SOURCE: Sturgis Bancorp Inc.

November 13, 2014 07:24 ET

Sturgis Bancorp Reports Earnings for Third Quarter 2014

STURGIS, MI--(Marketwired - Nov 13, 2014) -  Sturgis Bancorp, Inc. (OTCQB: STBI) today announced net income of $330,000 for the third 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 September 30, 2014:

  • Net income was $330,000 for the third quarter of 2014, compared to $467,000 for the third quarter of 2013.
  • The Bank maintained strong capital ratios, exceeding "well-capitalized" requirements, with Tier 1 capital at 9.74%. Total capital at September 30, 2014 was 15.84% of risk-weighted assets.
  • Total deposits increased 5.0% from December 31, 2013 to $240.4 million, mostly in noninterest-bearing deposit accounts.
  • Allowance for loan losses was 1.47% of loans, down from 1.74% at the end of 2013.

Three months ended September 30, 2014 vs. three months ended September 30, 2013 -- Net income for the three months ended September 30, 2014 was $330,000, or $0.16 per share, compared to net income of $467,000, or $0.23 per share, for the three months ended September 30, 2013. The tax equivalent net interest margin increased to 3.51% in 2014 from 3.37% in 2013. 

Noninterest income was $1.5 million in the third quarter of 2014, compared to $1.3 million in the third quarter of 2013. Investment brokerage commission income, the largest component of noninterest income, increased to $778,000 in the third quarter of 2014, compared to $481,000 in the third quarter of 2013. Mortgage banking activities income decreased to $119,000 in 2014 from $267,000 in 2013, as loan sale volume slowed. 

Noninterest expense increased to $3.2 million in 2014, compared to $3.1 million in 2013. Salaries and employee benefits increased $115,000, or 6.7%, to $1.8 million. The premium for FDIC deposit insurance decreased to $57,000 in the third quarter of 2014 from $108,000 in 2013. Noninterest expense in the third quarter of 2014 included $101,000 of legal, audit, and investment banker fees related to the pending acquisition of West Michigan Savings Bank in Bangor, MI.

The Company provided $307,000 to the allowance for loan losses in the third quarter of 2014, compared to $8,000 in the same quarter of 2013. Net charge-offs were $459,000 in the third quarter of 2014, compared to $208,000 in the third quarter of 2013.

Nine months ended September 30, 2014 vs. nine months ended September 30, 2013 -- Net income for the nine months ended September 30, 2013 was $1.4 million, or $0.69 per share, unchanged from $1.4 million, or $0.69 per share, for the nine months ended September 30, 2013. The tax equivalent net interest margin increased to 3.59% in 2014 from 3.41% in 2013. 

Noninterest income was $3.8 million in the first nine months of 2014, compared to $3.9 million in the first nine months of 2013. The decrease is primarily in mortgage-banking activities, which decreased $325,000 to $484,000 in 2014. Investment brokerage commission income increased to $1.7 million in the first nine months of 2014, compared to $1.4 million in 2013. 

Noninterest expense decreased to $9.2 million in 2014, compared to $9.4 million in 2013. Real estate owned expense of $242,000 in 2014 included $107,000 written down for the carrying value of foreclosed assets, compared to $358,000 written down in the first half of 2013. The premium for FDIC deposit insurance decreased to $172,000 in the first nine months of 2014, compared to $323,000 for the first nine months of 2013. Noninterest expense in the first nine months of 2014 included $102,000 of legal, audit, and investment banker fees related to the pending acquisition of West Michigan Savings Bank in Bangor, MI.

The Company provided $112,000 to the allowance for loan losses in the first nine months of 2014, compared to ($243,000) in the first nine months of 2013. Net charge-offs were $733,000 in the first nine months of 2014, compared to $360,000 in the first nine months of 2013. 

Total assets increased to $318.3 million at September 30, 2014 from $305.0 million at December 31, 2013, primarily in securities held-to-maturity. Loans increased $2.2 million from December 31, 2013, primarily due to purchased loans guaranteed by the U.S. Government. 

Cash and cash equivalents increased $2.7 million to $23.6 million.

Noninterest-bearing deposits increased by $10.2 million at September 30, 2014 from $41.7 million at December 31, 2013. Interest-bearing deposits also increased to $188.5 million at September 30, 2014 from $187.3 million at December 31, 2013. Brokered certificates of deposits decreased by $3.7 million to $4.0 million at September 30, 2014.

Total equity was $30.1 million at September 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 and announcing $0.03 for the fourth quarter of 2014.

