Southern Michigan Bancorp (SOMC) 8-K Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2007 Earnings

EXHIBIT 99.1

SOUTHERN MICHIGAN BANCORP, INC.
51 West Pearl Street
Coldwater, Michigan 49036

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

SOUTHERN MICHIGAN BANCORP, INC. ANNOUNCES FOURTH
QUARTER AND FULL YEAR 2007 EARNINGS

Coldwater, Michigan, February 20, 2008: Southern Michigan Bancorp, Inc. (OTCBB: SOMC.OB) reported a 3.1% increase in net income for the full year 2007 compared to 2006, marking the fourth consecutive year of record earnings. Net income for 2007 increased to $4,133,000, or $2.28 per share, compared to net income for 2006 of $4,009,000 or $2.26 per share. Return on average assets and average equity for 2007 were 1.18% and 12.72%, respectively, compared with 1.25% and 14.54%, respectively, in 2006. Net income for the three months ending December 31, 2007 was $1,004,000, down 3.2% from $1,037,000 for the same period in 2006.

Balance sheet comparisons to 2006 are affected by the acquisition of FNB Financial Corporation on December 1, 2007. The inclusion of FNB Financial increased assets by $148 million as of December 31, 2007. Total consolidated assets at December 31, 2007 were $480.2 million, compared to $329.9 million at December 31, 2006, an increase of $150.3 million or 45.6%. Shareholders' equity during the same period increased from $28.5 million to $44.2 million, or 55.1%.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "We are pleased to report record earnings in a difficult market where many banks are experiencing significant declines in earnings. We continue to make good progress integrating the systems of Southern Michigan Bank & Trust and FNB Financial."

Southern Michigan Bancorp, Inc. is a two bank holding company headquartered in Coldwater, Michigan with 19 branches within Branch, Calhoun, Cass, Hillsdale and St. Joseph Counties which provide a broad range of consumer, business and wealth management services throughout the region.

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SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	December 31, 2007			December 31, 2006
	(In thousands, except share data)
ASSETS
Cash and due from banks	$	14,470		$	9,369
Federal funds sold		6,449			10,429
Securities available for sale		77,515			35,602
Loans held for sale, net of valuation allowance of $0 in 2007		624			-
Loans, net of allowance for loan losses of $5,156 (2006 - $3,302)		330,822			249,523
Premises and equipment, net		13,335			8,665
Accrued interest receivable		3,387			2,506
Net cash surrender value of life insurance		10,015			7,502
Goodwill		13,422			620
Other intangible assets		3,091			-
Other assets		7,048			5,675
TOTAL ASSETS	$	480,178		$	329,891
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing	$	57,027		$	42,281
Interest bearing		342,142			240,228
Total deposits		399,169			282,509
Accrued expenses and other liabilities		5,077			4,440
Securities sold under agreements to repurchase		9,776			184
Other borrowings		14,753			6,973
Subordinated debentures		5,155			5,155
Total liabilities		433,930			299,261
Common stock subject to repurchase obligation in Employee
Stock Ownership Plan, shares outstanding - 92,203 in 2007
(89,122 in 2006)		2,029			2,148
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--2,307,924 shares in 2007 (2006 - 1,769,248)
Outstanding (other than ESOP shares)-2,215,721 shares in 2007                   (2006 - 1,680,126)		5,539			4,200
Additional paid-in capital		17,087			5,446
Retained earnings		21,629			19,021
Accumulated other comprehensive income/(loss), net		122			(42	)
Unearned Employee Stock Ownership Plan shares		(103	)		(143	)
Unearned restricted stock compensation		(55	)		-
Total shareholders' equity		44,219			28,482
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	480,178		$	329,891

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SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2007		2006		2007		2006
	(In thousands, except per share amounts)
Interest income:
Loans, including fees	$	5,599	$	5,056	$	20,756	$	19,475
Securities:
Taxable		535		265		1,648		1,018
Tax-exempt		187		140		648		555
Other		36		107		492		406
Total interest income		6,357		5,568		23,544		21,454
Interest expense:
Deposits		2,032		1,731		7,758		6,083
Other		321		211		880		876
Total interest expense		2,353		1,942		8.638		6,959
Net Interest Income		4,004		3,626		14.906		14,495
Provision for loan losses		400		250		745		500
Net interest income after provision for loan losses		3,604		3,376		14,161		13,995
Non-interest income:
Service charges on deposit accounts		584		467		1,990		1,838
Trust fees		235		188		791		709
Net gains on loan sales		73		168		390		627
Earnings on life insurance assets		85		95		286		272
Other		262		273		811		659
Total non-interest income		1,239		1,191		4,268		4,105
Non-interest expense:
Salaries and employee benefits		2,028		1,965		7,652		7,041
Occupancy, net		255		155		954		766
Equipment		272		209		839		756
Printing, postage and supplies		116		86		378		373
Advertising and marketing		58		88		237		284
Professional and outside services		241		170		747		951
Other		574		478		2,053		2,429
Total non-interest expense		3,544		3,151		12,860		12,600
INCOME BEFORE INCOME TAXES		1,299		1,416		5,569		5,500
Federal income taxes		295		379		1,436		1,491
NET INCOME	$	1,004	$	1,037	$	4,133	$	4,009
Basic Earnings Per Common Share	$	.52	$	.59	$	2.29	$	2.27
Diluted Earnings Per Common Share	$	.52	$	.59	$	2.28	$	2.26
Dividends Declared Per Common Share	$	.20	$	.20	$	.80	$	.78

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