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 18, 2011

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 18, 2011, 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 18, 2011. 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 18, 2011	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	Press Release, dated February 18, 2011. 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 2010 EARNINGS

Coldwater, Michigan, February 18, 2011: Southern Michigan Bancorp, Inc. (OTCBB: SOMC.OB) reported net income of $3,098,000 for 2010 compared to $1,936,000 for 2009. Earnings per share were $1.34 for the full year of 2010 compared to $0.84 in 2009. Fourth quarter 2010 net income was $723,000 compared to $685,000 in the fourth quarter of 2009.

Total consolidated assets at December 31, 2010 were $493.9 million compared to $462.4 million at December 31, 2009.

During 2010, Southern provided $1,375,000 for loan losses, with an allowance for loan losses at December 31, 2010 of $5,694,000, or 1.84% of loans. This compared to provision expense of $2,725,000 for 2009, with an allowance at December 31, 2009 of $6,075,000, or 1.82% of loans. The decrease in the provision for loan losses resulted primarily from reduced net charge-offs and a reduction in specific reserves on impaired loans. Net charge-offs totaled $1,756,000 for 2010, down from $3,754,000 in 2009. Non-performing loans totaled $5,294,000 at December 31, 2010, or 1.71% of total loans, representing a decrease of $2,305,000, or 30.3% from December 31, 2009.

Southern's 3.95% net interest margin for 2010 remained strong when compared to peers. Southern's net interest margin was 4.14% for 2009. The decrease in net interest margin was attributable to reduced levels of loans in 2010, partially offset by a reduction in deposit rates.

Non-interest income for 2010 was slightly higher at $7,207,000 compared to $7,172,000 in 2009. The increase was primarily a result of increased gains on loan sales and gains on life insurance proceeds, partially offset by reduced service charges on deposit accounts and a reduction in investment security gains.

Total non-interest expense decreased $712,000, or $3.8%, for 2010 as compared to 2009. Professional and outside services expense decreased $413,000, or 30.5%, primarily due to costs associated with merging the two subsidiary banks in 2009. Automated teller machine expense decreased $188,000 in 2010 as compared to 2009, as the merger of the two subsidiary banks facilitated a conversion to one operating system in the fourth quarter of 2009. FDIC deposit insurance assessments were $215,000 lower in 2010 due to a one-time industry-wide special assessment in June of 2009. In addition, other real estate owned (OREO) expenses and loss on the sale of OREO totaled $410,000 for 2010, a decrease of $227,000, or 35.6%, as compared to the 2009 expense of $637,000.

The annualized return on average assets for 2010 and 2009 was 0.65% and 0.41%, respectively. The annualized return on average equity was 6.56% for 2010 compared to 4.29% for 2009.

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John H. Castle, Chairman and Chief Executive Officer of Southern Michigan Bancorp, Inc., stated, "While we are pleased with both the revenue and expense improvements we achieved from 2009, we remain cautious about the year ahead and the realities facing the banking industry. The recently enacted Dodd-Frank regulatory reform legislation, including the Durbin amendment, and the Healthcare Reform bill, as they are currently written, will add additional complexity, reduce fee income, and add costs to the operations of all community banks."

Castle continued, "While we believe the emergence from the national recession will continue slowly over a prolonged period, 2011 should be a pivotal year for us. We will continue to closely monitor asset quality, as well as look for ways to increase operating efficiencies. Good progress was made in both of these critical areas during 2010, and we will continue to place emphasis on them again in 2011."

Southern Michigan Bancorp, Inc. is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 17 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", "believe", "should", "continue", "look for" and other similar words or expressions. All statements with reference to a future time period are forward-looking. 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, respond 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. 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, extend, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed in or implied by such forward-looking statements. Southern Michigan Bancorp, Inc. does not undertake to update forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the 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 September 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.

