8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  December 1, 2007

SOUTHERN MICHIGAN BANCORP, INC.
(Exact Name of Registrant as
Specified in Charter)

Michigan
(State or Other Jurisdiction
of Incorporation) 000-49772
(Commission
File Number) 38-2407501
(IRS Employer
Identification No.)

51 West Pearl Street
Coldwater, Michigan
(Address of Principal Executive Offices)
49036
(Zip Code)

Registrant's telephone number,
including area code:  (517) 279-5500

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Explanatory note: On December 6, 2007, Southern Michigan Bancorp, Inc. ("Southern") filed a current report on Form 8-K, dated December 1, 2007, to report the completion of its acquisition of FNB Financial Corporation. Southern is filing this amendment to provide the financial statement information required by Item 9.01 (a) and (b), which it previously omitted as permitted by Item 9.01.

Item 9.01.	Financial Statements and Exhibits.
	The following financial statements, pro forma financial information and exhibits are filed as part of this report.
	(a)	Financial Statements of Businesses Acquired
		The following financial statements of FNB Financial Corporation, as required by Item 9.01(a) of Form 8-K, are filed with this report: Audited financial statements of FNB Financial Corporation as of and for the fiscal years ended December 31, 2006 and December 31, 2005. Previously filed with the Commission on September 28, 2007 in Southern Michigan Bancorp Inc.'s Amendment No. 2 to Form S-4 Registration Statement, pages 160-184. Here incorporated by reference. Unaudited financial statements of FNB Financial Corporation as of and for the three and nine month periods ended September 30, 2007 are filed with this report as Exhibit 99.2 and are here incorporated by reference.
	(b)	Pro Forma Financial Information
		The following pro forma financial information for Southern Michigan Bancorp, Inc. and FNB Financial Corporation is filed with this report: Unaudited pro forma combined condensed consolidated balance sheet as of September 30, 2007 and unaudited pro forma combined condensed consolidated statements of income for the nine months ended September 30, 2007 and for the twelve months ended December 31, 2006 are filed with this report as Exhibit 99.3 and are here incorporated by reference.
	(d)	Exhibits:
	23	Consent of BKD LLP - Former Independent Accounting Firm for FNB Financial Corporation.

- -2-

99.1	Audited financial statements of FNB Financial Corporation as of and for the fiscal years ended December 31, 2006 and December 31, 2005. Previously filed with the Commission on September 28, 2007 in Southern Michigan Bancorp Inc.'s Amendment No. 2 to Form S-4 Registration Statement, pages 160-184. Here incorporated by reference.
99.2	Unaudited financial statements of FNB Financial Corporation as of September 30, 2007 and December 31, 2006 and for the three and nine month periods ended September 30, 2007 and 2006.
99.3	Unaudited pro forma combined condensed consolidated balance sheet as of September 30, 2007 and unaudited pro forma combined condensed consolidated statements of income for the nine months ended September 30, 2007 and for the twelve months ended December 31, 2006.

- -3-

SIGNATURES

                    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:  February 8, 2008	SOUTHERN MICHIGAN BANCORP, INC.
	By	/s/ Danice L. Chartrand
		Danice L. Chartrand Senior Vice President, Chief Financial Officer, Secretary, and Treasurer

- -4-

EXHIBIT INDEX

Exhibit Number	Document
23	Consent of BKD LLP - Former Independent Accounting Firm for FNB Financial Corporation.
99.1	Audited financial statements of FNB Financial Corporation as of and for the fiscal years ended December 31, 2006 and December 31, 2005. Previously filed with the Commission on September 28, 2007 in Southern Michigan Bancorp Inc.'s Amendment No. 2 to Form S-4 Registration Statement, pages 160-184. Here incorporated by reference.
99.2	Unaudited financial statements of FNB Financial Corporation as of September 30, 2007 and December 31, 2006, and for the three and nine month periods ended September 30, 2007 and 2006.
99.3	Unaudited pro forma combined condensed consolidated balance sheet as of September 30, 2007 and unaudited pro forma combined condensed consolidated statements of income for the nine months ended September 30, 2007 and for the twelve months ended December 31, 2006.

EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in this amendment to current report on Form 8-K, dated December 1, 2007, of our report dated February 17, 2007, except for Note 19 as to which the date is August 23, 2007, on our audits of the consolidated financial statements of FNB Financial Corporation as of and for the years ended December 31, 2006 and 2005.

/s/ BKD, LLP
BKD, LLP

Fort Wayne, Indiana
February 6, 2008

EX-99.2

EXHIBIT 99.2

FNB Financial Corporation

Consolidated Financial Statements

FNB Financial Corporation
September 30, 2007 and December 31, 2006

Contents
Consolidated Financial Statements
Balance Sheets	1
Statements of Income	2
Statements of Stockholders' Equity	3
Statements of Cash Flows	4
Notes to Financial Statements	5

FNB Financial Corporation
Consolidated Balance Sheets
September 30, 2007 and December 31, 2006
(Unaudited)

	September 30, 2007			December 31, 2006
Assets
Cash and due from banks	$	4,124,367		$	4,355,333
Interest-bearing demand deposits		127,332			102,468
Federal funds sold		7,256,079			5,597,663
Cash and cash equivalents		11,507,778			10,055,464
Available-for-sale securities		40,020,885			40,084,583
Loans held for sale		359,736			686,288
Loans, net of allowance for loan losses of $1,537,437 and             $1,266,134 at September 30, 2007 and December 31, 2006		80,918,422			91,821,242
Premises and equipment		2,711,305			2,928,507
Federal Reserve and Federal Home Loan Bank stock		923,100			923,100
Life insurance contracts		2,280,441			2,217,483
Interest receivable		906,012			1,000,412
Other assets		1,227,045			1,454,797
Total assets	$	140,854,724		$	151,171,876
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing demand	$	15,797,438		$	18,059,000
Savings, NOW and money market		58,837,894			59,219,328
Time		47,814,246			52,208,093
Total deposits		122,449,578			129,486,421
Short-term borrowings		150,000			-
Long-term borrowings		3,000,000			8,000,000
Interest payable		303,901			306,325
Shares subject to mandatory redemption		-			48,975
Other liabilities		2,334,402			951,565
Total liabilities		128,237,881			138,793,286
Stockholders' Equity
Preferred stock, no par value, authorized 100,000 shares; none                issued and outstanding
Common stock, $1 par value; authorized 1,000,000 shares;                issued and outstanding September 30, 2007 - 573,339 shares,                December 31, 2006 - 574,839		573,339			574,839
Additional paid-in capital		468,000			468,000
Retained earnings		11,591,501			11,508,379
Shares subject to mandatory redemption		-			(48,975	)
Accumulated other comprehensive loss		(15,997	)		(123,653	)
Total stockholders' equity		12,616,843			12,378,590
Total liabilities and stockholders' equity	$	140,854,724		$	151,171,876

See Notes to Consolidated Financial Statements 1

FNB Financial Corporation
Consolidated Statements of Income
Three and Nine Months Ended September 30, 2007 and 2006
(Unaudited)

