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 FIRST QUARTER 2010 EARNINGS
Coldwater, Michigan, April 28, 2010: Southern Michigan Bancorp, Inc. (OTCBB: SOMC.OB) reported net income of $702,000, or $0.30 per share, for the first quarter ended March 31, 2010, compared to a net loss of $271,000, or $0.12 per share, for the first quarter of 2009.
Total consolidated assets at March 31, 2010 were $464.2 million compared to $462.4 million at December 31, 2009. Cash balances remained elevated as of March 31, 2010 as compared to December 31, 2009 due to maturities in the securities portfolio awaiting reinvestment and anticipated first quarter reduction in the loan portfolio.
Non-performing loans totaled $6,393,000 at March 31, 2010, or 2.00% of total loans, representing a decrease of $1,206,000, or 15.9%, from $7,599,000 at December 31, 2009. Southern provided $200,000 for loan losses during the first quarter of 2010, resulting in an allowance for loan losses of $5,944,000, or 1.83% of loans at March 31, 2010. This compared to $1,450,000 of provision expense for the first quarter of 2009, and an allowance of 2.07% of loans at March 31, 2009. The decrease in the provision for loan losses resulted primarily from reduced charge-offs. Net charge-offs totaled $332,000 for the first quarter of 2010, compared to $1,664,000 during the first quarter of 2009.
Southern's 4.07% net interest margin at March 31, 2010 remained strong when compared to peers and increased slightly from 4.04% at March 31, 2009.
The annualized return on average assets for the three month periods ending March 31, 2010 and 2009 was 0.60% and -0.23%, respectively. The annualized return on average equity was 6.08% for the 2010 first quarter compared to -2.40% for the 2009 first quarter.
John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "The first quarter of 2010 results were good considering the challenges faced from the current economic and rate environment. However, we continue to spend a lot of time and energy on problem loans. While we were encouraged to see a 15.9% decrease in non-performing assets in the first quarter compared to year-end 2009 levels, as well as a marked decrease in net charge-offs, we continued to see businesses and individuals struggling from the effects of the poor economy."
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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. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to real estate valuation, future levels of non-performing loans, the rate of asset dispositions, and the state of the economy. Management's determination of the provision and allowance for loan losses, the appropriate carrying value of intangible assets (including goodwill, mortgage servicing rights and deferred tax assets) 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. Management's assumptions regarding pension and other post retirement plans involve judgments that are inherently forward-looking. Our ability to successfully implement new programs and initiatives, increase efficiencies, respond to declines in collateral values and credit quality, maintain our current level of deposits and other sources of funding, and improve profitability is not entirely within our control and is not assured. The future effect of changes in the real estate, 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 materiall y differ from what may be expressed or forecasted in such forward-looking statements.
Risk factors include, but are not limited to, the risk factors described in "Item 1A - Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2009. These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement. We undertake no obligation to update or revise our forward-looking statements to reflect developments that occur or information obtained after the date of this report.
