Sturgis Bancorp Reports Earnings for Third Quarter 2020
Sturgis Bancorp, Inc. (STBI) reported a net income of $4.4 million for the first nine months of 2020, marking a 20% increase from the previous year. The third quarter alone saw a net income of $1.6 million. Total assets rose 27.8% to $604.7 million, with loans increasing by 23.4% to $435.1 million. The company facilitated $35.9 million in PPP loans for 563 borrowers. However, net interest margin declined to 3.41%. Expenses increased by 8.3%.
- Net income rose 20% to $4.4 million for the first nine months of 2020.
- Total assets increased by 27.8% to $604.7 million.
- Net loans increased by 23.4% to $435.1 million.
- Noninterest income nearly doubled to $6.8 million, primarily from mortgage banking activities.
- Tax-equivalent net interest margin decreased from 4.00% to 3.41%.
- Total noninterest expenses rose to $12.3 million, an increase of 8.8%.
STURGIS, MI / ACCESSWIRE / October 26, 2020 / 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, Inc., Oak Mortgage, LLC, Oak Insurance Services, LLC, and Oak Title Services, LLC. The Bank provides a full array of trust, commercial and consumer banking services from banking centers in Sturgis, Bangor, Bronson, Centreville, Climax, Colon, South Haven, Three Rivers and White Pigeon, MI. The Bank also has loan production offices in Portage and St. Joseph, Michigan. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oak Mortgage offers residential mortgages in all markets of the Bank. Oak Insurance Services offers various competitive commercial and consumer insurance products. Oak Title Services offers commercial and consumer title insurance.
Key Highlights:
- Net income increased
20% for the first nine months of 2020 to$4,446,000 , compared to$3,706,000 for the first nine months of 2019, primarily due to mortgage banking activities. - Sales of
$111.8 million residential mortgages generated$3.4 million of noninterest income in the first nine months of 2020, compared to$672,000 on$27.4 million of sales in the first nine months of 2019. - Net loans increased
23.4% in the first nine months of 2020 to$435.1 million . - The Bank supported 563 borrowers with SBA's Paycheck Protection Program (PPP) loans, for a total of
$35.9 million on September 30, 2020. - Total assets increased
27.8% to$604.7 million . The Bank's risk-weighted assets were$385.6 million on September 30, 2020. - Total deposits increased
37.8% to$486.4 million . - Allowance for loan losses was
1.25% of loans.
Eric L. Eishen, President and CEO, stated, "I am very pleased to report the Bank remained open during the entire stay-at-home orders in the State of Michigan. Although Bank branch lobbies were operating under an appointment-only system, we successfully served all our customer needs during the height of the COVID pandemic. The Bank's technology investments over the past few years well prepared the Bank for full service, using drive-thru, night deposit, Telebank, Internet, mobile banking, and remote deposit. The Bank had a strong first half, led by mortgage banking activities. The Bank provided
Nine months ended September 30, 2020 vs. nine months ended September 30, 2019 - Net income for the nine months ended September 30, 2020 was
Net interest income increased to
The Company provided
Noninterest income was
Noninterest expense was
Three months ended September 30, 2020 vs. three months ended September 30, 2019 - Net income for the three months ended September 30, 2020 was
Net interest income increased to
The Company provided
Noninterest income was
Noninterest expense was
Total assets increased to
In response to the COVID-19 pandemic, the Bank deferred payments for 222 loans with total March 31, 2020 balances of
Status | Number | Balance | Percentage of total loans | |||||||||
Continuing accommodations: | ||||||||||||
Extended deferment | 9 | $ | 29,440 | 6.766 | % | |||||||
Within original deferment | 14 | 3,340 | 0.768 | % | ||||||||
Repayment plan-30 days past due | 2 | 591 | 0.136 | % | ||||||||
Repayment plan-current | 9 | 631 | 0.145 | % | ||||||||
Total in continuing accommodations | 34 | $ | 34,002 | 7.815 | % | |||||||
Full payments resumed-current | 177 | 45,273 | 10.406 | % | ||||||||
Paid off | 11 | 0 | 0.000 | % | ||||||||
Total deferrals | 222 | $ | 79,276 | 18.221 | % | |||||||
The primary loan segment with continuing payment deferments is hotel loans, a component of commercial real estate loans. The Bank has thoroughly analyzed this segment, evaluating it with stress testing of cashflow, loan-to-value ratios, and historical occupancy. Bank staff also interviewed all of the hotel borrowers on their mitigation plans. We remain confident this portfolio can withstand the recent decline in revenue and is positioned to recover.