	Three Months Ended September 30, 2007			Three Months Ended September 30, 2006		Nine Months Ended September 30, 2007			Nine Months Ended September 30, 2006
Interest and Dividend Income
Loans	$	1,587,252		$	1,836,814	$	4,937,007		$	5,556,741
Securities
Taxable		360,878			198,699		1,083,725			556,150
Tax-exempt		94,947			100,289		285,972			276,838
Federal funds sold		74,459			53,934		207,468			107,532
Dividends on Federal Home Loan         and Federal Reserve Bank stock		10,519			11,619		31,439			41,534
Deposits with financial institutions		718			858		2,514			2,329
Total interest and dividend income		2,128,773			2,202,213		6,548,125			6,541,124
Interest Expense
Deposits		819,530			759,216		2,497,111			2,096,939
Short-term borrowings		2,875			---		10,063			1,716
Long-term borrowings		98,698			98,237		279,499			294,735
Total interest expense		921,103			857,453		2,786,673			2,393,390
Net Interest Income		1,207,670			1,344,760		3,761,452			4,147,734
Provision for Loan Losses		620,000			120,000		890,000			360,000
Net Interest Income After Provision for    Loan Losses		587,670			1,224,760		2,871,452			3,787,734
Noninterest Income
Fiduciary activities		102,896			95,332		322,673			302,930
Service charges on deposit accounts		272,703			273,253		783,318			802,109
Other customer fees		86,878			82,640		257,233			244,397
Net gains on loan sales		26,275			29,227		76,431			189,371
Other		50,108			146,674		377,247			402,138
Total noninterest income		538,860			627,126		1,816,902			1,940,945
Noninterest Expense
Salaries and employee benefits		699,522			677,786		2,149,013			2,061,054
Net occupancy expense		101,322			113,203		323,994			349,265
Equipment expense		114,919			126,704		359,121			374,929
Professional fees		150,591			85,332		392,786			198,890
Other		510,761			510,946		1,499,332			1,459,941
Total noninterest expense		1,577,115			1,513,971		4,724,246			4,444,079
Income (loss) Before Income Tax		(450,585	)		337,915		(35,892	)		1,284,600
Provision (credit) for Income Taxes		(196,337	)		63,133		(166,489	)		308,429
Net Income (loss)	$	(254,248	)	$	274,782	$	130,597		$	976,171
Basic Earnings (loss) Per Share	$	(.44	)	$	.48	$	.23		$	1.69
Weighted-Average Shares Outstanding		573,339			576,626		573,339			576,626

See Notes to Consolidated Financial Statements 2

FNB Financial Corporation
Consolidated Statements of Stockholders' Equity
Year Ended December 31, 2006 and Nine Months Ended September 30, 2007
(Unaudited)

	Common Stock				Additional Paid-in	Compre- hensive	Shares Subject to Mandatory		Retained		Accumulated Other Compre- hensive
	Shares		Amount		Capital	Income	Redemption		Earnings		Loss		Total
Balance, January 1, 2006	581,843		$ 581,843		$ 468,000		$ (104,520	)	$11,467,522		$ (313,108	)	$12,099,737
Comprehensive income
Net income						$ 774,180			774,180				774,180
Other comprehensive       income, net of tax,       unrealized gain on       available-for-sale       securities, net of       reclassification       adjustment						189,455					189,455		189,455
Total comprehensive           income						$  963,635
Change in shares subject     to mandatory redemption							(146,925	)					(146,925	)
Redemption of stock	(7,004	)	(7,004	)			202,470		(227,133	)			(31,667	)
Cash dividends ($.88 per     share)									(506,190	)			(506,190	)
Balance, December 31, 2006	574,839		$ 574,839		$ 468,000		$  (48,975	)	$11,508,379		$ (123,653	)	$12,378,590
Comprehensive income
Net income						$  130,597			130,597				130,597
Other comprehensive       gain, net of tax,       unrealized gain on       available-for-sale       securities, net of       reclassification       adjustment						107,656					107,656		107,656
Total comprehensive           income						$ 238,253
Redemption of stock	(1,500	)	(1,500	)			48,975		(47,475	)
Balance, September 30, 2007	573,339		$ 573,339		$ 468,000		$           0		$11,591,501		$  (15,997	)	$12,616,843

See Notes to Consolidated Financial Statements 3

FNB Financial Corporation
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2007 and 2006
(Unaudited)

