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): February 24, 2010

Southern Michigan Bancorp, Inc.
(Exact Name of Registrant as
Specified in its Charter)

Michigan
(State or Other Jurisdiction
of Incorporation) 000-49722
(Commission
File Number) 38-2407501
(IRS Employer
Identification No.)

51 West Pearl Street
Coldwater, MI
(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 (see General Instruction A.2. below):

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 2.02 Results of Operations and Financial Condition.

                    On February 24, 2010, Southern Michigan Bancorp, Inc. issued the press release 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.

Item 9.01	Financial Statements and Exhibits.
	(d)	Exhibits:
		99.1	Press Release, dated February 24, 2010. This Exhibit is furnished to, and not filed with, the Commission.

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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 hereunto duly authorized.

Dated:	February 24, 2010	SOUTHERN MICHIGAN BANCORP, INC.
		/s/ Danice L. Chartrand
		Danice L. Chartrand Senior Vice President, Chief Financial Officer, Secretary, and Treasurer

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EXHIBIT INDEX

Exhibit Number	Document
99.1	Southern Michigan Bancorp, Inc. Press Release, dated February 24, 2010. This Exhibit is furnished to, and not filed with, the Commission.

EX-99.1

EXHIBIT 99.1

SOUTHERN MICHIGAN BANCORP, INC.
51 West Pearl Street
Coldwater, Michigan 49036

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

SOUTHERN MICHIGAN BANCORP, INC. ANNOUNCES FOURTH
QUARTER AND FULL YEAR 2009 EARNINGS

Coldwater, Michigan, February 24, 2010: Southern Michigan Bancorp, Inc. (OTCBB: SOMC.OB) reported net income of $1,936,000 for 2009 compared to $813,000 for 2008. Earnings per share were $0.84 for the full year of 2009 compared to $0.36 in 2008. Fourth quarter 2009 net income was $685,000 compared to a net loss of $758,000 in the fourth quarter of 2008.

Total consolidated assets at December 31, 2009 were $462.4 million compared to $475.0 million at December 31, 2008.

During 2009, Southern added $2,725,000 to its provision for loan losses, with an allowance for loan losses at December 31, 2009 of $6,075,000, or 1.82% of loans. This compared to provision expense of $5,080,000 for 2008, with an allowance at December 31, 2008 of $7,104,000, or 2.12% of loans. The decrease in the provision for loan losses resulted primarily from reduced specific reserves. Net charge-offs totaled $3,754,000 for 2009. Non-performing loans totaled $7,599,000 at December 31, 2009, or 2.28% of total loans, representing a decrease of $1,553,000, or 17.0% from December 31, 2008.

Southern's 4.14% net interest margin for 2009 remained strong when compared to peers. This compared to 4.36% for 2008. The decline in net interest margin was attributable to lower rates being in effect for all of 2009.

Non-interest income for 2009 was $809,000 greater than in 2008. The increase was a result of $682,000 of net securities gains being recorded during the year compared to $15,000 in 2008 and a $420,000 increase in gains recorded from the sale of secondary market loans, offset by the $390,000 reduction of life insurance proceeds recorded in 2008.

Total non-interest expense was flat for 2009 as compared to 2008. For the full year of 2009, FDIC deposit insurance expense increased $676,000 to $855,000, an increase of 377.7% over 2008 premium costs of $179,000. In the second quarter of 2009, Southern was assessed $217,000 by the FDIC as a special assessment paid by all banks to help cover the costs of bank failures. Additionally, on December 30, 2009, Southern paid $2.4 million to the FDIC as a required three year prepayment of FDIC premiums, of which $2.2 million will be expensed over the next three years. Southern was successful in reducing other non-interest expense categories. Salary and employee benefit costs decreased $780,000, or 7.4%, as a result of cost saving initiatives implemented in 2009.

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The annualized return on average assets for 2009 and 2008 was 0.41% and .17%, respectively. The annualized return on average equity was 4.29% for 2009 compared to 1.77% for 2008.

John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "Like most banks during the past year, net income has been adversely affected by higher than historically normal provision for loan losses, extraordinary FDIC premium assessments and OREO property expenses. In spite of the challenging environment, we are pleased to be performing better than many in our industry. Our results, while adequate in this environment, are not at levels we would like to see. We have been proactive throughout 2009 in working with our clients and recognizing credit problems as they occur, as well as looking for efficiencies within our organization. While we are beginning to see some improvement in the credit markets and in economic news, we anticipate a gradual turnaround in economic conditions. We will continue to focus on initiatives to mitigate loss and increase efficiencies during 2010."

Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 18 branches within Branch, Calhoun, Cass, Hillsdale 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 "will", "anticipate" or "continue" and other similar words or expressions. 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, respo nd 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. Additional information about factors that may adversely affect the matters addressed in forward-looking statements are contained in Southern's reports filed with the Securities and Exchange Commission. Other risk factors exist and new risk factors may emerge at any time. Investors should not place undue reliance on forward-looking statements as predictions of future results. Southern undertakes no obligation to update or revise any forward-looking statements to reflect developments or information obtained after the date of this press release.

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SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	December 31, 2009			December 31, 2008
	(In thousands, except share data)
ASSETS
Cash and due from banks	$	24,814		$	27,989
Federal funds sold		2,540			3,320
Securities available for sale		56,948			65,718
Loans held for sale, net of valuation allowance of $0 in 2009 and 2008		605			121
Loans, net of allowance for loan losses of $6,075 in 2009 (2008 - $7,104)		327,004			328,206
Premises and equipment, net		12,914			13,286
Accrued interest receivable		2,054			2,614
Net cash surrender value of life insurance		9,881			9,523
Goodwill		13,422			13,422
Other intangible assets, net		2,355			2,717
Other assets		9,872			8,080
TOTAL ASSETS	$	462,409		$	474,996
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	55,250		$	57,216
Interest bearing		325,655			336,827
Total deposits		380,905			394,043
Securities sold under agreements to repurchase		14,799			13,890
Accrued expenses and other liabilities		4,039			4,272
Other borrowings		10,832			12,492
Subordinated debentures		5,155			5,155
Common stock subject to repurchase obligation in Employee
Stock Ownership Plan, shares outstanding - 101,999 in 2009
(100,392 shares in 2008)		945			728
Total liabilities		416,675			430,580
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-2,323,410 shares in 2009 (2,311,740 shares in 2008)
Outstanding (other than ESOP shares)-2,221,411 shares in 2009                   (2,211,348 shares in 2008)		5,553			5,528
Additional paid-in capital		18,363			18,473
Retained earnings		22,062			20,593
Accumulated other comprehensive income, net		193			413
Unearned Employee Stock Ownership Plan shares		(437	)		(591	)
Total shareholders' equity		45,734			44,416
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	462,409		$	474,996

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SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended December 31,					Twelve Months Ended December 31,
	2009		2008			2009		2008
	(In thousands, except per share amounts)
Interest income:
Loans, including fees	$	4,971	$	5,227		$	19,852	$	22,528
Securities:
Taxable		239		510			1,134		2,100
Tax-exempt		199		227			883		943
Other		27		19			69		358
Total interest income		5,436		5,983			21,938		25,929
Interest expense:
Deposits		1,110		1,539			4,671		6,992
Other		185		288			729		1,197
Total interest expense		1,295		1,827			5,400		8,189
Net Interest Income		4,141		4,156			16,538		17,740
Provision for loan losses		425		2,350			2,725		5,080
Net interest income after provision for loan losses		3,716		1,806			13,813		12,660
Non-interest income:
Service charges on deposit accounts		655		668			2,746		2,744
Trust fees		271		246			987		1,090
Net securities gains		275		-			682		15
Net gains on loan sales		153		41			756		336
Earnings on life insurance assets		107		107			358		363
Income from automated teller machines		189		149			703		624
Gain on life insurance proceeds		-		-			-		390
Other		222		187			940		801
Total non-interest income		1,872		1,398			7,172		6,363
Non-interest expense:
Salaries and employee benefits		2,447		2,605			9,802		10,582
Occupancy, net		304		335			1,351		1,383
Equipment		245		307			917		1,234
Printing, postage and supplies		145		170			615		659
Telecommunication		109		96			372		379
Software maintenance		100		92			415		396
Professional and outside services		355		479			1,354		1,575
Amortization of other intangibles		90		93			362		374
Automated teller machines		417		76			521		297
FDIC deposit assessments		179		122			855		179
Other real estate owned expense		30		90			319		201
Loss on sale of other real estate owned		130		76			318		213
Other		237		106			1,769		1,498
Total non-interest expense		4,788		4,647			18,970		18,970
INCOME (LOSS) BEFORE INCOME TAXES		800		(1,443	)		2,015		53
Federal income tax provision (credit)		115		(685	)		79		(760	)
NET INCOME (LOSS)	$	685	$	(758	)	$	1,936	$	813
Basic Earnings (Loss) Per Common Share	$	0.29	$	(0.33	)	$	0.84	$	0.36
Diluted Earnings (Loss) Per Common Share	$	0.29	$	(0.33	)	$	0.84	$	0.36
Dividends Declared Per Common Share	$	0.05	$	0.20		$	0.20	$	0.80

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