SOURCE: Sturgis Bancorp Inc.

April 23, 2013 15:12 ET

Sturgis Bancorp Reports Earnings for First Quarter 2013

STURGIS, MI--(Marketwired - Apr 23, 2013) -  Sturgis Bancorp, Inc. (OTCBB: STBI) today announced net income of $502,000 for the first quarter of 2013. 

Sturgis Bancorp is the holding company for Sturgis Bank & Trust Company (Bank), and its subsidiaries Oakleaf Financial Services, Inc. and Oak Mortgage, LLC. Sturgis Bancorp provides a full array of trust, commercial and consumer banking services from 11 banking centers in Sturgis, Bronson, Centreville, Climax, Colon, South Haven, Three Rivers and White Pigeon, Mich. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oak Mortgage offers residential mortgages in all markets of the Bank.

Key Highlights for the first quarter of 2013:

  • Net income for the first quarter of 2013 remained unchanged, at $502,000, compared to $502,000 for the first quarter of 2012.
  • The Bank maintained strong capital ratios, exceeding "well-capitalized" requirements, with Tier 1 capital at 8.76%. Total capital at March 31, 2013 was 13.85% of risk-weighted assets.
  • Nonaccrual and past due loans decreased.
  • Total deposits increased 4.6% to $245.8 million, mostly in temporary municipal deposits.
  • Allowance for loan losses was 1.97% of loans, down slightly from 2.03% at the end of 2012.

President and CEO Eric L. Eishen stated: "The Bank's core earnings are stable and credit quality continues to improve. We continue to control expenses and seek quality loan business. While the U. S. Economy seems to be improving, we are still cautious with how aggressively we pursue any loan growth opportunities. There is weakness in loan demand, and the primary business opportunities are related to our mortgage banking business. Credit worthy commercial borrowers remain hesitant to take on additional debt until they are confident the recovery will be sustained. Deposits continue to be strong and customers remain reluctant to commit long-term. Once the economy is back on track, we expect deposits to normalize and maturities to extend. We are keeping our loan origination activity focused on loan types we know best. When we are comfortable the economy is in full recovery, we will look to a more expansionary management of the balance sheet. The Bank enjoys a diversified non-interest income stream and the net interest margin is stable as well.

"The most challenging aspect to our business model will be managing the significant increase in regulatory burden. The Bank is large enough to deal with the increased burden, but all banks are concerned with the increased cost of compliance."

Three months ended March 31, 2013 vs. three months ended March 31, 2012 - Net income for the three months ended March 31, 2013 was $502,000, or $0.25 per share, compared to net income of $502,000, or $0.25 per share, for the three months ended March 31, 2012. The tax equivalent net interest margin increased to 3.54% in 2013 from 3.52% in 2012. 

Noninterest income was $1.3 million in the first quarter of 2013, compared to $1.1 million in the first quarter of 2012. Mortgage banking activities increased to $328,000 in 2013, as loan sale volume continued relatively strong. Commission income also increased to $464,000 in the first three months of 2013, compared to $299,000 in the first three months of 2012.

Noninterest expense increased to $3.2 million in 2013, compared to $2.8 million in 2012. Salaries and employee benefits increased $127,000, or 8.1%, to $1.7 million, due to increased health insurance benefit expense, salary adjustments, and commissions earned. Real estate owned expense increased to $303,000, including $202,000 written down for the carrying value of foreclosed assets. 

The Company provided ($88,000) to the allowance for loan losses in the first three months of 2013, compared to $2,000 in the same quarter or 2012. Net charge-offs were $77,000 in 2013, compared to $95,000 in 2012. 

Total assets increased to $328.2 million at March 31, 2013 from $317.1 million at December 31, 2012, primarily in cash and cash equivalents. Loans decreased $1.2 million from December 31, 2012, primarily in Home Equity Lines of Credit and Commercial Nonmortgage Loans. 

Noninterest-bearing deposits increased to $45.1 million at March 31, 2013 from $41.3 million at December 31, 2012. Interest-bearing deposits also increased to $200.8 million at March 31, 2013 from $193.7 million at December 31, 2012. These increases in deposit accounts are typical for the first quarter of each year, as municipalities deposit property tax revenues. Municipalities historically have reinvested those funds elsewhere during the second quarter of the year, and Management expects that pattern to continue for 2013. The number of checking accounts continues to increase, as the Bank continues to expand its customer base. 

Total equity was $27.3 million at March 31, 2013, compared to $26.9 million at December 31, 2012. Book value per share increased to $13.37 at March 31, 2013 from $13.21 at December 31, 2012.

During the worst part of the national financial crisis, the Company began including expanded ratios for the Bank's asset quality in quarterly press releases. Because the Company believes these ratios have returned to more normal levels, the Company will not present these ratios in subsequent releases.