	2007			2006
Operating Activities
Net income	$	130,597		$	976,171
Items not requiring (providing) cash
Depreciation and amortization		289,137			312,772
Provision for loan losses		890,000			360,000
Amortization of premiums on securities, net		16,428			83,691
Loan fees and costs amortization, net		(42,316	)		(53,066	)
Amortization of mortgage servicing rights		48,179			69,949
Increase in cash value of life insurance contracts		(62,958	)		(63,653	)
Loss on abandonment of premises and equipment		439			4,771
Proceeds from sale of loans held for sale		3,128,305			7,507,719
Originations of loans held for sale		(2,751,231	)		(7,293,459	)
Gain from sale of loans		(50,522	)		(127,876	)
Changes in
Interest receivable		94,400			(202,022	)
Other assets		627,538			95,964
Interest payable		(2,424	)		84,039
Other liabilities		1,382,837			240,928
Net cash provided by operating activities		3,698,409			1,995,928
Investing Activities
Purchases of available-for-sale securities		(8,681,099	)		(7,871,191	)
Proceeds from maturities and calls of available-for-sale securities		8,891,508			4,359,526
Net change in loans		9,551,688			4,416,318
Purchase of premises and equipment		(72,374	)		(224,775	)
Proceeds from sale of FHLB stock		-			149,100
Net cash provided by investing activities		9,689,723			828,978
Financing Activities
Net increase (decrease) in demand deposits, money market,           NOW and savings accounts		(2,642,996	)		(2,079,562	)
Net increase (decrease) in certificates of deposit		(4,393,847	)		4,003,110
Net increase (decrease) in short-term borrowings		150,000			(2,366,994	)
Repayment of long-term borrowings		(5,000,000	)		(1,000,000	)
Redemption of stock		(48,975	)		(185,162	)
Dividends paid		-			(380,386	)
Net cash used in financing activities		(11,935,818	)		(2,008,994	)
Increase in Cash and Cash Equivalents		1,452,314			815,912
Cash and Cash Equivalents, Beginning of Year		10,055,464			5,057,833
Cash and Cash Equivalents, End of Period	$	11,507,778		$	5,873,745
Supplemental Cash Flows Information
Interest paid	$	2,789,097		$	2,309,351
Income taxes paid		171,208			38,605
Noncash investing activity, transfer of loans to foreclosed assets           held for sale		503,448			330,851

See Notes to Consolidated Financial Statements 4

FNB Financial Corporation
Notes to Consolidated Financial Statements

Basis of Presentation

The financial statements of FNB Financial Corporation (Corporation) include the consolidation of its wholly owned subsidiary The First National Bank of Three Rivers. These interim financial statements are unaudited and do not include all disclosures normally provided with annual financial statements. These interim statements should be read in conjunction with the Corporation's annual financial statements and footnotes for the year ended December 31, 2006.

In the opinion of management, these statements reflect all adjustments (consisting of normal recurring adjustments) which are necessary for a fair presentation for the interim periods. The annualized results of operations for the nine months ended September 30, 2007 are not necessarily indicative of the results expected for the full year ending December 31, 2007.

Securities

The amortized cost and approximate fair values of securities are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
Available-for-Sale Securities
September 30, 2007
U.S. government agencies	$	12,673	$	58	$	30	$	12,701
Mortgage-backed securities		8,866		50		123		8,793
Collateralized mortgage obligations		6,393		17		9		6,401
State and political subdivisions		12,113		99		86		12,126
	$	40,045	$	224	$	248	$	40,021
December 31, 2006
U.S. government agencies	$	11,172	$	24	$	100	$	11,096
Mortgage-backed securities		9,150		14		142		9,022
Collateralized mortgage obligations		6,915		17		1		6,931
State and political subdivisions		13,035		126		125		13,036
	$	40,272	$	181	$	368	$	40,085

Loans and Allowance for Loan Losses

Categories of loans at September 30, 2007 and December 31, 2006 include:

