STURGIS, MI -- (Marketwired) -- 10/14/15 --Sturgis Bancorp, Inc. (OTCQX: STBI) today announced net income of $534,000 for the third quarter of 2015.
Sturgis Bancorp is the holding company for Sturgis Bank & Trust Company (Bank), and its subsidiaries Oakleaf Financial Services, Inc. and Oak Mortgage, LLC. Sturgis Bancorp provides a full array of trust, commercial and consumer banking services from 12 banking centers in Sturgis, Bangor, Bronson, Centreville, Climax, Colon, South Haven, Three Rivers and White Pigeon, Mich. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oak Mortgage offers residential mortgages in all markets of the Bank.
Key Highlights as of September 30, 2015:
- Net income was $534,000 for the third quarter of 2015, compared to $330,000 for the third quarter of 2014.
- The Bank successfully completed its acquisition of The West Michigan Savings Bank in Bangor, Michigan, which is now operating as a branch office of the Bank.
- The Bank maintained strong capital ratios, exceeding "well-capitalized" requirements, with Tier 1 capital at 8.49%. Total Bank capital at September 30, 2015 was 14.29% of risk-weighted assets.
- Total deposits increased by $43.7 million in the first nine months of 2015, to $277.9 million, mostly due to the $32.6 million deposits assumed in the bank acquisition.
- Nonaccrual and past due loans decreased in the first nine months of 2015.
- Allowance for loan losses was 1.28% of loans, down from 1.43% at the end of 2014.
Three months ended September 30, 2015 vs. three months ended September 30, 2014 - Net income for the three months ended September 30, 2015 was $534,000, or $0.26 per share, compared to net income of $330,000, or $0.16 per share, for the three months ended September 30, 2014. The tax equivalent net interest margin increased to 3.66% in 2015 from 3.65% in 2014.
Net interest income increased by $379,000 in the third quarter of 2015, primarily due to growth in net interest-bearing assets from the bank acquisition and changes in the Bank's investment portfolio.
Noninterest income was $1.4 million in the third quarter of 2015, compared to $1.5 million in the third quarter of 2014, primarily due to lower brokerage commission income. Mortgage banking activities increased to $190,000 in 2015, due to more loans originated for sale.
Noninterest expense was $3.5 million in 2015, compared to $3.2 million in 2014. Salaries and employee benefits increased $106,000, due to higher pension expense and staff for the acquired bank. Data processing expense increased with the acquired accounts now on the Bank's computer system. Real estate owned expense of $242,000 in 2015 included $180,000 written down in the third quarter of 2015, compared to $22,000 written down in the third quarter of 2014.
The Bank provided ($31,000) to the allowance for loan losses in the third quarter of 2015, compared to $307,000 in the same quarter of 2014. Net charge-offs were $15,000 in the third quarter of 2015, compared to $459,000 in the third quarter of 2014.
Nine months ended September 30, 2015 vs. nine months ended September 30, 2014 - Net income for the nine months ended September 30, 2015 was $1.6 million, or $0.79 per share, compared to $1.4 million, or $0.69 per share, in the nine months ended September 30, 2014. The tax equivalent net interest margin decreased to 3.58% in 2015 from 3.59% in 2014.
Noninterest income was $4.7 million in the first nine months of 2015, compared to $3.8 million in the first nine months of 2014. The Bank received $700,000 of death benefit in excess of recorded cash value from bank-owned life insurance in the first half of 2015. Gain on sale of real estate increased to $92,000 in 2015, compared to $10,000 in 2014. Commission income decreased $97,000 to $1.6 million in 2015.
Noninterest expense was $10.7 million in 2015, compared to $9.1 million in 2014. The Bank incurred $563,000 of acquisition-related expense in the first nine months of 2015. Compensation expense increased $541,000, primarily due to pension funding. The Company made an elective additional contribution to fund pension liabilities in 2015, which increased nine-month expense by $274,000, compared to 2014.
The Company provided ($4,000) to the allowance for loan losses in the first nine months of 2015, compared to $112,000 in the first nine months of 2014. Net charge-offs were $138,000 in the first nine months of 2015, compared to $733,000 in the first nine months of 2014.
Total assets increased to $362.3 million at September 30, 2015 from $312.5 million at December 31, 2014, primarily due to $35.3 million from the bank acquisition. Most of the increase was in securities. Loans also increased $17.2 million from December 31, 2014, including $11.2 million from the bank acquisition.
Deposits increased by $43.7 million in the first nine months of 2015, to $277.9 million, mostly due to the $32.6 million deposits assumed in the bank acquisition.
Total equity was $31.8 million at September 30, 2015, compared to $30.4 million at December 31, 2014. Book value per share increased to $15.31 at September 30, 2015 from $14.66 at December 31, 2014.
Acquisition of West Michigan Savings Bank - On April 6, 2015, the Company completed its acquisition of West Michigan Savings Bank in Bangor, Michigan, in an all-cash transaction valued at approximately $3.3 million. Liabilities assumed included $32.6 million of deposits and $690,000 in other liabilities. The assets acquired included $6.1 million of cash and cash equivalents, $17.4 million of available for sale securities, $11.2 million in loans, and $590,000 in other assets. The Company recognized $365,000 core deposit intangible and $962,000 in goodwill. The transaction incurred $755,000 of pre-tax expense, including $563,000 recorded in 2015. Most of the transaction expenses were professional services, data processing termination and conversion, and severance pay.
This release contains statements that constitute forward-looking statements. These statements appear in several places in this release and include statements regarding intent, belief, outlook, objectives, efforts, estimates or expectations of Bancorp, primarily with respect to future events and the future financial performance of the Bancorp. Any such forward-looking statements are not guarantees of future events or performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statement. Factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; government and regulatory policy changes; the outcome of any pending and future litigation and contingencies; trends in consumer behavior and ability to repay loans; and changes of the world, national and local economies. Bancorp undertakes no obligation to update, amend or clarify forward-looking statements as a result of new information, future events, or otherwise. The numbers presented herein are unaudited.
