EXHIBIT 99.1
51 West Pearl Street • P.O. Box 309 • Coldwater, Michigan • 49036
|
June 9, 2010
To Our Shareholders:
Southern Michigan Bank and Trust recently conducted its 138th annual meeting at which financial results for all of 2009 and through the first quarter of 2010 were announced. Southern reported net income of $702,000, or $.30 per share, for the first quarter of 2010, marking the fourth consecutive quarterly profit. Also notable is Southern's earnings of $1.936 million for all of 2009 during a period when many of our peers reported earnings declines or losses.
In response to the many positive comments and insightful questions related to the annual meeting, the entire presentation is now available on our website at www.smb-t.com (just click on the Investor Relations link). This offers those unable to attend the annual meeting the opportunity to have access to all the information shared, including substantial details about Southern's financial results during 2009.
The four slides enclosed with this letter compare Southern with the twenty largest publicly traded banking companies headquartered in Michigan in several important categories. While Southern, with year-end assets totaling $462 million, is the nineteenth largest publicly traded banking company headquartered in Michigan, it was the fifth most profitable banking company in 2009. In measures of asset quality, which are vitally important in assessing financial strength and stability, Southern's non-performing asset ratio of 2.05 percent and Texas ratio of 26.3 percent, ranked third best among the top twenty peers.
Although our directors, management team and staff are pleased with improvements in many of the financial performance measures included in the shareholder meeting presentation, continued economic uncertainties combined with the volatility of financial markets compel us to maintain conservative balance sheet management strategies. Our emphasis on capital preservation allows Southern to remain comfortably above regulatory minimums for institutions categorized as "well-capitalized."
If you have any questions or comments about the annual meeting presentation, please contact me, members of our management team or any of our directors.
Sincerely,
John H. Castle,
Chairman and Chief Executive Officer
517.279.5500 • 800.379.7628 • www.smb-t.com
| Excerpts from Southern Michigan Bancorp, Inc. Annual Meeting - May 13, 2010 |
| Top Twenty Largest Public Banks in Michigan
Ranked by Assets
|
|
Company Name
|
City
| 12/31/2009 Total
Assets ($000)
|
| Flagstar Bancorp, Inc. | Troy | 14,013,331 |
| Citizens Republic Bancorp, Inc. | Flint | 11,931,631 |
| Capitol Bancorp Ltd. | Lansing | 5,131,940 |
| Chemical Financial Corporation | Midland | 4,250,712 |
| Independent Bank Corporation | Ionia | 2,965,364 |
| Mercantile Bank Corporation | Grand Rapids | 1,906,208 |
| Macatawa Bank Corporation | Holland | 1,830,172 |
| Citizens First Bancorp, Inc. | Port Huron | 1,716,332 |
| Firstbank Corporation | Alma | 1,482,356 |
| MBT Financial Corp. | Monroe | 1,383,369 |
| Isabella Bank Corporation | Mount Pleasant | 1,143,944 |
| Dearborn Bancorp, Inc. | Dearborn | 986,486 |
| United Bancorp, Inc. | Tecumseh | 909,328 |
| O.A.K. Financial Corporation | Byron Center | 821,773 |
| Community Central Bank Corporation | Mount Clemens | 543,846 |
| Fentura Financial, Inc. | Fenton | 522,079 |
| Mackinac Financial Corporation | Manistique | 515,377 |
| ChoiceOne Financial Services, Inc. | Sparta | 465,915 |
| Southern Michigan Bancorp, Inc. | Coldwater | 462,409 |
| PSB Group, Inc. | Madison Heights | 462,029 |
Top Twenty Largest Public Banks in Michigan
Rank by Net Income
| |
Company Name
|
City
| 2009 Net Income
($000)
| |
Chemical Financial Corporation | Midland | 10,003 | |
