EXHIBIT 99.1
51 West Pearl Street • P.O. Box 309 • Coldwater, Michigan • 49036
|
June 3, 2011
To Our Shareholders:
Southern recently conducted its 139th annual meeting highlighting financial results for 2010 and the first quarter of 2011. Southern reported net income of $748,000, or $.32 per share, for the first quarter of 2011. Southern's earnings of $3.1 million for 2010 is noteworthy given the economic climate and as compared to peer bank results.
In response to the many positive comments related to the annual meeting presentation, the entire slideshow presentation remains available on our website at www.smb-t.com (just click on the Investor Relations link). This continues to offer those unable to attend the annual meeting the opportunity to have access to the information shared, including substantial details about Southern's financial results during 2010.
The five 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 $494 million, is the thirteenth largest publicly traded banking company headquartered in Michigan, it was the fourth most profitable banking company in 2010. In measures of asset quality, which are vitally important in assessing financial strength and stability, Southern's nonperforming asset ratio of 1.32 percent and Texas ratio of 17.2 percent, ranked second best among the top twenty peers. Lastly, when comparing annual dividends, Southern ranked fourth with only five out of the twenty largest banks in the state paying a dividend in 2010.
Our directors and management team are pleased with improvements in many of the financial performance measures included in the shareholder meeting presentation. However, continued economic uncertainties compel us to maintain conservative balance sheet management strategies. Our continued 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 12, 2011 |
| Twenty Largest Public Banks in Michigan
Ranked by Assets |
| |
Company Name
|
City
| 12/31/10
Total
Assets
($000) |
| 1 | Flagstar Bancorp, Inc. | Troy | $13,643,504 |
| 2 | Citizens Republic Bancorp, Inc. | Flint | $9,965,645 |
| 3 | Chemical Financial Corporation | Midland | $5,246,209 |
| 4 | Capitol Bancorp Ltd. | Lansing | $3,540,214 |
| 5 | Independent Bank Corporation | Ionia | $2,535,248 |
| 6 | Mercantile Bank Corporation | Grand Rapids | $1,632,421 |
| 7 | Macatawa Bank Corporation | Holland | $1,578,261 |
| 8 | Firstbank Corporation | Alma | $1,458,343 |
| 9 | MBT Financial Corp. | Monroe | $1,259,377 |
| 10 | Isabella Bank Corporation | Mount Pleasant | $1,225,810 |
| 11 | Dearborn Bancorp, Inc. | Dearborn | $915,684 |
| 12 | United Bancorp, Inc. | Ann Arbor | $861,710 |
| 13 | Southern Michigan Bancorp, Inc. | Coldwater | $493,880 |
| 14 | ChoiceOne Financial Services, Inc. | Sparta | $480,524 |
| 15 | Mackinac Financial Corporation | Manistique | $478,696 |
| 16 | Fentura Financial, Inc. | Fenton | $424,228 |
| 17 | Wolverine Bancorp, Inc. | Midland | $314,206 |
| 18 | Monarch Community Bancorp, Inc. | Coldwater | $256,868 |
| 19 | CNB Corporation | Cheboygan | $255,098 |
| 20 | Community Shores Bank Corporation | Muskegon | $237,945 |
Twenty Largest Public Banks in Michigan
Ranked by Net Income | |
|
Company Name
|
City
| 2010Y
Net
Income
($000) | |
1 | Chemical Financial Corporation | Midland | $23,090 | |
2 | Isabella Bank Corporation | Mount Pleasant | $9,045 | |
3 | Firstbank Corporation | Alma | $3,763 | |
4 | Southern Michigan Bancorp, Inc. | Coldwater | $3,098 | |
5 | ChoiceOne Financial Services, Inc. | Sparta | $2,711 | |
6 | CNB Corporation | Cheboygan | $319 | |
7 | Mackinac Financial Corporation | Manistique | ($418) | |
8 | Wolverine Bancorp, Inc. | Midland | ($3,612) | |
9 | United Bancorp, Inc. | Ann Arbor | ($3,708) | |
10 | Fentura Financial, Inc. | Fenton | ($5,385) | |
11 | Community Shores Bank Corporation | Muskegon | ($8,883) | |
12 | Monarch Community Bancorp, Inc. | Coldwater | ($10,882) | |
13 | MBT Financial Corp. | Monroe | ($11,899) | |
14 | Mercantile Bank Corporation | Grand Rapids | ($13,316) | |
15 | Dearborn Bancorp, Inc. | Dearborn | ($14,249) | |
16 | Independent Bank Corporation | Ionia | ($16,709) | |