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

	December 31, 2010			December 31, 2009
	(In thousands, except share data)
ASSETS
Cash and due from banks	$	78,833		$	24,814
Federal funds sold		275			2,540
Securities available for sale		59,228			56,948
Loans held for sale		2,637			605
Loans, net of allowance for loan losses of $5,694 in 2010 (2009 - $6,075)		303,830			327,004
Premises and equipment, net		12,599			12,914
Accrued interest receivable		2,107			2,054
Net cash surrender value of life insurance		9,965			9,881
Goodwill		13,422			13,422
Other intangible assets, net		2,005			2,355
Other assets		8,979			9,872
TOTAL ASSETS	$	493,880		$	462,409
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	59,942		$	55,250
Interest bearing		349,959			325,655
Total deposits		409,901			380,905
Securities sold under agreements to repurchase		15,027			14,799
Accrued expenses and other liabilities		4,476			4,039
Other borrowings		10,079			10,832
Subordinated debentures		5,155			5,155
Common stock subject to repurchase obligation in Employee
Stock Ownership Plan, shares outstanding - 107,627 in 2010
(101,999 shares in 2009)		1,399			945
Total liabilities		446,037			416,675
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-2,340,717 shares in 2010 (2,323,410 shares in 2009)
Outstanding (other than ESOP shares)-2,233,090 shares in 2010                   (2,221,411 shares in 2009)		5,583			5,553
Additional paid-in capital		18,033			18,363
Retained earnings		24,692			22,062
Accumulated other comprehensive income (loss), net		(168	)		193
Unearned Employee Stock Ownership Plan shares		(297	)		(437	)
Total shareholders' equity		47,843			45,734
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	493,880		$	462,409

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

	Three Months Ended December 31,					Year Ended December 31,
	2010			2009		2010		2009
	(In thousands, except per share amounts)
Interest income:
Loans, including fees	$	4,760		$	4,971	$	19,187	$	19,852
Securities:
Taxable		130			239		604		1,134
Tax-exempt		189			199		769		883
Other		56			27		155		69
Total interest income		5,135			5,436		20,715		21,938
Interest expense:
Deposits		914			1,110		3,777		4,671
Other		178			185		693		729
Total interest expense		1,092			1,295		4,470		5,400
Net Interest Income		4,043			4,141		16,245		16,538
Provision for loan losses		600			425		1,375		2,725
Net interest income after provision for loan losses		3,443			3,716		14,870		13,813
Non-interest income:
Service charges on deposit accounts		578			655		2,412		2,746
Trust fees		257			271		997		987
Net securities gains		-			275		207		682
Net gains on loan sales		617			153		1,301		756
Earnings on life insurance assets		106			107		349		358
Income from automated teller machines		237			189		897		703
Gain on life insurance proceeds		-			-		156		-
Other		236			222		888		940
Total non-interest income		2,031			1,872		7,207		7,172
Non-interest expense:
Salaries and employee benefits		2,608			2,447		10,075		9,802
Occupancy, net		285			304		1,353		1,351
Equipment		213			245		896		917
Printing, postage and supplies		155			145		592		615
Telecommunication		105			109		386		372
Software maintenance		108			100		410		415
Professional and outside services		256			355		941		1,354
Amortization of other intangibles		88			90		350		362
Automated teller machines		88			417		333		521
FDIC deposit assessments		167			179		640		855
Other real estate owned		51			30		195		319
Loss(gain) on sale of other real estate owned		(25	)		130		215		318
Other		484			237		1,872		1,769
Total non-interest expense		4,583			4,788		18,258		18,970
INCOME BEFORE INCOME TAXES		891			800		3,819		2,015
Federal income tax provision		168			115		721		79
NET INCOME	$	723		$	685	$	3,098	$	1,936
Basic Earnings Per Common Share	$	0.30		$	0.29	$	1.34	$	0.84
Diluted Earnings Per Common Share	$	0.30		$	0.29	$	1.34	$	0.84
Dividends Declared Per Common Share	$	0.05		$	0.05	$	0.20	$	0.20

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