Southern Michigan Bancorp, Inc. Announces Second Quarter 2021 Earnings

COLDWATER, Mich., July 28, 2021 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced second quarter 2021 net income of $3,009,000, or $0.66 per share, compared to net income of $1,831,000, or $0.40 per share, for the second quarter of 2020. Southern earned $6,097,000, or $1.33 per share, for the six-month period ending June 30, 2021 compared to $3,344,000, or $0.73 per share, for the same six-month period a year ago.

Total consolidated assets at June 30, 2021 increased 12.7%, reaching $1.124 billion compared to $997.6 million at December 31, 2020. Loan totals grew 10.3%, from December 31, 2020 levels of $635.9 million to $701.1 million. Deposits also increased totaling $944.8 million at June 30, 2021, an increase of $106.5 million or 12.7%, as compared to year end 2020.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc. stated, “We are pleased to report record earnings for both the second quarter and six-month period of 2021 as well as solid loan and deposit growth resulting in record high balance sheet footings for loans, deposits and total assets. Additional loan growth is expected during the third and fourth quarters of 2021 as approved loans in the commercial pipeline fund.”

The allowance for loan losses totaled $8,229,000, or 1.17% of loans at June 30, 2021. Net loan recoveries totaled $40,000 for the first six months of 2021, compared to net loan recoveries of $2,000 during the first six months of 2020. Loan delinquencies dropped from 0.72% of gross loans on December 31, 2020 to 0.21% of gross loans on June 30, 2021. Likewise, total non-performing assets dropped from .49% of total assets on December 31, 2020 to 0.15% of total assets on June 30, 2021. Southern provided $400,000 of provision for loan loss expense during the second quarter of 2021 to support loan growth. This contrasts with $1,750,000 of provision for loan loss expense during the first six months of 2020.

The annualized return on average assets for the six-month periods ending June 30, 2021 and 2020 was 1.13% and 0.78%, respectively. The annualized return on average equity was 13.12% for the first six months of 2021 compared to 7.80% for the first six months of 2020. The tax equivalent net interest margins for the six-month periods ending June 30, 2021 and 2020 was 3.16% and 3.31%, 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)

	June 30, 2021			December 31, 2020
ASSETS
Cash and cash equivalents	$	106,781		$	99,610
Federal funds sold		245			231
Securities available for sale		258,848			208,380
Loans held for sale		1,287			1,691
Loans, net of allowance for loan losses of $8,229 - 2021 ($7,789 – 2020)		692,932			628,081
Premises and equipment, net		13,280			13,698
Accrued interest receivable		4,390			4,749
Net cash surrender value of life insurance		19,236			16,016
Goodwill		13,422			13,422
Other intangible assets, net		237			255
Other assets		13,218			11,441
TOTAL ASSETS	$	1,123,876		$	997,574
LIABILITIES
Deposits:
Non-interest bearing	$	256,870		$	220,786
Interest bearing		687,935			617,512
Total deposits		944,805			838,298
Securities sold under agreements to repurchase and overnight borrowings		15,977			20,083
Accrued expenses and other liabilities		13,087			14,561
Other borrowings		20,000			26,500
Subordinated debentures		34,480			5,155
Total liabilities		1,028,349			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 – 4,571,691 shares in 2021 (2,301,269 shares in 2020)		11,425			5,748
Additional paid-in capital		14,628			15,416
Retained earnings		67,003			67,741
Accumulated other comprehensive income, net		2,711			4,362
Unearned Employee Stock Ownership Plan shares		(240	)		(290	)
Total shareholders’ equity		95,527			92,977
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,123,876		$	997,574

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Interest income:
Loans, including fees	$	7,662		$	7,260		$	15,467		$	14,187
Federal funds sold and balances with banks		39			29			70			256
Securities:
Taxable		861			567			1,595			1,274
Tax-exempt		287			169			518			285
Total interest income		8,849			8,025			17,650			16,002
Interest expense:
Deposits		589			1,032			1,275			2,289
Other		412			302			634			621
Total interest expense		1,001			1,334			1,909			2,910
Net interest income		7,848			6,691			15,741			13,092
Provision for loan losses		400			750			400			1,750
Net interest income after provision for loan losses		7,448			5,941			15,341			11,342
Non-interest income:
Service charges on deposit accounts		276			255			569			718
Trust fees		545			504			1,094			1,021
Net gains on loan sales		698			538			1,442			787
Earnings on life insurance assets		286			95			387			189
ATM and debit card fee income		479			380			889			728
Other		153			113			298			263
Total non-interest income		2,437			1,885			4,679			3,706
Non-interest expense:
Salaries and employee benefits		3,834			3,309			7,833			6,567
Occupancy, net		400			375			809			772
Equipment		283			277			587			590
Printing, postage and supplies		82			109			197			212
Telecommunication expenses		84			122			184			250
Professional and outside services		440			400			777			737
Software maintenance		394			388			794			768
ATM expenses		170			157			321			288
Other		607			482			1,171			882
Total non-interest expense		6,294			5,619			12,673			11,066
INCOME BEFORE INCOME TAXES		3.591			2,207			7,347			3,982
Federal income tax provision		582			376			1,250			638
NET INCOME	$	3,009		$	1,831		$	6,097		$	3,344
Basic Earnings Per Common Share	$	0.66		$	0.40		$	1.33		$	0.73
Diluted Earnings Per Common Share		0.66			0.40			1.33			0.73
Dividends Declared Per Common Share		0.12			0.12			0.24			0.23

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