SOURCE: Sturgis Bancorp Inc.

April 25, 2016 10:37 ET

Sturgis Bancorp Reports Earnings for First Quarter 2016

STURGIS, MI--(Marketwired - Apr 25, 2016) -   Sturgis Bancorp, Inc. (OTCQX: STBI) today announced net income of $592,000 for the first quarter of 2016.

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 12 banking centers in Sturgis, Bangor, 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 2016:

  • Net income for the first quarter of 2016 increased to $592,000, compared to $397,000 for the first quarter of 2015, primarily due to higher net interest income.
  • The Bank maintained strong capital ratios, exceeding "well-capitalized" requirements, with Tier 1 leverage capital at 8.60%. Total capital at March 31, 2016 was 14.58% of risk-weighted assets. The Bank's risk-weighted assets were $235.8 million at March 31, 2016.
  • Total deposits increased 5.5% to $299.6 million, mostly in temporary municipal deposits.
  • Allowance for loan losses was 1.25% of loans, unchanged from December 31, 2016.

Three months ended March 31, 2016 vs. three months ended March 31, 2015 - Net income for the three months ended March 31, 2016 was $592,000, or $0.28 per share, compared to net income of $397,000, or $0.19 per share, for the three months ended March 31, 2015. The tax equivalent net interest margin increased to 3.75% in the first three months of 2016 from 3.53% in the first three months of 2015. 

Noninterest income was $1.2 million in the first quarter of 2016, compared to $1.4 million in the first quarter of 2015. Most of the decrease was in trust fee income, which decreased to $84,000 in 2016 from $151,000 in 2015, with a large one-time fee assessed in the first quarter of 2015. Mortgage banking income decreased $67,000 to $135,000 in 2016, due to slower loan sale activity. Commission income decreased $48,000 to $445,000 in 2016, based on market volatility.

Noninterest expense was $3.4 million in 2016 and 2015. Salaries and employee benefits, the largest component of noninterest expense, decreased $45,000, primarily due to lower pension funding in 2016. Real estate owned expense decreased to $60,000 in 2016, compared to $141,000 in 2015. 

The Company provided $94,000 to the allowance for loan losses in the first three months of 2016, compared to ($85,000) in the same quarter of 2015. Net charge-offs were $69,000 in 2016, compared to ($17,000) in 2015. 

Total assets increased to $377.8 million at March 31, 2016 from $368.6 million at December 31, 2015, primarily in loans. Loans increased $4.8 million from December 31, 2015. Most of the increase in loans was in Commercial loans. 

Noninterest-bearing deposits increased to $67.6 million at March 31, 2016 from $65.0 million at December 31, 2015. Average noninterest-bearing deposits were $62.8 million for the three months ended March 31, 2016. Interest-bearing deposits also increased to $232.0 million at March 31, 2016 from $219.0 million at December 31, 2015. Average interest-bearing deposits were $223.9 million for the three months ended March 31, 2016. 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 2016. Brokered deposits increased $2.2 million to $9.9 million at March 31, 2016. The growth in deposits allowed borrowed funds to decrease by $7.1 million to $40.7 million at March 31, 2016.

Total equity was $32.9 million at March 31, 2016, compared to $32.6 million at December 31, 2015. Book value per share increased to $15.80 ($12.23 tangible) at March 31, 2016 from $15.70 ($12.08 tangible) at December 31, 2015. Average equity was $32.7 million for the three months ended March 31, 2016.

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, 2016 and December 31, 2015  
(Amounts in thousands, except share and per share data)  
   
    March 31, 2016     Dec. 31, 2015  
ASSETS                
  Cash and due from banks   $ 10,781     $ 10,786  
  Other short-term investments     8,380       5,084  
    Total cash and cash equivalents     19,161       15,870  
                   
  Interest-earning deposits in banks     16,805       16,805  
  Securities - Available for sale     27,225       27,635  
  Securities - Held to maturity     21,569       19,245  
  Federal Home Loan Bank stock, at cost     2,632       2,632  
  Loans held for sale     684       1,575  
  Loans, net of allowance of $3,238 and $3,213     258,637       253,830  
  Premises and equipment, net     7,990       8,114  
  Goodwill     5,834       5,834  
  Core deposit intangibles     304       320  
  Originated mortgage servicing rights     1,283       1,349  
  Real estate owned     1,158       827  
  Bank-owned life insurance     9,800       9,735  
  Accrued interest receivable     1,363       1,183  
  Other assets     3,356       3,605  
                   
    Total assets   $ 377,801     $ 368,559  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Liabilities                
  Deposits                
    Noninterest-bearing   $ 67,622     $ 65,041  
    Interest-bearing     232,008       218,998  
      Total deposits     299,630       284,039  
  Federal Home Loan Bank advances and other borrowings     40,704       47,812  
  Accrued interest payable     224       243  
  Other liabilities     4,392       3,853  
    Total liabilities     344,950       335,947  
                 
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 2,079,741 shares at March 31, 2016 and 2,077,791 at December 31, 2015     2,080       2,078  
  Additional paid-in capital     7,296       7,277  
  Retained earnings     23,871       23,445  
  Accumulated other comprehensive income (loss)     (396 )     (188 )
    Total stockholders' equity     32,851       32,612  
                     
      Total liabilities and stockholders' equity   $ 377,801     $ 368,559  
                 
                 
   
CONSOLIDATED STATEMENTS OF INCOME  
Three Months ended March 31, 2016 and 2015  
(Amounts in thousands, except share and per share data)  
   
    Three Months ended March 31,  
    2016     2015  
Interest income                
  Loans   $ 3,007     $ 2,702  
  Investment securities:                
    Taxable     156       91  
    Tax-exempt     204       22  
  Dividends     28       40  
    Total interest income     3,395       2,855  
Interest expense                
  Deposits     166       159  
  Borrowed funds     274       312  
    Total interest expense     440       471  
                 
Net interest income     2,955       2,384  
                 
Provision for loan losses     94       (85 )
                 
Net interest income after provision for loan losses     2,861       2,469  
                 
Noninterest income:                
  Service charges and other fees     251       246  
  Interchange income     167       147  
  Investment brokerage commission income     445       493  
  Mortgage banking activities     135       202  
  Trust fee income     79       151  
  Increase in value of bank owned life insurance     65       67  
  Gain (loss) on sale of real estate owned     (1 )     71  
  Other income     99       13  
    Total noninterest income     1,240       1,390  
Noninterest expenses:                
  Salaries and employee benefits     1,908       1,953  
  Occupancy and equipment     405       411  
  Interchange expenses     98       87  
  Data processing     197       177  
  Professional services     61       137  
  Real estate owned expense     60       141  
  Advertising     61       40  
  Other     578       405  
    Total noninterest expenses     3,368       3,351  
                 
Income before income tax expense (benefit)     733       508  
                 
Income tax expense     141       111  
                 
Net income   $ 592     $ 397  
                 
Earnings per share   $ 0.28     $ 0.19  
Dividends declared per share   $ 0.08     $ 0.03  
    Key Ratios:                
Return on average equity     7.31 %     5.27 %
Return on average assets     0.63 %     0.50 %
Net interest margin (tax equivalent)     3.75 %     3.53 %

Contact Information

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