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 |
% |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Contacts: Sturgis Bancorp Eric Eishen President & CEO or
Brian P. Hoggatt CFO P: 269 651-9345
Sturgis Bancorp (QX) (USOTC:STBI)
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