | 770 | 660 | ||||||
Total noninterest expenses | 5,668 | 5,271 | ||||||
Income before income tax expense | 2,516 | 2,186 | ||||||
Income tax expense | 419 | 360 | ||||||
Net income | $ | 2,097 | $ | 1,826 | ||||
Earnings per share | $ | 0.98 | $ | 0.86 | ||||
Dividends per share | $ | 0.17 | $ | 0.16 |
CONSOLIDATED STATEMENTS OF INCOME | ||||||||
(Amounts in thousands, except share and per share data) | ||||||||
Nine Months | ||||||||
Ended September 30, | ||||||||
2022 | 2021 | |||||||
Interest income | ||||||||
Loans | $ | 18,367 | $ | 16,386 | ||||
Investment securities: | ||||||||
Taxable | 1,184 | 882 | ||||||
Tax-exempt | 376 | 402 | ||||||
Dividends | 205 | 121 | ||||||
Total interest income | 20,132 | 17,791 | ||||||
Interest expense | ||||||||
Deposits | 1,578 | 1,945 | ||||||
Borrowed funds | 1,212 | 1,171 | ||||||
Total interest expense | 2,790 | 3,116 | ||||||
Net interest income | 17,342 | 14,675 | ||||||
Provision (benefit) for loan losses | - | 1,074 | ||||||
Net interest income after provision (benefit) for loan losses | 17,342 | 13,601 | ||||||
Noninterest income: | ||||||||
Service charges and other fees | 936 | 892 | ||||||
Interchange income | 960 | 872 | ||||||
Investment brokerage commission income | 1,445 | 1,429 | ||||||
Mortgage banking activities | 1,153 | 2,089 | ||||||
Trust fee income | 324 | 281 | ||||||
Earnings on cash value of bank-owned life insurance | 290 | 307 | ||||||
Gain on termination of interest rate swap | - | 407 | ||||||
Other income | 310 | 503 | ||||||
Total noninterest income | 5,418 | 6,689 | ||||||
Noninterest expenses: | ||||||||
Compensation and benefits | 10,920 | 9,013 | ||||||
Occupancy and equipment | 2,246 | 1,873 | ||||||
Interchange expenses | 426 | 365 | ||||||
Data processing | 251 | 668 | ||||||
Professional services | 248 | 236 | ||||||
Real estate owned expense | 3 | 7 | ||||||
Advertising | 402 | 448 | ||||||
FDIC premiums | 256 | 193 | ||||||
Other expenses | 2,291 | 1,991 | ||||||
Total noninterest expenses | 17,043 | 14,794 | ||||||
Income before income tax expense | 5,717 | 5,496 | ||||||
Income tax expense | 962 | 928 | ||||||
Net income | $ | 4,755 | $ | 4,568 | ||||
Earnings per share | $ | 2.23 | $ | 2.15 | ||||
Dividends per share | $ | 0.51 | $ | 0.48 |
OTHER FINANCIAL INFORMATION | |||||||
(Amounts in thousands) | |||||||
Three Months Ended | |||||||
September 30, | |||||||
2022 | 2021 | ||||||
Sturgis Bank & Trust Company: | |||||||
Average noninterest-bearing deposits | $ | 163,797 | $ | 149,670 | |||
Average interest-bearing deposits | 556,580 | 428,433 | |||||
Average total assets | 817,780 | 716,912 | |||||
Sturgis Bancorp: | |||||||
Average equity | 51,449 | 50,445 | |||||
Average total assets | 817,995 | 717,074 | |||||
Financial ratios for Sturgis Bancorp: | |||||||
Return on average assets | 1.01 | % | 1.01 | % | |||
Return on average equity | 16.17 | % | 14.36 | % | |||
Net interest margin | 3.46 | % | 3.56 | % | |||
Tax equivalent net interest margin | 3.49 | % | 3.59 | % | |||
Nine Months Ended | |||||||
September 30, | |||||||
2022 | 2021 | ||||||
Sturgis Bank & Trust Company: | |||||||
Average noninterest-bearing deposits | $ | 160,821 | $ | 140,930 | |||
Average interest-bearing deposits | 537,622 | 425,314 | |||||
Average total assets | 803,179 | 703,235 | |||||
Sturgis Bancorp: | |||||||
Average equity | 51,503 | 49,095 | |||||
Average total assets | 803,410 | 703,381 | |||||
Financial ratios for Sturgis Bancorp: | |||||||
Return on average assets | 0.79 | % | 0.87 | % | |||
Return on average equity | 12.34 | % | 12.40 | % | |||
Net interest margin | 3.12 | % | 3.08 | % | |||
Tax equivalent net interest margin | 3.15 | % | 3.11 | % | |||
Contacts:
Sturgis Bancorp
Eric Eishen, President & CEO
Brian P. Hoggatt, CFO
P: 269 651-9345
SOURCE: Sturgis Bancorp, Inc.
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https://www.accesswire.com/723055/Sturgis-Bancorp-Reports-Earnings-for-Third-Quarter-2022
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