-----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, QCV7Ip9JXQvMF2a21Gk5spiSsKj18mEgf5oQVIZ6mVqch4PYPqAFdy+OcL96nl0c i+iOoEXNaP1ZOBtpAR+lrw== 0000950124-03-001716.txt : 20030514 0000950124-03-001716.hdr.sgml : 20030514 20030514080103 ACCESSION NUMBER: 0000950124-03-001716 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030514 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: 000-49772 FILM NUMBER: 03696839 BUSINESS ADDRESS: STREET 1: 51 W PEARL ST CITY: COLDWATER STATE: MI ZIP: 49036 BUSINESS PHONE: 5172795500 MAIL ADDRESS: STREET 1: 51 W PEARL ST CITY: COLDWATER STATE: MI ZIP: 49036 10-Q 1 k76827e10vq.txt QUARTELRY REPORT FOR PERIOD ENDED 03/31/03 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO 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 NO.) 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 the 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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). YES / / NO /X/ The number of shares of the registrant's common stock, $2.50 par value, outstanding as of April 30, 2003 was 1,849,329 (including shares held by the ESOP). ================================================================================ PART 1 - FINANCIAL INFORMATION ITEM 1. Financial Statements. CONDENSED CONSOLIDATED BALANCE SHEETS SOUTHERN MICHIGAN BANCORP, INC.
March 31, December 31, 2003 2002 ----------------------------------------- (Unaudited) (A) (In thousands, except share and per share data) ASSETS Cash and due from banks $ 21,909 $ 19,287 Securities available for sale 51,098 48,811 Loans held for sale, net of valuation of $-0- (2002 - $-0-) 2,422 1,083 Loans, net of allowance for loan losses of $3,520 (2002 - $3,512) 229,285 230,654 Premises and equipment, net 7,003 7,137 Accrued interest receivable 1,983 2,118 Net cash surrender value of life insurance 6,532 6,472 Goodwill 620 620 Other intangible assets 140 150 Other assets 4,520 4,351 ----------------------------------------- TOTAL ASSETS $325,512 $320,683 ========================================= LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Non-interest bearing $ 40,919 $ 42,462 Interest bearing 226,934 219,887 ----------------------------------------- 267,853 262,349 Federal funds purchased 3,700 5,000 Accrued expenses and other liabilities 4,043 4,197 Other borrowings 23,140 22,646 Common stock subject to repurchase obligation in Employee Stock Ownership Plan, shares outstanding - 92,948 in 2003 (104,841) in 2002 1,604 1,618 Shareholders' equity: Preferred stock, 100,000 shares authorized; none issued or outstanding Common stock, $2.50 par value: Authorized--4,000,000 shares Issued--1,849,349 shares (2002 - 1,864,046) Outstanding--1,756,401 shares (2002 -1,759,205) 4,391 4,398 Additional paid-in capital 8,492 8,752 Retained earnings 11,887 11,366 Accumulated other comprehensive income, net of tax 736 793 Unearned Employee Stock Ownership Plan shares (334) (436) ----------------------------------------- TOTAL SHAREHOLDERS' EQUITY 25,172 24,873 ----------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $325,512 $320,683 =========================================
(A) The balance sheet at December 31, 2002 has been derived from the audited consolidated financial statements at that date. See notes to condensed consolidated financial statements. 2 CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) SOUTHERN MICHIGAN BANCORP, INC.
Three Months Ended March 31, 2003 2002 ----------------------------------- (In thousands, except per share amounts) Interest income: Loans, including fees $ 3,773 $ 4,044 Securities: Taxable 277 438 Tax-exempt 227 252 ----------------------------------- Total interest income 4,277 4,734 Interest expense: Deposits 1,011 1,220 Other 432 433 ----------------------------------- Total interest expense 1,443 1,653 ----------------------------------- NET INTEREST INCOME 2,834 3,081 Provision for loan losses 225 275 ----------------------------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,609 2,806 Non-interest income: Service charges on deposit accounts 534 263 Trust fees 139 148 Net securities gains - 4 Net gains on loan sales 568 252 Earnings on life insurance assets 60 51 Other 293 96 ----------------------------------- 1,594 814 ----------------------------------- Non-interest expense: Salaries and employee benefits 1,644 1,475 Occupancy, net 186 186 Equipment 218 356 Professional and outside services 395 195 Advertising and marketing 41 34 Other 613 670 ----------------------------------- 3,097 2,916 ----------------------------------- INCOME BEFORE INCOME TAXES 1,106 704 Federal income taxes 290 141 ----------------------------------- NET INCOME 816 563 Other comprehensive income/(loss), net of tax: (57) (98) ----------------------------------- COMPREHENSIVE INCOME $ 759 $ 465 =================================== Basic and Diluted Earnings Per Common Share $ 0.44 $ 0.30 =================================== Dividends Declared Per Common Share $ 0.16 $ 0.16 ===================================
See notes to condensed consolidated financial statements. 3 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) SOUTHERN MICHIGAN BANCORP, INC.