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SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
| March 31,
2010
| | December 31,
2009
| |
| | | | |
| | |
ASSETS | | | | | | |
Cash and due from banks | $ | 39,438 | | $ | 24,814 | |
Federal funds sold | | 2,504 | | | 2,540 | |
Securities available for sale | | 52,309 | | | 56,948 | |
Loans held for sale | | 865 | | | 605 | |
Loans, net of allowance for loan losses of $5,944 in 2010 (2009 - $6,075) | | 318,862 | | | 327,004 | |
Premises and equipment, net | | 12,921 | | | 12,914 | |
Accrued interest receivable | | 2,286 | | | 2,054 | |
Net cash surrender value of life insurance | | 9,690 | | | 9,881 | |
Goodwill | | 13,422 | | | 13,422 | |
Other intangible assets, net | | 2,268 | | | 2,355 | |
Other assets |
| 9,675
| |
| 9,872
| |
TOTAL ASSETS | $
| 464,240
| | $
| 462,409
| |
| | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | |
Liabilities: | | | | | | |
Deposits: | | | | | | |
Non-interest bearing | $ | 54,991 | | $ | 55,250 | |
Interest bearing |
| 322,807
| |
| 325,655
| |
Total deposits | | 377,798 | | | 380,905 | |
| | | | | | |
Securities sold under agreements to repurchase | | 13,813 | | | 14,799 | |
Accrued expenses and other liabilities | | 4,460 | | | 4,039 | |
Other borrowings | | 15,663 | | | 10,832 | |
Subordinated debentures | | 5,155 | | | 5,155 | |
Common stock subject to repurchase obligation in Employee | | | | | | |
Stock Ownership Plan, shares outstanding - 103,858 in 2010 | | | | | | |
(101,999 shares in 2009) |
| 1,142
| |
| 945
| |
Total liabilities | | 418,031 | | | 416,675 | |
| | | | | | |
| | | | | | |
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-2,340,717 shares in 2010 (2,323,410 shares in 2009) | | | | | | |
Outstanding (other than ESOP shares)-2,236,859 shares in 2010
(2,221,411 shares in 2009) | | 5,592 | | | 5,553 | |
Additional paid-in capital | | 18,162 | | | 18,363 | |
Retained earnings | | 22,648 | | | 22,062 | |
Accumulated other comprehensive income, net | | 215 | | | 193 | |
Unearned Employee Stock Ownership Plan shares |
| (408
| )
|
| (437
| )
|
Total shareholders' equity |
| 46,209
| |
| 45,734
| |
| | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $
| 464,240
| | $
| 462,409
| |
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SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
| Three Months Ended March 31, | |
| 2010
| | 2009
| |
| | | | | | |
Interest income: | | | | | | |
Loans, including fees | $ | 4,801 | | $ | 4,944 | |
Securities: | | | | | | |
Taxable | | 181 | | | 389 | |
Tax-exempt | | 204 | | | 230 | |
Other |
| 23
| |
| 9
| |
Total interest income | | 5,209 | | | 5,572 | |
| | | | | | |
Interest expense: | | | | | | |
Deposits | | 1,001 | | | 1,288 | |
Other |
| 168
| |
| 195
| |
Total interest expense |
| 1,169
| |
| 1,483
| |
Net Interest Income | | 4,040 | | | 4,089 | |
Provision for loan losses |
| 200
| |
| 1,450
| |
Net Interest Income after provision for loan losses | | 3,840 | | | 2,639 | |
| | | | | | |
Non-interest income: | | | | | | |
Service charges on deposit accounts | | 570 | | | 568 | |
Trust fees | | 253 | | | 251 | |
Net gains on loan sales | | 120 | | | 193 | |
Earnings on life insurance assets | | 74 | | | 84 | |
Gain on life insurance proceeds | | 156 | | | - | |
Income from automated teller machines | | 207 | | | 157 | |
Other |
| 244
| |
| 235
| |
Total non-interest income | | 1,624 | | | 1,488 | |
Non-interest expense: | | | | | | |
Salaries and employee benefits | | 2,501 | | | 2,510 | |
Occupancy, net | | 381 | | | 397 | |
Equipment | | 221 | | | 224 | |
Printing, postage and supplies | | 145 | | | 153 | |
Telecommunication expenses | | 78 | | | 91 | |
Professional and outside services | | 293 | | | 385 | |
Software maintenance | | 111 | | | 72 | |
FDIC assessments | | 169 | | | 112 | |
Amortization of other intangibles | | 87 | | | 90 | |
Other |
| 704
| |
| 713
| |
Total non-interest expense |
| 4,690
| |
| 4,747
| |
INCOME(LOSS) BEFORE INCOME TAXES | | 774 | | | (620 | ) |
Federal income tax provision (credit)
|
| 72
| |
| (349
| )
|
NET INCOME (LOSS)
| $
| 702
| | $
| (271
| )
|
Basic Earnings (Loss) Per Common Share
| $
| 0.30
| | $
| (0.12
| )
|
Diluted Earnings (Loss) Per Common Share
| $
| 0.30
| | $
| (0.12
| )
|
Dividends Declared Per Common Share
| $
| 0.05
| | $
| 0.05
| |
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