Sturgis Bancorp, Inc. (OTCBB: STBI) today
announced net income of $502,000 for the first 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 for the first quarter of 2013:
- Net income for the first quarter of 2013 remained unchanged, at
$502,000, compared to $502,000 for the first quarter of 2012.
- The Bank maintained strong capital ratios, exceeding
"well-capitalized" requirements, with Tier 1 capital at 8.76%.
Total capital at March 31, 2013 was 13.85% of risk-weighted
assets.
- Nonaccrual and past due loans decreased.
- Total deposits increased 4.6% to $245.8 million, mostly in
temporary municipal deposits.
- Allowance for loan losses was 1.97% of loans, down slightly
from 2.03% at the end of 2012.
President and CEO Eric L. Eishen stated: "The Bank's core
earnings are stable and credit quality continues to improve. We
continue to control expenses and seek quality loan business. While
the U. S. Economy seems to be improving, we are still cautious with
how aggressively we pursue any loan growth opportunities. There is
weakness in loan demand, and the primary business opportunities are
related to our mortgage banking business. Credit worthy commercial
borrowers remain hesitant to take on additional debt until they are
confident the recovery will be sustained. Deposits continue to be
strong and customers remain reluctant to commit long-term. Once the
economy is back on track, we expect deposits to normalize and
maturities to extend. We are keeping our loan origination activity
focused on loan types we know best. When we are comfortable the
economy is in full recovery, we will look to a more expansionary
management of the balance sheet. The Bank enjoys a diversified
non-interest income stream and the net interest margin is stable as
well.
"The most challenging aspect to our business model will be
managing the significant increase in regulatory burden. The Bank is
large enough to deal with the increased burden, but all banks are
concerned with the increased cost of compliance."
Three months ended March 31, 2013 vs. three
months ended March 31, 2012 - Net income for the three months
ended March 31, 2013 was $502,000, or $0.25 per share, compared to
net income of $502,000, or $0.25 per share, for the three months
ended March 31, 2012. The tax equivalent net interest margin
increased to 3.54% in 2013 from 3.52% in 2012.
Noninterest income was $1.3 million in the first quarter of
2013, compared to $1.1 million in the first quarter of 2012.
Mortgage banking activities increased to $328,000 in 2013, as loan
sale volume continued relatively strong. Commission income also
increased to $464,000 in the first three months of 2013, compared
to $299,000 in the first three months of 2012.
Noninterest expense increased to $3.2 million in 2013, compared
to $2.8 million in 2012. Salaries and employee benefits increased
$127,000, or 8.1%, to $1.7 million, due to increased health
insurance benefit expense, salary adjustments, and commissions
earned. Real estate owned expense increased to $303,000, including
$202,000 written down for the carrying value of foreclosed
assets.
The Company provided ($88,000) to the allowance for loan losses
in the first three months of 2013, compared to $2,000 in the same
quarter or 2012. Net charge-offs were $77,000 in 2013, compared to
$95,000 in 2012.
Total assets increased to $328.2 million at March 31, 2013 from
$317.1 million at December 31, 2012, primarily in cash and cash
equivalents. Loans decreased $1.2 million from December 31, 2012,
primarily in Home Equity Lines of Credit and Commercial Nonmortgage
Loans.
Noninterest-bearing deposits increased to $45.1 million at March
31, 2013 from $41.3 million at December 31, 2012. Interest-bearing
deposits also increased to $200.8 million at March 31, 2013 from
$193.7 million at December 31, 2012. These increases in deposit
accounts are typical for the first quarter of each year, as
municipalities deposit property tax revenues. Municipalities
historically have reinvested those funds elsewhere during the
second quarter of the year, and Management expects that pattern to
continue for 2013. The number of checking accounts continues to
increase, as the Bank continues to expand its customer base.
Total equity was $27.3 million at March 31, 2013, compared to
$26.9 million at December 31, 2012. Book value per share increased
to $13.37 at March 31, 2013 from $13.21 at December 31, 2012.
During the worst part of the national financial crisis, the
Company began including expanded ratios for the Bank's asset
quality in quarterly press releases. Because the Company believes
these ratios have returned to more normal levels, the Company will
not present these ratios in subsequent releases.