Three Months Ended March 31, 2003 2002 ------------------------------------ (In thousands) OPERATING ACTIVITIES Net income $ 816 $ 563 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 225 275 Depreciation 174 224 Net securities gains - (4) Loans originated for sale (26,807) (11,665) Proceeds on loans sold 26,036 12,804 Net gains on loan sales (568) (252) Earnings on life insurance assets (60) (51) Amortization of goodwill - 16 Amortization of other intangible assets 10 10 Reduction of obligation under ESOP 67 - Net change in: Accrued interest receivable 135 610 Other assets (140) (663) Accrued expenses and other liabilities (151) (595) ------------------------------------ Net cash from operating activities (263) 1,272 INVESTING ACTIVITIES Proceeds from sales of securities - 254 Proceeds from maturities of securities 4,127 11,016 Purchases of securities (6,500) (3,250) Loan originations and payments, net 1,144 (11,489) Additions to premises and equipment (40) (56) ------------------------------------ Net cash from investing activities (1,269) (3,525) FINANCING ACTIVITIES Net change in deposits 5,504 (11,551) Net change in federal funds purchased (1,300) 5,750 Proceeds from other borrowings 596 820 Repayments of other borrowings (102) - Repurchase of common stock (246) (840) Cash dividends paid (298) (307) ------------------------------------ Net cash from financing activities 4,154 (6,128) ------------------------------------ Net change in cash and cash equivalents 2,622 (8,381) Cash and cash equivalents at beginning of period 19,287 23,432 ------------------------------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 21,909 $ 15,051 ====================================
See notes to condensed consolidated financial statements. 4 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SOUTHERN MICHIGAN BANCORP, INC. March 31, 2003 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 accounting principles generally accepted in the U.S.A. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.A. for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S.A. 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 Southern Michigan Bancorp, Inc.'s (the "Company") annual report on Form 10-K for the year ended December 31, 2002. Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. ESOP shares are considered outstanding for this calculation unless unearned. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options. Earnings and dividends per common share are restated for all stock splits and dividends through the date of issue of the financial statements. The basic and diluted weighted average common shares outstanding for the three month periods ended March 31, 2003 and 2002 were:
For the 3 months ended 3/31/03 3/31/02 -------------------------- Basic 1,838,866 1,891,397 Diluted 1,839,063 1,891,702
Reclassifications: Some items in the prior year consolidated financial statements have been reclassified to conform with the current year presentation. NOTE B -- STOCK COMPENSATION The following table illustrates the effect on net income and earnings per common share if expense was measured using the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock Based Compensation. 5
March 31, 2003 March 31, 2002 ------------------------------- Net income as reported $816 $563 Deduct: stock based compensation expense determined under fair value based method (2) (3) --- --- Pro forma net income $814 $560 Basic earnings per share as reported .44 .30 Pro forma basic earnings per share .44 .30 Diluted earnings per share as reported .44 .30 Pro forma diluted earnings per share .44 .30
NOTE C -- NEWLY ISSUED ACCOUNTING STANDARDS New accounting standards on asset retirement obligations, restructuring activities and exit costs, operating leases, early extinguishments of debt, stock options, and guarantees of indebtedness of others were effective January 1, 2003. Adoption of these standards did not have a material impact on the Company's financial condition or results of operations for the period ended March 31, 2003. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. FINANCIAL CONDITION During the first three months of 2003, cash and cash equivalents increased 13.6% or $2,622,000. In addition, securities available for sale increased by 4.7% or $2,287,000 during this same time period. Gross loans have decreased slightly, .6%, or $1,361,000 as management has focused on improving credit quality and internal control policies and procedures during the quarter rather than growth. In assessing the adequacy of the allowance for loan losses, 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 allowance for loan losses is being maintained at a level, which in management's opinion, is adequate to absorb probable incurred loan losses in the loan portfolio as of March 31, 2003. The allowance for loan losses was $3,520,000 or 1.51% of gross loans at March 31, 2003. As of December 31, 2002, the allowance for loan losses was $3,512,000 or 1.50% of gross loans. Non-performing loans (defined as loans over 90 days past due or 6 non accrual loans) increased from $3,969,000 at December 31, 2002 to $4,484,000 at March 31, 2003. In consideration of increases in the levels of non-performing loans, management is keeping the allowance for loan losses at the high end of the range of estimated loss determined by Southern Michigan Bank & Trust's (the "Bank") methodology to assess the adequacy of the allowance for loan losses. Total deposits increased by $5,504,000 or 2.1% during the first three months of 2003. The Bank provides services to several commercial clients who have large fluctuating balances. On the last day of the quarter these customers had higher than average balances. Total average deposits were up only $132,000 over total average deposits at year end. During the first three months of 2003, the Company repurchased and retired approximately $246,000 worth of stock. 