Southern Michigan Bancorp, Inc. Announces Fourth Quarter and Full Year 2021 Earnings

Southern Michigan Bancorp Inc

COLDWATER, Mich., Feb. 11, 2022 (GLOBE NEWSWIRE) -- Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) reported net income of $11,757,000 for 2021 compared to $7,386,000 for 2020. Diluted earnings per share were $2.58 for 2021 compared to $1.61 for 2020 after adjusting for the 100 percent stock dividend issued in May 2021. Fourth quarter 2021 net income was $2,522,000, or $0.56 per share, compared to $2,024,000, or $0.44 per share for the fourth quarter of 2020.

Total consolidated assets at December 31, 2021 increased 16.4 percent, reaching $1.16 billion compared to $997.6 million at December 31, 2020. Loan totals grew 16.6 percent, from December 31, 2020 levels of $635.9 million to $741.4 million. Deposits also increased to $974.4 million at December 31, 2021, an increase of $136.1 million or 16.2 percent, as compared to year end 2020.

Southern Michigan Bancorp, Inc., Chairman and Chief Executive Officer John H. Castle stated, “Net income was a record for the year, 36.4 percent higher than the previous high of $8,622,000 reported in 2019. Total assets, loans and deposits also continued to grow, expanding to new record highs at year end 2021. Excluding the forgiveness of $46.9 million of PPP loans during the year, loan growth exceeded $150 million. Additionally, the commercial loan pipeline remains strong. With liquidity remaining elevated, continued loan growth will be a key to positive earnings momentum in 2022.”

Southern provided $1.5 million for loan losses in 2021, with an allowance for loan losses at December 31, 2021 of $9,320,000, or 1.26% of loans. This compared to a provision for loan losses of $2.6 million for 2020, with an allowance for loan losses at December 31, 2020 of $7,789,000, or 1.22% of loans. Net loan loss recoveries totaled $31,000 for 2021 compared to $5,000 for 2020.

The return on average assets for 2021 was 1.06% compared to 0.82% for 2020. The return on average equity was 12.32% for 2021 compared to 8.36% for 2020. The tax equivalent net interest margins for 2021 and 2020 were 3.27% and 3.24%, respectively.

Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 13 branches within Branch, Calhoun, Hillsdale, Kalamazoo 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. Forward-looking statements are identifiable by words or phrases such as “expected,” “begin,” and other similar words or expressions. All statements with reference to a future time period are forward-looking. Management’s determination of the provision and allowance for loan losses and other accounting estimates, such as the carrying value of goodwill, other real estate owned 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-looking. There can be no assurance that future loan losses will be limited to the amounts estimated. Our ability to successfully implement new programs and initiatives, increase efficiencies, maintain our current level of deposits and other sources of funding, respond to declines in collateral values and credit quality, and improve profitability is not entirely within our control and is not assured. 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.

Southern Michigan Bancorp, Inc. Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)
	December 31, 2021				December 31, 2020
ASSETS
Cash and cash equivalents	$	119,389			$	99,610
Federal funds sold		271				231
Securities available for sale		245,846				208,380
Loans held for sale		1,146				1,691
Loans, net of allowance for loan losses of $9,320 - 2021 ($7,789 – 2020)		732,088				628,081
Premises and equipment, net		13,115				13,698
Accrued interest receivable		4,193				4,749
Net cash surrender value of life insurance		18,671				16,016
Goodwill		13,422				13,422
Other intangible assets, net		219				255
Other assets		12,794				11,441
TOTAL ASSETS	$	1,161,154			$	997,574
LIABILITIES
Deposits :
Non-interest bearing	$	262,980			$	220,786
Interest bearing		711,372				617,512
Total deposits		974,352				838,298
Securities sold under agreements to repurchase and overnight borrowings		20,609				20,083
Accrued expenses and other liabilities		13,930				14,561
Other borrowings		20,000				26,500
Subordinated debentures		34,514				5,155
Total liabilities		1,063,405				904,597
SHAREHOLDERS’ EQUITY
Preferred stock, 100,000 shares authorized; none issued or outstanding		-				-
Common stock, $2.50 par value:
Authorized - 10,000,000 shares
Issued and outstanding – 4,516,377 shares in 2021 (2,301,269 shares in 2020)		11,287				5,748
Additional paid-in capital		14,235				15,416
Retained earnings		71,581				67,741
Accumulated other comprehensive income, net		856				4,362
Unearned Employee Stock Ownership Plan shares		(210	)			(290	)
Total shareholders’ equity		97,749				92,977
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,161,154			$	997,574

Southern Michigan Bancorp, Inc. condensed consolidated statements of income (unaudited) (In thousands, except per share data)
	Three Months Ended December 31,						Year Ended December 31,
	2021			2020			2021			2020
Interest income:
Loans, including fees	$	8,535		$	7,202		$	32,593		$	28,377
Federal funds sold and balances with banks		41			33			148			314
Securities:
Taxable		843			643			3,330			2,482
Tax-exempt		269			185			1,069			645
Total interest income		9,688			8,063			37,140			31,818
Interest expense:
Deposits		485			800			2,268			4,025
Other		460			246			1,553			1,116
Total interest expense		945			1,046			3,821			5,141
Net interest income		8,743			7,017			33,319			26,677
Provision for loan losses		450			350			1,500			2,600
Net interest income after provision for loan losses		8,293			6,667			31,819			24,077
Non-interest income:
Service charges on deposit accounts		373			334			1,286			1,373
Trust fees		586			513			2,267			2,048
Net gains on loan sales		381			636			2,293			2,389
Earnings on life insurance assets		184			98			695			383
ATM and debit card fee income		463			394			1,823			1,543
Other		173			236			645			642
Total non-interest income		2,160			2,211			9,009			8,378
Non-interest expense:
Salaries and employee benefits		4,612			4,157			16,492			14,580
Occupancy, net		368			352			1,565			1,519
Equipment		313			300			1,174			1,180
Printing, postage and supplies		100			84			390			386
Telecommunication expenses		90			89			356			451
Professional and outside services		596			423			1,814			1,532
Software maintenance		449			400			1,677			1,552
ATM expenses		177			138			670			578
Other		771			497			2,570			1,888
Total non-interest expense		7,476			6,440			26,708			23,666
INCOME BEFORE INCOME TAXES		2,977			2,438			14,120			8,789
Federal income tax provision		455			414			2,363			1,403
NET INCOME	$	2,522		$	2,024		$	11,757		$	7,386
Basic Earnings Per Common Share	$	0.56		$	0.44		$	2.59		$	1,61
Diluted Earnings Per Common Share		0.56			0.44			2.58			1.61
Dividends Declared Per Common Share		0.12			0.12			0.48			0.46

CONTACT: CONTACT: John H. Castle, CEO (517) 279-5500