 |
Press Release
SOUTHERN MICHIGAN BANCORP, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR 2009 EARNINGS
Coldwater, Michigan, February 24, 2010: Southern Michigan Bancorp, Inc. (OTCBB: SOMC.OB) reported net income of $1,936,000 for 2009 compared to $813,000 for 2008. Earnings per share were $0.84 for the full year of 2009 compared to $0.36 in 2008. Fourth quarter 2009 net income was $685,000 compared to a net loss of $758,000 in the fourth quarter of 2008.
Total consolidated assets at December 31, 2009 were $462.4 million compared to $475.0 million at December 31, 2008.
During 2009, Southern added $2,725,000 to its provision for loan losses, with an allowance for loan losses at December 31, 2009 of $6,075,000, or 1.82% of loans. This compared to provision expense of $5,080,000 for 2008, with an allowance at December 31, 2008 of $7,104,000, or 2.12% of loans. The decrease in the provision for loan losses resulted primarily from reduced specific reserves. Net charge-offs totaled $3,754,000 for 2009. Non-performing loans totaled $7,599,000 at December 31, 2009, or 2.28% of total loans, representing a decrease of $1,553,000, or 17.0% from December 31, 2008.
Southern’s 4.14% net interest margin for 2009 remained strong when compared to peers. This compared to 4.36% for 2008. The decline in net interest margin was attributable to lower rates being in effect for all of 2009.
Non-interest income for 2009 was $809,000 greater than in 2008. The increase was a result of $682,000 of net securities gains being recorded during the year compared to $15,000 in 2008 and a $420,000 increase in gains recorded from the sale of secondary market loans, offset by the $390,000 reduction of life insurance proceeds recorded in 2008.
Total non-interest expense was flat for 2009 as compared to 2008. For the full year of 2009, FDIC deposit insurance expense increased $676,000 to $855,000, an increase of 377.7% over 2008 premium costs of $179,000. In the second quarter of 2009, Southern was assessed $217,000 by the FDIC as a special assessment paid by all banks to help cover the costs of bank failures. Additionally, on December 30, 2009, Southern paid $2.4 million to the FDIC as a required three year prepayment of FDIC premiums, of which $2.2 million will be expensed over the next three years. Southern was successful in reducing other non-interest expense categories. Salary and employee benefit costs decreased $780,000, or 7.4%, as a result of cost saving initiatives implemented in 2009.
The annualized return on average assets for 2009 and 2008 was 0.41% and 0.17%, respectively. The annualized return on average equity was 4.29% for 2009 compared to 1.77% for 2008.
John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, “Like most banks during the past year, net income has been adversely affected by higher than historically normal provision for loan losses, extraordinary FDIC premium assessments and OREO property expenses. In spite of the challenging environment, we are pleased to be performing better than many in our industry. Our results, while adequate in this environment, are not at levels we would like to see. We have been proactive throughout 2009 in working with our clients and recognizing credit problems as they occur, as well as looking for efficiencies within our organization. While we are beginning to see some improvement in the credit markets and in economic news, we anticipate a gradual turnaround in economic conditions. We will continue to focus on initiatives to mitigate loss and increase efficiencies during 2010.”
Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 18 branches within Branch, Calhoun, Cass, Hillsdale 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 “will”, “anticipate” or “continue” and other similar words or expressions. Management’s determination of the provision and allowance for loan losses and other accounting estimates, such as the carrying value of goodwill 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, 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. Additional information about factors that may adversely affect the matters addressed in forward-looking statements are contained in Southern’s reports filed with the Securities and Exchange Commission. Other risk factors exist and new risk factors may emerge at any time. Investors should not place undue reliance on forward-looking statements as predictions of future results. Southern undertakes no obligation to update or revise any forward-looking statements to reflect developments or information obtained after the date of this press release.
SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
December 31, |
|
December 31, |
||
|
|
|
|
||
|
(In thousands, except share data) |
||||
ASSETS |
|
|
|
|
|
Cash and due from banks |
$ |
24,814 |
|
$ |
27,989 |
Federal funds sold |
|
2,540 |
|
|
3,320 |
Securities available for sale |
|
56,948 |
|
|
65,718 |
Loans held for sale, net of valuation allowance of $0 in 2009 and 2008 |
|
605 |
|
|
121 |
Loans, net of allowance for loan losses of $6,075 in 2009 (2008 - $7,104) |
|
327,004 |
|
|
328,206 |