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 interest in equity accounts of consolidated subsidiaries less intangible assets. As a supplement to the risk-based capital requirements, the FRB has also adopted leverage capital ratio requirements. The leverage ratio requirements establish a minimum ratio of Tier 1 capital to total assets less intangible assets 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, 2003 and December 31, 2002:
March 31, 2002 December 31, 2002 -------------- ----------------- Tier 1 risk-based capital ratio 10.3% 10.3% Total risk-based capital ratio 11.6% 11.5% Leverage ratio 7.9% 7.8%
7 The above table indicates that the Company's capital ratios are above the regulatory minimum requirements. At March 31, 2003 the Bank had a tier 1 capital to average asset ratio of 7.7%. On February 17, 2003, the Bank entered into an agreement with its banking regulators that requires the Bank to maintain this ratio at a level at or above 7%. In addition, under this agreement, the Bank will establish and monitor certain lending and operational policies and procedures. RESULTS OF OPERATIONS Net Interest Income Net interest income decreased by 8.0% or $247,000 for the three month period ended March 31, 2003 compared to the same period in 2002. This decrease can be partially attributed to the large number of commercial loans that are tied to the prime rate. During the first quarter of 2002, the prime rate was fifty basis points higher than during the first quarter of 2003 resulting in lower net interest income in 2003. In addition, bonds that were purchased to replace maturing securities had lower yields than the matured bonds. Offsetting these decreases in interest income was a 12.7%, or $210,000, decrease in interest expense. The Bank reduced rates paid on deposit accounts throughout 2002 as rates decreased. In addition, as higher priced longer term certificates of deposit matured, they were rolled over into lower interest rate certificates. Provision for Loan Losses The provision for loan losses is based on an analysis of outstanding loans. In assessing the adequacy of the allowance for loan losses, 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, historical loan loss experience, delinquency and charge off trends, loan volume, portfolio mix, concentrations of credit and lending policies, procedures and personnel. The provision for loan losses for the first quarter of 2003 replenished the allowance for loan losses for net charge-offs incurred during the quarter. As discussed earlier, management is keeping the allowance for loan losses at the high end of the range of estimated loss determined by the Bank's methodology to assess the adequacy of the allowance for loan losses. Non-interest Income Non-interest income increased $780,000, or 95.8%, for the three month period ending March 31, 2003 compared to the same period in 2002. 8 A $271,000 increase was realized in service charges on deposit accounts for this period. This was primarily due to fee income generated from an overdraft product the bank introduced at the end of May 2002 where the Bank began paying overdraft checks for qualifying customers, up to a specified dollar limit, rather than return the checks. A significant increase in overdraft volume has occurred since this product was introduced. Additionally, the increase can be attributed to increased service fees that began in January 2003. In order to reduce the risk associated with changing interest rates, the Bank regularly sells fixed rate real estate mortgage loans on the secondary market. The Bank recognized a profit at the time of the sale. The Bank originated for sale $26,807,000 in loans during the first quarter of 2003 compared to $11,665,000 during the same quarter of 2002. Net gain on sale of loans increased $316,000 or 125.4% for the three month period ending March 31, 2003 compared to the same period in 2002. The low interest rates continue to make these loans attractive to customers. In addition, other non-interest income increased $197,000 as an insurance settlement totaling $199,000 was received in the first quarter of 2003 relating to a litigation settled in 2002. Non-interest Expense Non-interest expenses increased by $181,000 during the three month period ended March 31, 2003 compared to the same period in 2002. During the three months ended March 31, 2003, salaries and employee benefits expense increased $169,000 compared to the same period in 2002. Commissions paid to mortgage originators for the first three months of 2003 have exceeded the commissions for the same time period in 2002 by over $121,000. The cost of employee benefits increased in 2003 as health insurance costs have increased. Costs for health