	September 30, 2007			December 31, 2006
Commercial and industrial loans	$	16,430		$	18,023
Real estate loans (includes $878 and $3,876 secured by farmland)		56,905			65,638
Construction loans		3,239			3,446
Agricultural production financing and other loans to farmers		1,425			1,457
Individuals' loans for household and other personal expenditures		2,767			2,796
Tax-exempt loans		1,684			1,717
Other		6			10
Total loans		82,456			93,087
Less
Allowance for loan losses		(1,537	)		(1,266	)
Net loans	$	80,919		$	91,821

Activity in the allowance for loan losses was as follows:

	September 30, 2007			September 30, 2006
Balance, beginning of year	$	1,266		$	1,217
Provision charged to expense		890			360
Recoveries of loans		41			43
Loans charged off		(660	)		(220	)
Balance, end of year	$	1,537		$	1,400

Sale of Corporation

On December 1, 2007, the Corporation was merged with and into Southern Michigan Bancorp, Inc. (Southern). Each outstanding share of FNB common stock was converted into the right to receive, at the holder's election, either $45.35 in cash or 1.87 shares of Southern common stock (plus cash in lieu of any fractional share), or a combination of both. All elections were subject to an allocation adjustment, whereby 50% of the outstanding shares of FNB common stock were converted into the right to receive cash and 50% of the outstanding shares of FNB common stock were converted into the right to receive Southern common stock.

EX-99.3

EXHIBIT 99.3

SOUTHERN MICHIGAN BANCORP, INC. AND FNB FINANCIAL CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
As of September 30, 2007
(Dollars in thousands, except per share data)

	Southern			FNB			Pro Forma Adjustments(1)			Pro Forma Combined
ASSETS
Cash and due from banks	$	9,343		$	4,252		$	(5,498	)	$	8,097
Federal funds sold		7,248			7,256			-			14,504
Securities available for sale(2)		57,516			40,944			(139	)		98,321
Loans held for sale		776			360			-			1,136
Loans held in portfolio		252,921			82,456			(223	)		335,154
Allowance for loan losses		(3,394	)		(1,537	)		-			(4,931	)
Loans, net		249,527			80,919			(223	)		330,223
Premises and equipment, net		10,347			2,711			261			13,319
Cash surrender value of life insurance policies		7,636			2,280			-			9,916
Goodwill		620			-			12,035			12,655
Other intangible assets		-			10			3,112			3,122
Other assets		7,896			2,123			-			10,019
Total assets	$	350,909		$	140,855		$	9,548		$	501,312
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing	$	40,640		$	15,798		$	-		$	56,438
Interest bearing		253,156			106,652			(252	)		360,060
Total deposits		293,796			122,450			(252	)		416,498
Federal funds borrowed		8,409			-						8,409
Other borrowings		5,795			3,150			7,982			16,927
Subordinated debentures		5,155			-			-			5,155
Accrued expenses and other liabilities		4,849			2,638			1,217			8,704
Total liabilities		318,004			128,238			9,451			455,693
Common stock subject to repurchase obligation    in ESOP		2,215			- -			- -			2,215
Shareholders' equity
Preferred stock		-			-			-			-
Common stock and additional paid-in capital		9,703			1,041			11,673			22,417
Retained earnings		21,087			11,592			(11,592	)		21,087
Unearned ESOP plan shares		(103	)		-			-			(103	)
Unearned restricted stock compensation		(58	)		-			-			(58	)
Accumulated other comprehensive (loss) income		61			(16	)		16			61
Total shareholders' equity		30,690			12,617			97			43,404
Total liabilities and shareholders' equity	$	350,909		$	140,855		$	9,548		$	501,312

(1)	See Note D for description of adjustments.
(2)	Includes Federal Home Loan Bank stock of $1,162,000 for Southern and Federal Reserve Bank stock of $39,000 and Federal Home Loan Bank stock of $884,000 for FNB.

