SOURCE: Sturgis Bancorp Inc.

November 04, 2013 09:40 ET

Sturgis Bancorp Reports Earnings for Third Quarter 2013

STURGIS, MI--(Marketwired - Nov 4, 2013) - Sturgis Bancorp, Inc. (OTCBB: STBI) today announced net income of $467,000 for the third 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 as of September 30, 2013:

  • Net income was $467,000 for the third quarter of 2013, compared to $517,000 for the third quarter of 2012.
  • The Bank enhanced strong capital ratios, significantly exceeding "well-capitalized" requirements, with Tier 1 capital at 9.22%. Total capital at September 30, 2013 was 15.25% of risk-weighted assets.
  • Nonaccrual loans decreased $1.6 million and real estate owned decreased $918,000 from December 31, 2012.
  • Total deposits increased 0.1% to $235.3 million, with noninterest-bearing deposits increasing $1.8 million.
  • Allowance for loan losses was 1.89% of loans, down slightly from 2.03% at the end of 2012.
  • Oakleaf Financial Services, Inc. recorded commission income of $1.4 million in the nine months ended September 30, an increase of $311,000 from 2012. That increase contributed to an increase in compensation expense.

President and CEO Eric L. Eishen stated: "Credit quality continues to improve and earnings are stable. Capital ratios are the strongest they have been since I took leadership of the Bank. I am pleased we have navigated the financial crisis and come out a stronger bank. Management will continue to focus on improving earnings and expense control. The low sustained rates are problematic for the industry and regulatory expectations are increasing. We are confident the Bank is in excellent position to return to normal operations, as soon as the economic conditions have stabilized. Loan demand is weak and the increase in mortgage rates has slowed down mortgage refinance activity. We continue to be the market leader in St. Joseph County and real estate purchase activity is improving."

Three months ended September 30, 2013 vs. three months ended September 30, 2012 - Net income for the three months ended September 30, 2013 was $467,000, or $0.23 per share, compared to net income of $517,000, or $0.26 per share, for the three months ended September 30, 2012. The tax equivalent net interest margin decreased to 3.37% in 2013 from 3.54% in 2012. 

Noninterest income was $1.3 million in the third quarter of 2013, compared to $1.2 million in the third quarter of 2012. Investment brokerage commission income increased to $481,000 in the third quarter of 2013, compared to $412,000 in the third quarter of 2012. Mortgage banking activities decreased slightly to $267,000 in 2013, as loan sale volume slowed. 

Noninterest expense increased to $3.1 million in 2013, compared to $2.9 million in 2012. Real estate owned expense of $76,000 in 2013 included $31,000 written down for the carrying value of foreclosed assets, compared to $191,000 in 2012 with $95,000 in assets written down. 

The Company provided $8,000 to the allowance for loan losses in the third quarter of 2013, compared to $63,000 in the same quarter of 2013. Net charge-offs were $208,000 in the third quarter of 2013, compared to $43,000 in the third quarter of 2012. 

Nine months ended September 30, 2013 vs. nine months ended September 30, 2012 - Net income for the nine months ended September 30, 2013 was $1.4 million, or $0.69 per share, compared to net income of $1.5 million, or $0.75 per share, for the nine months ended September 30, 2012. The tax equivalent net interest margin decreased to 3.41% in 2013 from 3.53% in 2012. 

Noninterest income was $3.8 million in the first nine months of 2013, compared to $3.4 million in the first nine months of 2012. The increase is primarily in investment brokerage commission income, which increased to $1.4 million in the first nine months of 2013, compared to $1.1 million in the first nine months of 2012. 

Noninterest expense increased to $9.4 million in 2013, compared to $8.6 million in 2012. Real estate owned expense of $561,000 in 2013 included $358,000 written down for the carrying value of foreclosed assets, compared to $538,000 in 2012 with $316,000 of assets written down.

The Company provided ($234,000) to the allowance for loan losses in the first nine months of 2013, compared to $54,000 in the first nine months of 2012. Net charge-offs were $360,000 in the first nine months of 2013, compared to $454,000 in the first nine months of 2012. Asset quality improvements and the net reduction in loans were the primary factors permitting the negative provision in 2013.

Total assets increased to $318.5 million at September 30, 2013 from $317.0 million at December 31, 2012, primarily in cash and cash equivalents. Cash and cash equivalents increased $14.6 million to $34.4 million. Loans decreased $13.1 million from December 31, 2012, primarily in commercial mortgage and commercial nonmortgage loans. Real estate owned of $334,000 on September 30, 2013 is the lowest inventory in eight years.

Noninterest-bearing deposits increased by $1.8 million at September 30, 2013 from $41.3 million at December 31, 2012. Interest-bearing deposits decreased to $192.2 million at September 30, 2013 from $193.7 million at December 31, 2012. The decrease in interest-bearing deposits includes $5.6 million decrease in brokered certificates of deposit. The number of checking accounts continues to increase, as the Bank continues to expand its customer base. 

Total equity was $28.2 million at September 30, 2013, compared to $26.9 million at December 31, 2012. Book value per share increased to $13.74 at September 30, 2013 from $13.21 at December 31, 2012.