insurance increased $21,000 for the three months ended March 31, 2003 compared to the same period last year. In addition to salaries and employee benefits increasing, the Company saw an increase in professional and outside services expense. During the fourth quarter of 2002, the Bank hired an outside consulting firm to review selected areas of the Bank looking for potential cost savings, revenue enhancements and efficiency measures. The Bank has implemented a number of recommendations made by the consulting firm and expects to continue to see benefits to both efficiency and net income. The final work was completed by the consulting firm during the first quarter of 2003. In 2002 the Bank had higher equipment service contract and lease costs. The service contracts and leases were renegotiated during the fourth quarter of 2002 as a result of recommendations made by the outside consulting firm. In addition to costs associated with the consultants, $48,000 was paid in legal fees relating to the $199,000 settlement received. 9 Contingent and Contractual Obligations At March 31, 2003, the Bank had commitments under commercial letters of credit, used to facilitate customers' trade transactions, of $69,000. The Bank had commitments under performance letter of credit agreements of $70,000 at March 31, 2003. Under standby letter of credit agreements, the Bank agrees to honor certain commitments in the event that its customers are unable to do so. At March 31, 2003, commitments under outstanding standby letters of credit were $138,000. Loan commitments outstanding to extend credit totaled $40,113,000 at March 31, 2003. Management does not anticipate any losses as a result of the above transactions; however the above amount represents the maximum exposure to credit loss for loan commitments and commercial, performance and standby letters of credit. ITEM 3. Quantitative and Qualitative Disclosures About Market Risk. The Company's primary market risk exposure is interest rate risk and to a lesser extent, liquidity risk. Interest rate risk arises when the maturity or repricing characteristics of assets differ significantly from the maturity or the repricing characteristics of liabilities. Accepting this risk can be an important source of profitability and shareholder value, however, excessive levels of interest rate risk could pose a significant threat to the Company's earnings and capital base. Accordingly, effective risk management that maintains interest rate risk at prudent levels is essential to the Company's safety and soundness. The Company measures the impact of changes in interest rates on net interest income through a comprehensive analysis of the Bank's interest rate sensitive assets and liabilities. Interest rate sensitivity varies with different types of interest-earning assets and interest-bearing liabilities. Overnight federal funds and mutual funds on which rates change daily and loans which are tied to the prime rate or a comparable index differ considerably from long-term investment securities and fixed-rate loans. Similarly, certificates of deposit and money market investment accounts are much more interest sensitive than passbook savings accounts. The shorter term interest rate sensitivities are key to measuring the interest sensitivity gap, or excess interest-earning assets over interest-bearing liabilities. In addition to reviewing the interest sensitivity gap, the Company also analyzes projected changes in market interest rates and the resulting effect on net interest income. Liquidity management involves the ability to meet the cash flow requirements of customers who may be either depositors wanting to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs. 10 Certain portions of the Bank's liabilities may be short-term or due on demand, while most of its assets may be invested in long-term loans or investments. Accordingly, the Company seeks to have in place sources of cash to meet short-term demands. These funds can be obtained by increasing deposits, borrowing or selling assets. Also, Federal Home Loan Bank advances and short-term borrowings provide additional sources of liquidity for the Company. There have been no significant changes in the distribution of the Company's financial instruments that are sensitive to changes in interest rates during the first three months of 2003. ITEM 4. Controls and Procedures. (a) Within the 90 days prior to the date of filing of this report, an evaluation was carried out under the supervision and with the participation of the Company's management, including the Company's Chairman and Chief Executive Officer along with the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-14 and 15d-14). Based upon that evaluation, the Company's Chairman and Chief Executive Officer along with the Chief Financial Officer have concluded that the Company's disclosure controls and procedures are, to the best of their knowledge, effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in our periodic SEC filings. Prior to and during this evaluation certain significant deficiencies or material weaknesses in internal controls existed, namely: o Commercial loan documentation review and disbursement controls have been inadequate to provide for appropriate segregation of duties at origination of loans. o Less than satisfactory commercial loan workout and collection efforts. The following actions have been taken to correct these deficiencies in internal controls: o Creation of a Credit Administration Department reporting to the President of the Bank, independent of the loan officers. This department is now responsible for the underwriting, documentation and funding of new loans. o The Bank has hired a reputable outside consulting firm to assist with the collection of non-performing commercial loans. In addition, as part of the Credit Administration Department, the Bank has created a Managed Assets Division to work in conjunction with the outside consultant to ensure an acceptable reduction in non-performing loans. 