For additional information, visit our website at www.sturgisbank.com.
CONSOLIDATED BALANCE SHEETS
September 30, 2015 and December 31, 2014
(Amounts in thousands, except share and per share data)
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Sept. 30, 2015 Dec. 31, 2014
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ASSETS
Cash and due from banks $ 13,693 $ 7,680
Other short-term investments 5,779 4,369
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Total cash and cash equivalents 19,472 12,049
Interest-earning deposits in banks 16,067 16,575
Securities - Available for sale 28,205 7,044
Securities - Held to maturity 9,520 5,792
Federal Home Loan Bank stock, at cost 2,632 3,409
Loans held for sale 1,487 1,716
Loans, net of allowance of $3,296 and
$3,437 253,530 236,371
Premises and equipment, net 8,190 7,504
Goodwill 6,072 5,109
Core deposit intangible 337 -
Originated mortgage servicing rights 1,370 1,413
Real estate owned 1,036 1,608
Bank-owned life insurance 9,669 9,808
Accrued interest receivable 1,215 868
Other assets 3,518 3,189
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Total assets $ 362,320 $ 312,455
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing $ 67,697 $ 51,383
Interest-bearing 210,251 182,907
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Total deposits 277,948 234,290
Federal Home Loan Bank advances and
other borrowings 43,920 44,218
Accrued interest payable 233 238
Other liabilities 8,441 3,359
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Total liabilities 330,542 282,105
Stockholders' equity
Preferred stock - $1 par value:
authorized - 1,000,000 shares issued
and outstanding - 0 shares
Common stock - $1 par value:
authorized - 9,000,000 shares issued
and outstanding 2,075,841 shares at
Sept. 30, 2015 and 2,069,891 at
December 31, 2014 2,076 2,070
Additional paid-in capital 7,259 7,204
Retained earnings 22,725 21,276
Accumulated other comprehensive income
(loss) (282) (200)
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Total stockholders' equity 31,778 30,350
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Total liabilities and
stockholders' equity $ 362,320 $ 312,455
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CONSOLIDATED STATEMENTS OF INCOME
Three Months ended Sept. 30, 2015 and 2014
(Amounts in thousands, except share and per share data)
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Three Months ended Sept. 30,
2015 2014
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Interest income
Loans $ 3,024 $ 2,779
Investment securities:
Taxable 137 98
Tax-exempt 77 22
Dividends 33 38
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Total interest income 3,271 2,937
Interest expense
Deposits 169 208
Borrowed funds 315 321
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Total interest expense 484 529
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Net interest income 2,787 2,408
Provision for loan losses (31) 307
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Net interest income after provision for loan
losses 2,818 2,101
Noninterest income:
Service charges and other fees 257 257
Interchange income 174 155
Investment brokerage commission income 611 778
Mortgage banking activities 190 119
Trust fee income 75 82
Bank owned life insurance 72 68
Other income 13 30
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Total noninterest income 1,392 1,489
Noninterest expenses:
Salaries and employee benefits 1,932 1,826
Occupancy and equipment 366 379
Interchange expense 100 89
Data processing 204 169
Professional services 100 180
Real estate owned expense 242 67
Advertising 33 37
FDIC premiums 73 57
Other 460 418
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Total noninterest expenses 3,510 3,222
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Income (loss) before income tax expense
(benefit) 700 368
Provision for income tax 166 38
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Net income (loss) $ 534 $ 330
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Earnings per share $ 0.26 $ 0.16
Dividends declared per share $ 0.03 $ 0.02
Key Ratios:
Return on average equity 6.70% 4.44%
Return on average assets 0.59% 0.43%
Net interest margin (tax equivalent) 3.66% 3.64%
CONSOLIDATED STATEMENTS OF INCOME
Nine Months ended September 30, 2015 and 2014
(Amounts in thousands, except share and per share data)
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Nine Months Ended Sept. 30,
2015 2014
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Interest income
Loans $ 8,613 $ 8,333
Investment securities:
Taxable 366 286
Tax-exempt 154 58
Dividends 107 132
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Total interest income 9,240 8,809
Interest expense
Deposits 502 642
Borrowed funds 942 954
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Total interest expense 1,444 1,596
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Net interest income 7,796 7,213
Provision for loan losses (4) 112
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Net interest income after provision for
loan losses 7,800 7,101
Noninterest income:
Service charges and other fees 730 725
Interchange income 494 450
Investment brokerage commission income 1,570 1,667
Mortgage banking activities 525 484
Trust fee income 322 294
Bank owned life insurance 906 202
Other income 131 24
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Total noninterest income 4,678 3,846
Noninterest expenses:
Salaries and employee benefits 5,743 5,202
Occupancy and equipment 1,203 1,162
Interchange expense 283 255
Data processing 657 480
Professional services 387 369
Real estate owned expense 451 242
Advertising 114 118
FDIC premiums 199 172
Other 1,613 1,164
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Total noninterest expenses 10,650 9,164
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Income (loss) before income tax expense
(benefit) 1,828 1,783
Provision for income tax 192 353
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Net income (loss) $ 1,636 $ 1,430
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Earnings per share $ 0.79 $ 0.69
Dividends declared per share $ 0.09 $ 0.06
Key Ratios:
Return on average equity 7.06% 6.57%
Return on average assets 0.64% 0.61%
Net interest margin (tax equivalent) 3.58% 3.59%
Contacts:
Sturgis Bancorp
Eric Eishen
President & CEO
or
Brian P. Hoggatt
CFO
P: 269 651-9345
