SOURCE: Sturgis Bancorp Inc.

April 23, 2014 11:33 ET

Sturgis Bancorp Reports Earnings for First Quarter 2014

STURGIS, MI--(Marketwired - Apr 23, 2014) - Sturgis Bancorp, Inc. (OTCBB: STBI) today announced net income of $547,000 for the first quarter of 2014.

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 2014:

  • Net income for the first quarter of 2014 increased to $547,000, compared to $502,000 for the first quarter of 2013.
  • The Bank maintained strong capital ratios, exceeding "well-capitalized" requirements, with Tier 1 capital at 9.39%. Total capital at March 31, 2014 was 15.80% of risk-weighted assets.
  • Nonaccrual and past due loans decreased.
  • Total deposits increased 8.3% to $248.0 million, mostly in temporary municipal deposits.
  • Allowance for loan losses was 1.60% of loans, down slightly from 1.74% at the end of 2013.

Three months ended March 31, 2014 vs. three months ended March 31, 2013 - Net income for the three months ended March 31, 2014 was $574,000, or $0.27 per share, compared to net income of $502,000, or $0.25 per share, for the three months ended March 31, 2013. The tax equivalent net interest margin increased to 3.60% in 2014 from 3.54% in 2013. 

Noninterest income was $1.1 million in the first quarter of 2014, compared to $1.3 million in the first quarter of 2013. Mortgage banking activities decreased to $145,000 in 2014, as loan sale volume slowed significantly. Commission income also decreased to $398,000 in the first three months of 2014, compared to $464,000 in the first three months of 2013.

Noninterest expense was $2.9 million in 2014, compared to $3.2 million in 2013. Real estate owned expense decreased to $72,000 in 2014, compared to $303,000 in 2013. Real estate owned expense in 2014 included $30,000 written down for the carrying value of foreclosed assets, compared to $202,000 in 2013. 

The Company provided ($214,000) to the allowance for loan losses in the first three months of 2014, compared to ($88,000) in the same quarter of 2013. Net charge-offs were $121,000 in 2014, compared to $77,000 in 2013. 

Total assets increased to $324.0 million at March 31, 2014 from $305.0 million at December 31, 2013, primarily in securities. Loans decreased $115,000 from December 31, 2013, despite $3.3 million of government-guaranteed loans purchased. Most of the decrease in loans was in Home Equity Lines of Credit and Commercial Real Estate Loans. 

Noninterest-bearing deposits increased to $43.9 million at March 31, 2014 from $41.7 million at December 31, 2013. Interest-bearing deposits also increased to $204.1 million at March 31, 2014 from $187.3 million at December 31, 2013. These increases in deposit accounts are typical for the first quarter of each year, as municipalities deposit property tax revenues. Municipalities historically have either used or reinvested those funds elsewhere during the second quarter of the year, and Management expects that pattern to continue for 2014. 

Total equity was $29.2 million at March 31, 2014, compared to $28.5 million at December 31, 2013. Book value per share increased to $14.16 ($10.94 tangible) at March 31, 2014 from $13.21 ($10.67 tangible) at December 31, 2013.

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, 2014 and December 31, 2013 
(Amounts in thousands, except share and per share data) 
   
    March 31, 2014     Dec. 31, 2013  
ASSETS            
  Cash and due from banks   $ 18,392     $ 14,236  
  Other short-term investments     13,224       6,638  
    Total cash and cash equivalents     31,616       20,874  
                   
  Interest-earning deposits in banks     16,408       14,914  
  Securities - Available for sale     2,468       1,575  
  Securities - Held to maturity     6,678       -  
  Federal Home Loan Bank stock, at cost     4,064       4,064  
  Loans held for sale     525       1,034  
  Loans, net of allowance of $4,974 and $4,146     234,434       234,549  
  Premises and equipment, net     7,071       7,113  
  Goodwill     5,109       5,109  
  Originated mortgage servicing rights     1,518       1,501  
  Real estate owned     654       630  
  Bank-owned life insurance     9,603       9,537  
  Accrued interest receivable     868       828  
  Other assets     2,989       3,252  
                   
    Total assets   $ 324,005     $ 304,980  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
  Liabilities                
    Deposits                
      Noninterest-bearing   $ 43,884     $ 41,706  
      Interest-bearing     204,067       187,314  
        Total deposits     247,951       229,020  
    Federal Home Loan Bank advances and other borrowings     44,494       44,585  
    Accrued interest payable     263       272  
    Other liabilities     2,138       2,568  
      Total liabilities     294,846       276,445  
                 
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 2,059,538 shares at March 31, 2014 and 2,055,025 at December 31, 2013     2,060       2,055  
    Additional paid-in capital     7,128       7,094  
    Retained earnings     20,085       19,580  
    Accumulated other comprehensive income (loss)     (114 )     (194 )
      Total stockholders' equity     29,159       28,535  
                       
        Total liabilities and stockholders' equity   $ 324,005     $ 304,980  
                 
             
CONSOLIDATED STATEMENTS OF INCOME 
Three Months ended March 31, 2014 and 2013 
(Amounts in thousands, except share and per share data) 
   
    Three Months ended March 31,  
    2014     2013  
Interest income                
  Loans   $ 2,757     $ 2,974  
  Investment securities:                
    Taxable     80       41  
    Tax-exempt     14       16  
  Dividends     56       39  
    Total interest income     2,907       3,070  
Interest expense                
  Deposits     222       267  
  Borrowed funds     316       411  
    Total interest expense     538       678  
                 
Net interest income     2,369       2,392  
                 
Provision for loan losses     (214 )     (88 )
                 
Net interest income after provision for loan losses     2,583       2,480  
                 
Noninterest income:                
  Service charges and other fees     338       344  
  Investment brokerage commission income     398       464  
  Mortgage banking activities     183       328  
  Trust fee income     88       85  
  Increase in value of bank owned life insurance     66       70  
  Other income     (5 )     7  
    Total noninterest income     1,068       1,298  
Noninterest expenses:                
  Salaries and employee benefits     1,692       1,696  
  Occupancy and equipment     463       403  
  Data processing     176       176  
  Professional services     107       117  
  Real estate owned expense     72       303  
  Advertising     31       28  
  Other     407       433  
    Total noninterest expenses     2,948       3,156  
                 
Income (loss) before income tax expense (benefit)     703       622  
                 
Provision for income tax     156       120  
                 
Net income (loss)   $ 547     $ 502  
                 
Earnings per share   $ 0.27     $ 0.25  
Dividends declared per share   $ 0.02     $ 0.00  
    Key Ratios:                
Return on average equity     7.71 %     7.59 %
Return on average assets     0.69 %     0.63 %
Net interest margin (tax equivalent)     3.60 %     3.54 %
                 

Contact Information

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