COLDWATER, Mich., Feb. 18, 2011 /PRNewswire/ -- Southern Michigan Bancorp, Inc. (BULLETIN BOARD: SOMC) reported net income of $3,098,000 for 2010 compared to $1,936,000 for 2009. Earnings per share were $1.34 for the full year of 2010 compared to $0.84 in 2009. Fourth quarter 2010 net income was $723,000 compared to $685,000 in the fourth quarter of 2009.
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Total consolidated assets at December 31, 2010 were $493.9 million compared to $462.4 million at December 31, 2009.
During 2010, Southern provided $1,375,000 for loan losses, with an allowance for loan losses at December 31, 2010 of $5,694,000, or 1.84% of loans. This compared to provision expense of $2,725,000 for 2009, with an allowance at December 31, 2009 of $6,075,000, or 1.82% of loans. The decrease in the provision for loan losses resulted primarily from reduced net charge-offs and a reduction in specific reserves on impaired loans. Net charge-offs totaled $1,756,000 for 2010, down from $3,754,000 in 2009. Non-performing loans totaled $5,294,000 at December 31, 2010, or 1.71% of total loans, representing a decrease of $2,305,000, or 30.3% from December 31, 2009.
Southern's 3.95% net interest margin for 2010 remained strong when compared to peers. Southern's net interest margin was 4.14% for 2009. The decrease in net interest margin was attributable to reduced levels of loans in 2010, partially offset by a reduction in deposit rates.
Non-interest income for 2010 was slightly higher at $7,207,000 compared to $7,172,000 in 2009. The increase was primarily a result of increased gains on loan sales and gains on life insurance proceeds, partially offset by reduced service charges on deposit accounts and a reduction in investment security gains.
Total non-interest expense decreased $712,000, or $3.8%, for 2010 as compared to 2009. Professional and outside services expense decreased $413,000, or 30.5%, primarily due to costs associated with merging the two subsidiary banks in 2009. Automated teller machine expense decreased $188,000 in 2010 as compared to 2009, as the merger of the two subsidiary banks facilitated a conversion to one operating system in the fourth quarter of 2009. FDIC deposit insurance assessments were $215,000 lower in 2010 due to a one-time industry-wide special assessment in June of 2009. In addition, other real estate owned (OREO) expenses and loss on the sale of OREO totaled $410,000 for 2010, a decrease of $227,000, or 35.6%, as compared to the 2009 expense of $637,000.
The annualized return on average assets for 2010 and 2009 was 0.65% and 0.41%, respectively. The annualized return on average equity was 6.56% for 2010 compared to 4.29% for 2009.
John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "While we are pleased with both the revenue and expense improvements we achieved from 2009, we remain cautious about the year ahead and the realities facing the banking industry. The recently enacted Dodd-Frank regulatory reform legislation, including the Durbin amendment, and the Healthcare Reform bill, as they are currently written, will add additional complexity, reduce fee income, and add costs to the operations of all community banks."
Castle continued, "While we believe the emergence from the national recession will continue slowly over a prolonged period, 2011 should be a pivotal year for us. We will continue to closely monitor asset quality, as well as look for ways to increase operating efficiencies. Good progress was made in both of these critical areas during 2010, and we will continue to place emphasis on them again in 2011."
Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 17 branches within Branch, Calhoun, Cass, 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 "will", "believe", "should", "continue", "look for" 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 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, 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.
