Southern Michigan Bancorp (SOMC) 8-K Southern Michigan Bancorp, Inc. Announces Second Quarter 2011 Earnings

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 2011 EARNINGS

Coldwater, Michigan, July 22, 2011: Southern Michigan Bancorp, Inc. (OTCBB: SOMC.OB) announced second quarter net income of $762,000, or $0.33 per diluted share, for the three months ended June 30, 2011. This compares to net income of $803,000, or $0.35 per diluted share, for the three months ended June 30, 2010. Southern's net income for the six months ended June 30, 2011, was $1,510,000, or $0.65 per diluted share, compared to net income of $1,505,000, or $0.65 per diluted share, for the same six month period a year ago.

Total consolidated assets at June 30, 2011 were $481.3 million compared to $493.9 million at December 31, 2010.

Southern provided $375,000 for loan losses during the second quarter of 2011 compared to a $150,000 provision for the second quarter of 2010. The increase in the provision for loan losses resulted from increased net charge offs. Net charge offs totaled $549,000 during the second quarter of 2011 compared to $368,000 in the second quarter of 2010. For the six month period ended June 30, 2011, net charge offs totaled $792,000 compared to $699,000 for the same six month period in 2010.

The annualized return on average assets for the six month periods ended June 30, 2011 and 2010 was 0.61% and 0.64%, respectively. The annualized return on average equity was 6.17% for the first six months of 2011 compared to 6.48% for the same period of 2010.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "While uncertain economic conditions continue to exist, Southern continues to be well positioned for future growth and profitability. Earnings results, although not where we would like them to be, remained stable. Asset quality indicators have improved with delinquencies down 98 basis points to 2.41% at June 30, 2011 as compared to 3.39% at June 30, 2010, and non-performing assets, including non-accrual loans, loans past due 90 days and OREO, are down 19.7%, or $1,812,000, during the same period. In addition, we are pleased with the progress we are making with cost saving initiatives which were implemented earlier this year."

Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 15 branches within Branch, Calhoun, Hillsdale and St. Joseph Counties, providing 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," "continue," "well positioned," "future," and other similar words or phrases. 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 future growth and profitability and the future effect of cost saving measures. 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 other real estate owned, 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 sell other-real-estate owned at its carrying value or at all, 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 materially differ from what may be expressed or forecasted in such forward-looking statements. 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.

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, 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.
CONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)

(In thousands, except share data)

	June 30, 2011			December 31, 2010
ASSETS
Cash and cash equivalents	$	44,935		$	78,833
Federal funds sold		312			275
Securities available for sale		88,015			59,228
Loans held for sale		608			2,637
Loans, net of allowance for loan losses of $5,402 - 2011 ($5,694 - 2010)		300,219			303,830
Premises and equipment, net		12,397			12,599
Accrued interest receivable		2,053			2,107
Net cash surrender value of life insurance		10,129			9,965
Goodwill		13,422			13,422
Other intangible assets, net		1,836			2,005
Other assets		7,394			8,979
TOTAL ASSETS	$	481,320		$	493,880
LIABILITIES
Deposits :
Non-interest bearing	$	60,911		$	59,942
Interest bearing		336,204			349,959
Total deposits		397,115			409,901
Securities sold under agreements to repurchase and overnight borrowings		15,171			15,027
Accrued expenses and other liabilities		4,077			4,476
Other borrowings		8,676			10,079
Subordinated debentures		5,155			5,155
Common stock subject to repurchase obligation in Employee
Stock Ownership Plan, shares outstanding - 110,506 in 2011
(107,627 shares in 2010)		1,381			1,399
Total liabilities		431,575			446,037
SHAREHOLDERS' EQUITY
Preferred stock, 100,000 shares authorized; none issued or outstanding		-			-
Common stock, $2.50 par value:
Authorized - 4,000,000 shares
Issued - 2,358,599 shares in 2011 (2,340,717 shares in 2010)
Outstanding (other than ESOP shares) - 2,248,093 shares in 2011           (2,233,090 shares in 2010)		5,620			5,583
Additional paid-in capital		18,084			18,033
Retained earnings		25,967			24,692
Accumulated other comprehensive income (loss), net		339			(168	)
Unearned Employee Stock Ownership Plan shares		(265	)		(297	)
Total shareholders' equity		49,745			47,843
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	481,320		$	493,880

SOUTHERN MICHIGAN BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Interest income:
Loans, including fees	$	4,386	$	4,748	$	8,847	$	9,549
Federal funds sold and balances with banks		47		34		98		57
Securities:
Taxable		171		142		309		323
Tax-exempt		218		198		434		402
Total interest income		4,822		5,122		9,688		10,331
Interest expense:
Deposits		803		934		1,647		1,935
Other		148		175		307		343
Total interest expense		951		1,109		1,954		2,278
Net interest income		3,871		4,013		7,734		8,053
Provision for loan losses		375		150		500		350
Net interest income after provision for loan losses		3,496		3,863		7,234		7,703
Non-interest income:
Service charges on deposit accounts		568		612		1,079		1,182
Trust fees		293		243		568		496
Net gains on security calls and sales		-		207		2		207
Net gains on loan sales		205		161		522		281
Earnings on life insurance assets		84		76		164		150
Gain on life insurance proceeds		-		-		-		156
Income from loan servicing		128		85		225		163
ATM and debit card fee income		257		218		492		425
Other		119		112		257		278
Total non-interest income		1,654		1,714		3,309		3,338
Non-interest expense:
Salaries and employee benefits		2,346		2,437		4,884		4,938
Occupancy, net		336		363		709		744
Equipment		204		233		407		454
Printing, postage and supplies		102		146		243		291
Telecommunication expenses		98		96		197		174
Professional and outside services		199		232		420		525
FDIC assessments		110		147		275		316
Software maintenance		110		97		215		208
Amortization of other intangibles		84		88		169		175
Expenses relating to OREO property		86		154		131		352
ATM expenses		92		83		174		164
Other		421		481		820		906
Total non-interest expense		4,188		4,557		8,644		9,247
INCOME BEFORE INCOME TAXES		962		1,020		1,899		1,794
Federal income tax provision		200		217		389		289
NET INCOME	$	762	$	803	$	1,510	$	1,505
Basic Earnings Per Common Share	$	0.33	$	0.35	$	0.65	$	0.65
Diluted Earnings Per Common Share		0.33		0.35		0.65		0.65
Dividends Declared Per Common Share		0.05		0.05		0.10		0.10