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Southern Michigan Bancorp reports drop in Q4 earnings By Investing.com

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COLDWATER, Mich. – Southern Michigan Bancorp, Inc. (OTC Pink: SOMC) disclosed a decrease in net income for the fourth quarter of 2023, with earnings of $2,437,000, or $0.54 per share, a decline from $3,584,000, or $0.79 per share, during the same period in 2022. The bank holding company also reported a lower annual net income of $10,905,000, or $2.40 per share for the year ended December 31, 2023, compared to the previous year’s $13,491,000, or $2.97 per share.

Despite the dip in earnings, the company experienced growth in consolidated assets, reaching $1.41 billion at the end of 2023, up from $1.28 billion at the end of 2022. Total loans saw a significant increase of 16.9%, rising to $1.04 billion from $886.6 million. Deposits also grew by 6.1%, totaling $1.16 billion.

The bank’s President and CEO, John Waldron, commented on the year’s performance, acknowledging the challenges posed by the rate environment and increased deposit costs. He noted that the company’s expansion contributed to higher overhead due to increased full-time employee counts.

Southern Michigan Bancorp’s allowance for credit losses was $11,697,000, or 1.13% of loans, as of December 31, 2023, compared to $9,588,000, or 1.08% of loans, at the end of 2022. The bank maintained strong asset quality, with loan delinquencies representing just 0.10% of gross loans. The bank recognized a $950,000 provision for credit losses in 2023, primarily attributed to loan growth, which was an increase from the $275,000 provision in 2022.

The annualized return on average assets was 0.80% for 2023, down from 1.10% in 2022. Similarly, the return on average equity decreased to 11.94% from 15.68%. The tax equivalent net interest margin also saw a decrease, from 3.36% in 2022 to 3.16% in 2023.

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