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):  September 10, 2010

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 September 10, 2010, 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 "will," "likely," "anticipate," "uncertainty," "continuing," "strategic," "in an effort," "may" and variations of such words and similar expressions. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to the state of the regional and national economic environment, the future impact on our business of a prolonged economic recession, additional legislative and regulatory burdens under the Dodd-Frank Act and the implementation of nati onal health care legislation, and future strategic opportunities. Management's determination of the provision and allowance for loan losses involves judgments that are inherently forward-looking. Our ability to successfully implement strategic initiatives, attain efficiency targets, identify and resolve potential problem credit relationships, and build capital is not entirely within our control and is not assured. The future effect of changes in the real estate, 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 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 June 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. We undertake no obligation to update or revise our 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 September 10, 2010.

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:  September 10, 2010	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 September 10, 2010.

EX-99.1

EXHIBIT 99.1

51 West Pearl Street     •     P.O. Box 309     •      Coldwater, Michigan     •      49036

September 10, 2010

To Our Shareholders:

I am pleased to announce that Southern Michigan Bancorp, Inc. earned $803,000, or $.35 per share, for the second quarter of 2010. The financial performance for the period represents the fifth consecutive profitable quarter for the company. For the first six months of 2010, Southern earned $1,505,000, or $.65 per share. Both the quarterly and six-month financial results are substantial increases compared with the same periods of 2009.

The improvements in Southern's financial performance are attributable to our efforts to reduce costs associated with problem loans and to control operating expenses. Southern's provision for loan losses for the second quarter of 2010 was $150,000, a sharp reduction from the $500,000 provision for the second quarter of 2009. Net charge-offs for this year's second quarter totaled $368,000 compared with $766,000 for the same period one year ago. For the first six months of this year, our net charge-offs totaled $699,000 compared with $2,430,000 for the first six months of last year.

Total non-interest expenses for the most recent quarter declined by $317,000 compared with the total for the second quarter of 2009. The reduction was due principally to the absence of a one-time special FDIC deposit insurance assessment imposed on all banks during the second quarter of 2009. Absent deposit insurance assessments, most key operating expense categories have remained relatively flat for the first six months of 2010 compared with a year ago.

Our balance sheet has modestly increased since the beginning of 2010, with total assets rising to $468.8 million through the first six months of this year from $462.4 million. Total deposits during this period of historically low interest rates increased to $385.7 million as of June 30, 2010 from $380.9 million at year-end 2009. Loans, through the comparable period, declined to $324.1 million from $333.1 million. As a result, net interest income for the six-month period ended June 30, 2010 declined minimally to $8.1 million from $8.2 million compared with the same period a year ago. Our net interest margin for the first six months of 2010 was a healthy 4.02 percent, although slightly lower from 4.11 percent for the first six months of 2009.

Southern's consistent levels of profitability and capital strength will position the company to take advantage of growth opportunities likely to emerge with an economic recovery. Our annualized return on average assets for the six-month period ended June 30, 2010 was 0.64 percent, compared with 0.21 percent for the same period last year. The annualized return on average equity was 6.48 percent for the first six months of 2010 compared with 2.13 percent for the same period in 2009. Equally important, our Total and Tier 1 risk-based capital ratios of 12.58 percent and 11.32 percent, respectively, remain comfortably above the regulatory minimums for financial institutions to be categorized as "well-capitalized".

I have discussed with many of you the unprecedented nature and impact of the economic downturn in Michigan, which is now into its third year. Recent passage of the Dodd-

Frank Act represents the most sweeping change to the financial services industry in more than a generation. The Act will establish new oversight agencies and regulatory mandates that are likely to increase Southern's cost of doing business as well as its minimum capital requirements. It is impossible at this time to fully anticipate the impact and costs to Southern of a prolonged economic recession, additional regulatory burdens, and implementation of national health care legislation, among other factors that have created more uncertainty rather than clarity for community banks.

Southern's management team continues to implement strategic initiatives developed since the onset of the economic downturn that emphasize:

Ø	Providing high quality financial services to many underserved market segments throughout our primary service area;
Ø	Streamlining servicing capabilities at both the customer contact and back office areas in an effort to ensure that efficiency targets are attained;
Ø	Promptly identifying and resolving potential problem credit relationships; and
Ø	Building capital in an effort to withstand a prolonged economic slump and to seize strategic opportunities as they may present themselves.

Our management team, employees and directors appreciate your continued support.

Sincerely,

John H. Castle,
Chairman & Chief Executive Officer

517.279.5500     •      800.379.7628     •      www.smb-t.com