8-K

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

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported):  June 5, 2009

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

Michigan
(State or Other Jurisdiction
of Incorporation) 000-49722
(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)).

Item 7.01. Regulation FD Disclosure.

          On June 5, 2009, Southern Michigan Bancorp, Inc. mailed to its shareholders the letter furnished with this report as Exhibit 99.1, which is here incorporated by reference. This Report and the Exhibit are furnished to, and not filed with, the Commission.

Forward-Looking Statements

          The letter 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 that an event or trend "will" or is "likely" or "unlikely" to occur or "continue" or other words or phrases such as "foreseeable", "future", "predict", "belief", "believe" or "optimistic", and variations of such words and similar expressions. Accounting estimates, such as the provision and allowance for loan losses, 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 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, 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. Risk factors include, but are not limited to, the risk factors described in "Item 1A - Risk Factors" of Southern Michigan Bancorp, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008; the timing and level of asset growth; changes in banking laws and regulations; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances and issues; governmental and regulatory policy changes; opportunities for acquisitions and the effective compl etion of acquisitions and integration of acquired entities; the possibility that anticipated cost savings and revenue enhancements from acquisitions, restructurings, reorganizations and bank consolidations may not be realized at amounts projected, at all or within expected time frames; and current uncertainties and fluctuations in the financial markets and stocks of financial services providers due to concerns about credit availability and concerns about the Michigan economy in particular. Southern undertakes no obligation to update or revise any forward-looking statements to reflect developments that occur or information obtained after the date of this report.

Item 9.01.	Financial Statements and Exhibits.
	(d)	Exhibits:
	99.1	Letter mailed June 5, 2009.

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:  June 5, 2009	SOUTHERN MICHIGAN BANCORP, INC.
	By	/s/ Danice L. Chartrand
		Danice L. Chartrand Senior Vice President, Chief Financial Officer, Secretary, and Treasurer

EXHIBIT INDEX

Exhibit Number	Document
99.1	Letter mailed June 5, 2009.

EX-99.1

Exhibit 99.1

To Our Shareholders:

Southern Michigan Bancorp, Inc. incurred a net loss of $271,000, or 12¢ per diluted share, for the first quarter of 2009. Our earnings for the quarter were primarily affected by an increase in loan loss provision expense, totaling $1.1 million, when compared to the first quarter of 2008. The financial results for the quarter compared with the same period last year are included with this letter for your review.

By now you have no doubt been overwhelmed by media reports regarding the economic challenges for our region and the country as a whole, and their impact on the banking industry. Some of the information has been accurate and much has been either incomplete or inaccurate. I would like to use the opportunity of this letter to update you on what we see from our vantage point at Southern with regard to economic conditions in our market area, the impact on Southern's future financial performance, and our actions to return to Southern's historic levels of profitability.

Michigan's economy continues to struggle and recently included the government takeover of Chrysler and General Motors. Very simply, thousands of jobs have been eliminated and are unlikely to be replaced for several years, if at all. Michigan and our market area will likely experience nominal growth at best for the foreseeable future.

Southern's directors and management team have already begun to implement strategies to improve the Company's financial performance. During the first quarter, we consolidated the charters of our two affiliate banks into a single charter and single name: Southern Michigan Bank & Trust. This alone will generate operating expense savings of more than $400,000 per year when fully phased in. Our balance sheet management strategies have enabled us to reduce the Company's exposure to higher cost, non-core funding sources. This will improve our net interest margin, which still remains over 4% and ranks us among the upper end of our peers.

Southern continues to be well capitalized as measured by applicable regulatory standards. The reduction of our quarterly dividend to five cents per share, although a very difficult decision, will increase capital by more than $1.4 million per year. Our capital strength enabled us to avoid participating in the federal government's TARP Capital Purchase Program. After thoroughly analyzing all aspects of the program, our board determined that it would not enhance creation of long-term shareholder value and it would permit the government to dictate business decisions that may not be in the best interests of shareholders.

The turmoil within the banking industry is likely to transform the competitive landscape in ways we cannot predict. However, it is our belief that companies like Southern, with exceptional capital strength, strong core earnings and disciplined decision-making, will emerge as industry leaders. We have already begun to experience growth in high quality business loan and deposit relationships, and in consumer banking services as customers in both sectors seek out strong banking partners. In addition, we believe that our fundamental strengths will allow us to take advantage of geographic expansion opportunities as the pace of consolidation within the banking industry accelerates.

I appreciate your encouragement and support through these challenging times. Despite the preponderance of disappointing news, we are optimistic about the future for both our region and our company. Please feel free to contact me, members of our management team or any of our directors should you have questions or comments.

Sincerely,

/s/ John H. Castle

John H. Castle
Chairman and Chief Executive Officer