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.sturgisbank.com.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
Sept. 30, 2020 | Dec. 31, 2019 | ||||||||||
| ASSETS | |||||||||||
Cash and due from banks | $ | 9,947 | $ | 13,301 | |||||||
Other short-term investments | 20,011 | 9,896 | |||||||||
Total cash and cash equivalents | 29,958 | 23,197 | |||||||||
Interest-earning deposits in banks | 1,979 | 2,720 | |||||||||
Securities - available for sale | 76,131 | 55,850 | |||||||||
Securities - held to maturity | - | - | |||||||||
Federal Home Loan Bank stock, at cost | 4,917 | 3,612 | |||||||||
Loans held for sale, at fair value | 15,944 | 2,977 | |||||||||
Loans, net of allowance of | 435,089 | 352,531 | |||||||||
Premises and equipment, net | 11,215 | 9,367 | |||||||||
Goodwill | 5,834 | 5,834 | |||||||||
Core deposit intangibles | 86 | 113 | |||||||||
Originated mortgage servicing rights | 1,959 | 1,112 | |||||||||
Real estate owned | 404 | 193 | |||||||||
Bank-owned life insurance | 11,017 | 10,797 | |||||||||
Accrued interest receivable | 2,675 | 1,610 | |||||||||
Other assets | 7,569 | 3,458 | |||||||||
Total assets | $ | 604,777 | $ | 473,371 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Liabilities | |||||||||||
Deposits | |||||||||||
Noninterest-bearing | $ | 120,043 | $ | 89,747 | |||||||
Interest-bearing | 366,368 | 263,189 | |||||||||
Total deposits | 486,411 | 352,936 | |||||||||
Federal Home Loan Bank advances and other borrowings | 61,500 | 70,000 | |||||||||
Accrued interest payable | 473 | 438 | |||||||||
Other liabilities | 11,159 | 6,425 | |||||||||
Total liabilities | 559,543 | 429,799 | |||||||||
Stockholders' equity | |||||||||||
Preferred stock - | |||||||||||
issued and outstanding - 0 shares | - | - | |||||||||
Common stock - | |||||||||||
issued and outstanding 2,121,041 shares at Sept. 30, 2020 and 2,113,591 shares at December 31, 2019 | 2,121 | 2,114 | |||||||||
Additional paid-in capital | 8,009 | 7,893 | |||||||||
Retained earnings | 37,620 | 34,190 | |||||||||
Accumulated other comprehensive loss | (2,516 | ) | (625 | ) | |||||||
Total stockholders' equity | 45,234 | 43,572 | |||||||||
Total liabilities and stockholders' equity | $ | 604,777 | $ | 473,371 | |||||||
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share data)
| Three Months Ended Sept. 30, | ||||||||
| 2020 | 2019 | |||||||
Interest income | ||||||||
Loans | $ | 4,927 | $ | 4,419 | ||||
Investment securities: | ||||||||
Taxable | 243 | 291 | ||||||
Tax-exempt | 140 | 204 | ||||||
Dividends | 216 | 79 | ||||||
Total interest income | 5,526 | 4,993 | ||||||
Interest expense | ||||||||
Deposits | 596 | 525 | ||||||
Borrowed funds | 300 | 343 | ||||||
Total interest expense | 896 | 868 | ||||||
Net interest income | 4,630 | 4,125 | ||||||
Provision (benefit) for loan losses | 947 | 102 | ||||||
Net interest income after provision (benefit) for loan losses | 3,683 | 4,023 | ||||||
Noninterest income: | ||||||||
Service charges and other fees | 308 | 321 | ||||||
Interchange income | 278 | 239 | ||||||
Investment brokerage commission income | 391 | 336 | ||||||
Mortgage banking activities | 1,469 | 266 | ||||||
Trust fee income | 69 | 101 | ||||||
Earnings on cash value of bank-owned life insurance | 74 | 73 | ||||||
Gain (loss) on sale of real estate owned | 1 | (1 | ) | |||||
Gain on sale of securities | - | 4 | ||||||
Other income | 30 | 37 | ||||||
Total noninterest income | 2,620 | 1,376 | ||||||
Noninterest expenses: | ||||||||
Salaries and employee benefits | 2,688 | 2,290 | ||||||
Occupancy and equipment | 555 | 544 | ||||||
Interchange expenses | 111 | 102 | ||||||
Data processing | 226 | 186 | ||||||
Professional services | 76 | 66 | ||||||
Real estate owned expense | 7 | 8 | ||||||
Advertising | 84 | 99 | ||||||
FDIC premiums | 58 | (47 | ) | |||||
Other expenses | 577 | 515 | ||||||
Total noninterest expenses | 4,382 | 3,763 | ||||||
Income before income tax expense | 1,921 | 1,635 | ||||||
Income tax expense | 338 | 268 | ||||||
Net income | $ | 1,583 | $ | 1,367 | ||||
Earnings per share | $ | 0.75 | $ | 0.65 | ||||
