SOURCE: Sturgis Bancorp Inc.

July 16, 2014 14:59 ET

Sturgis Bancorp Reports Earnings for Second Quarter 2014

STURGIS, MI--(Marketwired - Jul 16, 2014) - Sturgis Bancorp, Inc. (OTCBB: STBI) today announced net income of $554,000 for the second 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 as of June 30, 2014:

  • Net income was $554,000 for the second quarter of 2014, compared to $436,000 for the second quarter of 2013.
  • The Bank maintained strong capital ratios, exceeding "well-capitalized" requirements, with Tier 1 capital at 9.52%. Total capital at June 30, 2014 was 15.94% of risk-weighted assets.
  • Total deposits increased 0.6% to $230.4 million, mostly in noninterest-bearing deposit accounts.
  • Allowance for loan losses was 1.53% of loans, down from 1.74% at the end of 2013.

Three months ended June 30, 2014 vs. three months ended June 30, 2013 - Net income for the three months ended June 30, 2014 was $554,000, or $0.27 per share, compared to net income of $436,000, or $0.21 per share, for the three months ended June 30, 2013. The tax equivalent net interest margin increased to 3.62% in 2014 from 3.29% in 2013. 

Noninterest income was $1.3 million in the second quarter of 2014, compared to $1.2 million in the second quarters of 2013. Investment brokerage commission income, the largest component of noninterest income, decreased slightly to $491,000 in the second quarter of 2013, compared to $494,000 in the second quarter of 2013. Loss on sale of other real estate owned decreased net income by only $5,000 in 2014, compared to $62,000 in 2013. Mortgage banking activities decreased to $182,000 in 2014, as loan sale volume slowed. 

Noninterest expense decreased to $3.0 million in 2014, compared to $3.1 million in 2013. Salaries and employee benefits decreased $31,000, or 1.8%, to $1.7 million. Real estate owned expense of $103,000 in 2014 included $54,000 written down for the carrying value of foreclosed assets, compared to $124,000 written down in 2013. The premium for FDIC deposit insurance decreased to $65,000 in the second quarter of 2013 from $110,000 in 2013.

The Company provided $19,000 to the allowance for loan losses in the second quarter of 2014, compared to ($154,000) in the same quarter of 2013. Net charge-offs were $49,000 in the second quarter of 2014, compared to $76,000 in the second quarter of 2013.

Six months ended June 30, 2014 vs. six months ended June 30, 2013 - Net income for the six months ended June 30, 2013 was $1.1 million, or $0.53 per share, compared to $938,000, or $0.46 per share, for the six months ended June 30, 2013. The tax equivalent net interest margin increased to 3.61% in 2014 from 3.42% in 2013. 

Noninterest income was $2.3 million in the first half of 2014, compared to $2.5 million in the first half of 2013. The decrease is primarily in mortgage-banking activities, which decreased $177,000 to $365,000 in 2014. Investment brokerage commission income also decreased to $889,000 in the first half of 2014, compared to $958,000 in the first half of 2013. 

Noninterest expense decreased to $5.9 million in 2014, compared to $6.3 million in 2013. Real estate owned expense of $175,000 included $85,000 written down for the carrying value of foreclosed assets, compared to $326,000 written down in the first half of 2013. The premium for FDIC deposit insurance decreased to $115,000 in the first half of 2014, compared to $215,000 for the first half of 2013.

The Company provided ($195,000) to the allowance for loan losses in the first half of 2014, compared to ($243,000) in the first half of 2013. Net charge-offs were $170,000 in the first half of 2014, compared to $152,000 in the first half of 2013. 

Total assets increased to $307.2 million at June 30, 2014 from $305.0 million at December 31, 2013, primarily in securities held-to-maturity. Loans increased $1.9 million from December 31, 2013, primarily due to purchased loans guaranteed by the U.S. Government. 

Cash and cash equivalents decreased $9.5 million to $11.3 million.

Noninterest-bearing deposits increased by $3.1 million at June 30, 2014 from $41.7 million at December 31, 2013. Interest-bearing deposits decreased to $185.6 million at June 30, 2014 from $187.3 million at December 31, 2013. The decrease in interest-bearing deposits includes $1.6 million decrease in brokered certificates of deposit. 

Total equity was $29.7 million at June 30, 2014, compared to $28.5 million at December 31, 2013. Book value per share increased to $14.41 at June 30, 2014 from $13.89 at December 31, 2013. The Company reinstated regular quarterly dividends in 2014, paying $0.02 per common share in each quarter.

