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 THIRD QUARTER EARNINGS
Coldwater, Michigan, October 29, 2010: Southern Michigan Bancorp, Inc. (OTCBB: SOMC.OB) announced net income of $870,000, or $0.38 per diluted share, for the three months ended September 30, 2010. This compares to net income of $771,000, or $0.34 per diluted share, for the three months ended September 30, 2009. Southern's net income for the nine months ended September 30, 2010 was $2,375,000, or $1.03 per diluted share, compared to net income of $1,251,000, or $0.55 per diluted share, for the same nine month period a year ago.
Southern provided $425,000 for loan losses during the third quarter of 2010 compared to $350,000 for the third quarter of 2009. Net charge offs totaled $423,000 during the third quarter of 2010 compared to $254,000 in the third quarter of 2009. For the nine month period ended September 30, 2010, net charge offs totaled $1,122,000 compared to $2,684,000 for the same nine month period in 2009.
Southern's allowance for loan losses totaled $5.7 million, or 1.79% of total loans at September 30, 2010, compared to $6.1 million, or 1.82% of total loans at December 31, 2009. Non-performing loans totaled $6,869,000, or 2.18% of total loans at September 30, 2010, compared to $7,599,000, or 2.28% of total loans at December 31, 2009, and $8,151,000, or 2.43% of total loans at September 30, 2009.
Southern's net interest margin decreased slightly from 4.14% for the nine month period ended September 30, 2009 to 4.02% for the same period of 2010. Reduced net interest income resulted from lower rates and balances for investment securities and loans, which were partially offset by lower deposit rates.
John Castle, Chairman & CEO, stated, "Residential mortgage activity along with expense control initiatives contributed to continued earnings improvement in the third quarter of 2010. Southern maintained a favorable net interest margin at September 30, 2010, largely by aggressively working to reduce non-earning assets. In addition, we continue to monitor the outcomes from the recent banking legislation. While it remains uncertain what the final rules and regulations will say, we expect that the banking industry will bear significantly increased compliance costs and a higher cost of capital."
The annualized return on average assets for the nine month periods ended September 30, 2010 and 2009 was 0.67% and 0.36%, respectively. The annualized return on average equity for the same periods was 6.76% and 3.70%, respectively.
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.
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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 "uncertain", "expect", "continue" and other similar words or expressions. These statements include, among others, statements related to the future effect of recently passed banking legislation. All statements with references to future time periods are forward-looking. Management's determination of the provision and allowance for loan losses, the appropriate carrying value of intangible assets (including goodwill 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-l ooking. There can be no assurance that future loan losses will be limited to the amounts estimated. 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, extend, 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.
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 and in "Part II, Item 1A - Risk Factors" of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010. 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.
SOUTHERN MICHIGAN BANCORP, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
September 30, | December 31, | |||||
ASSETS | ||||||
Cash and cash equivalents | $ | 64,411 | $ | 24,814 | ||
Federal funds sold | 221 | 2,540 | ||||
Securities available for sale | 58,057 | 56,948 | ||||
Loans held for sale | 1,115 | 605 | ||||
Loans, net of allowance for loan losses of $5,728 - 2010 ($6,075 - 2009) | 314,542 | 327,004 | ||||
Premises and equipment, net | 12,712 | 12,914 | ||||
Accrued interest receivable | 2,366 | 2,054 | ||||
Net cash surrender value of life insurance | 9,859 | 9,881 | ||||