Isabella Bank Corporation | Mount Pleasant | 7,800 | |
Firstbank Corporation | Alma | 2,691 | |
Mackinac Financial Corporation | Manistique | 2,416 | |
Southern Michigan Bancorp, Inc. | Coldwater | 1,936 | |
ChoiceOne Financial Services, Inc. | Sparta | 1,478 | |
O.A.K. Financial Corporation | Byron Center | 540 | |
United Bancorp, Inc. | Tecumseh | (8,833) | |
PSB Group, Inc. | Madison Heights | (12,931) | |
Community Central Bank Corporation | Mount Clemens | (14,638) | |
Fentura Financial, Inc. | Fenton | (16,980) | |
MBT Financial Corp. | Monroe | (34,177) | |
Mercantile Bank Corporation | Grand Rapids | (52,087) | |
Dearborn Bancorp, Inc. | Dearborn | (61,175) | |
Macatawa Bank Corporation | Holland | (63,641) | |
Independent Bank Corporation | Ionia | (90,227) | |
Citizens First Bancorp, Inc. | Port Huron | (124,024) | |
Capitol Bancorp Ltd. | Lansing | (264,540) | |
Flagstar Bancorp, Inc. | Troy | (496,678) | |
Citizens Republic Bancorp, Inc. | Flint | (514,231) | |
| Excerpts from Southern Michigan Bancorp, Inc. Annual Meeting - May 13, 2010 |
| Top Twenty Largest Public Banks in Michigan
Ranked By Non-Performing Asset Ratio |
|
Company Name
|
City
| 12/31/2009
Non-Performing Asset
Ratio %
|
| Isabella Bank Corporation | Mount Pleasant | 1.35 |
| O.A.K. Financial Corporation | Byron Center | 1.68 |
| Southern Michigan Bancorp, Inc. | Coldwater | 2.05 |
| Firstbank Corporation | Alma | 3.27 |
| ChoiceOne Financial Services, Inc. | Sparta | 3.48 |
| Chemical Financial Corporation | Midland | 3.61 |
| United Bancorp, Inc. | Tecumseh | 3.90 |
| Mackinac Financial Corporation | Manistique | 4.08 |
| Mercantile Bank Corporation | Grand Rapids | 5.74 |
| Fentura Financial, Inc. | Fenton | 6.96 |
| Citizens Republic Bancorp, Inc. | Flint | 7.09 |
| Independent Bank Corporation | Ionia | 7.20 |
Non-performing Assets = | MBT Financial Corp. | Monroe | 7.99 |
Nonaccrual Loans + Renegotiated Loans | Macatawa Bank Corporation | Holland | 8.70 |
+ 90+Days Past Due + OREO | Capitol Bancorp Ltd. | Lansing | 8.89 |
| Community Central Bank Corporation | Mount Clemens | 9.76 |
| Citizens First Bancorp, Inc. | Port Huron | 11.86 |
| Flagstar Bancorp, Inc. | Troy | 12.58 |
| Dearborn Bancorp, Inc. | Dearborn | 13.40 |
| PSB Group, Inc. | Madison Heights | 15.02 |
Top Twenty Largest Public Banks in Michigan
Rank By Texas Ratio
| |
Company Name
|
City
| 12/31/2009 by Texas
Ratio %
| |
Isabella Bank Corporation | Mount Pleasant | 14.5 | |
O.A.K. Financial Corporation | Byron Center | 16.7 | |
Southern Michigan Bancorp, Inc. | Coldwater | 26.3 | |
Chemical Financial Corporation | Midland | 31.7 | |
Mackinac Financial Corporation | Manistique | 34.8 | |
Firstbank Corporation | Alma | 38.0 | |
ChoiceOne Financial Services, Inc. | Sparta | 40.1 | |
Citizens Republic Bancorp, Inc. | Flint | 44.8 | |
Mercantile Bank Corporation | Grand Rapids | 58.2 | |
MBT Financial Corp. | Monroe | 104.4 | |
Macatawa Bank Corporation | Holland | 112.1 | |
Flagstar Bancorp, Inc. | Troy | 115.5 | |
Fentura Financial, Inc. | Fenton | 116.8 | |
Independent Bank Corporation | Ionia | 117.7 | |
Capitol Bancorp Ltd. | Lansing | 146.2 | |
Community Central Bank Corporation | Mount Clemens | 146.5 | |
Dearborn Bancorp, Inc. | Dearborn | 171.5 | |
PSB Group, Inc. | Madison Heights | 265.0 | |
Citizens First Bancorp, Inc. | Port Huron | 593.7 | |
The Texas Ratio is another measure of asset quality and an indicator of strength. It was developed by Gerard Cassidy and other analysts at RBC Capital Markets to help analyze Texas Banks in the early 1980's. It is calculated by dividing non-performing assets by tangible equity plus loan loss reserves. A ratio greater than 100% indicates severe asset quality problems.