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)  
   
    Sept. 30, 2014     Dec. 31, 2013  
ASSETS                
  Cash and due from banks   $ 16,106     $ 14,236  
  Other short-term investments     7,456       6,638  
    Total cash and cash equivalents     23,562       20,874  
                   
  Interest-earning deposits in banks     14,425       14,914  
  Securities - Available for sale     2,554       1,575  
  Securities - Held to maturity     6,155       -  
  Federal Home Loan Bank stock, at cost     4,064       4,064  
  Loans held for sale     673       1,034  
  Loans, net of allowance of $3,525 and $4,146     236,714       234,549  
  Premises and equipment, net     7,268       7,113  
  Goodwill     5,109       5,109  
  Originated mortgage servicing rights     1,428       1,501  
  Real estate owned     1,529       630  
  Bank-owned life insurance     9,739       9,537  
  Accrued interest receivable     942       828  
  Other assets     4,181       3,252  
                   
    Total assets   $ 318,343     $ 304,980  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Liabilities                
  Deposits                
    Noninterest-bearing   $ 51,916     $ 41,706  
    Interest-bearing     188,502       187,314  
      Total deposits     240,418       229,020  
  Federal Home Loan Bank advances and other borrowings     44,311       44,585  
  Accrued interest payable     232       272  
  Other liabilities     3,287       2,568  
    Total liabilities     288,248       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 2,067,741 shares at September 30, 2014 and 2,055,025 at December 31, 2013     2,068       2,055  
  Additional paid-in capital     7,188       7,094  
  Retained earnings     20,887       19,580  
  Accumulated other comprehensive income (loss)     (48 )     (194 )
    Total stockholders' equity     30,095       28,535  
                   
      Total liabilities and stockholders' equity   $ 318,343     $ 304,980  
                 
                 
                 
CONSOLIDATED STATEMENTS OF INCOME  
Three Months ended September 30, 2014 and 2013  
(Amounts in thousands, except share and per share data)  
   
    Three Months ended September 30,  
    2014     2013  
Interest income                
  Loans   $ 2,779     $ 2,874  
  Investment securities:                
    Taxable     98       50  
    Tax-exempt     22       15  
  Dividends     38       39  
    Total interest income     2,937       2,978  
Interest expense                
  Deposits     208       241  
  Borrowed funds     321       419  
    Total interest expense     529       660  
                 
Net interest income     2,408       2,318  
                 
Provision for loan losses     307       8  
                 
Net interest income after provision for loan losses     2,101       2,310  
                 
Noninterest income:                
  Service charges and other fees     257       259  
  Interchange income     155       145  
  Investment brokerage commission income     778       481  
  Mortgage banking activities     119       267  
  Trust fee income     82       96  
  Increase in value of bank owned life insurance     68       71  
  Other income     30       -  
    Total noninterest income     1,489       1,319  
Noninterest expenses:                
  Salaries and employee benefits     1,826       1,711  
  Occupancy and equipment     379       374  
  Interchange expenses     89       76  
  Data processing     169       149  
  Professional services     180       77  
  Real estate owned expense     67       76  
  Advertising     37       41  
  FDIC premiums     57       108  
  Other     418       467  
    Total noninterest expenses     3,222       3,079  
                 
Income (loss) before income tax expense (benefit)     368       550  
                 
Provision for income tax     38       83  
                 
Net income (loss)   $ 330     $ 467  
                 
Earnings per share   $ 0.16     $ 0.23  
Dividends declared per share   $ 0.02     $ 0.00  
    Key Ratios:                
Return on average equity     4.44 %     6.71 %
Return on average assets     0.43 %     0.59 %
Net interest margin (tax equivalent)     3.64 %     3.37 %
                 
                 
                 
CONSOLIDATED STATEMENTS OF INCOME  
Nine Months ended September 30, 2014 and 2013  
(Amounts in thousands, except share and per share data)  
   
    Nine Months Ended September 30,  
    2014     2013  
Interest income                
  Loans   $ 8,333     $ 8,704  
  Investment securities:                
    Taxable     286       152  
    Tax-exempt     58       46  
  Dividends     132       117  
    Total interest income     8,809       9,019  
Interest expense                
  Deposits     642       759  
  Borrowed funds     954       1,245  
    Total interest expense     1,596       2,004  
                 
Net interest income     7,213       7,015  
                 
Provision for loan losses     112       (234 )
                 
Net interest income after provision for loan losses     7,101       7,249  
                 
Noninterest income:                
  Service charges and other fees     725       752  
  Interchange income     450       421  
  Investment brokerage commission income     1,667       1,438  
  Mortgage banking activities     484       809  
  Trust fee income     294       292  
  Increase in value of bank owned life insurance     202       210  
  Other income     24       (53 )
    Total noninterest income     3,846       3,869  
Noninterest expenses:                
  Salaries and employee benefits     5,202       5,123  
  Occupancy and equipment     1,162       1,112  
  Interchange expenses     255       212  
  Data processing     480       440  
  Professional services     369       301  
  Real estate owned expense     242       561  
  Advertising     118       96  
  FDIC premiums     172       323  
  Other     1,164       1,260  
    Total noninterest expenses     9,164       9,428  
                 
Income (loss) before income tax expense (benefit)     1,783       1,690  
                 
Provision for income tax     353       285  
                 
Net income (loss)   $ 1,430     $ 1,405  
                 
Earnings per share   $ 0.69     $ 0.69  
Dividends declared per share   $ 0.06     $ 0.00  
    Key Ratios:                
Return on average equity     6.57 %     6.86 %
Return on average assets     0.61 %     0.59 %
Net interest margin (tax equivalent)     3.59 %     3.41 %

Contact Information

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