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Southern Michigan Bancorp, Inc. Announces Third Quarter 2021 Earnings

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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


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


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