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  
June 30, 2014 and December 31, 2013  
(Amounts in thousands, except share and per share data)  
             
    June 30, 2014     Dec. 31, 2013  
ASSETS                
  Cash and due from banks   $ 8,240     $ 14,236  
  Other short-term investments     3,089       6,638  
    Total cash and cash equivalents     11,329       20,874  
                   
  Interest-earning deposits in banks     16,408       14,914  
  Securities - Available for sale     2,515       1,575  
  Securities - Held to maturity     6,457       -  
  Federal Home Loan Bank stock, at cost     4,064       4,064  
  Loans held for sale     2,015       1,034  
  Loans, net of allowance of $3,676 and $4,146     236,459       234,549  
  Premises and equipment, net     7,073       7,113  
  Goodwill     5,109       5,109  
  Originated mortgage servicing rights     1,486       1,501  
  Real estate owned     725       630  
  Bank-owned life insurance     9,671       9,537  
  Accrued interest receivable     879       828  
  Other assets     3,022       3,252  
                   
    Total assets   $ 307,212     $ 304,980  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Liabilities                
  Deposits                
    Noninterest-bearing   $ 44,784     $ 41,706  
    Interest-bearing     185,621       187,314  
      Total deposits     230,405       229,020  
  Federal Home Loan Bank advances and other borrowings     44,403       44,585  
  Accrued interest payable     239       272  
  Other liabilities     2,420       2,568  
    Total liabilities     277,467       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 2,063,607 shares at June 30, 2014 and 2,055,025 at December 31, 2013     2,064       2,055  
  Additional paid-in capital     7,158       7,094  
  Retained earnings     20,598       19,580  
  Accumulated other comprehensive income (loss)     (75 )     (194 )
    Total stockholders' equity     29,745       28,535  
                     
      Total liabilities and stockholders' equity   $ 307,212     $ 304,980  
                 
                 
   
CONSOLIDATED STATEMENTS OF INCOME  
Three Months ended June 30, 2014 and 2013  
(Amounts in thousands, except share and per share data)  
             
    Three Months ended June 30,  
    2014     2013  
Interest income                
  Loans   $ 2,796     $ 2,857  
  Investment securities:                
    Taxable     109       53  
    Tax-exempt     22       15  
  Dividends     38       47  
    Total interest income     2,965       2,972  
Interest expense                
  Deposits     211       252  
  Borrowed funds     318       415  
    Total interest expense     529       667  
                 
Net interest income     2,436       2,305  
                 
Provision for loan losses     19       (154 )
                 
Net interest income after provision for loan losses     2,417       2,459  
                 
Noninterest income:                
  Service charges and other fees     394       372  
  Investment brokerage commission income     491       494  
  Mortgage banking activities     182       213  
  Trust fee income     124       111  
  Increase in value of bank owned life insurance     67       70  
  Other income     -       (62 )
    Total noninterest income     1,258       1,198  
Noninterest expenses:                
  Salaries and employee benefits     1,685       1,716  
  Occupancy and equipment     462       426  
  Data processing     197       177  
  Professional services     81       107  
  Real estate owned expense     103       182  
  Advertising     31       27  
  FDIC premiums     65       110  
  Other     340       394  
    Total noninterest expenses     2,964       3,139  
                 
Income (loss) before income tax expense (benefit)     711       518  
                 
Provision for income tax     157       82  
                 
Net income (loss)   $ 554     $ 436  
                 
Earnings per share   $ 0.27     $ 0.21  
Dividends declared per share   $ 0.02     $ 0.00  
    Key Ratios:                
Return on average equity     7.63 %     6.35 %
Return on average assets     0.71 %     0.54 %
Net interest margin (tax equivalent)     3.65 %     3.29 %
                 
                 
   
CONSOLIDATED STATEMENTS OF INCOME  
Six Months ended June 30, 2014 and 2013  
(Amounts in thousands, except share and per share data)  
             
    Six Months Ended June 20  
    2014     2013  
Interest income                
  Loans   $ 5,554     $ 5,831  
  Investment securities:                
  Taxable     188       93  
  Tax-exempt     36       31  
  Dividends     94       87  
    Total interest income     5,872       6,042  
Interest expense                
  Deposits     433       519  
  Borrowed funds     634       826  
    Total interest expense     1,067       1,345  
                 
Net interest income     4,805       4,697  
                 
Provision for loan losses     (195 )     (243 )
                 
Net interest income after provision for loan losses     5,000       4,940  
                 
Noninterest income:                
  Service charges and other fees     732       716  
  Investment brokerage commission income     889       958  
  Mortgage banking activities     365       542  
  Trust fee income     212       196  
  Increase in value of bank owned life insurance     134       140  
  Other income     (6 )     (56 )
    Total noninterest income     2,326       2,496  
Noninterest expenses:                
  Salaries and employee benefits     3,376       3,412  
  Occupancy and equipment     926       829  
  Data processing     373       353  
  Professional services     188       224  
  Real estate owned expense     175       485  
  Advertising     62       55  
  FDIC premiums     115       215  
  Other     696       723  
    Total noninterest expenses     5,911       6,296  
                 
Income (loss) before income tax expense (benefit)     1,415       1,140  
                 
Provision for income tax     314       202  
                 
Net income (loss)   $ 1,101     $ 938  
                 
Earnings per share   $ 0.53     $ 0.46  
Dividends declared per share   $ 0.04     $ 0.00  
    Key Ratios:                
Return on average equity     7.62 %     6.92 %
Return on average assets     0.70 %     0.59 %
Net interest margin (tax equivalent)     3.61 %     3.43 %
                 
                 

Contact Information

  • Contacts:

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