Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2023 Earnings
February 13, 2024 at 02:31 am IST
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COLDWATER, Mich., Feb. 12, 2024 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) announced fourth quarter 2023 net income of $2,437,000, or $0.54 per share, compared to net income of $3,584,000, or $0.79 per share, for the fourth quarter of 2022. Southern earned $10,905,000, or $2.40 per share, for the year ended December 31, 2023 compared to $13,491,000, or $2.97 per share, for the same period a year ago.
Consolidated assets at December 31, 2023 totaled $1.41 billion compared to $1.28 billion at December 31, 2022. Total loans grew 16.9%, from December 31, 2022 levels of $886.6 million to $1.04 billion. Deposits totaled $1.16 billion at December 31, 2023, an increase of $66.9 million or 6.1%, as compared to December 31, 2022.
John Waldron, President and CEO of Southern Michigan Bancorp, Inc. stated, “We had a solid year despite the challenging rate environment and higher deposit costs. Overhead increased in part due to higher FTE counts associated with our recent expansion.”
The allowance for credit losses totaled $11,697,000, or 1.13% of loans at December 31, 2023 compared to $9,588,000, or 1.08% of loans at December 31, 2022. Net loan losses totaled $15,000 for 2023, compared to $7,000 for 2022. Asset quality remains strong with loan delinquencies totaling just 0.10% of gross loans at December 31, 2023. During 2023, the Bank recognized a $950,000 provision for credit losses, primarily due to loan growth. This compares with a $275,000 provision for credit losses recognized for 2022.
The annualized return on average assets for the year ended December 31, 2023 and 2022 was 0.80% and 1.10%, respectively. The annualized return on average equity was 11.94% for the year ended December 31, 2023 compared to 15.68% for the year ended December 31, 2022. The tax equivalent net interest margin for the years ended December 31, 2023 and 2022 was 3.16% and 3.36%, respectively.
Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 15 branches within Branch, Calhoun, Hillsdale, Jackson, Kalamazoo and St. Joseph Counties, and a loan production office in Jackson County, 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,” “anticipated,” 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- sell other real estate owned at its carrying value or at all, 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, extent, 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)
December 31, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
71,620
$
77,255
Federal funds sold
1,468
253
Securities available for sale, at fair value
169,740
178,154
Securities held-to-maturity, at amortized cost
61,600
69,661
Loans held for sale
169
-
Loans, net of allowance for credit losses of $11,697 - 2023 ($9,588 – 2022)
1,024,720
877,038
Premises and equipment, net
23,114
16,545
Net cash surrender value of life insurance
22,472
18,124
Goodwill
13,422
13,422
Other intangible assets, net
147
183
Other assets
26,323
25,888
TOTAL ASSETS
$
1,414,795
$
1,276,523
LIABILITIES
Deposits :
Non-interest bearing
$
226,178
$
268,704
Interest bearing
931,793
822,347
Total deposits
1,157,971
1,091,051
Securities sold under agreements to repurchase and overnight borrowings
1,738
11,179
Accrued expenses and other liabilities
15,703
13,545
Other borrowings
106,900
40,000
Subordinated debentures
34,653
34,584
Total liabilities
1,316,965
1,190,359
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 – 4,533,637 shares in 2023 (4,519,179 shares in 2022)
11,330
11,294
Additional paid-in capital
13,126
14,066
Retained earnings
89,808
82,705
Accumulated other comprehensive loss, net
(16,434
)
(21,901
)
Total shareholders’ equity
97,830
86,164
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
1,414,795
$
1,276,523
Southern Michigan Bancorp, Inc. Condensed consolidated statements of income (unaudited) (In thousands, except per share data)
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
Interest income:
Loans, including fees
$
15,308
$
10,802
$
54,887
$
36,583
Federal funds sold and deposits with other banks
766
490
3,125
1,249
Securities:
Taxable
1,635
1,527
6,291
4,948
Tax-exempt
304
401
1,265
1,354
Total interest income
18,013
13,220
65,568
44,134
Interest expense:
Deposits
6,078
2,045
20,593
4,118
Other
1,606
555
4,995
1,914
Total interest expense
7,684
2,600
25,588
6,032
Net interest income
10,329
10,620
39,980
38,102
Provision for credit losses
-
275
950
275
Net interest income after provision for credit losses
Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust (The Bank). The Bank operates about 18 branches within Branch, Calhoun, Hillsdale, Jackson, Kalamazoo, and St. Joseph counties, providing a range of consumer, business, and wealth management services throughout the region. Its business, which it conducts primarily through the Bank, is concentrated in a single industry segment, commercial banking. The Bank offers a variety of deposit, payment, credit, and other financial services to all types of customers. The Bankâs commercial lending covers categories, such as business, industrial, agricultural, construction, inventory, and real estate. It offers trust and investment services, which include investment management, trustee services, and others. It also owns Southern Michigan Bancorp Capital Trust I, SMB Risk Management, Inc., and 27 Marshall Street, LLC. The Bank wholly owns SMB Financial Services, Inc.