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
September 30, 2013 and December 31, 2012
(Amounts in thousands, except share and per share data)
 
    Sept. 30, 2013   Dec. 31, 2012
ASSETS            
  Cash and due from banks   $ 19,700   $ 10,237
  Other short-term investments     14,698     9,611
    Total cash and cash equivalents     34,398     19,848
             
  Interest-earning deposits in banks     14,914     12,196
  Securities - Available for sale     1,588     1,242
  Federal Home Loan Bank stock, at cost     4,064     4,064
  Loans held for sale     800     2,261
  Loans, net of allowance of $4,744 and $5,138     235,400     248,520
  Premises and equipment, net     7,147     7,044
  Goodwill     5,109     5,109
  Originated mortgage servicing rights     1,336     1,273
  Real estate owned     334     1,252
  Bank-owned life insurance     9,469     9,259
  Accrued interest receivable     910     861
  Prepaid FDIC assessment     -     414
  Other assets     3,018     3,702
             
    Total assets   $ 318,487   $ 317,045
         
         
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Liabilities        
  Deposits        
    Noninterest-bearing   $ 43,043   $ 41,261
    Interest-bearing     192,227     193,662
    Total deposits     235,270     234,923
  Federal Home Loan Bank advances and other borrowings     52,175     52,440
  Accrued interest payable     262     333
  Other liabilities     2,595     2,425
    Total liabilities     290,302     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 2,051,093 shares at September 30, 2013 and 2,038,395 at December 31, 2012     2,051       2,038  
  Additional paid-in capital     7,066       6,979  
  Retained earnings     19,358       17,953  
  Accumulated other comprehensive income (loss)     (290 )     (46 )
    Total stockholders' equity     28,185       26,924  
                 
    Total liabilities and stockholders' equity   $ 318,487     $ 317,045  
   
   
   
CONSOLIDATED STATEMENTS OF INCOME  
Three Months ended September 30, 2013 and 2012  
(Amounts in thousands, except share and per share data)  
       
    Three Months ended September 30,  
    2013     2012  
Interest income                
  Loans   $ 2,874     $ 3,095  
  Investment securities:                
    Taxable     42       41  
    Tax-exempt     15       11  
  Dividends     47       41  
    Total interest income     2,978       3,188  
Interest expense                
  Deposits     241       324  
  Borrowed funds     419       423  
    Total interest expense     660       747  
                 
Net interest income     2,318       2,441  
                 
Provision for loan losses     8       63  
                 
Net interest income after provision for loan losses     2,310       2,378  
                 
Noninterest income:                
  Service charges and other fees     390       323  
  Investment brokerage commission income     481       412  
  Mortgage banking activities     267       286  
  Trust fee income     85       69  
  Increase in value of bank owned life insurance     71       71  
  Other income     1       13  
    Total noninterest income     1,295       1,174  
Noninterest expenses:                
  Salaries and employee benefits     1,711
      1,554
 
  Occupancy and equipment     434       361  
  Data processing     180       176  
  Professional services     77       105  
  Real estate owned expense     76       191  
  Advertising     26       25  
  FDIC premiums     108       103  
  Other     443       347  
    Total noninterest expenses     3,055       2,862  
                 
Income (loss) before income tax expense (benefit)     550       690  
                 
Provision for income tax     83       173  
                 
Net income (loss)   $ 467     $ 517  
                 
Earnings per share   $ 0.23     $ 0.26  
Dividends declared per share   $ 0.00     $ 0.00  
    Key Ratios:                
Return on average equity     6.71 %     7.87 %
Return on average assets     0.59 %     0.66 %
Net interest margin (tax equivalent)     3.37 %     3.54 %
   
   
   
CONSOLIDATED STATEMENTS OF INCOME  
Nine Months ended September 30, 2013 and 2012  
(Amounts in thousands, except share and per share data)  
   
    Nine Months Ended September 30,  
    2013     2012  
Interest income                
  Loans   $ 8,704     $ 9,313  
  Investment securities:                
    Taxable     135       89  
    Tax-exempt     46       27  
  Dividends     134       111  
    Total interest income     9,019       9,540  
Interest expense                
  Deposits     759       1,032  
  Borrowed funds     1,245       1,273  
    Total interest expense     2,004       2,305  
                 
Net interest income     7,015       7,235  
                 
Provision for loan losses     (234 )     54  
                 
Net interest income after provision for loan losses     7,249       7,181  
                 
Noninterest income:                
  Service charges and other fees     1,106       1,016  
  Investment brokerage commission income     1,438       1,127  
  Mortgage banking activities     809       850  
  Trust fee income     282       228  
  Increase in value of bank owned life insurance     210       211  
  Other income     (53 )     (14 )
    Total noninterest income     3,792       3,418  
Noninterest expenses:                
  Salaries and employee benefits     5,123       4,692  
  Occupancy and equipment     1,263       1,075  
  Data processing     533       532  
  Professional services     301       293  
  Real estate owned expense     561       538  
  Advertising     81       76  
  FDIC premiums     323       314  
  Other     1,166       1,056  
    Total noninterest expenses     9,351       8,576  
                 
Income (loss) before income tax expense (benefit)     1,690       2,023  
                 
Provision for income tax     285       503  
                 
Net income (loss)   $ 1,405     $ 1,520  
                 
Earnings per share   $ 0.69     $ 0.75  
Dividends declared per share   $ 0.00     $ 0.00  
    Key Ratios:                
Return on average equity     6.86 %     7.90 %
Return on average assets     0.59 %     0.64 %
Net interest margin (tax equivalent)     3.41 %     3.53 %
                 
                 
                 

Contact Information

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