Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2023 Earnings

Southern Michigan Bancorp, Inc.

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		10,329			10,345			39,030			37,827
Non-interest income:
Service charges on deposit accounts		422			401			1,670			1,516
Trust fees		632			589			2,419			2,264
Net losses on securities		-			(666	)		-			(666	)
Net gains on loan sales		119			41			305			606
Earnings on life insurance assets		161			125			617			472
Gain from life insurance		-			747			-			747
ATM and debit card fee income		447			430			1,786			1,749
Other		296			138			941			692
Total non-interest income		2,077			1,805			7,738			7,380
Non-interest expense:
Salaries and employee benefits		5,836			5,162			20,586			18,134
Occupancy, net		416			431			1,813			1,675
Equipment		385			340			1,449			1,294
Printing, postage and supplies		118			106			437			413
Telecommunication expenses		109			63			376			303
Professional and outside services		770			450			2,243			1,742
Software maintenance		608			491			2,247			1,911
ATM expenses		201			208			803			755
Other		940			793			3,466			2,907
Total non-interest expense		9,383			8,044			33,420			29,134
INCOME BEFORE INCOME TAXES		3,023			4,106			13,348			16,073
Federal income tax provision		586			522			2,443			2,582
NET INCOME	$	2,437		$	3,584		$	10,905		$	13,491
Basic Earnings Per Common Share	$	0.54		$	0.79		$	2.40		$	2.98
Diluted Earnings Per Common Share		0.54			0.79			2.40			2.97
Dividends Declared Per Common Share		0.14			0.13			0.56			0.52

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