Goodwill | 13,422 | 13,422 | ||||
Other intangible assets, net | 2,093 | 2,355 | ||||
Other assets | | 8,700 | | 9,872 | ||
TOTAL ASSETS | $ | 487,498 | $ | 462,409 | ||
LIABILITIES | ||||||
Deposits: | ||||||
Non-interest bearing | $ | 56,501 | $ | 55,250 | ||
Interest bearing | | 345,487 | | 325,655 | ||
Total deposits | 401,988 | 380,905 | ||||
Securities sold under agreements to repurchase and overnight borrowings | 16,876 | 14,799 | ||||
Accrued expenses and other liabilities | 4,183 | 4,039 | ||||
Other borrowings | 10,318 | 10,832 | ||||
Subordinated debentures | 5,155 | 5,155 | ||||
Common stock subject to repurchase obligation in Employee | ||||||
Stock Ownership Plan, shares outstanding - 104,514 in 2010 | ||||||
(101,999 shares in 2009) | | 1,233 | | 945 | ||
Total liabilities | 439,753 | 416,675 | ||||
SHAREHOLDERS' EQUITY | ||||||
Preferred stock, 100,000 shares authorized; none issued or outstanding | - | - | ||||
Common stock, $2.50 par value: | ||||||
Authorized - 4,000,000 shares | ||||||
Issued - 2,340,717 shares in 2010 (2,323,410 shares in 2009) | ||||||
Outstanding (other than ESOP shares) - 2,236,203 shares in 2010 |
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Additional paid-in capital | 18,152 | 18,363 | ||||
Retained earnings | 24,086 | 22,062 | ||||
Accumulated other comprehensive income, net | 243 | 193 | ||||
Unearned Employee Stock Ownership Plan shares | | (327 | ) | | (437 | ) |
Total shareholders' equity | | 47,745 | | 45,734 | ||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 487,498 | $ | 462,409 |
SOUTHERN MICHIGAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||
Interest income: | ||||||||||||
Loans, including fees | $ | 4,878 | $ | 4,966 | $ | 14,427 | $ | 14,881 | ||||
Federal funds sold and balances with banks | 42 | 22 | 99 | 42 | ||||||||
Securities: | ||||||||||||
Taxable | 151 | 228 | 474 | 895 | ||||||||
Tax-exempt | | 178 | | 231 | | 580 | | 684 | ||||
Total interest income | | 5,249 | | 5,447 | | 15,580 | | 16,502 | ||||
Interest expense: | ||||||||||||
Deposits | 928 | 1,128 | 2,863 | 3,561 | ||||||||
Other | | 172 | | 142 | | 515 | | 544 | ||||
Total interest expense | | 1,100 | | 1,270 | | 3,378 | | 4,105 | ||||
Net interest income | 4,149 | 4,177 | 12,202 | 12,397 | ||||||||
Provision for loan losses | | 425 | | 350 | | 775 | | 2,300 | ||||
Net interest income after provision for loan losses | 3,724 | 3,827 | 11,427 | 10,097 | ||||||||
Non-interest income: | ||||||||||||
Service charges on deposit accounts | 652 | 786 | 1,834 | 2,091 | ||||||||
Trust fees | 244 | 237 | 740 | 716 | ||||||||
Net gains on security calls and sales | - | - | 207 | 407 | ||||||||
Net gains on loan sales | 403 | 173 | 684 | 603 | ||||||||
Earnings on life insurance assets | 93 | 83 | 243 | 251 | ||||||||
Gain on life insurance proceeds | - | - | 156 | - | ||||||||
Income and fees from automated teller machines | 235 | 181 | 660 | 514 | ||||||||
Other | | 211 | | 214 | | 652 | | 718 | ||||
Total non-interest income | 1,838 | 1,674 | 5,176 | 5,300 | ||||||||
Non-interest expense: | ||||||||||||
Salaries and employee benefits | 2,529 | 2,413 | 7,467 | 7,355 | ||||||||
Occupancy, net | 324 | 325 | 1,068 | 1,047 | ||||||||
Equipment | 229 | 217 | 683 | 672 | ||||||||
Printing, postage and supplies | 146 | 158 | 437 | 470 | ||||||||
Telecommunication expenses | 107 | 88 | 281 | 263 | ||||||||
Professional and outside services | 160 | 339 | 685 | 999 | ||||||||
FDIC assessments | 157 | 157 | 473 | 676 | ||||||||
Software maintenance | 94 | 101 | 302 | 315 | ||||||||
Amortization of other intangibles | 87 | 91 | 262 | 272 | ||||||||
Other | | 595 | | 672 | | 2,017 | | 2,113 | ||||
Total non-interest expense | | 4,428 | | 4,561 | | 13,675 | | 14,182 | ||||
INCOME BEFORE INCOME TAXES | 1,134 | 940 | 2,928 | 1,215 | ||||||||
Federal income tax provision (credit) | | 264 | | 169 | | 553 | | (36 | ) | |||
NET INCOME | $ | 870 | $ | 771 | $ | 2,375 | $ | 1,251 | ||||
Basic Earnings Per Common Share | $ | 0.38 | $ | 0.34 | $ | 1.03 | $ | 0.55 | ||||
Diluted Earnings Per Common Share | | 0.38 | | .34 | | 1.03 | | .55 | ||||
Dividends Declared Per Common Share | | .05 | | .05 | | .15 | | .15 |