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 SECOND QUARTER EARNINGS
Coldwater, Michigan, July 29, 2009: Southern Michigan Bancorp, Inc. (OTCBB: SOMC.OB) announced second quarter net income of $751,000, or $0.33 per diluted share, for the three months ended June 30, 2009. This compares to net income of $349,000, or $0.16 per diluted share, for the three months ended June 30, 2008. Southern's net income for the six months ended June 30, 2009, was $480,000, or $0.21 per diluted share, compared to net income of $1,550,000, or $0.68 per diluted share, for the same six month period a year ago.
Southern provided $500,000 for loan losses during the second quarter of 2009 compared to a $1,450,000 provision for the first quarter of 2009 and an $800,000 provision for the second quarter of 2008. Net charge offs totaled $766,000 during the second quarter of 2009 compared to $1.7 million in the first quarter of 2009 and $501,000 in the second quarter of 2008.
Southern's allowance for loan losses totaled $6.6 million, or 1.99% of total loans at June 30, 2009 compared to $5.6 million, or 1.66% of total loans at June 30, 2008. Non-performing loans totaled $7,357,000, or 2.21% of gross loans at June 30, 2009 compared to $9,318,000, or 2.77% of gross loans at June 30, 2008, a decrease of $1,961,000, or 21%.
John Castle, Chairman & CEO, stated, "We are pleased with our overall results and encouraged by the improvement in our net charge-offs and our non-performing loan totals. However, the weakened Michigan economy could continue to challenge us for some time."
Southern's net interest margin remained strong when compared to peers at 4.11% for the six month period ending June 30, 2009. This was a slight increase from the March 31, 2009 margin of 4.04%, but a decrease compared to 4.41% for the six month comparable period in 2008. The decline in margin from 2008 is attributable to the declining rate environment.
Non-interest income for the second quarter of 2009 was $622,000 greater than the comparable period in 2008. Security gains and gains from loan sales accounted for $545,000 of this increase. These gains offset substantially higher FDIC insurance premiums recorded during the second quarter of 2009. Southern recorded $407,000 in FDIC assessments which included a special assessment of $217,000 during the second quarter of 2009. Non-interest expense for the second quarter of 2009 was $99,000 greater than 2008.
The annualized return on average assets for the six month periods ending June 30, 2009 and 2008 was 0.21% and 0.64%, respectively. The annualized return on average equity was 2.13% for the 2009 period compared to 6.75% for the 2008 period.
Total consolidated assets at June 30, 2009 were $456.5 million, compared to $475.0 million at December 31, 2008. Over $14 million of higher priced, non core deposits were eliminated from the balance sheet during the first quarter of 2009.
Southern Michigan Bancorp, Inc. is a bank holding company headquartered in Coldwater, Michigan with 18 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.
***
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 "encouraged", "could", "continue", "for some time" and other similar words or expressions. Accounting estimates, such as the provision and allowance for loan losses, 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 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.
UNAUDITED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| June 30,
2009
| | December 31,
2008
| |
ASSETS | | | | | | |
Cash and cash equivalents | $ | 17,917 | | $ | 27,989 | |
Federal funds sold | | 2,614 | | | 3,320 | |
Securities available for sale | | 60,382 | | | 65,718 | |
Loans held for sale, net of valuation of -0- in 2009 and 2008 | | 562 | | | 121 | |
Loans, net of allowance for loan losses of $6,624 - 2009 ($7,104 - 2008) | | 325,830 | | | 328,206 | |
Premises and equipment, net | | 13,040 | | | 13,286 | |
Accrued interest receivable | | 1,998 | | | 2,614 | |
Net cash surrender value of life insurance | | 9,690 | | | 9,523 | |
Goodwill | | 13,422 | | | 13,422 | |
Other intangible assets | | 2,536 | | | 2,717 | |
Other assets |
| 8,505
| |
| 8,080
| |
TOTAL ASSETS | $
| 456,496
| | $
| 474,996
| |
| | | | | | |
LIABILITIES | | | | | | |
Deposits : | | | | | | |
Non-interest bearing | $ | 55,555 | | $ | 57,216 | |
Interest bearing |
| 320,326
| |
| 336,827
| |
Total deposits | | 375,881 | | | 394,043 | |