17 | Macatawa Bank Corporation | Holland | ($17,854) | |
18 | Capitol Bancorp Ltd. | Lansing | ($254,364) | |
19 | Citizens Republic Bancorp, Inc. | Flint | ($292,925) | |
20 | Flagstar Bancorp, Inc. | Troy | ($374,813) | |
| Excerpts from Southern Michigan Bancorp, Inc. Annual Meeting - May 12, 2011 |
| Twenty Largest Public Banks in Michigan
Ranked By Nonperforming Asset Ratio |
| |
Company Name
|
City
| 2010Y
NPAs/
Asset % |
| 1 | Isabella Bank Corporation | Mount Pleasant | 0.67 |
| 2 | Southern Michigan Bancorp, Inc. | Coldwater | 1.32 |
| 3 | ChoiceOne Financial Services, Inc. | Sparta | 1.72 |
| 4 | Mackinac Financial Corporation | Manistique | 2.40 |
| 5 | Firstbank Corporation | Alma | 2.42 |
| 6 | Chemical Financial Corporation | Midland | 2.63 |
| 7 | Citizens Republic Bancorp, Inc. | Flint | 2.81 |
| 8 | Wolverine Bancorp, Inc. | Midland | 3.11 |
| 9 | CNB Corporation | Cheboygan | 3.60 |
| 10 | Fentura Financial, Inc. | Fenton | 3.82 |
| 11 | United Bancorp, Inc. | Ann Arbor | 3.89 |
| 12 | Independent Bank Corporation | Ionia | 4.22 |
Note: Total Nonperforming Assets | 13 | Flagstar Bancorp, Inc. | Troy | 4.35 |
("NPAs") exclude restructured loans. | 14 | Community Shores Bank Corporation | Muskegon | 4.89 |
Based on 90+days past due loans + | 15 | Mercantile Bank Corporation | Grand Rapids | 4.98 |
nonaccrual loans + OREO. | 16 | Monarch Community Bancorp, Inc. | Coldwater | 6.64 |
| 17 | MBT Financial Corp. | Monroe | 7.32 |
| 18 | Macatawa Bank Corporation | Holland | 8.45 |
| 19 | Dearborn Bancorp, Inc. | Dearborn | 9.62 |
| 20 | Capitol Bancorp Ltd. | Lansing | 12.02 |
Twenty Largest Public Banks in Michigan
Ranked By Texas Ratio | |
|
Company Name
|
City
| 2010Y
Texas
Ratio | |
1 | Isabella Bank Corporation | Mount Pleasant | 7.4% | |
2 | Southern Michigan Bancorp, Inc. | Coldwater | 17.2% | |
3 | Wolverine Bancorp, Inc. | Midland | 18.9% | |
4 | Mackinac Financial Corporation | Manistique | 19.0% | |
5 | ChoiceOne Financial Services, Inc. | Sparta | 19.3% | |
6 | Chemical Financial Corporation | Midland | 26.2% | |
7 | Firstbank Corporation | Alma | 26.7% | |
8 | United Bancorp, Inc. | Ann Arbor | 28.5% | |
9 | Citizens Republic Bancorp, Inc. | Flint | 28.6% | |
10 | Flagstar Bancorp, Inc. | Troy | 38.7% | |
11 | CNB Corporation | Cheboygan | 39.9% | |
12 | Mercantile Bank Corporation | Grand Rapids | 47.5% | |
13 | Independent Bank Corporation | Ionia | 60.1% | |
14 | Fentura Financial, Inc. | Fenton | 62.1% | |
15 | Monarch Community Bancorp, Inc. | Coldwater | 92.3% | |
16 | MBT Financial Corp. | Monroe | 96.9% | |
17 | Macatawa Bank Corporation | Holland | 116.1% | |
18 | Dearborn Bancorp, Inc. | Dearborn | 160.3% | |
19 | Community Shores Bank Corporation | Muskegon | 206.3% | |
20 | Capitol Bancorp Ltd. | Lansing | 391.3% | |
Note: Texas Ratio = Total Nonperforming Assets / (Tangible Equity + Loan Loss Reserve).
| Excerpts from Southern Michigan Bancorp, Inc. Annual Meeting - May 12, 2011 |
| Twenty Largest Public Banks in Michigan
Ranked By Annual Dividend | |
| |
Company Name
|
City
| Annual
Dividend
($) | |
| 1 | Chemical Financial Corporation | Midland | 0.80 | |
| 2 | Isabella Bank Corporation | Mount Pleasant | 0.76 | |
| 3 | ChoiceOne Financial Services Inc. | Sparta | 0.48 | |
| 4 | Southern Michigan Bancorp, Inc. | Coldwater | 0.20 | |
| 5 | Firstbank Corporation | Alma | 0.04 | |
| 6 | Capitol Bancorp Ltd. | Lansing | 0.00 | |
| 7 | Citizens Republic Bancorp, Inc. | Flint | 0.00 | |
| 8 | CNB Corporation | Cheboygan | 0.00 | |
| 9 | Community Shores Bank Corporation | Muskegon | 0.00 | |
| 10 | Dearborn Bancorp, Inc. | Dearborn | 0.00 | |
| 11 | Fentura Financial, Inc. | Fenton | 0.00 | |
| 12 | Flagstar Bancorp, Inc. | Troy | 0.00 | |
| 13 | Independent Bank Corporation | Ionia | 0.00 | |
| 14 | Macatawa Bank Corporation | Holland | 0.00 | |
| 15 | Mackinac Financial Corporation | Manistique | 0.00 | |
| 16 | MBT Financial Corp. | Monroe | 0.00 | |
| 17 | Mercantile Bank Corporation | Grand Rapids | 0.00 | |
| 18 | Monarch Community Bancorp, Inc. | Coldwater | 0.00 | |
| 19 | United Bancorp, Inc. | Ann Arbor | 0.00 | |
| 20 | Wolverine Bancorp, Inc. | Midland | 0.00 | |