SOUTHERN MICHIGAN BANCORP, INC. AND FNB FINANCIAL CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Nine Months Ended September 30, 2007
(Dollars in thousands, except per share data)

	Southern		FNB			Pro Forma Adjustments(1)			Pro Forma Combined
Interest income
Loans, including fees	$	15,157	$	4,937		$	102		$	20,196
Securities
Taxable		1,569		1,084			-			2,653
Tax-exempt		461		286			-			747
Other		-		241			-			241
Total interest income		17,187		6,548			102			23,837
Interest expense
Deposits		5,726		2,497			(119	)		8,104
Federal Home Loan Bank advances		-		280			9			289
Other		559		10			392			961
Total interest expense		6,285		2,787			282			9,354
Net interest income		10,902		3,761			(180	)		14,483
Provision for loan losses		345		890			-			1,235
Net interest income after
provision for loan losses		10,557		2,871			(180	)		13,248
Non-interest income
Service charges on deposit accounts		1,406		783			-			2,189
Trust fees		556		323			-			879
Net gains on sales of loans		317		76			-			393
Income earned on life insurance policies		201		69			-			270
Other income		549		566			-			1,115
Total non-interest income		3,029		1,817			-			4,846
Non-interest expense
Salaries and employee benefits		5,624		2,149			-			7,773
Occupancy, net		699		324			5			1,028
Equipment		567		359			-			926
Professional and outside services		506		393			-			899
Printing, postage and supplies		262		127			-			389
Advertising and marketing		-		57			-			57
Amortization of other intangibles		-		3			281			284
Other		1,658		1,312			-			2,970
Total non-interest expense		9,316		4,724			286			14,326
Income (loss) before federal income    taxes		4,270		(36	)		(466	)		3,768
Federal income taxes		1,141		(167	)		(158	)		816
Net income	$	3,129	$	131		$	(308	)	$	2,952

(1) See Note E for description of adjustments.

	Southern		FNB		Pro Forma Adjustments		Pro Forma Combined
Earnings per share
Basic	$	1.77		0.23		-	$	1.28
Diluted	$	1.77		0.23		-	$	1.28
Average shares outstanding
Basic		1,766,294		573,339		536,073		2,302,367
Diluted		1,772,303		573,339		536,073		2,308,376

SOUTHERN MICHIGAN BANCORP, INC. AND FNB FINANCIAL CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Twelve Months Ended December 31, 2006
(Dollars in thousands, except per share data)

	Southern		FNB		Pro Forma Adjustments(1)			Pro Forma Combined
Interest income
Loans, including fees	$	19,475	$	7,350	$	130		$	26,955
Securities
Taxable		1,018		767		-			1,785
Tax-exempt		555		434		-			989
Other		406		211		-			617
Total interest income		21,454		8,762		130			30,346
Interest expense
Deposits		6,083		2,909		(159	)		8,833
Federal Home Loan Bank advances		346		392		12			750
Other		530		1		522			1,053
Total interest expense		6,959		3,302		375			10,636
Net interest income		14,495		5,460		(245	)		19,710
Provision for loan losses		500		1,195		-			1,695
Net interest income after
provision for loan losses		13,995		4,265		(245	)		18,015
Non-interest income
Customer service charges		1,838		1,057		-			2,895
Trust fees		709		385		-			1,094
Net gains on sales of loans		627		262		-			889
Net securities gains		1		6		-			7
Income earned on life insurance policies		272		92		-			364
Other income		658		750		-			1,408
Total non-interest income		4,105		2,552		-			6,657
Non-interest expense
Salaries and employee benefits		7,041		2,794		-			9,835
Occupancy		766		462		7			1,235
Equipment		756		493		-			1,249
Professional and outside services		951		306		-			1,257
Printing, postage and supplies		373		181		-			554
Advertising and marketing		284		98		-			382
Amortization of other intangibles		22		4		374			400
Other		2,407		1,570		-			3,977
Total non-interest expense		12,600		5,908		381			18,889
Income before federal income taxes		5,500		909		(626	)		5,783
Federal income taxes		1,491		135		(213	)		1,413
Net income	$	4,009	$	774	$	(413	)	$	4,370

(1) See Note E for description of adjustments.