11 (b) There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date the Company carried out this evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings. The Bank is engaged in litigation from time to time, both as plaintiff and defendant, which is incidental to its business. In certain proceedings, claims or counterclaims may be asserted against the Bank. Based on the facts known to date, management of the Company does not currently anticipate that the ultimate liability, if any arising out of any such litigation will have a material adverse effect on the Company's financial condition or results of operations. The Company previously reported claims in Note A of the Notes to the Company's Consolidated Financial Statements contained in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2002. There were no material developments in these proceedings during the quarter ended March 31, 2003. ITEM 2. Changes in Securities and Use of Proceeds. None. ITEM 3. Defaults Upon Senior Securities. none. ITEM 4. Submission of Matters to a Vote of Security Holders. None. ITEM 5. Other Information. None. ITEM 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 12
Exhibit No. Description of Exhibit - ----------- ---------------------- Exhibit 99.1 Certification of the Company's Chief Executive Officer, John H. Castle, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit 99.2 Certification of the Company's Chief Financial Officer, Danice L. Chartrand, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) On March 10, 2003, the Company filed a Form 8-K which contained the Company's annual report and management's discussion & analysis. 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) Date: May 14, 2003 /s/ John H. Castle --------------------- -------------------------------------------- John H. Castle, Chief Executive Officer Date: May 14, 2003 /s/ Danice L. Chartrand --------------------- -------------------------------------------- Danice L. Chartrand, Chief Financial Officer (Principal Financial and Accounting Officer) 13 CERTIFICATIONS Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, John H. Castle, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Southern Michigan Bancorp, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and 14 b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 14, 2003 /s/ John H. Castle ------------ --------------------------------------- John H. Castle, Chief Executive Officer I, Danice L. Chartrand, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Southern Michigan Bancorp, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and 15 c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 14, 2003 /s/ Danice L. Chartrand ------------ ----------------------------------- Danice L. Chartrand, Chief Financial Officer 16 INDEX TO EXHIBITS
Exhibit No. Description of Exhibit - ----------- ---------------------- 99.1 Certification of the Company's Chief Executive Officer, John H. Castle, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.2 Certification of the Company's Chief Financial Officer, Danice L. Chartrand, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
17 EX-99.1 3 k76827exv99w1.txt 906 CERTFICATION OF CHIEF EXECUTIVE OFFICER EXHIBIT 99.1 CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, John H. Castle, the Chief Executive Officer of Southern Michigan Bancorp, Inc. (the "Company") hereby certifies that, to the best of his knowledge: 1. The Company's Quarterly Report on Form 10-Q for the period ended March 31, 2003, and to which this Certification is attached as Exhibit 99.1 (the "Periodic Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: May 14, 2003 /s/ John H. Castle --------------------------------------- John H. Castle, Chief Executive Officer This certification accompanies the Periodic Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended. 18 EX-99.2 4 k76827exv99w2.txt 906 CERTFICATION OF CHIEF FINANCIAL OFFICER EXHIBIT 99.2 CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Danice L. Chartrand, the Chief Financial Officer of Southern Michigan Bancorp, Inc. (the "Company") hereby certifies that, to the best of his knowledge: 1. The Company's Quarterly Report on Form 10-Q for the period ended March 31, 2003, and to which this Certification is attached as Exhibit 99.2 (the "Periodic Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: May 14, 2003 /s/ Danice L. Chartrand -------------------------------------------- Danice L. Chartrand, Chief Financial Officer This certification accompanies the Periodic Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended. 19 -----END PRIVACY-ENHANCED MESSAGE-----