-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UKDLDzcXHDQuHoQgJX5/ka3X4libF3v7HftXU/hK2w6rzPTBoU+3Y/1teuiL89Y0 7QsJaRIPKmxrOw3lbF7vbA== 0000950124-97-002792.txt : 19970513 0000950124-97-002792.hdr.sgml : 19970513 ACCESSION NUMBER: 0000950124-97-002792 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970512 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN MICHIGAN BANCORP INC CENTRAL INDEX KEY: 0000703699 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 382407501 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-78178 FILM NUMBER: 97600508 BUSINESS ADDRESS: STREET 1: 51 W PEARL ST CITY: COLDWATER STATE: MI ZIP: 49036 BUSINESS PHONE: 5172795500 10-Q 1 QUARTERLY REPORT 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1997 Commission file number 2-78178 -------------- ------- Southern Michigan Bancorp, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Michigan 38-2407501 - ------------------------------- ----------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 51 West Pearl Street, Coldwater, Michigan 49036 - ----------------------------------------- ----------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code--(517) 279-5500 -------------- Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No -- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock, $2.50 Par Value - 954,623 shares at April 30, 1997 - ---------------------------------------------------------------- 2 CONDENSED CONSOLIDATED BALANCE SHEETS SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARY March 31 December 31 1997 1996 ------------------------- (Unaudited) (A) (In thousands) ASSETS Cash and due from banks $ 13,084 $ 13,520 Federal funds sold 1,500 Investment securities available-for-sale 22,134 24,089 Investment securities (market value of $32,924,000 in 1997 and $32,796,000 in 1996) 32,957 32,510 Loans 152,673 152,678 Less allowance for loan losses (1,848) (1,814) -------- -------- 150,825 150,864 Premises and equipment 5,191 5,227 Other assets 9,663 9,352 -------- -------- TOTAL ASSETS $235,354 $235,562 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Non-interest bearing $ 29,455 $ 35,230 Interest bearing 179,760 174,238 -------- -------- 209,215 209,468 Accounts payable and other liabilities 2,459 2,922 -------- -------- TOTAL LIABILITIES 211,674 212,390 Common stock subject to repurchase obligation in ESOP 3,685 3,555 Shareholders' equity: Common stock, $2.50 par value: Authorized--2,000,000 shares Outstanding--871,857 shares (1996-- 869,550 shares) 2,180 2,174 Capital surplus 2,709 2,735 Retained earnings 15,191 14,687 Net unrealized appreciation (depreciation) on available-for-sale securities, net of tax of $44,000 (1996--$10,000) (85) 21 -------- -------- TOTAL SHAREHOLDERS' EQUITY 19,995 19,617 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $235,354 $235,562 ======== ======== (A) The balance sheet at December 31, 1996 has been derived from the audited consolidated financial statements at that date. See notes to condensed consolidated financial statements. -2- 3 CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARY Three Months Ended March 31 1997 1996 ------------------- (In thousands, except per share amounts) Interest income: Loans, including fees $ 3,705 $ 3,190 Investment securities: Taxable 625 703 Tax exempt 222 191 Other 6 19 ------- ------- Total interest income 4,558 4,103 Interest expense: Deposits 1,792 1,565 Capital notes and other 51 38 ------- ------- Total interest expense 1,843 1,603 ------- ------- NET INTEREST INCOME 2,715 2,500 Provision for loan losses 75 117 ------- ------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,640 2,383 Non-interest income: Service charges on deposit accounts 201 179 Trust department 136 136 Security gains 0 5 Other 92 0 ------- ------- 429 320 ------- ------- 3,069 2,703 Non-interest expenses: Salaries and benefits 1,021 893 Occupancy 176 140 Equipment 188 186 Other 734 648 ------- ------- 2,119 1,867 ------- ------- INCOME BEFORE INCOME TAXES 950 836 Federal income taxes 207 194 ------- ------- NET INCOME $ 743 $ 642 ======= ======= Net income per share $ .78 $ .69 ======= ======= Dividends declared per share $ .25 $ .24 ======= ======= See notes to condensed consolidated financial statements. -3- 4 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARY Three Months Ended March 31 1997 1996 ------------------- (In thousands) OPERATING ACTIVITIES Net income $ 743 $ 642 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 75 117 Unrealized loss on loans held for sale 65 Provision for depreciation 123 72 Increase in other assets (257) (76) Decrease in accounts payable and other liabilities (379) (452) ------- ------- Net cash provided by operating activities 305 368 INVESTING ACTIVITIES Proceeds from maturities of investment securities 2,099 8,514 Purchases of investment securities (751) (8,163) Increase (decrease) in federal funds sold (1,500) 4,500 Net increase in loans (36) (7,493) Purchases of premises and equipment (87) (718) ------- ------- Net cash used in investing activities (275) (3,360) FINANCING ACTIVITIES Net decrease in deposits (253) (2,307) Payment of capital note (1,000) Common stock issued 110 129 Cash dividends (323) (336) ------- ------- Net cash used in financing activities (466) (3,514) ------- ------- Decrease in cash and cash equivalents (436) (6,506) Cash and cash equivalents at beginning of period 13,520 17,180 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $13,084 $10,674 ======= ======= See notes to condensed consolidated financial statements. -4- 5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SOUTHERN MICHIGAN BANCORP, INC. AND SUBSIDIARY March 31, 1997 NOTE A -- BASIS OF PRESENTATION The accompanying year-end balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1996. -5- 