	Southern		FNB		Pro Forma Adjustments		Pro Forma Combined
Earnings per share
Basic	$	2.27	$	1.35		-	$	1.90
Diluted	$	2.26	$	1.35		-	$	1.89
Average shares outstanding
Basic		1,764,532		575,440		536,073		2,300,605
Diluted		1,770,835		575,440		536,073		2,306,908

NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION

The unaudited pro forma combined condensed consolidated financial statements have been prepared assuming that the merger will be accounted for under the purchase method of accounting. The unaudited pro forma combined condensed consolidated statements of income for the year ended December 31, 2006 and the nine months ended September 30, 2007 are presented as if the merger occurred at the beginning of the period. The unaudited pro forma combined condensed consolidated balance sheet as of September 30, 2007 is presented as if the merger occurred as of that date. This information is not intended to reflect the actual results that would have been achieved had the merger actually occurred on those dates. Southern is in the process of completing its review of FNB's accounting policies. After this review is completed, Southern might determine that it is necessary to restate certain amounts in the financial statements of FNB to conform to Southern's accounting policies.

NOTE B - SOURCES OF FUNDS AND PURCHASE PRICE

Under the terms of the plan of merger, each outstanding share of FNB common stock was converted into the right to receive, at the holder's election, either $45.35 in cash or 1.87 shares of Southern common stock (plus cash in lieu of any fractional share), or a combination of both. All elections were subject to an allocation adjustment, whereby 50% of the outstanding shares of FNB common stock were converted into the right to receive cash and 50% of the outstanding shares of FNB common stock were converted into the right to receive Southern common stock. Southern funded the cash portion of the merger consideration with a combination of a cash dividend from Southern Michigan Bank & Trust and loan proceeds of approximately $8,000,000. Southern Michigan Bank & Trust funded the cash dividend from existing cash reserves and cash equivalent investments.

NOTE C - ALLOCATION OF PURCHASE PRICE OF FNB

Under purchase accounting, FNB's assets and liabilities and any identifiable intangible assets are required to be adjusted to their estimated fair values. The estimated fair values have been determined by Southern based upon available information from FNB. Southern cannot be sure that such estimated values represent the fair value that will ultimately be determined as of the merger date. The following are the pro forma adjustments made to record the transaction and to adjust FNB's assets and liabilities to their estimated fair values at September 30, 2007.

Purchase Price of FNB:
(Dollars in thousands)
Market value (assuming market value per share of $23.95)
of Southern common stock to be issued	$	12,839
Cash to holders of FNB common stock		13,000
Offering costs		(125	)
Merger costs		498
Total purchase price	$	26,212
Historical net assets of FNB as of September 30, 2007	$	12,617
Adjustments:
Accrual of remaining professional fees		(259	)
Accrual of severance and health care plan benefits		(15	)
Write-off FNB's intangible		(10	)
Tax benefit of above adjustments (excluding non-deductible professional fees)		5
Adjusted net assets of FNB		12,338
Fair market value adjustments as of September 30, 2007:
Loans held in portfolio		(223	)
Securities		(139	)
Premises and equipment, net		261
Goodwill		12,035
Core deposit intangible		3,122
Fixed rate certificates of deposit		(252	)
Advances from the Federal Home Loan Bank		18
Deferred taxes on purchase accounting adjustments		(948	)
	$	26,212

All of the other asset and liability categories are either variable rate or short-term in nature and fair market adjustments were considered to be immaterial to the financial presentation. The purchase price adjustments are subject to further refinement, including the determination of a core deposit intangible and its life for amortization purposes. In accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations," and No. 142, "Goodwill and Other Intangible Assets," goodwill and intangible assets with indefinite lives are not amortized for acquisitions initiated after June 30, 2001; therefore, no goodwill amortization is presented in the pro forma financial statements. However, the core deposit intangible will be amortized over its estimated life of 10 years and recorded as a charge to operations.