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. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) December December 31, 31, 2010 2009 ---- ---- (In thousands, except share data) ASSETS Cash and due from banks $78,833 $24,814 Federal funds sold 275 2,540 Securities available for sale 59,228 56,948 Loans held for sale 2,637 605 Loans, net of allowance for loan losses of $5,694 in 2010 (2009 -$6,075) 303,830 327,004 Premises and equipment, net 12,599 12,914 Accrued interest receivable 2,107 2,054 Net cash surrender value of life insurance 9,965 9,881 Goodwill 13,422 13,422 Other intangible assets, net 2,005 2,355 Other assets 8,979 9,872 TOTAL ASSETS $493,880 $462,409 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits: Non-interest bearing $59,942 $55,250 Interest bearing 349,959 325,655 ------- ------- Total deposits 409,901 380,905 Securities sold under agreements to repurchase 15,027 14,799 Accrued expenses and other liabilities 4,476 4,039 Other borrowings 10,079 10,832 Subordinated debentures 5,155 5,155 Common stock subject to repurchase obligation in Employee Stock Ownership Plan, shares outstanding - 107,627 in 2010 (101,999 shares in 2009) 1,399 945 ----- --- Total liabilities 446,037 416,675 Shareholders' equity: Preferred stock, 100,000 shares authorized; none issued or outstanding Common stock, $2.50 par value per share: Authorized -4,000,000 shares - - Issued -2,340,717 shares in 2010 (2,323,410 shares in 2009) Outstanding (other than ESOP shares) -2,233,090 shares in 2010 5,583 5,553 (2,221,411 shares in 2009) Additional paid-in capital 18,033 18,363 Retained earnings 24,692 22,062 Accumulated other comprehensive income (loss), net (168) 193 Unearned Employee Stock Ownership Plan shares (297) (437) ---- ---- Total shareholders' equity 47,843 45,734 ------ ------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $493,880 $462,409 ======== ======== SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Year Ended December 31, December 31, 2010 2009 2010 2009 ---- ---- ---- ---- (In thousands, except per share amounts) Interest income: Loans, including fees $4,760 $4,971 $19,187 $19,852 Securities: Taxable 130 239 604 1,134 Tax-exempt 189 199 769 883 Other 56 27 155 69 Total interest income 5,135 5,436 20,715 21,938 ----- ----- ------ ------ Interest expense: Deposits 914 1,110 3,777 4,671 Other 178 185 693 729 Total interest expense 1,092 1,295 4,470 5,400 ----- ----- ----- ----- Net Interest Income 4,043 4,141 16,245 16,538 Provision for loan losses 600 425 1,375 2,725 --- --- ----- ----- Net interest income after provision for loan losses 3,443 3,716 14,870 13,813 Non-interest income: Service charges on deposit accounts 578 655 2,412 2,746 Trust fees 257 271 997 987 Net securities gains - 275 207 682 Net gains on loan sales 617 153 1,301 756 Earnings on life insurance assets 106 107 349 358 Income from automated teller machines 237 189 897 703 Gain on life insurance proceeds - - 156 - Other 236 222 888 940 --- --- --- --- Total non- interest income 2,031 1,872 7,207 7,172 Non-interest expense: Salaries and employee benefits 2,608 2,447 10,075 9,802 Occupancy, net 285 304 1,353 1,351 Equipment 213 245 896 917 Printing, postage and supplies 155 145 592 615 Telecommunication 105 109 386 372 Software maintenance 108 100 410 415 Professional and outside services 256 355 941 1,354 Amortization of other intangibles 88 90 350 362 Automated teller machines 88 417 333 521 FDIC deposit assessments 167 179 640 855 Other real estate owned expense 51 30 195 319 Loss (gain) on sale of other real estate owned (25) 130 215 318 Other 484 237 1,872 1,769 Total non- interest expense 4,583 4,788 18,258 18,970 ----- ----- ------ ------ INCOME BEFORE INCOME TAXES 891 800 3,819 2,015 Federal income tax provision 168 115 721 79 --- --- --- --- NET INCOME $723 $685 $3,098 $1,936 ==== ==== ====== ====== Basic Earnings Per Common Share $0.30 $0.29 $1.34 $0.84 Diluted Earnings Per Common Share $0.30 $0.29 $1.34 $0.84 Dividends Declared Per Common Share $0.05 $0.05 $0.20 $0.20 ===== ===== ===== =====
Southern Michigan Bancorp, Inc.
CONTACT: John H. Castle, CEO, +1-517-279-5500
Web Site: http://www.smb-t.com/