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION Total deposits have remained fairly steady during the first quarter of 1997. The deposits acquired in the fourth quarter of 1996 helped to offset the historical decline in deposits that the Company typically experiences in the first quarter of the year. Loans have remained fairly steady during the first quarter of 1997. The Company historically experiences loan growth in the second and third quarters of the year as borrowers' seasonal demands increase. There were no loans held for sale at March 31, 1997. Investment securities decreased by 2.7% during the first quarter of 1997. The funds received from maturing securities were reinvested in federal funds sold in anticipation of future loan growth. The Company had no material commitments for capital expenditures at March 31, 1997. CAPITAL RESOURCES The Federal Reserve Board (FRB) has adopted risk-based capital guidelines applicable to the Company. These guidelines require that bank holding companies maintain capital commensurate with both on and off balance sheet credit risks of their operations. Under the guidelines, a bank holding company must have a minimum ratio of total capital to risk-weighted assets of 8.0 percent. In addition, a bank holding company must maintain a minimum ratio of Tier 1 capital equal to 4.0 percent of risk-weighted assets. Tier 1 capital includes common shareholders' equity, qualifying perpetual preferred stock and minority interests in equity accounts of consolidated subsidiaries less goodwill. As a supplement to the risk-based capital requirements, the FRB has also adopted leverage capital ratio requirements. The new leverage ratio requirements establish a minimum ratio of Tier 1 capital to total assets less goodwill of 3 percent for the most highly rated bank holding companies. All other bank holding companies are required to maintain additional Tier 1 capital yielding a leverage ratio of 4 percent to 5 percent, depending on the particular circumstances and risk profile of the institution. The following table summarizes the Company's capital ratios as of March 31, 1997: Tier 1 risk-based capital ratio 12.26% Total risk-based capital ratio 13.30% Leverage ratio 9.35% The table above indicates that the Company's capital ratios are above the regulatory minimum requirements. -6- 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations--Continued RESULTS OF OPERATIONS Net Interest Income Net interest income increased by $215,000 for the three month period ended March 31, 1997 compared to the same period in 1996. This increase is due to loan rates rising at a faster pace than the rates paid on deposit accounts. Provision for Loan Losses The provision for loan losses is based on an analysis of outstanding loans. In assessing the adequacy of the allowance, management reviews the characteristics of the loan portfolio in order to determine the overall quality and risk profile. Some factors considered by management in determining the level at which the allowance is maintained include a continuing evaluation of those loans identified as being subject to possible problems in collection, results of examinations by regulatory agencies, current economic conditions and historical loan loss experience. The provision for loan losses decreased by $42,000 for the three month period ended March 31, 1997 compared to the same period in 1996. This decrease occurred as a result of the low level of loan losses experience in recent years. The allowance for loan losses is being maintained at a level which, in management's opinion, is adequate to absorb possible loan losses in the loan portfolio as of March 31, 1997. Non-Interest Income Non-interest income, which includes service charges on deposit accounts, trust fee income, security gains and losses and other miscellaneous charges and fees, increased by $109,000 during the first quarter of 1997 compared to the same period in 1996. This increase is due to increased service charges on deposit accounts in 1997 as a result of the additional deposits purchased in connection with the acquisition of two branches in late 1996, increased gains on the sale of secondary market real estate mortgage loans in 1997 and unrecognized losses on real estate mortgage loans held for sale recorded in 1996. Non-Interest Expense Non-interest expense increased by $252,000 for the three month period ended March 31, 1997 compared to the same period in 1996. This increase is due to additional personnel costs, occupancy costs, marketing and advertising expenditures and training costs primarily as a result of the acquisition of two branches in late 1996. -7- 8 PART II - OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders None. ITEM 6. Exhibits and Reports on Form 8-K a. Listing of Exhibits: Financial Data Schedule b. There were no reports on Form 8-K filed in the first quarter of 1997. 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. Southern Michigan Bancorp, Inc. ------------------------------- (Registrant) May 12, 1997 /s/ Jerry L. Towns - -------------------- ------------------------------- Date Jerry L. Towns, President and Chief Executive Officer May 12, 1997 /s/ James T. Grohalski - -------------------- ------------------------------- Date James T. Grohalski, Executive Vice-President (Principal Financial and Accounting Officer) -8- 9 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ------- ----------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF INCOME FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 13,084 0 1,500 0 22,134 32,957 32,924 152,673 1,848 235,354 209,215 0 6,144 0 0 0 2,180 17,815 235,354 3,705 847 6 4,558 1,792 1,843 2,715 75 0 2,119 950 950 0 0 743 .78 .78 5.19 208 227 0 2,321 1,814 56 15 1,848 640 0 1,208
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