Southern's cost estimates are forward-looking. While the costs represent Southern's current estimate of merger costs associated with the merger that will be incurred, the ultimate level and timing of recognition of these costs will be based on the final integration in connection with completion of the merger. Readers are cautioned that the completion of this integration and other actions that may be taken in connection with the merger will impact these estimates. The type and amount of actual costs incurred could vary materially from these estimates if future developments differ from the underlying assumptions used by management in determining the current estimate of these costs.

NOTE D - PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET ADJUSTMENTS

For purposes of determining the pro forma effect of the merger on the balance sheet, the following pro forma adjustments have been made as if the acquisition occurred as of September 30, 2007:

(Dollars in thousands)

Cash received from line of credit	$	8,000
Cash disbursed for Purchase Price		(13,000	)
Cash disbursed for Merger costs		(498	)
Fair market value adjustment for loans held in portfolio		(223	)
Fair market value adjustment for securities		(139	)
Fair market value adjustment for premises and equipment, net		261
Write-off of FNB's intangible		(10	)
Recognition of goodwill caused by Merger		12,035
Recognition of core deposit intangible		3,122
	$	9,548
Fair market value adjustment of fixed rate certificates of deposit	$	252
Fair market value adjustment of advances from the Federal Home Loan Bank		(18	)
Line of credit funding		8,000
Accrual of remaining professional fees, severance and benefits		274
Deferred tax effect of Merger costs		(5	)
Deferred tax effect of fair market value adjustments		948
Market value of Southern common stock to be issued		12,714
Elimination of FNB common stock and paid-in capital balance		(1,041	)
Elimination of remaining FNB retained earnings balance		(11,592	)
Elimination of FNB accumulated other comprehensive (loss) income balance		16
	$	9,548

NOTE E - PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF INCOME ADJUSTMENTS

For purposes of determining the pro forma effect of the merger on the statement of income, the following pro forma adjustments have been made as if the acquisition occurred as of January 1, 2007 and 2006, respectively:

	Nine Months Ended September 30, 2007			Year Ended December 31, 2006
	(Dollars in thousands)
Yield adjustment for fair market value adjustment of loans held in     portfolio	$	102		$	130
Cost adjustment for fair market value adjustment of fixed rate time     deposits		119			159
Cost adjustment for fair market value adjustment of Federal Home     Loan Bank advances		(9	)		(12	)
Interest expense increase due to line of credit		(392	)		(522	)
Amortization of fair market adjustment of bank premises and     equipment		(5	)		(7	)
Amortization of core deposit intangible		(281	)		(374	)
		(466	)		(626	)
Tax effect of pro forma adjustments		158			213
Total pro-forma effect on net income	$	(308	)	$	(413	)

Taxes were adjusted for pro forma purposes at a 34% rate for all income statement adjustments.

Basic and diluted average shares outstanding were calculated by adding the shares assumed to be issued by Southern in the merger (536,073 shares) to the historical average Southern shares outstanding for the nine months ended September 30, 2007 and for the year ended December 31, 2006.

The following assumptions were used for purposes of determining the pro forma effect of the merger on the statement of income. In accordance with Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," goodwill will not be amortized, but will be reviewed for impairment at least annually.

	Weighted Average Remaining Term/ Useful Life in Years	Method of Amortization or Accretion
Loans held in portfolio	1	Accelerated(1)
Premises and equipment, net	40	Straight line
Core deposit intangible assets	10	Accelerated(1)
Interest-bearing deposits	1	Accelerated(1)
Advances from the Federal Home Loan Bank	4	Accelerated(1)

(1) Amortization or accretion will be based on the estimated life of the asset or liability category.

NOTE F - PRO FORMA FINANCIAL PRESENTATION AND POTENTIAL FINANCIAL BENEFITS

Southern and FNB anticipate that the merger will provide the combined organization with financial benefits that could include reduced operating expenses and enhanced opportunities to earn more revenue. Due to the uncertainty of the realization of the benefits, their effect has not been included in the pro forma financial statements.