Dividends per share | $ | 0.16 | $ | 0.15 | ||||
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share data)
| Nine Months Ended Sept. 30, | |||||||||||
| 2020 | 2019 | ||||||||||
Interest income | |||||||||||
Loans | $ | 14,015 | $ | 12,775 | |||||||
Investment securities: | |||||||||||
Taxable | 732 | 830 | |||||||||
Tax-exempt | 534 | 640 | |||||||||
Dividends | 390 | 178 | |||||||||
Total interest income | 15,671 | 14,423 | |||||||||
Interest expense | |||||||||||
Deposits | 1,597 | 1,539 | |||||||||
Borrowed funds | 1,129 | 945 | |||||||||
Total interest expense | 2,726 | 2,484 | |||||||||
Net interest income | 12,945 | 11,939 | |||||||||
Provision (benefit) for loan losses | 2,072 | 215 | |||||||||
Net interest income after provision (benefit) for loan losses | 10,873 | 11,774 | |||||||||
Noninterest income: | |||||||||||
Service charges and other fees | 903 | 958 | |||||||||
Interchange income | 709 | 652 | |||||||||
Investment brokerage commission income | 1,075 | 948 | |||||||||
Mortgage banking activities | 3,367 | 672 | |||||||||
Trust fee income | 270 | 358 | |||||||||
Earnings on cash value of bank-owned life insurance | 220 | 207 | |||||||||
Gain (loss) on sale of real estate owned | (1 | ) | 60 | ||||||||
Gain on sale of securities | 157 | 4 | |||||||||
Other income | 66 | 90 | |||||||||
Total noninterest income | 6,766 | 3,949 | |||||||||
Noninterest expenses: | |||||||||||
Salaries and employee benefits | 7,535 | 6,955 | |||||||||
Occupancy and equipment | 1,564 | 1,492 | |||||||||
Interchange expenses | 310 | 289 | |||||||||
Data processing | 647 | 579 | |||||||||
Professional services | 261 | 246 | |||||||||
Real estate owned expense | 10 | 16 | |||||||||
Advertising | 211 | 234 | |||||||||
FDIC premiums | 143 | 42 | |||||||||
Other expenses | 1,611 | 1,433 | |||||||||
Total noninterest expenses | 12,292 | 11,286 | |||||||||
Income before income tax expense | 5,347 | 4,387 | |||||||||
Income tax expense | 901 | 681 | |||||||||
Net income | $ | 4,446 | $ | 3,706 | |||||||
Earnings per share | $ | 2.10 | $ | 1.76 | |||||||
Dividends per share | $ | 0.48 | $ | 0.45 | |||||||
OTHER FINANCIAL INFORMATION
(Amounts in thousands)
| Three Months Ended Sept. 30, | ||||||||
| 2020 | 2019 | |||||||
Sturgis Bank & Trust Company: | ||||||||
Average noninterest-bearing deposits | $ | 121,273 | $ | 92,947 | ||||
Average interest-bearing deposits | 329,256 | 263,058 | ||||||
Average total assets | 601,750 | 458,587 | ||||||
Total risk-weighted assets | 385,612 | 322,774 | ||||||
Sturgis Bancorp: | ||||||||
Average equity | 44,576 | 41,723 | ||||||
Average total assets | 601,859 | 458,660 | ||||||
Total risk-weighted assets | 385,714 | 322,829 | ||||||
Financial ratios for Sturgis Bancorp: | ||||||||
Return on average assets | 1.05 | % | 1.18 | % | ||||
Return on average equity | 14.13 | % | 13.00 | % | ||||
Net interest margin | 3.31 | % | 3.92 | % | ||||
Tax equivalent net interest margin | 3.35 | % | 3.99 | % | ||||
| Nine Months Ended Sept. 30, | ||||||||
| 2020 | 2019 | |||||||
Sturgis Bank & Trust Company: | ||||||||
Average noninterest-bearing deposits | $ | 105,759 | $ | 85,565 | ||||
Average interest-bearing deposits | 300,474 | 265,200 | ||||||
Average total assets | 560,909 | 446,657 | ||||||
Sturgis Bancorp: | ||||||||
Average equity | 43,736 | 41,289 | ||||||
Average total assets | 561,013 | 446,773 | ||||||
Financial ratios for Sturgis Bancorp: | ||||||||
Return on average assets | 1.06 | % | 1.22 | % | ||||
Return on average equity | 13.58 | % | 11.91 | % | ||||
Net interest margin | 3.36 | % | 3.93 | % | ||||
Tax equivalent net interest margin | 3.41 | % | 4.00 | % | ||||
SOURCE: Sturgis Bancorp, Inc.
View source version on accesswire.com:
https://www.accesswire.com/612254/Sturgis-Bancorp-Reports-Earnings-for-Third-Quarter-2020
FAQ
What was the net income for Sturgis Bancorp (STBI) in the third quarter of 2020?
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What was the impact of PPP loans on Sturgis Bancorp (STBI)?
How has Sturgis Bancorp's (STBI) net interest margin changed?