Percentage of Gross Percentage of Total
Loans Assets
Mar. 31 Dec. 31 Mar. 31 Dec. 31
Past due and still accruing: 2013 2012 2013 2012
--------- --------- --------- ---------
Past due one month 0.44% 0.66% 0.34% 0.53%
Past due two months 0.16% 0.23% 0.12% 0.19%
Past due three or more months 0.01% 0.08% 0.01% 0.06%
Nonaccrual loans 2.53% 2.83% 1.95% 2.26%
Real Estate Owned 0.54% 0.49% 0.42% 0.39%
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, 2013 and December 31, 2012
(Amounts in thousands, except share and per share data)
March 31, Dec. 31,
2013 2012
------------ ------------
ASSETS
Cash and due from banks $ 17,030 $ 10,237
Other short-term investments 15,363 9,611
------------ ------------
Total cash and cash equivalents 32,393 19,848
Interest-earning deposits in banks 12,196 12,196
Securities - Available for sale 1,770 1,242
Federal Home Loan Bank stock, at cost 4,064 4,064
Loans held for sale 2,023 2,261
Loans, net of allowance of $4,974 and $5,138 247,323 248,520
Premises and equipment, net 7,175 7,044
Goodwill 5,109 5,109
Originated mortgage servicing rights 1,315 1,273
Real estate owned 1,363 1,252
Bank-owned life insurance 9,328 9,259
Accrued interest receivable 1,062 861
Prepaid FDIC assessment 314 414
Other assets 2,761 3,702
------------ ------------
Total assets $ 328,196 $ 317,045
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing $ 45,062 $ 41,261
Interest-bearing 200,751 193,662
------------ ------------
Total deposits 245,813 234,923
Federal Home Loan Bank advances and other
borrowings 52,352 52,440
Accrued interest payable 284 333
Other liabilities 2,423 2,425
------------ ------------
Total liabilities 300,872 290,121
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
2,043,112 shares at March 31, 2013 and
2,038,395 at December 31, 2012 2,043 2,038
Additional paid-in capital 7,009 6,979
Retained earnings 18,455 17,953
Accumulated other comprehensive income
(loss) (183) (46)
------------ ------------
Total stockholders' equity 27,324 26,924
------------ ------------
Total liabilities and stockholders'
equity $ 328,196 $ 317,045
============ ============
CONSOLIDATED STATEMENTS OF INCOME
Three Months ended March 31, 2013 and 2012
(Amounts in thousands, except share and per share data)
Three Months ended March
31,
2013 2012
------------ ------------
Interest income
Loans $ 2,974 $ 3,138
Investment securities:
Taxable 41 22
Tax-exempt 16 4
Dividends 39 36
------------ ------------
Total interest income 3,070 3,200
Interest expense
Deposits 267 371
Borrowed funds 411 424
------------ ------------
Total interest expense 678 795
------------ ------------
Net interest income 2,392 2,405
Provision for loan losses (88) 2
------------ ------------
Net interest income after provision for loan
losses 2,480 2,403
Noninterest income:
Service charges and other fees 344 374
Investment brokerage commission income 464 299
Mortgage banking activities 328 259
Trust fee income 85 79
Increase in value of bank owned life insurance 70 69
Other income 7 (12)
------------ ------------
Total noninterest income 1,298 1,068
Noninterest expenses:
Salaries and employee benefits 1,696 1,569
Occupancy and equipment 403 354
Data processing 176 175
Professional services 117 118
Real estate owned expense 303 135
Advertising 28 27
FDIC premiums 105 98
Other 328 326
------------ ------------
Total noninterest expenses 3,156 2,802
------------ ------------
Income (loss) before income tax expense
(benefit) 622 669
Provision for income tax 120 167
------------ ------------
Net income (loss) $ 502 $ 502
============ ============
Earnings per share $ 0.25 $ 0.25
Dividends declared per share $ 0.00 $ 0.00
Key Ratios:
Return on average equity 7.59% 7.93%
Return on average assets 0.63% 0.63%
Net interest margin (tax equivalent) 3.54% 3.52%
Contacts: Sturgis Bancorp Eric Eishen President & CEO or
Brian P. Hoggatt CFO P: 269 651-9345
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