Premises and equipment, net |
|
12,914 |
|
|
13,286 |
Accrued interest receivable |
|
2,054 |
|
|
2,614 |
Net cash surrender value of life insurance |
|
9,881 |
|
|
9,523 |
Goodwill |
|
13,422 |
|
|
13,422 |
Other intangible assets, net |
|
2,355 |
|
|
2,717 |
Other assets |
|
9,872 |
|
|
8,080 |
TOTAL ASSETS |
$ |
462,409 |
|
$ |
474,996 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Deposits: |
|
|
|
|
|
Non-interest bearing |
$ |
55,250 |
|
$ |
57,216 |
Interest bearing |
|
325,655 |
|
|
336,827 |
Total deposits |
|
380,905 |
|
|
394,043 |
|
|
|
|
|
|
Securities sold under agreements to repurchase |
|
14,799 |
|
|
13,890 |
Accrued expenses and other liabilities |
|
4,039 |
|
|
4,272 |
Other borrowings |
|
10,832 |
|
|
12,492 |
Subordinated debentures |
|
5,155 |
|
|
5,155 |
Common stock subject to repurchase obligation in Employee |
|
|
|
|
|
Stock Ownership Plan, shares outstanding – 101,999 in 2009 |
|
|
|
|
|
(100,392 shares in 2008) |
|
945 |
|
|
728 |
Total liabilities |
|
416,675 |
|
|
430,580 |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
Preferred stock, 100,000 shares authorized; none issued or outstanding |
|
|
|
|
|
Common stock, $2.50 par value per share: |
|
|
|
|
|
Authorized--4,000,000 shares |
|
- |
|
|
- |
Issued—2,323,410 shares in 2009 (2,311,740 shares in 2008) |
|
|
|
|
|
Outstanding (other than ESOP shares)-2,221,411 shares in 2009 |
|
5,553 |
|
|
5,528 |
Additional paid-in capital |
|
18,363 |
|
|
18,473 |
Retained earnings |
|
22,062 |
|
|
20,593 |
Accumulated other comprehensive income, net |
|
193 |
|
|
413 |
Unearned Employee Stock Ownership Plan shares |
|
(437 |
) |
|
(591 |
Total shareholders' equity |
|
45,734 |
|
|
44,416 |
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
462,409 |
|
$ |
474,996 |
SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|
Three Months Ended |
|
Twelve Months Ended |
||||||||
|
2009 |
|
2008 |
|
2009 |
|
2008 |
||||
|
(In thousands, except per share amounts) |
||||||||||
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
$ |
4,971 |
|
$ |
5,227 |
|
$ |
19,852 |
|
$ |
22,528 |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
239 |
|
|
510 |
|
|
1,134 |
|
|
2,100 |
Tax-exempt |
|
199 |
|
|
227 |
|
|
883 |
|
|
943 |
Other |
|
27 |
|
|
19 |
|
|
69 |
|
|
358 |
Total interest income |
|
5,436 |
|
|
5,983 |
|
|
21,938 |
|
|
25,929 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
1,110 |
|
|
1,539 |
|
|
4,671 |
|
|
6,992 |
Other |
|
185 |
|
|
288 |
|
|
729 |
|
|
1,197 |
Total interest expense |
|
1,295 |
|
|
1,827 |
|
|
5,400 |
|
|
8,189 |
Net Interest Income |
|
4,141 |
|
|
4,156 |
|
|
16,538 |
|
|
17,740 |
Provision for loan losses |
|
425 |
|
|
2,350 |
|
|
2,725 |
|
|
5,080 |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses |
|
3,716 |
|
|
1,806 |
|
|
13,813 |
|
|
12,660 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income: |
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
655 |
|
|
668 |
|
|
2,746 |
|
|
2,744 |
Trust fees |
|
271 |
|
|
246 |
|
|
987 |
|
|
1,090 |
Net securities gains |
|
275 |
|
|
- |
|
|
682 |
|
|
15 |
Net gains on loan sales |
|
153 |
|
|
41 |
|
|
756 |
|
|
336 |
Earnings on life insurance assets |
|
107 |
|
|
107 |
|
|
358 |
|
|
363 |
Income from automated teller machines |
|
189 |
|
|
149 |
|
|
703 |
|
|
624 |
Gain on life insurance proceeds |
|
- |
|
|
- |
|
|
- |
|
|
390 |
Other |
|
222 |
|
|
187 |
|
|
940 |
|
|
801 |
Total non-interest income |
|
1,872 |
|
|
1,398 |
|
|
7,172 |
|
|
6,363 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expense: |
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
2,447 |
|
|
2,605 |
|
|
9,802 |
|
|
10,582 |
Occupancy, net |
|
304 |
|
|
335 |
|
|
1,351 |
|
|
1,383 |
Equipment |
|
245 |
|
|
307 |
|
|
917 |
|
|
1,234 |
Printing, postage and supplies |
|
145 |
|
|
170 |
|
|
615 |
|
|
659 |
Telecommunication |
|
109 |
|
|
96 |
|
|
372 |
|
|
379 |
Software maintenance |
|
100 |
|
|
92 |
|
|
415 |
|
|
396 |
Professional and outside services |
|
355 |
|
|
479 |
|
|
1,354 |
|
|
1,575 |
Amortization of other intangibles |
|
90 |
|
|
93 |
|
|
362 |
|
|
374 |
Automated teller machines |
|
417 |
|
|
76 |
|
|
521 |
|
|
297 |
FDIC deposit assessments |
|
179 |
|
|
122 |
|
|
855 |
|
|
179 |
Other real estate owned expense |
|
30 |
|
|
90 |
|
|
319 |
|
|
201 |
Loss on sale of other real estate owned |
|
130 |
|
|
76 |
|
|
318 |
|
|
213 |
Other |
|
237 |
|
|
106 |
|
|
1,769 |
|
|
1,498 |
Total non-interest expense |
|
4,788 |
|
|
4,647 |
|
|
18,970 |
|
|
18,970 |
INCOME (LOSS) BEFORE INCOME TAXES |
|
800 |
|
|
(1,443 |
) |
|
2,015 |
|
|
53 |
Federal income tax provision (credit) |
|
115 |
|
|
(685 |
) |
|
79 |
|
|
(760 |
NET INCOME (LOSS) |
$ |
685 |
|
$ |
(758 |
) |
$ |
1,936 |
|
$ |
813 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings (Loss) Per Common Share |
$ |
0.29 |
|
$ |
(0.33 |
) |
$ |
0.84 |
|
$ |
0.36 |
Diluted Earnings (Loss) Per Common Share |
$ |
0.29 |
|
$ |
(0.33 |
) |
$ |
0.84 |
|
$ |
0.36 |
Dividends Declared Per Common Share |
$ |
0.05 |
|
$ |
0.20 |
|
$ |
0.20 |
|
$ |
0.80 |
Copyright © 2009 Southern Michigan Bank & Trust, Member FDIC, All Rights Reserved