    Percentage of Gross Loans     Percentage of Total Assets  
Past due and still accruing:   Mar. 31 2013     Dec. 31 2012     Mar. 31 2013     Dec. 31 2012  
  Past due one month   0.44 %   0.66 %   0.34 %   0.53 %
  Past due two months   0.16 %   0.23 %   0.12 %   0.19 %
  Past due three or more months   0.01 %   0.08 %   0.01 %   0.06 %
Nonaccrual loans   2.53 %   2.83 %   1.95 %   2.26 %
Real Estate Owned   0.54 %   0.49 %   0.42 %   0.39 %

This release contains statements that constitute forward-looking statements. These statements appear in several places in this release and include statements regarding intent, belief, outlook, objectives, efforts, estimates or expectations of Bancorp, primarily with respect to future events and the future financial performance of the Bancorp. Any such forward-looking statements are not guarantees of future events or performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statement. Factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; government and regulatory policy changes; the outcome of any pending and future litigation and contingencies; trends in consumer behavior and ability to repay loans; and changes of the world, national and local economies. Bancorp undertakes no obligation to update, amend or clarify forward-looking statements as a result of new information, future events, or otherwise. The numbers presented herein are unaudited.

For additional information, visit our website at www.sturgisbank.com.

             
             
CONSOLIDATED BALANCE SHEETS  
March 31, 2013 and December 31, 2012  
(Amounts in thousands, except share and per share data)  
   
    March 31, 2013     Dec. 31, 2012  
ASSETS                
    Cash and due from banks   $ 17,030     $ 10,237  
    Other short-term investments     15,363       9,611  
      Total cash and cash equivalents     32,393       19,848  
                     
    Interest-earning deposits in banks     12,196       12,196  
    Securities - Available for sale     1,770       1,242  
    Federal Home Loan Bank stock, at cost     4,064       4,064  
    Loans held for sale     2,023       2,261  
    Loans, net of allowance of $4,974 and $5,138     247,323       248,520  
    Premises and equipment, net     7,175       7,044  
    Goodwill     5,109       5,109  
    Originated mortgage servicing rights     1,315       1,273  
    Real estate owned     1,363       1,252  
    Bank-owned life insurance     9,328       9,259  
    Accrued interest receivable     1,062       861  
    Prepaid FDIC assessment     314       414  
    Other assets     2,761       3,702  
                 
      Total assets   $ 328,196     $ 317,045  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
  Liabilities                
    Deposits                
      Noninterest-bearing   $ 45,062     $ 41,261  
      Interest-bearing     200,751       193,662  
        Total deposits     245,813       234,923  
    Federal Home Loan Bank advances and other borrowings     52,352       52,440  
    Accrued interest payable     284       333  
    Other liabilities     2,423       2,425  
      Total liabilities     300,872       290,121  
                 
Stockholders' equity                
    Preferred stock - $1 par value: authorized - 1,000,000 shares issued and outstanding - 0 shares                
    Common stock - $1 par value: authorized - 9,000,000 shares issued and outstanding 2,043,112 shares at March 31, 2013 and 2,038,395 at December 31, 2012     2,043       2,038  
    Additional paid-in capital     7,009       6,979  
    Retained earnings     18,455       17,953  
    Accumulated other comprehensive income (loss)     (183 )     (46 )
      Total stockholders' equity     27,324       26,924  
                 
        Total liabilities and stockholders' equity   $ 328,196     $ 317,045  
                         
                         
                         
CONSOLIDATED STATEMENTS OF INCOME  
Three Months ended March 31, 2013 and 2012  
(Amounts in thousands, except share and per share data)  
   
    Three Months ended March 31,  
    2013     2012  
Interest income                
  Loans   $ 2,974     $ 3,138  
  Investment securities:                
    Taxable     41       22  
    Tax-exempt     16       4  
  Dividends     39       36  
    Total interest income     3,070       3,200  
Interest expense                
  Deposits     267       371  
  Borrowed funds     411       424  
    Total interest expense     678       795  
                 
Net interest income     2,392       2,405  
                 
Provision for loan losses     (88 )     2  
                 
Net interest income after provision for loan losses     2,480       2,403  
                 
Noninterest income:                
  Service charges and other fees     344       374  
  Investment brokerage commission income     464       299  
  Mortgage banking activities     328       259  
  Trust fee income     85       79  
  Increase in value of bank owned life insurance     70       69  
  Other income     7       (12 )
    Total noninterest income     1,298       1,068  
Noninterest expenses:                
  Salaries and employee benefits     1,696       1,569  
  Occupancy and equipment     403       354  
  Data processing     176       175  
  Professional services     117       118  
  Real estate owned expense     303       135  
  Advertising     28       27  
  FDIC premiums     105       98  
  Other     328       326  
    Total noninterest expenses     3,156       2,802  
                 
Income (loss) before income tax expense (benefit)     622       669  
                 
Provision for income tax     120       167  
                 
Net income (loss)   $ 502     $ 502  
                 
Earnings per share   $ 0.25     $ 0.25  
Dividends declared per share   $ 0.00     $ 0.00  
    Key Ratios:                
Return on average equity     7.59 %     7.93 %
Return on average assets     0.63 %     0.63 %
Net interest margin (tax equivalent)     3.54 %     3.52 %

Contact Information

  • Contacts:
    Sturgis Bancorp
    Eric Eishen
    President & CEO
    or
    Brian P. Hoggatt
    CFO
    P: 269 651-9345