Securities sold under agreements to repurchase and overnight borrowings | | 14,641 | | | 13,890 | |
Accrued expenses and other liabilities | | 4,371 | | | 4,272 | |
Other borrowings | | 11,134 | | | 12,492 | |
Subordinated debentures |
| 5,155
| |
| 5,155
| |
TOTAL LIABILITIES | | 411,182 | | | 429,852 | |
| | | | | | |
Common stock subject to repurchase obligation in
Employee Stock Ownership Plan, 99,586 shares outstanding in 2009
(100,392 in 2008) | |
677
| | |
728
| |
| | | | | | |
SHAREHOLDERS' EQUITY | | | | | | |
Preferred stock, 100,000 shares authorized; none issued or outstanding | | - | | | - | |
Common stock, $2.50 par value: | | | | | | |
Authorized - 4,000,000 shares | | | | | | |
Issued - 2,323,410 shares in 2009 (2,311,740 shares in 2008) | | | | | | |
Outstanding (other than ESOP shares) - 2,223,824 shares in 2009
(2,211,348 shares in 2008) | |
5,560
| | |
5,528
| |
Additional paid-in capital | | 18,735 | | | 18,588 | |
Retained earnings | | 20,839 | | | 20,593 | |
Accumulated other comprehensive income, net | | 213 | | | 413 | |
Unearned restricted stock compensation | | (175 | ) | | (115 | ) |
Unearned Employee Stock Ownership Plan shares |
| (535
| )
|
| (591
| )
|
Total shareholders' equity |
| 44,637
| |
| 44,416
| |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $
| 456,496
| | $
| 474,996
| |
SOUTHERN MICHIGAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
| Three Months Ended
June 30,
| | Six Months Ended
June 30,
| |
| 2009
| | 2008
| | 2009
| | 2008
| |
Interest income: | | | | | | | | | | | | |
Loans, including fees | $ | 4,971 | | $ | 5,570 | | $ | 9,915 | | $ | 11,714 | |
Federal funds sold and balances with banks | | 11 | | | 96 | | | 20 | | | 223 | |
Securities: | | | | | | | | | | | | |
Taxable | | 278 | | | 497 | | | 667 | | | 1,135 | |
Tax-exempt |
| 223
| |
| 240
| |
| 453
| |
| 483
| |
Total interest income |
| 5,483
| |
| 6,403
| |
| 11,055
| |
| 13,555
| |
| | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | |
Deposits | | 1,145 | | | 1,686 | | | 2,433 | | | 3,838 | |
Other |
| 207
| |
| 358
| |
| 402
| |
| 656
| |
Total interest expense |
| 1,352
| |
| 2,044
| |
| 2,835
| |
| 4,494
| |
Net Interest Income | | 4,131 | | | 4,359 | | | 8,220 | | | 9,061 | |
Provision for loan losses |
| 500
| |
| 800
| |
| 1,950
| |
| 1,150
| |
| | | | | | | | | | | | |
Net interest income after provision for loan losses | | 3,631 | | | 3,559 | | | 6,270 | | | 7,911 | |
| | | | | | | | | | | | |
Non-interest income: | | | | | | | | | | | | |
Service charges on deposit accounts | | 738 | | | 691 | | | 1,305 | | | 1,350 | |
Trust fees | | 228 | | | 260 | | | 479 | | | 548 | |
Net gains on security calls and sales | | 407 | | | 2 | | | 407 | | | 15 | |
Net gains on loan sales | | 236 | | | 96 | | | 430 | | | 215 | |
Earnings on life insurance assets | | 84 | | | 83 | | | 168 | | | 171 | |
Gain on life insurance proceeds | | - | | | 19 | | | - | | | 390 | |
Income and fees from automated teller machines | | 176 | | | 161 | | | 333 | | | 309 | |
Other |
| 269
| |
| 204
| |
| 504
| |
| 468
| |
Total non-interest income | | 2,138 | | | 1,516 | | | 3,626 | | | 3,466 | |
| | | | | | | | | | | | |
Non-interest expense: | | | | | | | | | | | | |
Salaries and employee benefits | | 2,432 | | | 2,575 | | | 4,942 | | | 5,262 | |
Occupancy, net | | 325 | | | 388 | | | 722 | | | 775 | |
Equipment | | 231 | | | 322 | | | 455 | | | 620 | |
Printing, postage and supplies | | 159 | | | 169 | | | 312 | | | 320 | |
Telecommunication expenses | | 84 | | | 88 | | | 175 | | | 196 | |
Professional and outside services | | 274 | | | 453 | | | 660 | | | 772 | |
FDIC assessments | | 407 | | | 13 | | | 519 | | | 39 | |
Software maintenance | | 143 | | | 88 | | | 214 | | | 222 | |
Amortization of other intangibles | | 91 | | | 94 | | | 181 | | | 187 | |
Other |
| 728
| |
| 585
| |
| 1,441
| |
| 1,277
| |
Total non-interest expense |
| 4,874
| |
| 4,775
| |
| 9,621
| |
| 9,670
| |
INCOME BEFORE INCOME TAXES | | 895 | | | 300 | | | 275 | | | 1,707 | |
Federal income tax provision (credit) |
| 144
| |
| (49
| )
|
| (205
| )
|
| 157
| |
NET INCOME | $
| 751
| | $
| 349
| | $
| 480
| | $
| 1,550
| |
| | | | | | | | | | | | |
Basic Earnings Per Common Share | $
| .33
| | $
| .16
| | $
| .21
| | $
| .68
| |
Diluted Earnings Per Common Share | $
| .33
| | $
| .16
| | $
| .21
| | $
| .68
| |
Dividends Declared Per Common Share | $
| .05
| | $
| .20
| | $
| .10
| | $
| .40
| |
